Loan Portfolio. The following table presents the composition of our loan portfolio as of the dates indicated.


	September 30,
	2020				2019				2018				2017				2016
	Amount		Percent		Amount		Percent		Amount		Percent		Amount		Percent		Amount		Percent
	(Dollars in thousands)
One- to four-family:
Originated	$	3,937,310	54.5	%	$	3,873,851	52.2	%	$	3,965,692	52.8	%	$	3,959,232	55.1	%	$	4,005,615	57.6	%
Correspondent purchased	2,101,082		29.1		2,349,877		31.7		2,505,987		33.4		2,445,311		34.0		2,206,072		31.7
Bulk purchased	208,427		2.9		252,347		3.4		293,607		3.9		351,705		4.9		416,653		6.0
Construction	34,593		0.5		36,758		0.5		33,149		0.4		30,647		0.4		39,430		0.6
Total	6,281,412		87.0		6,512,833		87.8		6,798,435		90.5		6,786,895		94.4		6,667,770		95.9
Commercial:
Commercial real estate	626,588		8.7		583,617		7.9		426,243		5.7		183,030		2.6		110,768		1.6
Commercial and industrial	97,614		1.4		61,094		0.8		62,869		0.9		—		—		—		—
Construction	105,458		1.4		123,159		1.7		80,498		1.1		86,952		1.2		43,375		0.6
Total	829,660		11.5		767,870		10.4		569,610		7.7		269,982		3.8		154,143		2.2
Consumer loans:
Home equity	103,838		1.4		120,587		1.6		129,588		1.7		122,066		1.7		123,345		1.8
Other	10,086		0.1		11,183		0.2		10,012		0.1		3,808		0.1		4,264		0.1
Total	113,924		1.5		131,770		1.8		139,600		1.8		125,874		1.8		127,609		1.9
Total loans receivable	7,224,996		100.0	%	7,412,473		100.0	%	7,507,645		100.0	%	7,182,751		100.0	%	6,949,522		100.0	%

Less:
ACL	31,527				9,226				8,463				8,398				8,540
Discounts/unearned loan fees	29,190				31,058				33,933				24,962				24,933
Premiums/deferred costs	(38,572)				(44,558)				(49,236)				(45,680)				(41,975)
Total loans receivable, net	$	7,202,851			$	7,416,747			$	7,514,485			$	7,195,071			$	6,958,024

September 30,
2019 2018 2017 2016 2015
Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
(Dollars in thousands)
One- to four-family:
Originated $ 3,873,851
52.2 % $ 3,965,692
52.8 % $ 3,959,232
55.1 % $ 4,005,615
57.6 % $ 4,010,424
60.6 %
Correspondent purchased 2,349,877
31.7
2,505,987
33.4
2,445,311
34.0
2,206,072
31.7
1,846,210
27.9
Bulk purchased 252,347
3.4
293,607
3.9
351,705
4.9
416,653
6.0
485,682
7.3
Construction 36,758
0.5
33,149
0.4
30,647
0.4
39,430
0.6
29,552
0.4
Total 6,512,833
87.8
6,798,435
90.5
6,786,895
94.4
6,667,770
95.9
6,371,868
96.2
Commercial:
Commercial real estate 583,617
7.9
426,243
5.7
183,030
2.6
110,768
1.6
109,314
1.6
Commercial and industrial 61,094
0.8
62,869
0.9
—
—
—
—
—
—
Construction 123,159
1.7
80,498
1.1
86,952
1.2
43,375
0.6
11,523
0.2
Total 767,870
10.4
569,610
7.7
269,982
3.8
154,143
2.2
120,837
1.8
Consumer loans:
Home equity 120,587
1.6
129,588
1.7
122,066
1.7
123,345
1.8
125,844
1.9
Other 11,183
0.2
10,012
0.1
3,808
0.1
4,264
0.1
4,179
0.1
Total 131,770
1.8
139,600
1.8
125,874
1.8
127,609
1.9
130,023
2.0
Total loans receivable 7,412,473
100.0 % 7,507,645
100.0 % 7,182,751
100.0 % 6,949,522
100.0 % 6,622,728
100.0 %

Less:
ACL 9,226
8,463
8,398
8,540
9,443

Discounts/unearned loan fees 31,058
33,933
24,962
24,933
24,213

Premiums/deferred costs (44,558 ) (49,236 ) (45,680 ) (41,975 ) (35,955 )
Total loans receivable, net $ 7,416,747
$ 7,514,485
$ 7,195,071
$ 6,958,024
$ 6,625,027

The following table presents the contractual maturity of our loan portfolio, along with associated weighted average yields, at September 30, ~~2019.~~2020. 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.


	One- to Four-Family				Commercial				Construction(2)				Home Equity(3)				Other Consumer				Total
	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
	(Dollars in thousands)
Amounts due:
Within one year(1)	$	1,237	4.51	%	$	117,410	4.03	%	$	139,667	4.27	%	$	2,130	5.15	%	$	1,161	3.36	%	$	261,605	4.17	%

After one year:
Over one to two	2,855		4.23		106,369		3.05		384		3.75		412		5.08		971		5.50		110,991		3.11
Over two to three	10,262		3.85		49,650		4.56		—		—		402		5.37		2,220		4.92		62,534		4.46
Over three to five	46,938		3.89		75,892		4.82		—		—		1,346		5.43		3,912		3.99		128,088		4.46
Over five to ten	497,411		3.18		267,221		4.57		—		—		11,201		5.52		1,383		5.81		777,216		3.70
Over ten to fifteen	1,316,691		3.12		64,802		4.66		—		—		42,602		4.41		355		6.06		1,424,450		3.23
After fifteen years	4,371,425		3.57		42,858		4.76		—		—		45,745		4.59		84		5.67		4,460,112		3.59
Total due after one year	6,245,582		3.44		606,792		4.36		384		3.75		101,708		4.64		8,925		4.76		6,963,391		3.54

Totals loans	$	6,246,819	3.44		$	724,202	4.30		$	140,051	4.27		$	103,838	4.65		$	10,086	4.60		7,224,996		3.57

Less:
ACL																					31,527
Discounts/unearned loan fees																					29,190
Premiums/deferred costs																					(38,572)
Total loans receivable, net																					$	7,202,851

One- to Four-Family Commercial
Construction⁽²⁾

Home Equity⁽³⁾
Other Consumer Total
Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
(Dollars in thousands)
Amounts due:
Within one year⁽¹⁾
$ 2,590
5.21 % $ 76,410
5.05 % $ 156,707
4.68 % $ 2,084
6.69 % $ 1,093
4.92 % $ 238,884
4.82 %

After one year:
Over one to two 2,977
4.47
117,508
4.13
3,210
6.81
211
6.26
1,249
5.96
125,155
4.23
Over two to three 6,402
4.06
66,485
4.61
—
—
331
5.85
1,818
5.55
75,036
4.59
Over three to five 50,480
3.98
68,080
5.30
—
—
1,637
5.84
5,491
4.48
125,688
4.74
Over five to ten 498,638
3.34
146,247
4.87
—
—
12,967
6.30
826
6.32
658,678
3.74
Over ten to fifteen 1,052,008
3.38
125,011
4.68
—
—
47,015
6.19
464
6.04
1,224,498
3.63
After fifteen years 4,862,980
3.73
44,970
4.88
—
—
56,342
6.04
242
5.24
4,964,534
3.77
Total due after one year 6,473,485
3.65
568,301
4.70
3,210
6.81
118,503
6.13
10,090
5.10
7,173,589
3.78

Totals loans $ 6,476,075
3.65
$ 644,711
4.74
$ 159,917
4.72
$ 120,587
6.14
$ 11,183
5.08
7,412,473
3.81

Less:
ACL 9,226

Discounts/unearned loan fees 31,058

Premiums/deferred costs (44,558 )
Total loans receivable, net $ 7,416,747


~~(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 borrower always makes the required minimum payment. The majority of home equity loans assume a maximum term of 240 months.~~

(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, including those that do not have a stated maturity date, the maturity date calculated assumes the borrower always makes the required minimum payment. The majority of home equity loans assume a maximum term of 240 months.

The following table presents, as of September 30, ~~2019,~~2020, the amount of loans due after September 30, ~~2020,~~2021, and whether these loans have fixed or adjustable interest rates.


	Fixed		Adjustable		Total
	(Dollars in thousands)
One- to four-family	$	5,416,534	$	829,048	$	6,245,582
Commercial	416,303		190,489		606,792
Construction	—		384		384
Consumer loans:
Home equity	14,682		87,026		101,708
Other	6,504		2,421		8,925
Total	$	5,854,023	$	1,109,368	$	6,963,391

Fixed Adjustable Total
(Dollars in thousands)
One- to four-family $ 5,445,463
$ 1,028,022
$ 6,473,485
Commercial 354,717
213,584
568,301
Construction 2,738
472
3,210
Consumer loans:
Home equity 16,723
101,780
118,503
Other 6,918
3,172
10,090
Total $ 5,826,559
$ 1,347,030
$ 7,173,589

Asset Quality

The Bank's traditional one- to four-family underwriting guidelines have provided the Bank with generally low delinquencies and low levels of non-performing assets within this loan category 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 underwritten according to the "ability to repay" and "qualified mortgage" standards, as issued by the CFPB.~~ 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 ~~10 to~~ 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.~~arrangements. For residential mortgage loans serviced by the Bank, beginning at approximately the 31^st day of delinquency, and again at approximately the 50^th 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 one- to four-family loans serviced by a third party, we monitor delinquencies using ~~reports~~data 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 one- to four-family loans is generally received during the first week of the month while the information from the servicers of our one- to-four family 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 loans originated by the Bank, when a ~~borrower fails to make a loan payment within 10 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~~initially by ~~telephone. The primary purpose of such contact is to notify~~notifying the borrower of the past due payment ~~in case the loan payment was misplaced or lost~~ and attempting to ~~identify any~~determine if there have been changes in the borrower's ~~income flow~~financial condition 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 or collection 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 Lending – Monitoring of Risk" for additional information.

In late March 2020, the Bank suspended the initiation of foreclosure proceedings for one- to four-family loans through the end of calendar year 2020. Additionally, the Bank announced loan modification programs to support and provide relief for its borrowers during the COVID-19 pandemic. Generally, loan modifications under these programs ("COVID-19 loan modifications") for one- to four-family loans and consumer loans consist of a three-month payment forbearance of principal, interest and, in some cases, escrow. COVID-19 loan modifications of commercial loans mainly consist of a six-month interest-only payment period. See "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition - Loans Receivable" for additional discussion regarding COVID-19 loan modifications.

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. Loans subject to payment forbearance under the Bank's COVID-19 loan modification program are not reported as delinquent during the forbearance time period. The amounts in the table represent the unpaid principal balance of the loans less related charge-offs. Of the loans 30 to 89 days delinquent at September 30, 2020, 2019, and 2018, ~~and 2017,~~ approximately 70%, 67%, ~~74%,~~ and ~~67%~~74%, respectively, were 59 days or less delinquent.


	Loans Delinquent for 30 to 89 Days at September 30,
	2020				2019				2018
	Number	Amount			Number	Amount			Number	Amount
	(Dollars in thousands)
One- to four-family:
Originated	42	$	3,012		90	$	7,223		129	$	10,647
Correspondent purchased	8	3,123			9	2,721			18	3,803
Bulk purchased	12	2,532			16	3,581			15	3,502
Commercial	2	45			8	826			6	322

Consumer	26	398			42	525			38	533


	90	$	9,110		165	$	14,876		206	$	18,807

Loans 30 to 89 days delinquent
to total loans receivable, net		0.13		%		0.20		%		0.25		%

Loans Delinquent for 30 to 89 Days at September 30,
2019 2018 2017
Number Amount Number Amount Number Amount
(Dollars in thousands)
One- to four-family:
Originated 90
$ 7,223
129
$ 10,647
129
$ 13,257
Correspondent purchased 9
2,721
18
3,803
8
1,827
Bulk purchased 16
3,581
15
3,502
22
3,194
Commercial 8
826
6
322
—
—
Consumer 42
525
38
533
35
500
165
$ 14,876
206
$ 18,807
194
$ 18,778

Loans 30 to 89 days delinquent
to total loans receivable, net 0.20 % 0.25 % 0.26 %

The table below presents the Company's non-performing loans and OREO at the dates indicated. The amounts in the table represent the unpaid principal balance of the loans less related charge-offs. 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 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 non-performing loans and OREO. OREO primarily includes assets acquired in settlement of loans. Over the past 12 months, one- to four-family OREO properties acquired in settlement of one- to four-family loans were owned by the Bank, on average, for approximately four months before the properties were sold.


	September 30,
	2020				2019				2018				2017				2016
	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:
Originated	51	$	4,362		44	$	3,268		67	$	5,040		67	$	5,515		73	$	8,190
Correspondent purchased	6	2,397			4	1,008			1	449			1	91			3	985
Bulk purchased	12	2,903			6	1,465			11	3,045			13	3,371			28	7,323
Commercial	5	1,360			4	170			—	—			—	—			—	—
Consumer	14	304			25	362			30	569			22	410			31	529
	88	11,326			83	6,273			109	9,103			103	9,387			135	17,027

Loans 90 or more days delinquent or in foreclosure
as a percentage of total loans		0.16		%		0.08		%		0.12		%		0.13		%		0.24		%

Nonaccrual loans less than 90 Days Delinquent:(1)
One- to four-family:
Originated	9	$	691		16	$	1,183		19	$	1,482		50	$	4,567		70	$	8,956
Correspondent purchased	—	—			—	—			2	396			8	1,690			9	2,786
Bulk purchased	—	—			1	65			—	—			4	846			1	31
Commercial	3	464			1	7			—	—			—	—			—	—
Consumer	1	9			2	35			2	9			7	113			12	328
	13	1,164			20	1,290			23	1,887			69	7,216			92	12,101
Total non-performing loans	101	12,490			103	7,563			132	10,990			172	16,603			227	29,128

Non-performing loans as a percentage of total loans		0.17		%		0.10		%		0.15		%		0.23		%		0.42		%


																						September 30,
	September 30,																					2020				2019				2018				2017				2016
	2019				2018				2017				2016				2015					Number	Amount			Number	Amount			Number	Amount			Number	Amount			Number	Amount
	Number	Amount			Number	Amount			Number	Amount			Number	Amount			Number	Amount				(Dollars in thousands)
	(Dollars in thousands)
Loans 90 or More Days Delinquent or in Foreclosure:
OREO:																					OREO:
One- to four-family:																					One- to four-family:
Originated	44	$	3,268		67	$	5,040		67	$	5,515		73	$	8,190		66	$	6,728
Originated(2)																					Originated(2)	4	$	183		8	$	745		8	$	843		4	$	58		12	$	692
Correspondent purchased	4	1,008			1	449			1	91			3	985			1	394			Correspondent purchased	—	—			—	—			—	—			—	—			1	499
Bulk purchased	6	1,465			11	3,045			13	3,371			28	7,323			36	8,898			Bulk purchased	—	—			—	—			1	454			5	1,279			4	1,265
Commercial	4	170			—	—			—	—			—	—			—	—			Commercial	—	—			1	600			1	600			—	—			—	—
Consumer	25	362			30	569			22	410			31	529			28	509			Consumer	—	—			—	—			—	—			1	67			—	—
Other																					Other	—	—			—	—			—	—			—	—			1	1,278
	83	6,273			109	9,103			103	9,387			135	17,027			131	16,529				4	183			9	1,345			10	1,897			10	1,404			18	3,734
Total non-performing assets																					Total non-performing assets	105	$	12,673		112	$	8,908		142	$	12,887		182	$	18,007		245	$	32,862

Loans 90 or more days delinquent or in foreclosure
as a percentage of total loans		0.08		%		0.12		%		0.13		%		0.24		%		0.25		%

Nonaccrual loans less than 90 Days Delinquent:⁽¹⁾
One- to four-family:
Originated	16	$	1,183		19	$	1,482		50	$	4,567		70	$	8,956		77	$	9,004
Correspondent purchased	—	—			2	396			8	1,690			9	2,786			1	25
Bulk purchased	1	65			—	—			4	846			1	31			1	82
Commercial	1	7			—	—			—	—			—	—			—	—
Consumer	2	35			2	9			7	113			12	328			12	295
	20	1,290			23	1,887			69	7,216			92	12,101			91	9,406
Total non-performing loans	103	7,563			132	10,990			172	16,603			227	29,128			222	25,935

Non-performing loans as a percentage of total loans		0.10		%		0.15		%		0.23		%		0.42		%		0.39		%

Non-performing assets as a percentage of total assets																					Non-performing assets as a percentage of total assets		0.13		%		0.10		%		0.14		%		0.20		%		0.35		%

(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. 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.

September 30,
2019 2018 2017 2016 2015
Number Amount Number Amount Number Amount Number Amount Number Amount
(Dollars in thousands)
OREO:
One- to four-family:
Originated⁽²⁾
8
$ 745
8
$ 843
4
$ 58
12
$ 692
29
$ 1,752
Correspondent purchased —
—
—
—
—
—
1
499
1
499
Bulk purchased —
—
1
454
5
1,279
4
1,265
2
796
Commercial 1
600
1
600
—
—
—
—
—
—
Consumer —
—
—
—
1
67
—
—
1
8
Other —
—
—
—
—
—
1
1,278
1
1,278
9
1,345
10
1,897
10
1,404
18
3,734
34
4,333
Total non-performing assets 112
$ 8,908
142
$ 12,887
182
$ 18,007
245
$ 32,862
256
$ 30,268

Non-performing assets as a percentage of total assets 0.10 % 0.14 % 0.20 % 0.35 % 0.31 %
(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.

~~(1)~~

Includes loans required to be reported as nonaccrual pursuant to accounting and/or 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.


~~(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.~~

The amount of interest income on nonaccrual loans and TDRs as of September 30, ~~2019~~2020 included in interest income was ~~$988 thousand~~$1.0 million for the year ended September 30, ~~2019.~~2020. The amount of additional interest income that would have been recorded on nonaccrual loans and TDRs as of September 30, ~~2019,~~2020, if they had performed in accordance with their original terms, was ~~$66~~$123 thousand for the year ended September 30, ~~2019.~~2020.

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, ~~2019.~~2020. 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, ~~2019,~~2020, 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	$	3,541,606	56.7	%	$	2,547	29.4	%	$	4,457	46.1	%	67	%
Missouri	1,089,197		17.4		1,683		19.4		210		2.2		40
Texas	698,017		11.2		1,553		17.9		437		4.5		44
Other states	917,999		14.7		2,884		33.3		4,558		47.2		60



	$	6,246,819	100.0	%	$	8,667	100.0	%	$	9,662	100.0	%	62

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 $ 3,540,471
54.7 % $ 6,121
45.3 % $ 3,117
54.3 % 59 %
Missouri 1,172,468
18.1
2,286
16.9
786
13.7
53
Texas 712,802
11.0
909
6.7
542
9.4
48
Other states 1,050,334
16.2
4,209
31.1
1,296
22.6
70
$ 6,476,075
100.0 % $ 13,525
100.0 % $ 5,741
100.0 % 60

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 5. 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, 2019. See "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 5. Loans Receivable and Allowance for Credit Losses" for information regarding asset classification definitions. During the June 30, 2019 quarter, management classified a $50.0 million commercial real estate participation loan as special mention. The loan has been in the portfolio for approximately 3.5 years, with approximately 1.5 years remaining, and relates to a recently opened large hotel and convention center in a high growth area in the central-southern United States. Management identified credit weaknesses associated with this loan, including a debt service coverage ratio below policy, the development surrounding the hotel and convention center has been slower than initially anticipated, and construction delays have occurred. The Bank has personal guarantees from members of a financially strong borrowing group, and the loan was current according to its terms as of September 30, 2019. Management continues to closely monitor the hotel and convention center and surrounding activities.2020. At September 30, ~~2019,~~2020, 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:
Originated	82	$	9,249	196	$	15,729
Correspondent purchased	6	2,076		17	4,512
Bulk purchased	—	—		25	5,319
Commercial:
Commercial real estate	5	50,957		9	3,541
Commercial and industrial	7	1,040		3	1,368
Consumer	14	331		35	589


Total loans	114	63,653		285	31,058

OREO:
One- to four-family:
Originated	—	—		4	183




Total OREO	—	—		4	183



Total classified assets	114	$	63,653	289	$	31,241

Special Mention Substandard
Number Amount Number Amount
(Dollars in thousands)
One- to four-family:
Originated 114
$ 12,941
198
$ 15,628
Correspondent purchased 8
2,349
13
2,785
Bulk purchased 1
102
24
5,294
Commercial 15
54,106
11
5,529
Consumer Loans:
Home equity 16
280
45
696
Other 1
2
6
24
Total loans 155
69,780
297
29,956

OREO:
One- to four-family:
Originated —
—
8
745
Commercial —
—
1
600
Total OREO —
—
9
1,345
Total classified assets 155
$ 69,780
306
$ 31,301

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 reduced payment amounts are required, reductions in interest rates, and/or 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 on one- to four-family and consumer loans, not to exceed the original loan balance, to these borrowers. For commercial loans, the Bank does not forgive principal or interest or commit to lend additional funds unless the borrower provides additional collateral or other enhancements to improve credit quality. See "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 1. Summary of Significant Accounting Policies and Note 5. Loans Receivable and Allowance for Credit Losses" for additional information related to TDRs.

As previously noted, in late March 2020, the Bank announced COVID-19 loan modification programs to support and provide relief for its borrowers during the COVID-19 pandemic. The Company has followed the Coronavirus Aid, Relief, and Economic Security ("CARES") Act and interagency guidance from the federal banking agencies when determining if a borrower's modification is subject to TDR classification.

The following table presents the Company's TDRs, based on accrual status, at the dates indicated.


	September 30,
	2020		2019		2018		2017		2016
	(Dollars in thousands)
Accruing TDRs	$	13,205	$	14,892	$	20,216	$	27,383	$	23,177
Nonaccrual TDRs(1)	3,394		2,958		4,652		11,742		18,725
Total TDRs	$	16,599	$	17,850	$	24,868	$	39,125	$	41,902

September 30,
2019
2018
2017
2016
2015
(Dollars in thousands)
Accruing TDRs $ 14,892
$ 20,216
$ 27,383
$ 23,177
$ 24,331
Nonaccrual TDRs⁽¹⁾
2,958
4,652
11,742
18,725
15,511
Total TDRs $ 17,850
$ 24,868
$ 39,125
$ 41,902
$ 39,842

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


~~(1)~~	~~Nonaccrual TDRs are included in the non-performing loan table above and are classified as substandard.~~

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, 2020, 2019, and 2018 ~~and 2017~~ was $23.1 million, $23.4 million, ~~$29.9 million,~~ and ~~$44.4~~$29.9 million, respectively. Included in the impaired loan balance at September 30, ~~2019~~2020 were ~~$23.2~~$22.9 million of loans classified as either special mention or substandard.

See "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 1. Summary of Significant Accounting Policies and Note 5. Loans Receivable and Allowance for Credit Losses" for additional information related to impaired loans.

Allowance for credit losses and ~~Provision~~provision for credit losses. Management maintains an ACL to absorb inherent losses in the loan portfolio based on 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 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 activity and ACL ratios, and the Bank's ACL ratios. For our commercial loan portfolio, we also consider qualitative factors such as geographic locations, collateral types, tenant brand name, borrowing relationships, and lender 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 5. Loans Receivable and Allowance for Credit Losses" for additional information on the ACL.

Each quarter ~~we prepare~~ a formula analysis model is prepared which segregates the loan portfolio into categories based on certain risk characteristics. Historical loss ~~factors~~ and qualitative factors are applied to each loan category in the formula analysis model. The factors are reviewed by management quarterly to assess whether ~~the factors~~they adequately cover probable and estimable losses inherent in the loan portfolio. To

During the ~~extent~~current fiscal year, management increased the historical loss and qualitative factors applied in the formula analysis model for all loan categories and added a COVID-19 qualitative factor to the Bank's commercial loan portfolio. The increase in the factors and addition of the new qualitative factor was in response to the deterioration of economic conditions due to the COVID-19 pandemic. When determining the appropriate historical loss and qualitative factors to apply in the formula analysis model, management considered such items as: national and state unemployment and unemployment benefit claim information, amount and timing of governmental financial assistance, the Bank's COVID-19 loan modification programs, consumer spending information, industries most impacted by the COVID-19 pandemic, and a loan analysis completed by the commercial lending team.

As of September 30, 2020, unemployment benefit claims continued to be at high levels, but not as high as the late March 2020/early April 2020 timeframe. Individuals that were unemployed benefited from the Federal Pandemic Unemployment Compensation Program ("FPUC") which the CARES Act created. FPUC provided an additional $600 per week to individuals collecting regular unemployment compensation. The FPUC expired in late July 2020. There were other unemployment compensation benefits created under the CARES Act which benefited individuals that exhausted their regular unemployment insurance benefits and that are generally not eligible for regular unemployment compensation, like self-employed individuals. In early August 2020, President Trump signed an executive memorandum authorizing the Federal Emergency Management Agency to provide $300 per week in extra unemployment benefits for six weeks, which started on August 1, 2020. The majority of the financial assistance provided by the federal government, which may be masking the Bank's actual credit exposure, tapered off significantly by September 30, 2020. In late March 2020, the Bank began offering

a COVID-19 loan modification program for one- to four-family and consumer loans. While the intention of the COVID-19 loan modification program was to keep customers current on their payments and therefore in their homes during the worst of the economic downturn, the program could also be masking the Bank's actual credit exposure on these loans. See "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Financial Condition" for additional information regarding COVID-19 loan modifications.

Many of the stay-at-home orders issued in March and April 2020 were lifted by September 30, 2020, resulting in some people returning to work, but not at the same level as prior to March 2020. Several companies are still requiring their employees to work from home and limit business travel and several colleges and schools are electing remote and/or hybrid learning. The residents of senior housing facilities continue to be generally disproportionately impacted by the COVID-19 pandemic. Consumer spending has continued to gradually rebound, but generally not in the travel, lodging, and entertainment industries. The Bank's commercial lending team analyzed the Bank's largest commercial lending relationships through September 30, 2020. Approximately 91% of all commercial loans, excluding PPP loans, were evaluated. The commercial lending team primarily focused on the lending relationships considered most at risk of short-term operational cash flow issues and/or collateral concerns, which had an aggregate unpaid principal balance of $201.2 million at September 30, 2020, and was primarily in the following categories: senior housing facilities, hotels, retail buildings, office buildings and single use buildings. These loan categories were among the categories with the highest usage of the Bank's COVID-19 loan modification program. We believe the Bank's COVID-19 loan modification program has been very beneficial to the majority of the Bank's commercial borrowers that took advantage of the program; however, as is the case with one- to four-family loans, the modifications may be masking the Bank's actual credit exposure. The commercial lending team also considered the largest credits in the industries most impacted by the COVID-19 pandemic: senior housing, hotel, retail building, office building and single use buildings. The weighted average LTV ratios based on the aggregate unpaid principal balances of senior housing, hotel, retail building, office building, and single use building loans were 69%, 58%, 67%, 75%, and 69%, respectively, at September 30, 2020. In most cases, the most recent appraisal was obtained at the time of origination.

There was no significant deterioration in credit quality indicators, such as loan delinquencies, asset classification and credit scores, during the current fiscal year; however, as noted above, the financial assistance provided by the federal government and our COVID-19 loan modifications may be masking our actual credit exposure which could result in worsening credit quality indicators in the coming months. Loans 30 to 89 days delinquent were 0.13% of total loans at September 30, 2020 and 0.20% of total loans at September 30, 2019. Loans 90 days or more delinquent or in foreclosure were 0.16% of total loans at September 30, 2020 and 0.08% of total loans at September 30, 2019. Loans classified as special mention were $63.7 million at September 30, 2020 compared to $69.8 million at September 30, 2019. Loans classified as substandard were $31.1 million at September 30, 2020 compared to $30.1 million at September 30, 2019. The weighted average credit score for our one- to four-family loan portfolio ~~continues~~was 768 at September 30, 2020 compared to ~~grow~~767 at September 30, 2019. We completed a credit score update from a nationally recognized consumer rating agency during September of 2020 and ~~the inherent loss factors remain relatively constant and/or the asset quality declines, the related ACL amounts will likely increase.~~2019.

The ~~Bank recorded a $750 thousand~~majority of the provision for credit losses ~~during the current fiscal year compared to no provision for credit losses in the prior fiscal year. The provision for credit losses~~recorded in the current fiscal year was to increase the ACL to account for the increase in the factors and the addition of the new qualitative factor in the formula analysis model as a result of management's assessment of the inherent losses in the loan portfolio due ~~primarily~~ to ~~commercial loan activities~~the deterioration of economic conditions. Management will continue to closely monitor economic conditions and will work with borrowers as necessary to assist them through this challenging economic climate. If economic conditions worsen or do not improve in the near term, and if future government programs, if any, do not provide adequate relief to borrowers, it is possible the Bank's ACL will need to increase in future periods. Management seeks to apply the ACL methodology in a consistent manner; however, the methodology may be modified in response to changing conditions, such as was the case during the current fiscal ~~year, specifically~~year. Although management believes the ~~classification of~~ACL was at a ~~large commercial participation loan as special mention, commercial loan growth and funding, certain commercial loans that renewed since being obtained~~level adequate to absorb inherent losses in the ~~CCB acquisition~~loan portfolio at September 30, 2020, the level of the ACL remains an estimate that is subject to significant judgment and ~~are now in~~short-term changes.

Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments became effective for the ~~Bank's ACL model,~~Company on October 1, 2020. See "Part II, Item 8. Financial Statements and ~~commercial loan charge-offs.~~Supplementary Data – Notes to Consolidated Financial Statements – Note 1. Summary of Significant Accounting Policies" for additional information.

The following table presents ACL activity and related ratios at the dates and for the periods indicated.


	Year Ended September 30,
	2020			2019			2018			2017			2016
	(Dollars in thousands)
Balance at beginning of period	$	9,226		$	8,463		$	8,398		$	8,540		$	9,443
Charge-offs:
One- to four-family:
Originated	(64)			(75)			(136)			(72)			(200)
Correspondent	—			—			(128)			—			—
Bulk purchased	—			(26)			—			(216)			(342)

Total	(64)			(101)			(264)			(288)			(542)
Commercial:
Commercial real estate	(325)			—			—			—			—
Commercial and industrial	(24)			(124)			—			—			—

Total	(349)			(124)			—			—			—
Consumer:
Home equity	(10)			(28)			(32)			(51)			(83)
Other	(20)			(9)			(6)			(9)			(5)
Total	(30)			(37)			(38)			(60)			(88)
Total charge-offs	(443)			(262)			(302)			(348)			(630)
Recoveries:
One- to four-family:
Originated	41			22			144			4			77

Bulk purchased	265			106			196			165			374

Total	306			128			340			169			451
Commercial:
Commercial real estate	110			22			—			—			—
Commercial and industrial	—			2			—			—			—
Construction	—			25			—			—			—
Total	110			49			—			—			—
Consumer:
Home equity	23			80			22			26			25
Other	5			18			5			11			1
Total	28			98			27			37			26
Total recoveries	444			275			367			206			477
Net recoveries (charge-offs)	1			13			65			(142)			(153)
Provision for credit losses	22,300			750			—			—			(750)
Balance at end of period	$	31,527		$	9,226		$	8,463		$	8,398		$	8,540

Ratio of net charge-offs during the period to
average loans outstanding during the period	—		%	—		%	—		%	—		%	—		%

Ratio of net (recoveries) charge-offs during the
period to average non-performing assets	(0.01)			(0.12)			(0.42)			0.56			0.48

ACL to non-performing loans at end of period	252.42			121.99			77.01			50.58			29.32

ACL to loans receivable, net at end of period	0.44			0.12			0.11			0.12			0.12

ACL to net charge-offs	N/M(1)			N/M(1)			N/M(1)			58.9x			55.8x

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

Year Ended September 30,
2019
2018
2017
2016
2015
(Dollars in thousands)
Balance at beginning of period $ 8,463
$ 8,398
$ 8,540
$ 9,443
$ 9,227
Charge-offs:
One- to four-family:
Originated (75 ) (136 ) (72 ) (200 ) (424 )
Correspondent —
(128 ) —
—
(11 )
Bulk purchased (26 ) —
(216 ) (342 ) (228 )
Total (101 ) (264 ) (288 ) (542 ) (663 )
Commercial:
Commercial and industrial (124 ) —
—
—
—
Total (124 ) —
—
—
—
Consumer:
Home equity (28 ) (32 ) (51 ) (83 ) (29 )
Other (9 ) (6 ) (9 ) (5 ) (43 )
Total (37 ) (38 ) (60 ) (88 ) (72 )
Total charge-offs (262 ) (302 ) (348 ) (630 ) (735 )
Recoveries:
One- to four-family:
Originated 22
144
4
77
56
Bulk purchased 106
196
165
374
58
Total 128
340
169
451
114
Commercial:
Commercial real estate 22
—
—
—
—
Commercial and industrial 2
—
—
—
—
Construction 25
—
—
—
—
Total 49
—
—
—
—
Consumer:
Home equity 80
22
26
25
64
Other 18
5
11
1
2
Total 98
27
37
26
66
Total recoveries 275
367
206
477
180
Net recoveries (charge-offs) 13
65
(142 ) (153 ) (555 )
Provision for credit losses 750
—
—
(750 ) 771
Balance at end of period $ 9,226
$ 8,463
$ 8,398
$ 8,540
$ 9,443

Ratio of net charge-offs during the period to
average loans outstanding during the period — % — % — % — % 0.01 %

Ratio of net (recoveries) charge-offs during the
period to average non-performing assets (0.12 ) (0.42 ) 0.56
0.48
1.87

ACL to non-performing loans at end of period 121.99
77.01
50.58
29.32
36.41

ACL to loans receivable, net at end of period 0.12
0.11
0.12
0.12
0.14

ACL to net charge-offs
N/M⁽¹⁾

N/M⁽¹⁾

58.9x
55.8x
17.0x


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

The distribution of our ACL at the dates indicated is summarized below.


	September 30,
	2020				2019				2018				2017				2016
			% 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)
One- to four-family:
Originated	$	6,044	54.5	%	$	1,982	52.2	%	$	2,933	52.8	%	$	3,149	55.1	%	$	3,892	57.6	%
Correspondent purchased	2,691		29.1		1,203		31.7		1,861		33.4		1,922		34.0		2,102		31.7
Bulk purchased	467		2.9		687		3.4		925		3.9		1,000		4.9		1,065		6.0
Construction	41		0.5		18		0.5		20		0.4		24		0.4		36		0.6
Total	9,243		87.0		3,890		87.8		5,739		90.5		6,095		94.4		7,095		95.9
Commercial:
Commercial real estate	16,869		8.6		3,448		7.9		1,801		5.7		1,242		2.6		774		1.6
Commercial and industrial	1,451		1.4		472		0.8		21		0.8		—		—		—		—
Construction	3,480		1.5		1,251		1.7		734		1.1		870		1.2		434		0.6
Total	21,800		11.5		5,171		10.4		2,556		7.6		2,112		3.8		1,208		2.2
Consumer loans:
Home equity	370		1.4		97		1.6		129		1.8		159		1.7		187		1.8
Other consumer	114		0.1		68		0.2		39		0.1		32		0.1		50		0.1
Total consumer loans	484		1.5		165		1.8		168		1.9		191		1.8		237		1.9
	$	31,527	100.0	%	$	9,226	100.0	%	$	8,463	100.0	%	$	8,398	100.0	%	$	8,540	100.0	%

September 30,
2019 2018 2017 2016 2015
% 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)
One- to four-family:
Originated $ 1,982
52.2 % $ 2,933
52.8 % $ 3,149
55.1 % $ 3,892
57.6 % $ 4,833
60.6 %
Correspondent purchased 1,203
31.7
1,861
33.4
1,922
34.0
2,102
31.7
2,115
27.9
Bulk purchased 687
3.4
925
3.9
1,000
4.9
1,065
6.0
1,434
7.3
Construction 18
0.5
20
0.4
24
0.4
36
0.6
32
0.4
Total 3,890
87.8
5,739
90.5
6,095
94.4
7,095
95.9
8,414
96.2
Commercial:
Commercial real estate 3,448
7.9
1,801
5.7
1,242
2.6
774
1.6
604
1.6
Commercial and industrial 472
0.8
21
0.8
—
—
—
—
—
—
Construction 1,251
1.7
734
1.1
870
1.2
434
0.6
138
0.2
Total 5,171
10.4
2,556
7.6
2,112
3.8
1,208
2.2
742
1.8
Consumer loans:
Home equity 97
1.6
129
1.8
159
1.7
187
1.8
222
1.9
Other consumer 68
0.2
39
0.1
32
0.1
50
0.1
65
0.1
Total consumer loans 165
1.8
168
1.9
191
1.8
237
1.9
287
2.0
$ 9,226
100.0 % $ 8,463
100.0 % $ 8,398
100.0 % $ 8,540
100.0 % $ 9,443
100.0 %

The majority of the ~~CCB~~ loans acquired in the CCB acquisition were not deemed purchased credit impaired ("PCI") as of the acquisition date ("non-PCI loans"). The net purchase discounts associated with non-PCI loans were compared to the amount of hypothetical ACL estimated for these loans at September 30, 2020, 2019, and ~~September 30,~~ 2018. See "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies – Allowance for Credit Losses" for additional information regarding management's estimation of the hypothetical ACL for non-PCI loans. As a result of this analysis, management determined the net purchase discounts were not sufficient, so ACL was recorded on those loans at September 30, 2020. At September 30, 2019 and 2018, the net purchase discounts were sufficient and no ACL was required on those loans.

The ratio of ACL to loans receivable, by loan type, at the dates indicated is summarized below. As discussed above, the ACL increased during the current fiscal year resulting in an overall increase in the ACL to loans receivable ratio at September 30, 2020 compared to the other dates presented in the table below. The bulk purchased loan ACL to loans receivable ratio decreased at September 30, 2020 compared to September 30, 2019 due to the portion of the loan portfolio guaranteed by a third party representing more of the overall portfolio balance. Included in the commercial and industrial loan category at September 30, 2020 are PPP loans. PPP loans are 100% guaranteed by the SBA so the Bank did not record ACL on those loans at September 30, ~~2019 or September 30, 2018.~~2020.


	At September 30,
	2020		2019		2018		2017		2016
One- to four-family:
Originated	0.15	%	0.05	%	0.07	%	0.08	%	0.10	%
Correspondent purchased	0.13		0.05		0.07		0.08		0.10
Bulk purchased	0.22		0.27		0.32		0.28		0.26
Construction	0.12		0.05		0.06		0.08		0.09
Total	0.15		0.06		0.08		0.09		0.11
Commercial:
Commercial real estate	2.69		0.59		0.42		0.68		0.70
Commercial and industrial	1.49		0.77		0.03		—		—
Construction	3.30		1.02		0.91		1.00		1.00
Total	2.63		0.67		0.45		0.78		0.78
Consumer	0.42		0.13		0.12		0.15		0.19
Total	0.44		0.12		0.11		0.12		0.12

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.~~purchases, and commercial construction loan funding.

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 have the ability to 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. Effective September 30, 2019, the

Company adopted ~~Accounting Standards Update ("ASU")~~ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities and certain components of ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments that are applicable to ASU 2017-12. As part of the adoption, the Company reclassified its entire portfolio of HTM securities, totaling $444.7 million at amortized cost, to AFS securities.

On a quarterly basis, management reviews 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, ~~2019.~~2020.

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, ~~2019,~~2020, our investment securities portfolio totaled ~~$268.4~~$380.1 million. The portfolio consisted entirely of securities classified as AFS. See "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 4. 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, ~~2019,~~2020, our MBS portfolio totaled ~~$936.5 million.~~$1.18 billion. The portfolio consisted entirely of securities classified as 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 4. 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, ~~2019,~~2020, the MBS portfolio included ~~$108.0~~$70.5 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, ~~2019~~2020 was ~~$2.3~~$11.9 million.

The following table sets forth the composition of our investment and MBS portfolios as of the dates indicated. At September 30, ~~2019,~~2020, 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,
	2020						2019						2018
	Carrying		% of		Fair		Carrying		% of		Fair		Carrying		% of		Fair
	Value		Total		Value		Value		Total		Value		Value		Total		Value
	(Dollars in thousands)
AFS:
MBS	$	1,180,803	75.7	%	$	1,180,803	$	936,487	77.7	%	$	936,487	$	445,090	62.3	%	$	445,090
GSE debentures	370,340		23.7		370,340		249,954		20.8		249,954		265,398		37.1		265,398

Municipal bonds	9,807		0.6		9,807		18,422		1.5		18,422		4,126		0.6		4,126
	1,560,950		100.0	%	1,560,950		1,204,863		100.0	%	1,204,863		714,614		100.0	%	714,614

HTM:
MBS	—		—	%	—		—		—	%	—		591,900		96.7	%	580,825
Municipal bonds	—		—		—		—		—		—		20,418		3.3		20,246

	—		—	%	—		—		—	%	—		612,318		100.0	%	601,071
	$	1,560,950			$	1,560,950	$	1,204,863			$	1,204,863	$	1,326,932			$	1,315,685

September 30,
2019 2018 2017
Carrying % of Fair Carrying % of Fair Carrying % of Fair
Value Total Value Value Total Value Value Total Value
(Dollars in thousands)
AFS:
MBS $ 936,487
77.7 % $ 936,487
$ 445,090
62.3 % $ 445,090
$ 141,516
34.0 % $ 141,516
GSE debentures 249,954
20.8
249,954
265,398
37.1
265,398
270,729
65.1
270,729
Trust Preferred Securities —
—
—
—
—
—
2,051
0.5
2,051
Municipal bonds 18,422
1.5
18,422
4,126
0.6
4,126
1,535
0.4
1,535
1,204,863
100.0 % 1,204,863
714,614
100.0 % 714,614
415,831
100.0 % 415,831

HTM:
MBS —
— % —
591,900
96.7 % 580,825
800,931
96.8 % 806,096
Municipal bonds —
—
—
20,418
3.3
20,246
26,807
3.2
26,913
—
— % —
612,318
100.0 % 601,071
827,738
100.0 % 833,009
$ 1,204,863
$ 1,204,863
$ 1,326,932
$ 1,315,685
$ 1,243,569
$ 1,248,840

The composition and maturities of the investment and MBS portfolio at September 30, ~~2019~~2020 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
	Value		Yield		Value		Yield		Value		Yield		Value		Yield		Value		Yield
	(Dollars in thousands)



MBS	$	3,664	2.63	%	$	58,924	1.90	%	$	272,681	2.34	%	$	845,534	1.82	%	$	1,180,803	1.94	%
GSE debentures	—		—		370,340		0.62		—		—		—		—		370,340		0.62

Municipal bonds	4,009		1.47		5,798		1.85		—		—		—		—		9,807		1.69







	$	7,673	2.02		$	435,062	0.81		$	272,681	2.34		$	845,534	1.82		$	1,560,950	1.62

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
Value Yield Value Yield Value Yield Value Yield Value Yield
(Dollars in thousands)
MBS $ 159
4.10 % $ 85,664
1.90 % $ 359,492
2.38 % $ 491,172
3.01 % $ 936,487
2.67 %
GSE debentures 49,873
1.53
200,081
2.30
—
—
—
—
249,954
2.15
Municipal bonds 7,760
1.55
10,662
1.69
—
—
—
—
18,422
1.63
$ 57,792
1.54
$ 296,407
2.16
$ 359,492
2.38
$ 491,172
3.01
$ 1,204,863
2.54

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 and commercial deposit accounts and services. Our deposit account offerings have 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 ~~2019~~2020 and there were no brokered deposits outstanding at September 30, ~~2019~~2020 or ~~2018.~~2019.

The Board of Directors also has authorized the utilization of public unit certificates of deposit 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 certificates of deposit and, by law, must pledge securities as collateral for all such balances in excess of the FDIC insurance limits. At September 30, ~~2019~~2020 and ~~2018,~~2019, the balance of public unit certificates of deposit was ~~$294.9~~$254.8 million and ~~$407.7~~$294.9 million, respectively.

As of September 30, ~~2019,~~2020, the Bank's policy allows for combined brokered and public unit certificates of deposit up to 15% of total deposits. At September 30, ~~2019,~~2020, that amount was approximately 5%4% of total deposits.

Borrowings. We utilize borrowings when we need 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, ~~2019, $1.40~~2020, $1.15 billion of our FHLB advances were fixed-rate advances with no embedded options and $640.0 million of our FHLB advances were variable-rate, also with no embedded options. The variable-rate advances are tied to interest rate swaps, effectively converting the adjustable-rate borrowings into fixed-rate liabilities. ~~The~~At times, 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 also regularly uses its FHLB line of credit as a source of funding. The Bank's internal policy limits total borrowings to 55% of total assets.

During fiscal year 2019, the Bank continued, at times, 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, or earlier if the strategy was suspended. 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 suspended the strategy during the majority of fiscal year 2019 due to the large negative interest rate spread making the strategy unprofitable. Management continues to monitor the net interest rate spread and overall profitability of the strategy. It is expected that the strategy will be reimplemented if it reaches a position that is profitable.

At September 30, ~~2019,~~2020, we had ~~$2.04~~$1.79 billion of FHLB advances, at par, outstanding and ~~$100.0 million~~did not have a balance outstanding on the Bank's FHLB line of ~~credit.~~credit, for a total of 19% of Bank Call Report total assets as of September 30, 2020. 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 2019, the president of the FHLB renewed the approval of the increase in the~~The Bank's borrowing limit ranged from 50% to 55% of Bank Call Report total assets ~~through July 2020. This approval was also in place throughout~~during fiscal year ~~2019. When~~2020, as approved by the ~~full leverage strategy is in place, FHLB borrowings may be in excess~~president of ~~40% of~~FHLB. At September 30, 2020, the ~~Bank's Call Report total assets, and may continue to be in excess of 40% as long as the Bank continues its leverage strategy and FHLB senior management continues to approve the Bank's borrowing~~approved limit ~~being in excess of 40% of Call Report total assets.~~was 50%.

At September 30, ~~2019,~~2020, the Bank did not have any repurchase agreements ~~totaled $100.0 million, or approximately 1% of total assets.~~outstanding. 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, 2019, we had securities with a fair value of $108.3 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.


	2020			2019			2018
	(Dollars in thousands)
Short-term FHLB borrowings:
Balance at end of period	$	843,000		$	1,090,000		$	975,000
Maximum balance outstanding at any month-end during the period	1,240,000			1,090,000			2,975,000
Average balance	1,024,866			1,208,456			2,189,483
Weighted average contractual interest rate during the period	1.62		%	2.34		%	1.65		%
Weighted average contractual interest rate at end of period	0.76			2.15			2.00

For the Year Ended September 30,
2019
2018
2017
2016
2015
(Dollars and counts in thousands, except per share amounts)
Selected Operations Data:
Total interest and dividend income $ 329,954
$ 321,892
$ 313,186
$ 301,113
$ 297,362
Total interest expense 123,564
123,119
117,804
108,931
107,594
Net interest and dividend income 206,390
198,773
195,382
192,182
189,768
Provision for credit losses 750
—
—
(750 ) 771
Net interest and dividend income after
provision for credit losses 205,640
198,773
195,382
192,932
188,997
Deposit service fees 12,740
15,636
15,053
14,835
14,897
Other non-interest income 9,218
6,399
7,143
8,477
6,243
Total non-interest income 21,958
22,035
22,196
23,312
21,140
Salaries and employee benefits 53,145
46,563
43,437
42,378
43,309
Other non-interest expense 53,799
50,339
46,221
51,927
51,060
Total non-interest expense 106,944
96,902
89,658
94,305
94,369
Income before income tax expense 120,654
123,906
127,920
121,939
115,768
Income tax expense 26,411
24,979
43,783
38,445
37,675
Net income $ 94,243
$ 98,927
$ 84,137
$ 83,494
$ 78,093

Basic earnings per share $ 0.68
$ 0.73
$ 0.63
$ 0.63
$ 0.58
Average basic shares outstanding 137,677
134,698
134,082
133,045
135,384
Diluted earnings per share $ 0.68
$ 0.73
$ 0.63
$ 0.63
$ 0.58
Average diluted shares outstanding 137,735
134,759
134,244
133,176
135,409

2019
2018
2017
2016
2015
Performance Ratios:
Return on average assets⁽¹⁾
0.99 % 0.94 % 0.75 % 0.74 % 0.70 %
Return on average equity⁽¹⁾
6.94
7.25
6.09
5.95
5.32
Dividends paid per share $ 0.98
$ 0.88
$ 0.88
$ 0.84
$ 0.84
Dividend payout ratio 143.17 % 119.60 % 140.20 % 133.86 % 146.19 %
Operating expense ratio 1.12
0.92
0.80
0.84
0.84
Efficiency ratio⁽¹⁾
46.83
43.89
41.21
43.76
44.74
Ratio of average interest-earning assets
to average interest-bearing liabilities 1.14x
1.13x
1.12x
1.13x
1.14x
Net interest margin⁽¹⁾
2.26 % 1.95 % 1.79 % 1.75 % 1.73 %

Interest rate spread information:
Average during period⁽¹⁾
2.07
1.80
1.66
1.63
1.59
End of period 2.04
2.18
2.04
1.92
1.85

Asset Quality Ratios:
Non-performing assets to total assets 0.10
0.14
0.20
0.35
0.31
Non-performing loans to total loans 0.10
0.15
0.23
0.42
0.39
ACL to non-performing loans 121.99
77.01
50.58
29.32
36.41
ACL to loans receivable, net 0.12
0.11
0.12
0.12
0.14

Capital Ratios:
Equity to total assets at end of period 14.3
14.7
14.9
15.0
14.4
Average equity to average assets 14.3
13.0
12.4
12.4
13.1
Company Tier 1 leverage ratio 13.8
14.9
12.3
12.3
12.6
Bank Tier 1 leverage ratio 12.1
13.0
10.8
10.9
11.3

Other Data:
Number of traditional offices 44
48
37
37
37
Number of in-store offices 10
10
10
10
10

~~(1)~~

The table below provides a reconciliation between certain performance ratios presented in accordance with GAAP and those same 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, even though it increases our net income, due to the amount of earnings associated with the transaction in comparison to the size of the transaction. The leverage strategy was in place for a shorter period of time during the current fiscal year than in prior fiscal years, so the leverage strategy impact for fiscal year 2019 shown in the table below is minimal. Management can discontinue the leverage strategy at any point in time.

For the Year Ended September 30,
2019 2018 2017
Actual Leverage Non- Actual Leverage Non- Actual Leverage Non-
(GAAP) Strategy GAAP (GAAP) Strategy GAAP (GAAP) Strategy GAAP
Return on average assets 0.99 % (0.02 )% 1.01 % 0.94 % (0.13 )% 1.07 % 0.75 % (0.14 )% 0.89 %
Return on average equity 6.94
—
6.94
7.25
0.13
7.12
6.09
0.21
5.88
Efficiency ratio 46.83
—
46.83
43.89
(0.30 ) 44.19
41.21
(0.63 ) 41.84
Net interest margin 2.26
(0.04 ) 2.30
1.95
(0.29 ) 2.24
1.79
(0.36 ) 2.15
Average interest rate spread 2.07
(0.03 ) 2.10
1.80
(0.26 ) 2.06
1.66
(0.32 ) 1.98

For the Year Ended September 30,
2016 2015
Actual Leverage Non- Actual Leverage Non-
(GAAP) Strategy GAAP (GAAP) Strategy GAAP
Return on average assets 0.74 % (0.14 )% 0.88 % 0.70 % (0.13 )% 0.83 %
Return on average equity 5.95
0.17
5.78
5.32
0.19
5.13
Efficiency ratio 43.76
(0.42 ) 44.18
44.74
(0.61 ) 45.35
Net interest margin 1.75
(0.35 ) 2.10
1.73
(0.34 ) 2.07
Average interest rate spread 1.63
(0.30 ) 1.93
1.59
(0.28 ) 1.87


	2020			2019			2018			2017			2016
Performance Ratios:
Return on average assets(1)	0.69		%	0.99		%	0.94		%	0.75		%	0.74		%
Return on average equity(1)	4.92			6.94			7.25			6.09			5.95
Dividends paid per share	$	0.68		$	0.98		$	0.88		$	0.88		$	0.84
Dividend payout ratio	145.43		%	143.17		%	119.60		%	140.20		%	133.86		%
Operating expense ratio	1.13			1.12			0.92			0.80			0.84
Efficiency ratio(1)	50.74			46.83			43.89			41.21			43.76
Ratio of average interest-earning assets
to average interest-bearing liabilities	1.13x			1.14x			1.13x			1.12x			1.13x
Net interest margin(1)	2.12		%	2.26		%	1.95		%	1.79		%	1.75		%

Interest rate spread information:
Average during period(1)	1.94			2.07			1.80			1.66			1.63
End of period	1.92			2.04			2.18			2.04			1.92

Asset Quality Ratios:
Non-performing assets to total assets	0.13			0.10			0.14			0.20			0.35
Non-performing loans to total loans	0.17			0.10			0.15			0.23			0.42
ACL to non-performing loans	252.42			121.99			77.01			50.58			29.32
ACL to loans receivable, net	0.44			0.12			0.11			0.12			0.12

Capital Ratios:
Equity to total assets at end of period	13.5			14.3			14.7			14.9			15.0
Average equity to average assets	14.0			14.3			13.0			12.4			12.4
Company CBLR/Tier 1 leverage ratio(2)	13.7			13.8			14.9			12.3			12.3
Bank CBLR/Tier 1 leverage ratio(2)	12.4			12.1			13.0			10.8			10.9

Other Data:
Number of traditional offices	45			44			48			37			37
Number of in-store offices	9			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 those same 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, even though it increases our net income, due to the small amount of earnings associated with the transaction in comparison to the size of the transaction. The leverage strategy was not in place during the current fiscal year due to the negative interest rate spreads between the related FHLB borrowings and cash held at the Federal Reserve Bank of Kansas City ("FRB of Kansas City"), making the transaction unprofitable.


		For the Year Ended September 30,
	2019			2018
		Actual		Leverage		Non-		Actual		Leverage		Non-
		(GAAP)		Strategy		GAAP		(GAAP)		Strategy		GAAP
Return on average assets		0.99	%	(0.02)	%	1.01	%	0.94	%	(0.13)	%	1.07	%
Return on average equity		6.94		—		6.94		7.25		0.13		7.12
Efficiency ratio		46.83		—		46.83		43.89		(0.30)		44.19
Net interest margin		2.26		(0.04)		2.30		1.95		(0.29)		2.24
Average interest rate spread		2.07		(0.03)		2.10		1.80		(0.26)		2.06


	For the Year Ended September 30,
	2017						2016
	Actual		Leverage		Non-		Actual		Leverage		Non-
	(GAAP)		Strategy		GAAP		(GAAP)		Strategy		GAAP
Return on average assets	0.75	%	(0.14)	%	0.89	%	0.74	%	(0.14)	%	0.88	%
Return on average equity	6.09		0.21		5.88		5.95		0.17		5.78
Efficiency ratio	41.21		(0.63)		41.84		43.76		(0.42)		44.18
Net interest margin	1.79		(0.36)		2.15		1.75		(0.35)		2.10
Average interest rate spread	1.66		(0.32)		1.98		1.63		(0.30)		1.93

(2)The Tier 1 leverage ratio was replaced with the CBLR when the Bank and Company elected to use the CBLR framework beginning in fiscal year 2020. See "Part I, Item 1. Business - Regulation and Supervision - Regulatory Capital Requirements" for additional information regarding the CBLR.

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.

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 banking services through the Bank, which is a wholly-owned subsidiary of the Company headquartered in Topeka, Kansas. The Bank has 4445 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. 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.

~~During April 2019,~~Company's Actions and Impact on Operations as a Result of the COVID-19 Pandemic

Management's actions related to the COVID-19 pandemic and the impact of the pandemic on certain aspects of the Company's business during fiscal year 2020 are summarized below.

Bank operations - In mid-March 2020, preventative health measures were put in place including elimination of business-related travel, implementing mandatory work from home for all employees able to do so, social distancing precautions for all employees in Bank offices, and preventative cleaning at offices and branches. Lobby services were limited to appointment only while drive-through, mobile, and online banking became the Bank's primary channels of serving customers. Retail loan closings were conducted with customers coming to our drive-through facilities and commercial loans were closed in person only when necessary. All employees continued to be paid their regular salary and receive full benefits. In mid-May 2020, lobbies reopened with limitations on the number of customers in a branch at one time. We also implemented operational measures to promote social distancing when customers visit branches and installed sneeze guards. There are several other precautions being taken at our locations such as extra cleaning in high traffic/touch areas and providing locations with additional cleaning supplies, hand sanitizer and masks. In early June 2020, back-office employees started to return to the office in phases. Due to the increase in COVID-19 cases in late June into July 2020, management rolled back the changes to the lobbies that occurred mid-May and adjusted the return to office phases, where necessary, for back-office employees and lobby services were again by appointment only. In mid-September 2020, lobbies were reopened once again. Management continues to monitor COVID-19 cases and will adjust operational plans as necessary.

Loan modification programs - In late March 2020, the Bank ~~completed~~announced loan modification programs to support and provide relief for its borrowers during the ~~integration~~COVID-19 pandemic. Generally, loan modifications under these programs ("COVID-19 loan modifications") for one- to four-family loans and consumer loans consist of a three-month payment forbearance of principal, interest and, in some cases, escrow. COVID-19 loan modifications of commercial loans mainly consist of a six-month interest-only payment period. See "Financial Condition - Loans Receivable" below for additional discussion regarding COVID-19 loan modifications.

As of September 30, 2020, the Bank had 193 one- to four-family loans totaling $39.8 million and 27 consumer loans totaling $795 thousand that were still in their deferral period. The deferral period concluded by September 30, 2020 for $199.7 million of one- to four-family loans and $1.6 million of consumer loans.

As of September 30, 2020, the Bank had 204 commercial loans with a combined gross loan amount of $367.4 million, which includes undisbursed amounts, that were still in their deferral period. The deferral period concluded by September 30, 2020 for $43.5 million, or 11%, of the ~~operations~~commercial loans subject to COVID-19 loan modifications. All of ~~Capital City~~these loans were current

as of September 30, 2020. The deferral period for the majority of the remaining commercial loans concluded by November 16, 2020.

Small Business Administration Paycheck Protection Program loans - As of September 30, 2020, the Bank ~~into~~had originated and funded 791 PPP loans totaling $43.9 million, with a median loan amount of $19 thousand, and received origination fees totaling $1.9 million associated with these loans. These loans are fully guaranteed by the SBA. The program ended August 8, 2020. Through November 16, 2020, $12.2 million of the Bank's ~~operations. The~~PPP loans have been forgiven by the SBA.

On October 8, 2020 the SBA released a streamlined loan forgiveness application for PPP loans in amounts of $50 thousand or less. Of the PPP loans originated by the Bank, 611 loans totaling $9.6 million, or 22% of the Bank's aggregate PPP loan balance, were in amounts less than $50 thousand and will be eligible for the streamlined forgiveness process.

Capital, liquidity, and dividends - Management performed stress test scenarios during April 2020. Based on the Company's existing capital levels, deposit inflows, loan underwriting policies, loan concentration, and geographical diversification, no liquidity or capital concerns were identified as a result of the stress tests. Management continues to anticipate being able to manage the economic risks and uncertainties associated with the COVID-19 pandemic and the Bank remaining well capitalized with sufficient liquidity to serve our customers.

Deposit balances have increased due primarily to the economic stimulus payments, a reduction in consumer spending, and PPP loan proceeds being deposited at the Bank. As a result, management is currently faced with the challenge of excess liquidity. Due to the nature of deposit cash flows, management does not know how long the excess liquidity will continue. As such, management has elected, for the time being, to reduce the Bank's level of borrowings and increase the balance of securities using the excess liquidity from the deposit portfolio.

With earnings of $0.47 per share for fiscal year 2020, and a cash balance at the holding company level of $82.5 million, the Company ~~completed~~has the resources to continue to pay its ~~acquisition~~regular quarterly dividend of ~~Capital City Bank~~$0.085 per share for the foreseeable future. Given the state of economic uncertainty and ~~its parent company, CCB, on August 31, 2018. The acquisition of Capital City Bank,~~how that may play out with the credit risk exposure in the Bank's loan portfolio, the Company elected to defer the annual True Blue dividend in June 2020 and did not ask at that time for a ~~commercial bank with $450 million in assets, allows us~~regulatory non-objection to ~~advance our commercial banking strategy through enhanced commercial deposit and lending products while managing to stay under $10 billion in assets. The acquisition also allows~~move capital from the Bank to ~~compete~~the Company to pay that dividend. It is management's intention to ask for a regulatory non-objection at some point in the future to pay this dividend when economic conditions are more certain. It is currently the Company's intention to pay out 100% of its fiscal year 2021 earnings.

Management's Evolving Response to COVID-19 - There is continued concern about a resurgence of COVID-19 as we enter the winter months. In October and November 2020, COVID-19 cases, hospitalizations, and deaths nationally and in our local market areas increased compared to the summer months, including to new record levels in some areas. The Kansas Governor recently issued an executive order establishing a statewide face-covering protocol as part of her administration's strategy to keep schools and businesses open and to protect the economy. We continue to be confronted with a significant and unfamiliar degree of uncertainty as to how a resurgence will impact our customers, employees, and operations and how actions taken by governmental authorities and other third parties in response to a resurgence will impact our customers, employees, and operations. We will continue to monitor COVID-19 cases and will adjust operational plans as necessary. We will also continue to assist our customers as necessary during these uncertain times. See "Part I, Item 1A. Risk Factors - Risks Related to Macroeconomic Conditions" for additional discussion regarding the impact the COVID-19 pandemic may have on our business, results of operations and financial condition.

Impact on Market Interest Rates as a Result of COVID-19 Pandemic and Company's Response

The Federal Reserve, in response to economic risks resulting from the COVID-19 pandemic, returned to a zero-interest rate policy in March 2020. This was after most broader market rates decreased significantly in response to evolving news about the COVID-19 pandemic. The dramatic lowering of interest rates in a short period of time impacted the operations and performance of the Bank. Deteriorating economic conditions included more than 20 million people becoming unemployed in the United States in one month's time, with more than 58 million in total filing for unemployment benefits, along with immediate reductions in consumer spending on almost all categories of purchases except groceries and staples, and closure or significantly reduced operations of restaurants, bars, airlines, hotels, and entertainment and hospitality venues, among others, and had a devastating impact on the economy. Since that time, many areas of consumer spending have rebounded, generally locally and not related to travel and entertainment. As previously described, we adjusted our operations in response to the

COVID-19 pandemic and have worked with both our retail and commercial ~~banking~~customers to help them manage their debt during this period of economic uncertainty as our regulators or the CARES Act have allowed. There is increasing concern about the longer lasting impact on local business ~~through a wide variety of commercial deposit services and expanded commercial lending products,~~ as well as ~~trust~~travel and ~~brokerage services.~~entertainment resulting from the COVID-19 pandemic. This could cause a longer recovery time for all sectors of the economy and could make it challenging for sectors that have had better recoveries to maintain that recovery in the long run.

We have been responding and expect to continue to respond to local market conditions regarding the loan and deposit rates we offer. We responded to lower market rates for lending by lowering rates offered on our one- to four-family loan products over the course of the year. Given current market interest rates, rates offered on new loans and the recent volume of one- to four-family refinances and endorsements allowing borrowers to take advantage of the lower current market interest rates, the yield on the total loan portfolio is likely to continue to decrease. Additionally, with significant cash inflows realized due to investment securities being called and prepayments on MBS increasing, the yields on reinvested funds into new securities are lower than portfolio yields. Since the onset of the pandemic the Bank lowered its offered rates on all retail deposit products except checking and savings accounts. Changes in the rates paid on money market accounts have an immediate impact on the cost of our deposits, while the impact of reducing rates offered on our certificate of deposit products lower the cost of deposits only as certificates of deposit reprice lower when they mature. As the Bank further monitors rates offered and the cost of borrowings, we anticipate that the average cost of our interest-bearing liabilities will continue to decrease.

Considering the drastic changes in market rates and the ongoing economic uncertainty, even with the changes the Bank has made to its cost of funding, with the lower rates on new mortgage loans, refinances, endorsements and new securities also at lower rates, our net interest margin could continue to decrease, with further downside risk as a result of high levels of prepayments and premium amortization on correspondent one- to four-family loans and MBS.

Summary of Results of Operation and Financial Condition

The Company recognized net income of $64.5 million, or $0.47 per share, for the year ended September 30, 2020 compared to net income of $94.2 million, or $0.68 per share, for ~~fiscal~~the year ~~2019 compared to net income of $98.9 million, or $0.73 per share, for fiscal year 2018.~~ended September 30, 2019. The decrease in net income was due primarily to a ~~$10.0~~$21.6 million increase in ~~non-interest expense~~provision for credit losses and a decrease in net interest income, partially offset by a decrease in income tax expense.

Net interest income decreased $17.1 million, or 8.3%, from the prior year to $189.3 million for the current year. The leverage strategy was suspended at certain times during the prior year and during all of the current year due mainly to an increase in salaries and employee benefits and information technology and related expenses, partially offset by a $7.6 million increase in net interest income due primarily to higher yielding loans added in the acquisition of CCB. Additionally, income tax expense was $1.4 million higher in the current fiscal year due primarily to income tax adjustments required in the prior fiscal year with the enactment of The Tax Cuts and Jobs Act (the "Tax Act") in December 2017.

At times, the Bank has utilized a leverage strategy to increase earnings. The leverage strategy has 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 quarter end, or earlier if the strategy was suspended. The proceeds from the borrowings, net of the required FHLB stock holdings which yielded 7.4% from dividends during the current fiscal year, were deposited at the FRB of Kansas City. Net income attributable to the ~~leverage strategy is largely derived from the dividends received on FHLB stock holdings, plus the net~~negative interest rate ~~spread~~spreads between the ~~yield on the~~related FHLB borrowings and cash held at the FRB of Kansas City, ~~and~~making the ~~rate paid on~~transaction unprofitable. Excluding the ~~related FHLB borrowings, less applicable federal insurance premiums and estimated taxes. Net~~effects of the leverage strategy, net interest income ~~attributable~~decreased $16.9 million, or 8.2% compared to the prior year. The decrease in net interest income excluding the effects of the leverage strategy was ~~$36 thousand during~~due to a $20.9 million decrease in interest and dividend income, partially offset by a $4.0 million decrease in interest expense. Interest and dividend income decreased across all interest-earning asset types, with the ~~current fiscal year compared~~most significant being a $13.7 million decrease in interest income on loans receivable, primarily related to ~~$1.7 million during~~correspondent loans. Interest income on correspondent loans decreased due primarily to a reduction in the ~~prior fiscal year. The decrease was~~portfolio balance and rate related to payoffs exceeding purchases, new loans purchased at lower market interest rates, and downward repricing of existing loans, along with an increase in premium amortization due ~~mainly~~ to payoffs and endorsements. Interest expense on borrowings, excluding the ~~strategy being suspended for the majority~~effects of the ~~current fiscal year~~leverage strategy, decreased $5.4 million due to replacing FHLB advances at lower market rates and a reduction in the ~~large negative interest~~ rate ~~spread, making the strategy unprofitable. Management continues to monitor the net interest rate spread~~ and ~~overall profitability~~usage of the ~~strategy. It is expected that~~Bank's FHLB line of credit. This was partially offset by a $1.4 million increase in interest expense on deposits due to an increase in the ~~strategy will be reimplemented if it reaches a position that is profitable.~~cost of the retail/business certificate of deposit portfolio.

The net interest margin ~~increased 31~~decreased 14 basis points, from ~~1.95%~~2.26% for the prior ~~fiscal~~ year to ~~2.26%~~2.12% for the current ~~fiscal~~ year. When the leverage strategy is in place, it increases our net interest income but reduces the net interest margin due to the ~~limited~~ amount of earnings from the transaction in comparison to the size of the transaction. Excluding the effects of the leverage strategy, the net interest margin would have ~~increased six~~decreased 18 basis points, from ~~2.24%~~2.30% for the prior ~~fiscal~~ year to ~~2.30%~~2.12% for the current ~~fiscal~~ year. The ~~increase~~decrease in the net interest margin, excluding the effects of the leverage strategy, was due mainly to ~~the addition of higher yielding commercial loans~~a decrease in the ~~CCB acquisition,~~loan portfolio yield, specifically the yield on the correspondent one- to four-family loan portfolio.

Total assets at September 30, 2020 were $9.49 billion, an increase of $147.2 million, or 1.6% from September 30, 2019. The increase was due mainly to an increase in securities, partially offset by a decrease in loans receivable. Securities were purchased with cash flows from payments on the loan portfolio and growth in the deposit portfolio. Total loans decreased $213.9 million from September 30, 2019 to September 30, 2020. The decrease was primarily in the one- to four-family correspondent loans and one- to four-family bulk purchased loans, partially offset by an increase in ~~the cost of deposits.~~

To the extent market rates of interest remain at current levels or go lower during fiscal year 2020, the Company expects a decrease in our net interest margin, compared to fiscal year 2019, due primarily to lower yields on our loans and securities. If realized, the decrease in the yields on our loans and securities is expected to be from loans originated at lower rates, adjustable-rate loans repricing lower and increased prepayment speeds on our correspondent loans and MBS portfolios, which would accelerate the amortization of the premiums we have paid to acquire these assets. The rates on our certificate of deposit portfolio and borrowings may also decrease if market rates decrease, but will likely do so at a slower pace than interest-earning assets because the majority of those liabilities have stated maturities.

~~Management continues to manage the size and mix of the loan portfolio, over the long-term, by utilizing cash flows from the~~ one- to four-family loan portfolio to fund commercial loan growth. Given the current level of total assets and the interest rate environment, it is unlikely that the loan portfolio will increase in the next year, but it is expected that cash flows from the one- to four-family loan portfolio will continue to be used to fund commercial loan growth. Over the past few years, cash flows from the securities portfolio have been used primarily to purchaseoriginated loans and in part to pay down FHLB advances. By moving cash from lower yielding assets to higher yielding assets and repaying higher costing liabilities, we have been able to maintain our net interest margin. Additionally, the Bank began reducing its balance of public unit certificates of deposit late in the third quarter of the current fiscal year in order to reduce its use of expensive wholesale funds and release securities pledged as collateral, which assists with liquidity levels. The balance of public unit certificates of deposit was $294.9 million at September 30, 2019. Management intends to maintain the balance of public unit certificates of deposit at approximately the same level for the time being. Management continues to evaluate liquidity levels, as measured by the ratio of securities and cash to total assets, and may consider reducing its target ratio below the current target level of 15%.

Total assets were $9.34 billion at September 30, 2019 compared to $9.45 billion at September 30, 2018. The $109.5 million, or 1.2% decrease was largely in the securities portfolio and the loan portfolio, partially offset by an increase in operating cash. The one- to four-family loan portfolio decreased $285.6 million, partially offset by a $198.3 million increase in the commercial ~~loan portfolio as cash flows from the one- to four-family loan portfolio were used to fund commercial loan growth.~~ loans. During the current ~~fiscal~~ year, the Bank originated and refinanced ~~$660.8 million~~$1.00 billion of one- to four-family and consumer loans with a weighted average rate of ~~4.18%~~3.27% and purchased ~~$166.4~~$448.0 million of one- to four-family loans from correspondent lenders with a weighted average rate of ~~4.17%~~3.29%. The Bank also originated ~~$164.1~~$165.5 million of commercial loans with a weighted average rate of ~~5.10%~~3.52% and entered into commercial real estate loan participations ~~totaling $96.0~~of $93.6 million at a weighted average rate of ~~5.27%~~4.16%. The commercial loan portfolio ~~was $767.9~~totaled $829.7 million at September 30, ~~2019, compared to $569.6 million at September 30, 2018, an increase of $198.3, or 35%. At September 30, 2019, the commercial loan portfolio~~2020 and was composed of ~~76%~~75% commercial real estate, ~~16% commercial construction, and 8%~~12% commercial and ~~industrial.~~industrial, and 13% commercial construction. Total commercial real estate and commercial construction potential exposure, including undisbursed amounts and outstanding commitments totaling ~~$214.3~~$205.5 million, was ~~$921.1~~$937.5 million at September 30, ~~2019.~~2020. Total commercial and industrial potential exposure, including undisbursed amounts and outstanding commitments of ~~$16.8~~$21.7 million, was ~~$77.9~~$119.3 million at September 30, ~~2019.~~2020.

Total deposits at September 30, 2020 were ~~$5.58~~$6.19 billion, an increase of $609.5 million, or 10.9%, from September 30, 2019. Non-maturity deposits increased $575.9 million, including a $242.8 million increase in checking accounts, a $220.8 million increase in money market accounts, and a $112.3 million increase in savings accounts. Retail/business certificates of deposit increased $73.7 million during the current year, mainly in the business-related certificates of deposit category. These increases were partially offset by a $40.1 million decrease in public unit certificates of deposit.

Total borrowings at September 30, 2020 were $1.79 billion, a decrease of $450.7 million, or 20.1%, from September 30, 2019. The decrease was due to not renewing a portion of the FHLB advances and repurchase agreements that matured during the current year and repaying the FHLB line of credit balance. Cash flows from the deposit portfolio were used to pay off maturing borrowings and the FHLB line of credit.

Stockholders' equity was $1.28 billion at September 30, ~~2019~~2020 compared to $5.60 billion at September 30, 2018. The retail/business certificate of deposit portfolio increased $163.4 million, or 6.5%, during the current fiscal year, funded primarily by cash flows from new certificate of deposit accounts, money market accounts, and checking accounts. The public unit certificate of deposit portfolio decreased $112.8 million during the current fiscal year, which was intentional, as discussed above. Excluding the impact of the decrease in the balance of public unit certificates of deposit, total deposits would have increased $91.3 million, or 1.8%, during the current fiscal year.

~~Stockholders' equity was~~ $1.34 billion at September 30, ~~2019 compared to $1.39 billion at September 30, 2018.~~2019. The ~~$55.3~~$51.5 million decrease was due primarily to the payment of ~~$134.9~~cash dividends totaling $93.9 million ~~in cash dividends,~~and the repurchase of common stock totaling $23.8 million, partially offset by net income of ~~$94.2~~$64.5 million during the current year. During the current fiscal ~~year.~~year, the Company repurchased 2,558,100 shares of common stock. In the long run, management considers the Bank's equity to total assets ratio of at least 10% an appropriate level of capital. At September 30, 2020, this ratio was 12.3%. The cash dividends paid during the current year totaled $0.68 per share and consisted of a $0.34 per share cash true-up dividend related to fiscal year 2019 earnings, paid in December 2019, per the Company's dividend policy, and four regular quarterly cash dividends of $0.085 per share, totaling $0.34 per share.

Critical Accounting Policies

Our most critical accounting policies are the methodologies used to determine the ACL and fair value measurements. These policies 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 affect reported results materially. These critical accounting policies and their application are reviewed at least annually by our audit committee. The following is a description of our critical accounting policies 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. The ACL is maintained through provisions for credit losses which are either charged or credited to income. The methodology for determining 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 lending emphasis on 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, has resulted in a loan concentration in one- to four-family 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. Adverse changes in any one or a combination of these events may negatively affect borrowers' ability to repay their loans, resulting in increased delinquencies, non-performing assets, loan losses, and future loan loss provisions. Although the commercial 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 the ability to utilize personal 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 more limited than that for a residential property. Therefore, the Bank could hold the property for an extended period of time, or potentially be forced to sell at a discounted price, resulting in additional losses. Our commercial and industrial loans are primarily secured by accounts receivable, inventory and equipment, which may be difficult to appraise, may be illiquid and may fluctuate in value based on the success of the business.

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, 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 the loan portfolio as of the evaluation date are applied to each loan category. Qualitative loss factors increase as loans are classified or become delinquent. 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 related to the historical and qualitative loss factors utilized in the formula analysis model.

The historical loss and qualitative factors applied in the formula analysis model are reviewed quarterly by management to assess whether the factors adequately cover probable and estimable losses inherent in the loan portfolio. Our ACL methodology permits modifications to the formula analysis model in the event that, in management's judgment, significant factors which affect the collectability of the portfolio or any category of the loan portfolio, as of the evaluation date, have changed from the current formula analysis model. Management's evaluation of the qualitative factors with respect to these conditions is subject to a higher degree of uncertainty because they are not identified with a specific problem loan or portfolio segment.

During the current fiscal year, management increased the historical loss and qualitative factors applied in the formula analysis model for all loan categories and added a COVID-19 qualitative loss factor to the Bank's commercial loan portfolio. The increase in the factors and the addition of the new qualitative factor was in response to the deterioration of economic conditions due to the COVID-19 pandemic. Management considered several items when determining the appropriate historical loss and qualitative factors to apply in the formula analysis model. Such considerations included: national and state unemployment and unemployment benefit claim information, amount and timing of governmental financial assistance, the Bank's COVID-19 loan modification program, consumer spending information, industries most impacted by the COVID-19 pandemic and a loan analysis completed by the commercial lending team. Management also evaluated the Bank's historical and peer ACL to loan ratios and charge-off ratios taking into consideration the economic conditions during those time periods. After applying the higher and new factors in the formula analysis model, management then considered the calculated ACL to loans ratio compared to historical and peer ratios to determine the appropriate amount of ACL at September 30, 2020, considering the economic conditions at that point in time.

Non-PCI loans that have not become impaired subsequent to the acquisition date are included in the formula analysis model. For these loans, the Company estimates a hypothetical amount of ACL. The Company ~~uses~~applies the ~~acquired bank's past~~same historical and qualitative loss ~~history adjusted for qualitative~~ factors as the Bank's formula analysis model to establish the hypothetical amount of ACL. This amount is compared with the remaining net purchase discount for the non-PCI loans to test for credit quality deterioration and the

possible need for an additional loan loss provision. To the extent the remaining net purchase discount of the pool is greater than the hypothetical ACL, no additional ACL is necessary. If the remaining net purchase discount of the pool is less than the hypothetical ACL, the difference results in an increase to the ACL recorded through a provision for credit losses.

Management ~~utilizes the formula analysis model, along~~will continue to closely monitor economic conditions and will work with analyzing and considering several other relevant internal and external data elements, when evaluating the adequacy of the ACL. Such data elements include the trend and composition of delinquent and non-performing loans, trends in foreclosed property transactions and charge-off activity, the current status and trends of local and national employment levels, trends and currentborrowers as necessary to assist them through this challenging economic climate. If economic conditions worsen or do not improve in the ~~housing markets, loan growth~~near term, and ~~concentrations, industry and peer charge-off and ACL information, and certain ACL ratios such as ACL~~if future government programs, if any, do not provide adequate relief to ~~loans receivable, net and annualized historical losses. Since our loan portfolio~~borrowers, it is ~~primarily concentrated in one- to four-family real estate, management monitors residential real estate market value trends in~~possible the Bank's local market areas and geographic sections of the U.S. by reference to various industry 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 evaluating the overall credit quality of the loan portfolio and the reasonableness of the ACL ~~on an ongoing basis, and whether changes~~will need to ~~be made to our ACL methodology.~~increase in future periods. In addition, 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~~Management seeks to apply the ACL methodology in a consistent manner; however, the methodology ~~can~~may be modified in response to changing conditions.

ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments became effective for the Company on October 1, 2020. 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.

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 Standards 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 are recorded, net of tax, as AOCI in stockholders' equity. The Company primarily uses prices obtained from third-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. All AFS securities are classified as Level 2.

The Company's interest rate swaps are measured at fair value on a recurring basis. The ~~Company uses~~estimated fair value 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 its 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 financial instruments that were measured at fair value on a recurring basis at September 30, ~~2019.~~2020.

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

We are a community-oriented financial institution dedicated 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 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 to our customers and participate in commercial loans with other 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.

•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 a branch network of 54 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 serve a broad range of customers through relatively few branch locations. Our average deposit base per traditional branch at September 30, 2020 was approximately $123.6 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.

•Asset Quality. We utilize underwriting standards for 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 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 provide 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 2020 were $93.9 million. 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 2021, it is the 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 is also provided through common stock repurchases. During fiscal year 2020, the Company repurchased $23.8 million, or 2,558,100 shares, of common stock.

•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. 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. With the acquisition of CCB in August 2018, we began offering more commercial lending options to our customers. 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.

•

~~Deposit Services.~~ We offer a wide array of deposit products and services. These products include checking, savings, money market, certificates of deposit, and retirement accounts. With the acquisition of CCB, we began offering commercial deposit services. Our deposit services are provided through a branch network of 54 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 serve a broad range of customers through relatively few branch locations. Our average deposit base per traditional branch at September 30, 2019 was approximately $112.7 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.


•	~~Asset Quality.~~ We utilize underwriting standards for our lending products 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.

•

~~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 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 provide 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 2019 were $134.9 million, including a $0.25 per share, or $34.4 million, True Blue® Capitol Dividend paid in June 2019. 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 2020, 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.

Financial Condition

Assets. Total assets ~~were $9.34 billion~~ at September 30, ~~2019 compared to $9.45~~2020 were $9.49 billion, atan increase of $147.2 million, or 1.6% from September 30, ~~2018.~~2019. The ~~$109.5 million decrease~~increase was ~~largely in the securities portfolio and the loan portfolio, partially offset by~~due mainly to an increase in ~~operating cash. The one- to four-family loan portfolio decreased $285.6 million,~~securities, partially offset by a ~~$198.3 million increase~~decrease in ~~the commercial loan portfolio as~~loans receivable. Securities were purchased with cash flows from the ~~one- to four-family~~ loan portfolio ~~were used to fund commercial loan growth. The increase in operating cash primarily occurred later~~and growth in the current fiscal year due to the interest rate environment as the interest rate earned on excess reserves was comparable to the available yield on securities, along with an increase in projected funding of commercial loan commitments.deposit portfolio.

Loans Receivable. The following table presents the balance and weighted average rate of our loan portfolio as of the dates indicated. Approximately ~~64%~~67% of the one- to four-family loan portfolio balance at September 30, ~~2019~~2020 was comprised of loans that had a balance of ~~$484~~$510 thousand or less at the time of origination. The weighted average interest rate ~~of the~~on our loan portfolio ~~increased seven~~decreased 26 basis points, to 3.55% at September 30, 2020. The decrease was due primarily to the ~~origination~~downward repricing of the one- to four-family originated and ~~purchase~~correspondent purchased portfolios as a result of endorsements, payoffs of loans with higher rates, and originations and purchases at ~~higher~~lower market rates during the ~~current fiscal year, as well as adjustable-rate loans repricing to higher market rates.~~year.


	September 30, 2020				September 30, 2019
	Amount		Rate		Amount		Rate
	(Dollars in thousands)
One- to four-family:
Originated	$	3,937,310	3.50	%	$	3,873,851	3.74	%
Correspondent purchased	2,101,082		3.49		2,349,877		3.64
Bulk purchased	208,427		2.41		252,347		2.94
Construction	34,593		3.30		36,758		4.00
Total	6,281,412		3.46		6,512,833		3.68
Commercial:
Commercial real estate	626,588		4.29		583,617		4.48
Commercial and industrial	97,614		2.79		61,094		5.14
Construction	105,458		4.04		123,159		4.81
Total	829,660		4.08		767,870		4.58
Consumer loans:
Home equity	103,838		4.66		120,587		6.15
Other	10,086		4.40		11,183		4.57
Total	113,924		4.64		131,770		6.02
Total loans receivable	7,224,996		3.55		7,412,473		3.81

Less:
ACL	31,527				9,226
Discounts/unearned loan fees	29,190				31,058
Premiums/deferred costs	(38,572)				(44,558)
Total loans receivable, net	$	7,202,851			$	7,416,747

September 30, 2019 September 30, 2018
Amount Rate Amount Rate
(Dollars in thousands)
One- to four-family:
Originated $ 3,873,851
3.74 % $ 3,965,692
3.74 %
Correspondent purchased 2,349,877
3.64
2,505,987
3.59
Bulk purchased 252,347
2.94
293,607
2.60
Construction 36,758
4.00
33,149
4.03
Total 6,512,833
3.68
6,798,435
3.64
Commercial:
Commercial real estate 583,617
4.48
426,243
4.33
Commercial and industrial 61,094
5.14
62,869
5.00
Construction 123,159
4.81
80,498
4.59
Total 767,870
4.58
569,610
4.44
Consumer loans:
Home equity 120,587
6.15
129,588
5.97
Other 11,183
4.57
10,012
4.59
Total 131,770
6.02
139,600
5.87
Total loans receivable 7,412,473
3.81
7,507,645
3.74

Less:
ACL 9,226
8,463

Discounts/unearned loan fees 31,058
33,933

Premiums/deferred costs (44,558 ) (49,236 )
Total loans receivable, net $ 7,416,747
$ 7,514,485

Loan Activity - The following ~~table summarizes~~tables summarize activity in the loan portfolio, along with weighted average rates where applicable, for the periods indicated, excluding changes in ACL, discounts/unearned loan fees, and premiums/deferred costs. Loans that were ~~paid-off~~paid off as a result of refinances ~~and loans that were sold~~ are included in repayments. Loan endorsements are not included in the activity in the following table 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. During fiscal year ~~2019,~~2020, the Bank endorsed ~~$121.5~~$695.4 million of one- to four-family loans, reducing the average rate on those loans by 6983 basis points. Commercial loan renewals are not included in the activity in the following table unless new funds are disbursed at the time of renewal. During the initial days of the COVID-19 pandemic, correspondent one- to four-family loan application acceptance was suspended by the Bank but existing correspondent applications and commitments continued to progress through the approval and funding process. One- to four-family correspondent new loan application acceptance resumed in mid-June 2020.


	For the Three Months Ended
	September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019
	Amount		Rate		Amount		Rate		Amount		Rate		Amount		Rate
	(Dollars in thousands)
Beginning balance	$	7,407,442	3.64	%	$	7,493,280	3.74	%	$	7,424,834	3.77	%	$	7,412,473	3.81	%
Originated and refinanced:
Fixed	265,424		2.98		277,904		2.83		172,891		3.44		233,693		3.52
Adjustable	44,625		3.68		60,626		3.75		55,946		4.11		55,126		4.30
Purchased and participations:
Fixed	61,435		3.07		131,739		3.28		125,612		3.46		123,118		3.77
Adjustable	4,396		2.76		62,510		3.76		18,985		2.96		13,801		3.06

Change in undisbursed loan funds	13,898				(32,202)				24,049				(9,743)
Repayments	(572,536)				(586,434)				(328,644)				(403,361)
Principal recoveries/(charge-offs), net	312				19				(314)				(16)
Other	—				—				(79)				(257)
Ending balance	$	7,224,996	3.55		$	7,407,442	3.64		$	7,493,280	3.74		$	7,424,834	3.77


	For the Year Ended September 30,
	2020				2019
	Amount		Rate		Amount		Rate
	(Dollars in thousands)
Beginning balance	$	7,412,473	3.81	%	$	7,507,645	3.74	%
Originated and refinanced:
Fixed	949,912		3.15		505,334		4.10
Adjustable	216,323		3.97		319,608		4.77
Purchased and participations:
Fixed	441,904		3.44		186,135		4.64
Adjustable	99,692		3.47		76,305		4.40

Change in undisbursed loan funds	(3,998)				52,220
Repayments	(1,890,975)				(1,233,157)
Principal recoveries, net	1				13
Other	(336)				(1,630)
Ending balance	$	7,224,996	3.55		$	7,412,473	3.81

For the Three Months Ended
September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018
Amount Rate Amount Rate Amount Rate Amount Rate
(Dollars in thousands)
Beginning balance $ 7,501,741
3.83 % $ 7,564,076
3.82 % $ 7,518,887
3.78 % $ 7,507,645
3.74 %
Originated and refinanced:
Fixed 188,753
3.60
121,871
4.09
78,678
4.58
116,032
4.59
Adjustable 59,550
4.37
63,341
4.87
123,006
4.80
73,711
4.98
Purchased and participations:
Fixed 49,161
4.12
29,447
4.65
35,387
5.46
72,140
4.60
Adjustable 12,305
3.55
10,018
3.85
11,331
4.01
42,651
4.88
Change in undisbursed loan funds 12,293
34,742
30,500
(25,315 )
Repayments (410,624 ) (321,439 ) (233,625 ) (267,469 )
Principal (charge-offs) recoveries, net (110 ) (33 ) 61
95

Other (596 ) (282 ) (149 ) (603 )
Ending balance $ 7,412,473
3.81
$ 7,501,741
3.83
$ 7,564,076
3.82
$ 7,518,887
3.78

For the Year Ended September 30,
2019 2018
Amount Rate Amount Rate
(Dollars in thousands)
Beginning balance $ 7,507,645
3.74 % $ 7,182,751
3.61 %
Originations and refinances:
Fixed 505,334
4.10
447,890
4.07
Adjustable 319,608
4.77
185,495
4.40
Purchases and participations:
Fixed 186,135
4.64
364,508
3.98
Adjustable 76,305
4.40
162,873
3.73
Loans added in CCB acquisition, net —
—
299,659
4.77
Change in undisbursed loan funds 52,220
(31,004 )
Repayments (1,233,157 ) (1,102,624 )
Principal recoveries, net 13
65

Other (1,630 ) (1,968 )
Ending balance $ 7,412,473
3.81
$ 7,507,645
3.74

The following table presents loan origination, refinance, and purchase activity for the periods indicated, excluding endorsement activity, ~~and $299.7 million of loans at a rate of 4.77% purchased in connection with the acquisition of CCB during fiscal year 2018,~~ along with associated weighted average rates and percent of total. 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. ~~Starting in the June 30,~~During fiscal year 2019, ~~quarter,~~ the Bank discontinued the use of LIBOR for adjustable-rate one- to four-family loan originations and no longer purchases correspondent one- to four-family loans that use LIBOR, since LIBOR is expected to be discontinued inby the end of calendar year 2021. ~~Currently, new adjustable-rate~~Adjustable-rate one- to four-family loan originations and purchases are now tied to the one-year CMT index, which, to date, does not appear to have had any impact on our ability and opportunities to originate and purchase adjustable-rate one- to four-family loans.


	For the Year Ended
	September 30, 2020						September 30, 2019
	Amount		Rate		% of Total		Amount		Rate		% of Total
	(Dollars in thousands)
Fixed-rate:
One- to four-family:(1)
<= 15 years	$	384,937	2.79	%	22.5	%	$	106,966	3.56	%	9.8	%
> 15 years	804,898		3.41		47.1		420,243		4.14		38.6
One- to four-family construction	44,754		3.28		2.6		51,663		4.13		4.8
Commercial:
Commercial real estate	44,005		4.17		2.7		27,886		6.21		2.6
Commercial and industrial	65,174		1.92		3.8		15,291		5.24		1.4
Commercial construction	39,346		4.71		2.3		59,108		4.85		5.4
Home equity	4,493		5.83		0.3		5,411		6.20		0.5
Other	4,209		5.67		0.2		4,901		5.29		0.5
Total fixed-rate	1,391,816		3.24		81.5		691,469		4.24		63.6

Adjustable-rate:
One- to four-family:(2)
<= 36 months	5,800		2.80		0.3		9,786		3.57		0.9
> 36 months	125,865		2.95		7.4		139,511		3.70		12.8
One- to four-family construction	12,984		2.97		0.8		19,364		3.86		1.8
Commercial:
Commercial real estate	50,697		4.56		3.0		100,142		4.84		9.2
Commercial and industrial	6,360		4.72		0.4		27,496		5.63		2.5
Commercial construction	53,563		4.06		3.1		30,251		5.39		2.8
Home equity	58,709		4.95		3.4		66,893		6.33		6.2
Other	2,037		3.86		0.1		2,470		3.51		0.2
Total adjustable-rate	316,015		3.81		18.5		395,913		4.70		36.4

Total originated, refinanced and purchased	$	1,707,831	3.35		100.0	%	$	1,087,382	4.41		100.0	%

Purchased and participation loans included above:
Fixed-rate:
Correspondent - one- to four-family	$	395,778	3.34				$	118,758	4.31

Participations - commercial	46,126		4.29				67,377		5.24

Total fixed-rate purchased/participations	441,904		3.44				186,135		4.64

Adjustable-rate:
Correspondent - one- to four-family	52,192		2.94				47,655		3.83

Participations - commercial	47,500		4.04				28,650		5.35

Total adjustable-rate purchased/participations	99,692		3.47				76,305		4.40
Total purchased/participation loans	$	541,596	3.44				$	262,440	4.57

(1)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.

(2)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, 2019 September 30, 2018
Amount Rate % of Total Amount Rate % of Total
(Dollars in thousands)
Fixed-rate:
One- to four-family:⁽¹⁾

<= 15 years $ 106,966
3.56 % 9.8 % $ 160,099
3.51 % 13.8 %
> 15 years 420,243
4.14
38.6
530,606
4.12
45.7
One- to four-family construction 51,663
4.13
4.8
43,604
4.11
3.8
Commercial:
Commercial real estate 27,886
6.21
2.6
10,644
4.48
0.9
Commercial and industrial 15,291
5.24
1.4
1,579
5.24
0.1
Commercial construction 59,108
4.85
5.4
60,417
4.30
5.2
Home equity 5,411
6.20
0.5
4,758
6.18
0.4
Other 4,901
5.29
0.5
691
7.54
0.1
Total fixed-rate 691,469
4.24
63.6
812,398
4.03
70.0

Adjustable-rate:
One- to four-family:⁽²⁾

<= 36 months 9,786
3.57
0.9
8,233
3.39
0.7
> 36 months 139,511
3.70
12.8
173,775
3.49
15.0
One- to four-family construction 19,364
3.86
1.8
18,791
3.58
1.6
Commercial:
Commercial real estate 100,142
4.84
9.2
570
5.03
—
Commercial and industrial 27,496
5.63
2.5
325
5.81
—
Commercial construction 30,251
5.39
2.8
69,543
4.16
6.0
Home equity 66,893
6.33
6.2
74,042
5.66
6.4
Other 2,470
3.51
0.2
3,089
3.24
0.3
Total adjustable-rate 395,913
4.70
36.4
348,368
4.09
30.0

Total originated, refinanced and purchased $ 1,087,382
4.41
100.0 % $ 1,160,766
4.05
100.0 %

Purchased and participation loans included above:
Fixed-rate:
Correspondent - one- to four-family $ 118,758
4.31
$ 298,299
3.92

Participations - commercial 67,377
5.24
66,209
4.28

Total fixed-rate purchased/participations 186,135
4.64
364,508
3.98

Adjustable-rate:
Correspondent - one- to four-family 47,655
3.83
93,330
3.41

Participations - commercial 28,650
5.35
69,543
4.16

Total adjustable-rate purchased/participations 76,305
4.40
162,873
3.73

Total purchased/participation loans $ 262,440
4.57
$ 527,381
3.91


~~(1)~~	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.


~~(2)~~	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.

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 credit score, weighted average LTV ratio, and average balance per loan as of the dates presented. Credit scores are updated at least ~~semiannually,~~annually, with the latest update in September ~~2019,~~2020, 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.


	September 30, 2020
			% of		Credit			Average
	Amount		Total		Score	LTV		Balance
	(Dollars in thousands)
Originated	$	3,937,310	63.0	%	771	62	%	$	145
Correspondent purchased	2,101,082		33.6		765	64		379
Bulk purchased	208,427		3.4		767	60		300
	$	6,246,819	100.0	%	768	63		187

	September 30, 2019
			% of		Credit			Average
	Amount		Total		Score	LTV		Balance
	(Dollars in thousands)
Originated	$	3,873,851	59.8	%	768	62	%	$	140
Correspondent purchased	2,349,877		36.3		765	65		371
Bulk purchased	252,347		3.9		762	61		304
	$	6,476,075	100.0	%	767	63		186

September 30, 2019
% of Credit Average
Amount Total Score LTV Balance
(Dollars in thousands)
Originated $ 3,873,851
59.8 % 768
62 % $ 140
Correspondent purchased 2,349,877
36.3
765
65
371
Bulk purchased 252,347
3.9
762
61
304
$ 6,476,075
100.0 % 767
63
186

September 30, 2018
% of Credit Average
Amount Total Score LTV Balance
(Dollars in thousands)
Originated $ 3,965,692
58.6 % 767
62 % $ 138
Correspondent purchased 2,505,987
37.1
764
67
378
Bulk purchased 293,607
4.3
758
62
304
$ 6,765,286
100.0 % 765
64
186

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 LTVs and weighted average credit scores for the periods indicated. Included in the "Refinanced by Bank customers" line item are correspondent loans that were refinanced with the Bank. Of the loans originated during the current year, ~~$85.1~~$300.4 million were refinanced from other lenders. Of the loans originated and refinanced during the current year, ~~78%~~76% had loan values of ~~$484~~$510 thousand or less. Of the correspondent loans purchased during the current year, ~~33%~~20% had loan values of ~~$484~~$510 thousand or less.


	For the Year Ended
	September 30, 2020					September 30, 2019
					Credit					Credit
	Amount		LTV		Score	Amount		LTV		Score
	(Dollars in thousands)
Originated	$	662,678	74	%	767	$	494,739	78	%	760
Refinanced by Bank customers	268,590		67		765	86,381		68		752
Correspondent purchased	447,970		71		768	166,413		73		762

	$	1,379,238	72		767	$	747,533	76		760

For the Year Ended
September 30, 2019 September 30, 2018
Credit Credit
Amount LTV Score Amount LTV Score
(Dollars in thousands)
Originated $ 494,739
78 % 760
$ 473,140
77 % 762
Refinanced by Bank customers 86,381
68
752
70,339
67
750
Correspondent purchased 166,413
73
762
391,629
74
766
$ 747,533
76
760
$ 935,108
75
763

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, ~~2019.~~2020.


State	Amount		% of Total		Rate		State	Amount		% of Total		Rate
	(Dollars in thousands)							(Dollars in thousands)
Kansas	$	507,341	67.9	%	3.92	%	Kansas	$	804,919	58.4	%	3.15	%
Missouri	128,751		17.2		3.95		Missouri	234,730		17.0		3.20
Texas	64,098		8.6		4.12		Texas	177,752		12.9		3.23
Other states	47,343		6.3		4.23		Other states	161,837		11.7		3.32
	$	747,533	100.0	%	3.96

								$	1,379,238	100.0	%	3.19

~~One-~~

Through September 30, 2020, the Bank had processed COVID-19 loan modifications for 942 one- to ~~Four-Family Loan Commitments -~~ four-family loans totaling $239.5 million, of which $39.8 million, or 17%, were still in the deferral period as of September 30, 2020. Of the COVID-19 loan modifications that had completed the deferral period by September 30, 2020 and were not delinquent prior to requesting assistance, $1.4 million were 30 to 89 days delinquent and none were 90 or more days delinquent as of September 30, 2020.

The modifications still in the deferral period as of September 30, 2020 are summarized in the table below, along with the weighted average credit score and weighted average LTV as of September 30, 2020. Credit scores were updated in September 2020 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.


				Credit
	Count	Amount		Score	LTV
	(Dollars in thousands)
Originated	159	$	26,859	715	67	%
Correspondent purchased	34	12,984		749	67

	193	$	39,843	727	67

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, ~~2019,~~2020, 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.


	Fixed-Rate
	15 years			More than			Adjustable-			Total
	or less			15 years			Rate			Amount		Rate
	(Dollars in thousands)
Originate/refinance	$	35,869		$	56,110		$	11,300		$	103,279	2.87	%
Correspondent	15,687			49,912			5,080			70,679		2.89
	$	51,556		$	106,022		$	16,380		$	173,958	2.88

Rate	2.49		%	3.08		%	2.79		%

Fixed-Rate
15 years More than Adjustable- Total
or less 15 years Rate Amount Rate
(Dollars in thousands)
Originate/refinance $ 16,826
$ 44,828
$ 14,679
$ 76,333
3.40 %
Correspondent 5,862
60,136
9,621
75,619
3.65
$ 22,688
$ 104,964
$ 24,300
$ 151,952
3.53

Rate 2.95 % 3.73 % 3.18 %

Commercial Loans - The commercial loan portfolio totaled $767.9 million at September 30, 2019, compared to $569.6 million at September 30, 2018. At September 30, 2019, the commercial loan portfolio was composed of 76% commercial real estate, 16% commercial construction, and 8% commercial and industrial. During ~~the current~~ fiscal year 2020, the Bank originated ~~$164.1~~$165.5 million of commercial loans, ~~and~~of which $43.9 million were PPP loans, entered into commercial real estate loan participations totaling ~~$96.0~~$93.6 million, ~~which included $82.0~~and processed commercial loan disbursements, excluding lines of credit, of approximately $228.7 million at a weighted average rate of ~~commercial real estate construction loans.~~3.78%.

The following table presents the Bank's commercial real estate and commercial construction loans and loan commitments by ~~industry classification, as defined by the North American Industry Classification System,~~type of primary collateral, as of September 30, ~~2019.~~2020. Included in the gross loan amounts in the table, which does not include outstanding commitments, are fixed-rate loans totaling ~~$487.0~~$534.6 million at a weighted average rate of ~~4.33%~~4.15% and adjustable-rate loans totaling ~~$342.8~~$331.1 million at a weighted average rate of ~~4.99%~~4.38%. The weighted average rate of fixed-rate loans is lower than that of adjustable-rate loans due primarily to the majority of the fixed-rate loans in the portfolio at September 30, ~~2019~~2020 having shorter terms to maturity. Because the commitments to pay out undisbursed funds are not cancellable by the Bank, unless the loan is in default, we anticipate fully funding the related projects.


		Unpaid			Undisbursed			Gross Loan			Outstanding						% of
	Count	Principal			Amount			Amount			Commitments			Total			Total
		(Dollars in thousands)
Senior housing	25	$	225,062		$	32,638		$	257,700		$	—		$	257,700		27.5	%
Hotel	9	129,488			49,686			179,174			—			179,174			19.1
Retail building	133	126,439			11,960			138,399			1,771			140,170			14.9
Office building	98	56,131			4,745			60,876			60,875			121,751			13.0
Multi-family	40	63,115			18,801			81,916			2,800			84,716			9.0
One- to four-family property	391	57,754			7,251			65,005			215			65,220			7.0
Single use building	21	43,596			5,163			48,759			1,500			50,259			5.4
Other	91	30,461			3,459			33,920			4,598			38,518			4.1
	808	$	732,046		$	133,703		$	865,749		$	71,759		$	937,508		100.0	%

Weighted average rate		4.25		%	4.19		%	4.24		%	4.05		%	4.23		%

Unpaid Undisbursed Gross Loan Outstanding % of
Principal Amount Amount Commitments Total Total
(Dollars in thousands)
Real estate rental and leasing $ 262,652
$ 44,558
$ 307,210
$ 3,123
$ 310,333
33.7 %
Health care and social assistance 219,715
38,981
258,696
28,426
287,122
31.2
Accommodation and food services 116,313
29,984
146,297
48,100
194,397
21.1
Arts, entertainment, and recreation 35,009
—
35,009
—
35,009
3.8
Retail trade 27,628
2,794
30,422
—
30,422
3.3
Construction 14,446
1,962
16,408
404
16,812
1.8
Other 31,013
4,774
35,787
11,225
47,012
5.1
$ 706,776
$ 123,053
$ 829,829
$ 91,278
$ 921,107
100.0 %

Weighted average rate 4.53 % 4.99 % 4.60 % 5.28 % 4.67 %

The following table summarizes the Bank's commercial real estate and commercial construction loans and loan commitments by state as of September 30, ~~2019.~~2020.


		Unpaid		Undisbursed		Gross Loan		Outstanding				% of
	Count	Principal		Amount		Amount		Commitments		Total		Total
		(Dollars in thousands)
Kansas	627	$	285,184	$	15,744	$	300,928	$	8,254	$	309,182	33.0	%
Missouri	149	227,101		56,545		283,646		2,005		285,651		30.5
Texas	9	117,675		53,107		170,782		60,000		230,782		24.6
Nebraska	6	33,820		16		33,836		—		33,836		3.6
Kentucky	1	25,450		109		25,559		—		25,559		2.7
California	3	5,843		4,300		10,143		1,500		11,643		1.2
Other	13	36,973		3,882		40,855		—		40,855		4.4
	808	$	732,046	$	133,703	$	865,749	$	71,759	$	937,508	100.0	%

The following table presents the Bank's commercial and industrial loans and loan commitments by business purpose, as of September 30, 2020. Including in the working capital loan category are $43.9 million of PPP loans.


		Unpaid		Undisbursed		Gross Loan		Outstanding				% of
	Count	Principal		Amount		Amount		Commitments		Total		Total
		(Dollars in thousands)
Working capital	942	$	56,348	$	17,237	$	73,585	$	331	$	73,916	62.0	%
Equipment	119	14,184		303		14,487		850		15,337		12.9
Purchase/lease autos	178	11,275		97		11,372		—		11,372		9.5
Business investment	70	11,029		80		11,109		—		11,109		9.3
Other	22	4,778		2,785		7,563		—		7,563		6.3

	1,331	$	97,614	$	20,502	$	118,116	$	1,181	$	119,297	100.0	%

Unpaid Undisbursed Gross Loan Outstanding % of
Principal Amount Amount Commitments Total Total
(Dollars in thousands)
Kansas $ 284,113
$ 14,211
$ 298,324
$ 14,547
$ 312,871
34.0 %
Missouri 208,888
53,337
262,225
30,931
293,156
31.8
Texas 118,911
46,721
165,632
40,000
205,632
22.3
Nebraska 29,752
4,010
33,762
—
33,762
3.7
Kentucky 22,285
3,274
25,559
—
25,559
2.8
California 6,107
—
6,107
5,800
11,907
1.3
Other 36,720
1,500
38,220
—
38,220
4.1
$ 706,776
$ 123,053
$ 829,829
$ 91,278
$ 921,107
100.0 %

The following table presents the Bank's commercial 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, ~~2019.~~2020.


	Count		Amount
	(Dollars in thousands)
Greater than $30 million	$	4	$	181,677
>$15 to $30 million	13		314,054
>$10 to $15 million	3		34,761
>$5 to $10 million	13		81,202
$1 to $5 million	103		217,178
Less than $1 million	2,003		227,933
	$	2,139	$	1,056,805

The Bank's commercial lending team is working proactively with our commercial customers as the COVID-19 pandemic continues to present challenging operating conditions. Through September 30, 2020, we have modified $410.9 million of commercial loans under our COVID-19 loan modification program. Of this amount, $43.5 million had completed the deferral period by September 30, 2020, all of which were current, and $367.4 million, or 89%, were still in the deferral period as of September 30, 2020. We have also processed 791 PPP loans for $43.9 million, for which we received approximately $1.9 million in fees. Approximately 60% of PPP loans processed were in the following industries: construction, professional/scientific/technical, health care/social assistance, and retail trade. Through November 16, 2020, $12.2 million of the Bank's PPP loans have been forgiven by the SBA.

The following table presents the gross loan amount, including undisbursed balances, of the Bank's commercial real estate loans by type of primary collateral, and commercial and industrial loans by business purpose, that have been modified per the Bank's COVID-19 loan modification program, and had not completed the deferral period as of September 30, 2020. The information is presented by type of modification and as a percentage of total modifications, as well as by a percentage of the total gross loan amount and undisbursed balances of the related property type or business purpose category. Of the loans presented in the table below, $258.8 million, or 70%, completed their deferral period by November 16, 2020, and an additional $57.4 million was paid off in October 2020.


	Modification Type								% of
	Interest		Payment				% of		Property Type/
	Only		Deferral		Total		Total		Business Purpose
	(Dollars in thousands)
Commercial real estate
Senior housing	$	115,082	$	57,258	$	172,340	46.9	%	66.9	%
Hotel	76,208		10,049		86,257		23.5		48.1
Retail building	27,197		5,815		33,012		9.0		23.9
Multi-family	30,304		1,625		31,929		8.7		65.5
One- to four-family property	14,618		4,375		18,993		5.2		31.2
Office building	7,643		336		7,979		2.2		12.3
Single use building	7,390		—		7,390		2.0		9.0
Other	2,318		—		2,318		0.6		6.8
	280,760		79,458		360,218		98.1		41.6
Commercial and industrial
Working capital	4,136		—		4,136		1.1		32.7
Equipment	848		—		848		0.2		1.2
Business investment	719		—		719		0.2		5.5
Purchase/lease autos	651		—		651		0.2		5.7
Other	786		—		786		0.2		32.6
	7,140		—		7,140		1.9		6.0
Total	$	287,900	$	79,458	$	367,358	100.0	%	37.3

Count Amount
(Dollars in thousands)
Greater than $30 million $ 5
$ 190,672
>$15 to $30 million 11
271,702
>$10 to $15 million 5
60,614
>$5 to $10 million 15
94,058
$1 to $5 million 88
194,876
Less than $1 million 1,181
187,054
$ 1,305
$ 998,976
Of the commercial loans modified under the COVID-19 loan modification program, through November 16, 2020, we have received or are expecting to receive requests for additional assistance on loans with a combined gross loan amount, including undisbursed balances, of $87.4 million. This amount includes $14.6 million of loans that had exited the initial deferral period by September 30, 2020, and $72.8 million that are included in the table above, of which $69.0 million were in their second deferral as of September 30, 2020. The Bank is evaluating requests for additional assistance as they are received.

Securities. Securities ~~decreased $139.4~~increased $338.2 million from ~~$1.33 billion at September 30, 2018 to~~ $1.19 billion at September 30, ~~2019.~~2019 to $1.53 billion at September 30, 2020. The ~~decrease primarily occurred later in the current fiscal year and was due mainly to not reinvesting some of the cash flows from~~weighted average yield on the securities portfolio decreased 92 basis points, from 2.54% at September 30, 2019 to 1.62% at September 30, 2020, due primarily to purchases at lower market yields during the ~~interest rate environment.~~current year. The following table presents the distribution of our securities portfolio, at amortized cost, at the dates indicated. Overall, fixed-rate securities comprised ~~75%~~87% of our securities portfolio at September 30, ~~2019.~~2020. 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 average yields on tax-exempt securities are not calculated on a fully taxable equivalent basis.


	September 30, 2020					September 30, 2019
	Amount		Yield		WAL	Amount		Yield		WAL
	(Dollars in thousands)
Fixed-rate securities:
MBS	$	945,432	1.82	%	3.7	$	625,840	2.46	%	2.9
GSE debentures	369,967		0.62		1.7	249,828		2.15		0.7
Municipal bonds	9,716		1.69		0.7	18,371		1.63		1.0
Total fixed-rate securities	1,325,115		1.49		3.1	894,039		2.35		2.3

Adjustable-rate securities:
MBS	204,490		2.49		2.9	297,416		3.10		4.7


Total securities portfolio	$	1,529,605	1.62		3.1	$	1,191,455	2.54		2.9

September 30, 2019 September 30, 2018
Amount Yield WAL Amount Yield WAL
(Dollars in thousands)
Fixed-rate securities:
MBS $ 625,840
2.46 % 2.9
$ 732,095
2.43 % 3.0
GSE debentures 249,828
2.15
0.7
268,525
2.09
2.3
Municipal bonds 18,371
1.63
1.0
24,574
1.56
1.8
Total fixed-rate securities 894,039
2.35
2.3
1,025,194
2.32
2.8

Adjustable-rate securities:
MBS 297,416
3.10
4.7
305,688
2.89
4.5
Total securities portfolio $ 1,191,455
2.54
2.9
$ 1,330,882
2.45
3.2

The following table presents the carrying value of MBS in our portfolio by issuer at the dates presented.


	At September 30,
	2020		2019
	(Dollars in thousands)
FNMA	$	809,232	$	656,799
FHLMC	327,167		208,745
Government National Mortgage Association	44,404		70,943

	$	1,180,803	$	936,487

At September 30,
2019
2018
(Dollars in thousands)
FNMA $ 656,799
$ 680,717
FHLMC 208,745
265,441
Government National Mortgage Association 70,943
90,832
$ 936,487
$ 1,036,990

Mortgage-Backed Securities - The balance of MBS, which primarily consists of securities of U.S. GSEs, ~~decreased $100.5~~increased $244.3 million to $1.18 billion at September 30, 2020 from $936.5 million at September 30, ~~2019 from $1.04 billion at September 30, 2018.~~2019. The following ~~table summarizes~~tables summarize the activity in our 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 last day of the period 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 isare the estimated remaining principal repayment term (in years) after three-month historical prepayment speeds have been applied.


	For the Three Months Ended
	September 30, 2020					June 30, 2020					March 31, 2020					December 31, 2019
	Amount		Yield		WAL	Amount		Yield		WAL	Amount		Yield		WAL	Amount		Yield		WAL
	(Dollars in thousands)
Beginning balance - carrying value	$	982,587	2.35	%	3.3	$	973,318	2.50	%	3.6	$	937,317	2.61	%	3.3	$	936,487	2.67	%	3.5
Maturities and repayments	(95,842)					(75,293)					(65,767)					(72,635)
Net amortization of (premiums)/discounts	(608)					(363)					(279)					(248)
Purchases:
Fixed	297,024		1.06		5.9	77,455		1.29		5.0	88,863		1.80		4.5	74,359		2.05		3.8
Adjustable	—		—		—	—		—		—	—		—		—	—		—		—


Change in valuation on AFS securities	(2,358)					7,470					13,184					(646)
Ending balance - carrying value	$	1,180,803	1.94		3.5	$	982,587	2.35		3.3	$	973,318	2.50		3.6	$	937,317	2.61		3.3


	For the Year Ended September 30,
	2020					2019
	Amount		Yield		WAL	Amount		Yield		WAL
	(Dollars in thousands)
Beginning balance - carrying value	$	936,487	2.67	%	3.5	$	1,036,990	2.57	%	3.4
Maturities and repayments	(309,537)					(275,116)
Net amortization of (premiums)/discounts	(1,498)					(1,304)
Purchases:
Fixed	537,701		1.35		5.2	77,755		2.53		4.1
Adjustable	—		—		—	84,138		2.74		4.4

Valuation transferred from HTM to AFS	—					3,039
Change in valuation on AFS securities	17,650					10,985
Ending balance - carrying value	$	1,180,803	1.94		3.5	$	936,487	2.67		3.5

For the Three Months Ended
September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018
Amount Yield WAL Amount Yield WAL Amount Yield WAL Amount Yield WAL
(Dollars in thousands)
Beginning balance - carrying value $ 979,256
2.68 % 3.4
$ 985,294
2.67 % 3.7
$ 972,543
2.62 % 3.6
$ 1,036,990
2.57 % 3.4
Maturities and repayments (70,865 ) (74,335 ) (62,702 ) (67,214 )
Net amortization of (premiums)/discounts (270 ) (375 ) (310 ) (349 )
Purchases:
Fixed 25,214
1.93
3.2
23,620
2.74
3.8
28,921
2.89
5.1
—
—
—
Adjustable —
—
—
40,362
2.79
4.5
43,776
2.69
4.3
—
—
—
Valuation transferred from HTM to AFS 3,039
—
—
—

Change in valuation on AFS securities 113
4,690
3,066
3,116

Ending balance - carrying value $ 936,487
2.67
3.5
$ 979,256
2.68
3.4
$ 985,294
2.67
3.7
$ 972,543
2.62
3.6

For the Year Ended September 30,
2019 2018
Amount Yield WAL Amount Yield WAL
(Dollars in thousands)
Beginning balance - carrying value $ 1,036,990
2.57 % 3.4
$ 942,447
2.28 % 3.5
Maturities and repayments (275,116 ) (277,464 )
Net amortization of (premiums)/discounts (1,304 ) (2,968 )
Purchases:
Fixed 77,755
2.53
4.1
201,871
2.93
4.1
Adjustable 84,138
2.74
4.4
94,028
2.42
4.2
Securities added in CCB acquisition, net —
—
—
85,741
3.13
2.5
Valuation transferred from HTM to AFS 3,039
—

Change in valuation on AFS securities 10,985
(6,665 )
Ending balance - carrying value $ 936,487
2.67
3.5
$ 1,036,990
2.57
3.4

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 $21.5~~increased $111.8 million to $380.1 million at September 30, 2020 from $268.4 million at September 30, ~~2019 from $289.9~~2019. Municipal investments totaled $9.7 million at September 30, ~~2018.~~2020. The following ~~table summarizes~~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. The beginning and ending WALs represent the estimated remaining principal repayment terms (in years) of the securities after projected call dates have been considered, based upon market rates at each date presented.


	For the Three Months Ended
	September 30, 2020					June 30, 2020					March 31, 2020					December 31, 2019
	Amount		Yield		WAL	Amount		Yield		WAL	Amount		Yield		WAL	Amount		Yield		WAL
	(Dollars in thousands)
Beginning balance - carrying value	$	237,467	1.23	%	0.8	$	262,719	1.87	%	0.3	$	292,270	2.00	%	0.8	$	268,376	2.11	%	0.8
Maturities, calls and sales	(102,115)					(125,000)					(80,125)					(51,175)
Net amortization of (premiums)/discounts	(54)					(80)					(49)					20
Purchases:
Fixed	244,975		0.51		3.2	99,990		0.58		1.2	50,097		1.42		0.4	75,000		1.90		1.7



Change in valuation on AFS securities	(126)					(162)					526					49
Ending balance - carrying value	$	380,147	0.65		1.7	$	237,467	1.23		0.8	$	262,719	1.87		0.3	$	292,270	2.00		0.8


	For the Year Ended September 30,
	2020					2019
	Amount		Yield		WAL	Amount		Yield		WAL
	(Dollars in thousands)
Beginning balance - carrying value	$	268,376	2.11	%	0.8	$	289,942	2.05	%	2.2
Maturities, calls and sales	(358,415)					(249,771)
Net amortization of (premiums)/discounts	(163)					62
Purchases:
Fixed	470,062		0.84		2.3	224,809		2.44		0.9


Valuation transferred from HTM to AFS	—					47
Change in valuation on AFS securities	287					3,287
Ending balance - carrying value	$	380,147	0.65		1.7	$	268,376	2.11		0.8

For the Three Months Ended
September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018
Amount Yield WAL Amount Yield WAL Amount Yield WAL Amount Yield WAL
(Dollars in thousands)
Beginning balance - carrying value $ 273,995
2.30 % 1.0
$ 288,894
2.38 % 1.0
$ 264,782
2.14 % 1.8
$ 289,942
2.05 % 2.2
Maturities, calls and sales (80,690 ) (65,781 ) (76,635 ) (26,665 )
Net amortization of (premiums)/discounts (13 ) 153
(39 ) (39 )
Purchases:
Fixed 75,000
2.02
1.1
50,000
2.60
1.0
99,809
2.67
0.7
—
—
—
Valuation transferred from HTM to AFS 47
—
—
—

Change in valuation on AFS securities 37
729
977
1,544

Ending balance - carrying value $ 268,376
2.11
0.8
$ 273,995
2.30
1.0
$ 288,894
2.38
1.0
$ 264,782
2.14
1.8

For the Year Ended September 30,
2019 2018
Amount Yield WAL Amount Yield WAL
(Dollars in thousands)
Beginning balance - carrying value $ 289,942
2.05 % 2.2
$ 301,122
1.33 % 1.5
Maturities, calls and sales (249,771 ) (129,838 )
Net amortization of (premiums)/discounts 62
(182 )
Purchases:
Fixed 224,809
2.44
0.9
115,560
2.85
1.8
Securities added in CCB acquisition, net —
—
—
5,855
2.12
1.0
Valuation transferred from HTM to AFS 47
—

Change in valuation on AFS securities 3,287
(2,575 )
Ending balance - carrying value $ 268,376
2.11
0.8
$ 289,942
2.05
2.2

Liabilities.Total liabilities at September 30, 2020 were $8.20 billion, an increase of $198.7 million, or 2.5% from September 30, 2019. The increase was due to an increase in deposits, partially offset by a decrease in borrowings.

~~Deposits~~ Deposits.- Total deposits were $6.19 billion at September 30, 2020, an increase of $609.5 million, or 10.9%, from September 30, 2019. The increase in retail and business deposit balances was due primarily to economic stimulus payments, a reduction in consumer spending, and PPP loan proceeds being deposited at the Bank. Also, the Bank secured a new business deposit relationship during the current year which brought in $163.6 million of new deposit balances. Because some of these deposits related to the new business deposit relationship are COVID-19 related payments, we do not expect the full balance of the deposits received during fiscal year 2020 to be retained through fiscal year 2021. As previously noted, since the onset of the COVID-19 pandemic, the Bank has lowered rates paid on money market accounts and certificate of deposit products. Despite this, money market accounts increased $220.8 million and certificate of deposit accounts increased $73.8 million during the current fiscal year. The increase in the certificate of deposit accounts was primarily related to business accounts. As retail certificates of deposit matured during the current year, not all were renewed. Rather, customers moved some of those funds to more liquid investment options, such as the Bank's money market accounts. During fiscal year 2020, the Bank's weighted average retention rate of maturing retail certificates of deposit was approximately 80%, compared to approximately 85% during fiscal year 2019.

The following table presents the amount, weighted average rate and percent of total for the components of our deposit portfolio at the dates presented. Cash flows from new certificate of deposit accounts, money market accounts, and checking accounts resulted in an increase of $163.4 million, or 6.5%, in retail/business certificates of deposit during the current fiscal year. The public unit certificate of deposit portfolio decreased $112.8 million, which was intentional as the Bank reduced its usage of public unit certificates of deposit, as previously discussed. Excluding the impact of the decrease in the balance of public unit certificates of deposit, total deposits would have increased $91.3 million, or 1.8%, during the current fiscal year.


	At September 30,
	2020						2019
					% of						% of
	Amount		Rate		Total		Amount		Rate		Total
	(Dollars in thousands)
Non-interest-bearing checking	$	451,394	—	%	7.3	%	$	357,284	—	%	6.4	%
Interest-bearing checking	865,782		0.10		14.0		717,121		0.09		12.8
Savings	433,808		0.06		7.0		321,494		0.05		5.8
Money market	1,419,180		0.37		22.9		1,198,343		0.70		21.5
Retail/business certificates of deposit	2,766,461		1.83		44.7		2,692,770		2.08		48.2
Public unit certificates of deposit	254,783		0.74		4.1		294,855		2.29		5.3
	$	6,191,408	0.95		100.0	%	$	5,581,867	1.29		100.0	%

At September 30,
2019 2018
% of % of
Amount Rate Total Amount Rate Total
(Dollars in thousands)
Non-interest-bearing checking $ 357,284
— % 6.4 % $ 336,454
— % 6.0 %
Interest-bearing checking 717,121
0.09
12.8
724,066
0.08
12.9
Savings 321,494
0.05
5.8
352,896
0.07
6.3
Money market 1,198,343
0.70
21.5
1,252,881
0.47
22.4
Retail/business certificates of deposit 2,692,770
2.08
48.2
2,529,368
1.79
45.1
Public unit certificates of deposit 294,855
2.29
5.3
407,689
1.89
7.3
$ 5,581,867
1.29
100.0 % $ 5,603,354
1.06
100.0 %

The composition of the retail/business certificate of deposit portfolio changed during the current fiscal year. Short-term and intermediate-term certificates of deposit increased $362.5 million while longer-term and variable rate certificates of deposit decreased $199.1 million. The change in the deposit portfolio mix was intentional. The Bank increased offered rates on short-term and certain intermediate-term certificates of deposit late in the third quarter of fiscal year 2019 and ran a special certificate of deposit campaign ("unTraditional campaign") during the last quarter of fiscal year 2019. The intention of the unTraditional campaign was to attract deposits with generally shorter term to maturity to allow the Bank to more quickly reprice certificate of deposit funds lower if market rates decrease.

The following tables set forth scheduled maturity information for our certificates of deposit, including public unit certificates of deposit, along with associated weighted average rates, at September 30, ~~2019.~~2020.

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% $ 17,483
$ 2,537
$ 29
$ —
$ 20,049
0.67 %
  1.00 – 1.99% 873,887
326,852
203,765
7,482
1,411,986
1.78
  2.00 – 2.99% 614,467
296,601
294,558
349,721
1,555,347
2.40
  3.00 – 3.99% —
—
—
243
243
3.00
$ 1,505,837
$ 625,990
$ 498,352
$ 357,446
$ 2,987,625
2.10

Percent of total 50.4 % 20.9 % 16.7 % 12.0 %
Weighted average rate 1.98
2.09
2.22
2.46

Weighted average maturity (in years) 0.5
1.4
2.6
3.6
1.4

Weighted average maturity for the retail/business certificate of deposit portfolio (in years) 1.5

Amount Due
Over Over
3 months 3 to 6 6 to 12 Over
or less months months 12 months Total
(Dollars in thousands)
Retail/business certificates of deposit less than $100,000 $ 188,883
$ 153,187
$ 358,223
$ 845,734
$ 1,546,027
Retail/business certificates of deposit of $100,000 or more 147,727
96,538
301,318
601,160
1,146,743
Public unit certificates of deposit of $100,000 or more 112,275
56,767
90,919
34,894
294,855
$ 448,885
$ 306,492
$ 750,460
$ 1,481,788
$ 2,987,625

~~Borrowings~~


	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%	$	449,875		$	55,037		$	8,103		$	1,374		$	514,389	0.55	%
1.00 – 1.99%	713,300			355,888			104,335			186,939			1,360,462		1.65
2.00 – 2.99%	342,326			362,353			313,831			127,632			1,146,142		2.38
3.00 – 3.99%	—			—			251			—			251		3.00



	$	1,505,501		$	773,278		$	426,520		$	315,945		$	3,021,244	1.74

Percent of total	49.8		%	25.6		%	14.1		%	10.5		%
Weighted average rate	1.46			1.99			2.16			1.88
Weighted average maturity (in years)	0.5			1.5			2.4			3.7			1.4
Weighted average maturity for the retail/business certificate of deposit portfolio (in years)													1.5


	Amount Due
			Over		Over
	3 months		3 to 6		6 to 12		Over
	or less		months		months		12 months		Total
	(Dollars in thousands)
Retail/business certificates of deposit less than $100,000	$	177,414	$	167,073	$	337,599	$	840,713	$	1,522,799
Retail/business certificates of deposit of $100,000 or more	134,441		140,790		310,654		657,777		1,243,662

Public unit certificates of deposit of $100,000 or more	100,761		39,310		97,459		17,253		254,783
	$	412,616	$	347,173	$	745,712	$	1,515,743	$	3,021,244

Borrowings. - Total borrowings at September 30, 2020 were $1.79 billion, a decrease of $450.7 million, or 20.1%, from September 30, 2019. As a result of excess liquidity due primarily to the inflow of deposits, management elected to reduce the Bank's level of borrowing during the current fiscal year. Not all maturing FHLB advances and repurchase agreement were renewed and the FHLB line of credit balance was paid off during the year.

The following tables present 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. Excluded from this table is a $3.0 million FHLB advance that had an original contractual term of less than one year. FHLB advances are presented at par. The effective rate is shown as a weighted average and 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 Three Months Ended
	September 30, 2020					June 30, 2020					March 31, 2020					December 31, 2019
			Effective					Effective					Effective					Effective
	Amount		Rate		WAM	Amount		Rate		WAM	Amount		Rate		WAM	Amount		Rate		WAM
	(Dollars in thousands)
Beginning balance	$	1,990,000	2.29	%	2.9	$	2,090,000	2.25	%	3.0	$	2,090,000	2.37	%	2.6	$	2,140,000	2.38	%	2.6
Maturities and prepayments:
FHLB advances	(440,000)		2.49			(200,000)		2.35			(415,000)		2.45			(350,000)		2.40
Repurchase agreements	(100,000)		2.53			—		—			—		—			—		—

New FHLB borrowings:
Fixed-rate	—		—		—	—		—		—	350,000		1.70		4.7	100,000		1.96		5.0
Interest rate swaps(1)	340,000		2.73		3.5	100,000		3.20		8.0	65,000		2.61		4.0	200,000		2.57		2.5

Ending balance	$	1,790,000	2.31		3.0	$	1,990,000	2.29		2.9	$	2,090,000	2.25		3.0	$	2,090,000	2.37		2.6


	For the Year Ended September 30,
	2020					2019
			Effective					Effective
	Amount		Rate		WAM	Amount		Rate		WAM
	(Dollars in thousands)
Beginning balance	$	2,140,000	2.38	%	2.6	$	2,185,052	2.17	%	2.9
Maturities and prepayments:
FHLB advances	(1,405,000)		2.44			(875,000)		2.10
Repurchase agreements	(100,000)		2.53			—		—
CCB acquisition - junior subordinated debentures assumed (redeemed)	—		—		—	(10,052)		8.76		12.3
New FHLB borrowings:
Fixed-rate	450,000		1.76		4.8	200,000		2.77		4.5
Interest rate swaps(1)	705,000		2.74		3.9	640,000		2.67		5.0

Ending balance	$	1,790,000	2.31		3.0	$	2,140,000	2.38		2.6

(1)Represents adjustable-rate FHLB advances for which the Bank has entered into interest rate swaps 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.

For the Three Months Ended
September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018
Effective Effective Effective Effective
Amount Rate WAM Amount Rate WAM Amount Rate WAM Amount Rate WAM
(Dollars in thousands)
Beginning balance $ 2,140,000
2.35 % 2.6
$ 2,240,000
2.29 % 2.8
$ 2,181,186
2.31 % 3.0
$ 2,185,052
2.17 % 2.9
Maturities:
FHLB advances (375,000 ) 2.38
(200,000 ) 2.11
—
—
(300,000 ) 1.73

CCB acquisition - junior subordinated debentures assumed (redeemed) —
—
—
—
—
—
(6,186 ) 10.60
11.5
(3,866 ) 5.82
13.5
New FHLB borrowings:
Fixed-rate 100,000
2.14
4.0
—
—
—
—
—
—
100,000
3.39
5.0
Interest rate swaps⁽¹⁾
275,000
2.70
4.5
100,000
3.09
9.0
65,000
2.57
5.0
200,000
2.46
3.5
Ending balance $ 2,140,000
2.38
2.6
$ 2,140,000
2.35
2.6
$ 2,240,000
2.29
2.8
$ 2,181,186
2.31
3.0

For the Year Ended September 30,
2019 2018
Effective Effective
Amount Rate WAM Amount Rate WAM
(Dollars in thousands)
Beginning balance $ 2,185,052
2.17 % 2.9
$ 2,375,000
2.16 % 2.7
Maturities:
FHLB advances (875,000 ) 2.10
(475,000 ) 2.38

Repurchase agreements —
—
(100,000 ) 3.35

CCB acquisition - junior subordinated debentures assumed (redeemed) (10,052 ) 8.76
12.3
10,052
8.75
12.7
New FHLB borrowings:
Fixed-rate 200,000
2.77
4.5
—
—
—
Interest rate swaps⁽¹⁾
640,000
2.67
5.0
375,000
2.64
6.8
Ending balance $ 2,140,000
2.38
2.6
$ 2,185,052
2.17
2.9


~~(1)~~	Represents adjustable-rate FHLB advances for which the Bank has entered into interest rate swaps 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.

Maturities - The following table presents the maturity of term borrowings ~~(including~~(which includes FHLB advances, at par, and repurchase agreements), along with associated weighted average contractual and effective rates as of September 30, ~~2019.~~

FHLB Advances Amount Repurchase
Maturity by Interest rate Agreements Total Contractual Effective
Fiscal Year Fixed-rate
swaps⁽¹⁾
Amount Amount Rate
Rate⁽²⁾
(Dollars in thousands)
2020 350,000
640,000
100,000
1,090,000
2.18 2.44
2021 550,000
—
—
550,000
2.27 2.27
2022 200,000
—
—
200,000
2.23 2.23
2023 200,000
—
—
200,000
1.98 1.98
2024 100,000
—
—
100,000
3.39 3.39
$ 1,400,000
$ 640,000
$ 100,000
$ 2,140,000
2.25 2.38

~~(1)~~

Represents 12-month adjustable-rate FHLB advances for which the Bank has entered into interest rate swaps with a notional amount of $640.0 million to hedge the variability in cash flows associated with the advances. These advances are presented based on their contractual maturity dates and will be renewed each year until the maturity or termination of the interest rate swaps. The expected WAL of the interest rate swaps was 4.5 years2020. The weighted average effective rate for term borrowings decreased seven basis points during fiscal year 2020, to 2.31% at ~~September 30, 2019.~~


~~(2)~~	~~The effective rate includes the impact of interest rate swaps and the amortization of deferred prepayment penalties resulting from FHLB advances previously prepaid.~~

~~As of~~ September 30, ~~2019,~~2020. The decrease in the effective rate was due primarily to FHLB advances being replaced at lower market interest rates.


	Term Borrowings Amount
Maturity by			Interest rate		Total		Effective
Fiscal Year	Fixed-rate		swaps(1)		Amount		Rate(2)
	(Dollars in thousands)
2021	203,000		640,000		843,000		2.56	%
2022	200,000		—		200,000		2.23
2023	300,000		—		300,000		1.81
2024	100,000		—		100,000		3.39
2025	250,000		—		250,000		1.94
2026	100,000		—		100,000		1.60

	$	1,153,000	$	640,000	$	1,793,000	2.31

(1)Represents adjustable-rate FHLB advances for which the Bank ~~had $100.0~~has entered into interest rate swaps with a notional amount of $640.0 million ~~outstanding,~~to hedge the variability in cash flows associated with the advances. These advances are presented based on their contractual maturity dates and will be renewed periodically until the maturity or termination of the interest rate swaps. The expected WAL of the interest rate swaps was 3.5 years at aSeptember 30, 2020.

(2)The effective rate includes the impact of ~~2.20%, on its~~interest rate swaps and the amortization of deferred prepayment penalties resulting from FHLB ~~line of credit which was not related to the leverage strategy. The average outstanding balance of FHLB line of credit borrowings during the current year was $115.6 million at an average rate of 2.54%.~~advances previously prepaid.

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 retail/business and public unit amounts, and term borrowings for the next four quarters as of September 30, ~~2019.~~2020.


	Retail/ Business				Public Unit				Term
Maturity by	Certificate		Repricing		Certificate		Repricing		Borrowings		Repricing				Repricing
Quarter End	Amount		Rate		Amount		Rate		Amount(1)		Rate		Total		Rate
	(Dollars in thousands)
December 31, 2020	$	311,855	1.76	%	$	100,761	0.43	%	$	53,000	1.98	%	$	465,616	1.50	%
March 31, 2021	307,863		1.78		39,310		1.19		150,000		1.97		497,173		1.79
June 30, 2021	342,662		1.51		49,185		0.48		—		—		391,847		1.38
September 30, 2021	305,591		1.40		48,274		0.95		75,000		2.99		428,865		1.63
	$	1,267,971	1.61		$	237,530	0.67		$	278,000	2.24		$	1,783,501	1.59

(1)The maturity date for FHLB advances tied to interest rate swaps is based on the maturity date of the related interest rate swap.

Retail/Business Public Unit Term
Maturity by Certificate Repricing Certificate Repricing Borrowings Repricing Repricing
Quarter End Amount Rate Amount Rate Amount Rate Total Rate
(Dollars in thousands)
December 31, 2019 $ 336,610
1.65 % $ 112,275
2.18 % $ 350,000
2.40 % $ 798,885
2.05 %
March 31, 2020 249,725
1.78
56,767
2.37
65,000
2.57
371,492
2.01
June 30, 2020 403,455
2.11
54,246
2.40
200,000
2.35
657,701
2.21
September 30, 2020 256,086
2.09
36,673
2.24
475,000
2.48
767,759
2.34
$ 1,245,876
1.91
$ 259,961
2.27
$ 1,090,000
2.44
$ 2,595,837
2.17

Stockholders' Equity. Stockholders' equity was $1.28 billion at September 30, 2020 compared to $1.34 billion at September 30, ~~2019 compared to $1.39 billion at September 30, 2018.~~2019. The ~~$55.3~~$51.5 million decrease was due primarily to the payment of ~~$134.9~~cash dividends totaling $93.9 million ~~in cash dividends,~~and the repurchase of common stock totaling $23.8 million, partially offset by net income of ~~$94.2 million.~~$64.5 million during the current year. The cash dividends paid during the current year totaled $0.68 per share and consisted of a $0.34 per share cash true-up dividend related to fiscal year 2019 earnings, paid in December 2019, per the Company's dividend policy, and four regular quarterly cash dividends of $0.085 per share, totaling $0.34 per share. In the long run, management considers ~~a ratio of stockholders'~~the Bank's equity to total assets ~~at the Bank~~ratio of at least 10% an appropriate level of capital. At September 30, ~~2019,~~2020, this ratio was ~~12.5%~~12.3%. The cash dividends paid during the current fiscal year totaled $0.98 per share and consisted of a $0.39 per share cash true-up dividend related to fiscal year 2018 earnings per the Company's dividend policy, a $0.25 per share True Blue Capitol dividend, and four regular quarterly cash dividends totaling $0.34 per share.

On October ~~16, 2019,~~20, 2020, the Company announced a regular quarterly cash dividend of $0.085 per share, or approximately ~~$11.7~~$11.5 million, payable on November ~~15, 2019~~20, 2020 to stockholders of record as of the close of business on November ~~1, 2019.~~6, 2020. On October ~~30, 2019,~~28, 2020, the Company announced a fiscal year ~~2019~~2020 cash true-up dividend of ~~$0.34~~$0.13 per share, or approximately ~~$46.9~~$17.6 million, related to fiscal year ~~2019~~2020 earnings. The ~~$0.34~~$0.13 per share cash true-up dividend was determined by taking the difference between total earnings for fiscal year ~~2019~~2020 and total regular quarterly cash dividends paid during fiscal year ~~2019,~~2020, divided by the number of shares outstanding as of October ~~18, 2019.~~16, 2020. The cash true-up dividend is payable on December ~~6, 2019~~4, 2020 to stockholders of record as of the close of business on November ~~22, 2019,~~20, 2020, and is the result of the Board of Directors' commitment to distribute to stockholders 100% of the annual earnings of the Company for fiscal year ~~2019.~~2020.

During the current fiscal year, the Company repurchased $23.8 million, or 2,558,100 shares, of common stock. Subsequent to September 30, 2020, through November 24, 2020, the Company repurchased an additional $1.5 million, or 164,400 shares, of common stock. As of November 24, 2020, there was still $44.7 million authorized under the existing stock repurchase plan for additional purchases of the Company's common stock. Shares may be repurchased from time to time based upon market conditions, available liquidity and other factors. This plan has no expiration date; however, the Federal Reserve Bank's approval for the Company to repurchase shares extends through August 2021.

At September 30, ~~2019,~~2020, Capitol Federal Financial, Inc., at the holding company level, had ~~$126.3~~$82.5 million on deposit at the Bank. For fiscal year ~~2020,~~2021, it is currently the ~~intent~~intention of the Board of Directors ~~and management~~ to continue ~~with~~ the payout of 100% of the Company's earnings to ~~its~~the 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 ~~2020~~2021 earnings in excess of the amount paid as regular quarterly cash dividends during fiscal year ~~2020.~~2021. It is anticipated that the fiscal year ~~2020~~2021 cash true-up dividend will be paid in December ~~2020.~~2021. 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.

The Company works to find multiple ways to provide stockholder value. ~~Recently, this~~This has primarily been through the payment of cash dividends and ~~historically, the Company has also utilized~~ stock buybacks. 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 order to provide additional stockholder value, the Company has paid a True Blue Capitol cash dividend of $0.25 per share in June of each of the past six ~~years, including June 2019, and in December prior to that.~~years. The Company has paid the True Blue Capitol dividend primarily due to excess capital levels at the Company and 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 capital levels and requirements, in determining the amount, if any, and timing of the True Blue dividend. Given the state of economic uncertainty and how that may play out with the credit risk exposure in the Bank's loan portfolio, the Company elected to defer the annual True Blue dividend in June 2020 and did not ask for a regulatory non-objection at that time to move capital from the Bank to the Company to pay that dividend. It is management's intention to ask for a regulatory non-objection at some point in the future and to pay this dividend when economic conditions are more certain. It remains the Company's intention to pay out 100% of its earnings.

The following table presents regular quarterly cash dividends and special cash dividends paid in calendar years 2020, 2019, ~~2018,~~ and ~~2017.~~2018. The amounts represent cash dividends paid during each period. The ~~2019~~2020 true-up dividend amount presented represents the dividend payable on December 6, ~~2019~~2020 to stockholders of record as of November 22, ~~2019.~~2020.


	Calendar Year
	2020				2019				2018
	Amount		Per Share		Amount		Per Share		Amount		Per Share
	(Dollars in thousands, except per share amounts)
Regular quarterly dividends paid
Quarter ended March 31	$	11,733	$	0.085	$	11,700	$	0.085	$	11,427	$	0.085
Quarter ended June 30	11,733		0.085		11,708		0.085		11,429		0.085
Quarter ended September 30	11,733		0.085		11,713		0.085		11,430		0.085
Quarter ended December 31	11,517		0.085		11,731		0.085		11,696		0.085
True-up dividends paid	17,614		0.130		46,932		0.340		53,666		0.390
True Blue dividends paid	—		—		34,446		0.250		33,614		0.250
Calendar year-to-date dividends paid	$	64,330	$	0.470	$	128,230	$	0.930	$	133,262	$	0.980

Calendar Year
2019 2018 2017
Amount Per Share Amount Per Share Amount Per Share
(Dollars in thousands, except per share amounts)
Regular quarterly dividends paid
Quarter ended March 31 $ 11,700
$ 0.085
$ 11,427
$ 0.085
$ 11,386
$ 0.085
Quarter ended June 30 11,708
0.085
11,429
0.085
11,409
0.085
Quarter ended September 30 11,713
0.085
11,430
0.085
11,411
0.085
Quarter ended December 31 11,731
0.085
11,696
0.085
11,427
0.085
True-up dividends paid 46,932
0.340
53,666
0.390
38,985
0.290
True Blue dividends paid 34,446
0.250
33,614
0.250
33,559
0.250
Calendar year-to-date dividends paid $ 128,230
$ 0.930
$ 133,262
$ 0.980
$ 118,177
$ 0.880

The Company has authorized the repurchase of $70.0 million of its common stock under its stock repurchase plan. Shares may be repurchased from time to time based upon market conditions and available liquidity. There is no expiration for this repurchase plan and no shares have been repurchased under this repurchase plan.

Weighted Average Yields and Rates. The following table presents the weighted average yields on interest-earning assets, the weighted average rates paid on interest-bearing liabilities, and the resultant interest rate spreads at the dates indicated. As previously discussed, the leverage strategy was not in place at September 30, 2019, 2018, and 2017, so the end of period yields/rates presented in the table below do not reflect the effects of this strategy. 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.


	At September 30,
	2020		2019		2018
Yield on:
Loans receivable	3.57	%	3.81	%	3.74	%
MBS	1.94		2.67		2.57
Investment securities	0.65		2.11		2.05
FHLB stock	4.64		7.47		7.22
Cash and cash equivalents	0.09		1.80		2.19
Combined yield on interest-earning assets	3.18		3.64		3.57

Rate paid on:
Checking	0.07		0.06		0.05
Savings	0.06		0.05		0.07
Money market	0.37		0.70		0.47
Retail/business certificates	1.83		2.08		1.79
Wholesale certificates	0.74		2.29		1.89
Total deposits	0.95		1.29		1.06
Total borrowings	2.31		2.37		2.18
Combined rate paid on interest-bearing liabilities	1.26		1.60		1.39

Net interest rate spread	1.92		2.04		2.18

At September 30,
2019
2018
2017
Yield on:
Loans receivable 3.81 % 3.74 % 3.59 %
MBS 2.67
2.57
2.28
Investment securities 2.11
2.05
1.33
FHLB stock 7.47
7.22
6.47
Cash and cash equivalents 1.80
2.19
1.25
Combined yield on interest-earning assets 3.64
3.57
3.32

Rate paid on:
Checking 0.06
0.05
0.04
Savings 0.05
0.07
0.24
Money market 0.70
0.47
0.24
Retail/business certificates 2.08
1.79
1.52
Wholesale certificates 2.29
1.89
1.28
Total deposits 1.29
1.06
0.89
FHLB borrowings 2.36
2.13
2.09
Other borrowings 2.53
3.10
2.94
Total borrowings 2.37
2.18
2.16
Combined rate paid on interest-bearing liabilities 1.60
1.39
1.28

Net interest rate spread 2.04
2.18
2.04

Rate/Volume Analysis. The table below presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities, comparing fiscal years 2020 to 2019. For the comparison of fiscal years 2019 to 2018, 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, 2019. For each category of interest-earning assets and interest-bearing liabilities, information is provided 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 the previous year. The net changes attributable to the combined impact of both rate and volume have been allocated proportionately to the changes due to volume and the changes due to rate.


	For the Year Ended September 30,
	2020 vs. 2019
	Increase (Decrease) Due to
	Volume		Rate		Total
	(Dollars in thousands)
Interest-earning assets:
Loans receivable	$	(2,074)	$	(11,661)	$	(13,735)
MBS	(612)		(2,109)		(2,721)
Investment securities	(236)		(1,663)		(1,899)
FHLB stock	(406)		(1,590)		(1,996)
Cash and cash equivalents	(1,322)		(3,303)		(4,625)
Total interest-earning assets	(4,650)		(20,326)		(24,976)

Interest-bearing liabilities:
Checking	65		82		147
Savings	29		66		95
Money market	(14)		(2,200)		(2,214)
Certificates of deposit	2,048		1,321		3,369
Borrowings	(8,876)		(442)		(9,318)
Total interest-bearing liabilities	(6,748)		(1,173)		(7,921)

Net change in net interest income	$	2,098	$	(19,153)	$	(17,055)

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 ~~2017~~2018 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, ~~2018.~~2019. 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,
	2020						2019
	Average		Interest				Average		Interest
	Outstanding		Earned/		Yield/		Outstanding		Earned/		Yield/
	Amount		Paid		Rate		Amount		Paid		Rate
Assets:	(Dollars in thousands)
Interest-earning assets:
One- to four-family loans	$	6,529,265	$	226,703	3.47	%	$	6,681,441	$	240,919	3.61	%
Commercial loans	785,127		37,320		4.68		701,771		34,810		4.90
Consumer loans	123,334		6,471		5.25		135,683		8,500		6.26
Total loans receivable(1)	7,437,726		270,494		3.63		7,518,895		284,229		3.77
MBS(2)	954,197		23,009		2.41		977,925		25,730		2.63
Investment securities(2)(3)	270,683		4,467		1.65		281,490		6,366		2.26
FHLB stock	100,251		5,827		5.81		106,057		7,823		7.38
Cash and cash equivalents(4)	179,142		1,181		0.65		251,015		5,806		2.28
Total interest-earning assets(1)(2)	8,941,999		304,978		3.40		9,135,382		329,954		3.61
Other non-interest-earning assets	461,614						385,803
Total assets	$	9,403,613					$	9,521,185

Liabilities and stockholders' equity:
Interest-bearing liabilities:
Checking	$	1,180,110	762		0.06		$	1,073,825	615		0.06
Savings	388,662		292		0.08		342,617		197		0.06
Money market	1,252,992		6,647		0.53		1,255,001		8,861		0.71
Retail/business certificates	2,716,945		55,238		2.03		2,531,923		48,496		1.92
Wholesale certificates	282,947		4,659		1.65		369,282		8,032		2.18
Total deposits	5,821,656		67,598		1.16		5,572,648		66,201		1.19
Borrowings(5)	2,065,966		48,045		2.31		2,441,002		57,363		2.34
Total interest-bearing liabilities	7,887,622		115,643		1.46		8,013,650		123,564		1.54
Other non-interest-bearing liabilities	203,990						149,156
Stockholders' equity	1,312,001						1,358,379
Total liabilities and stockholders' equity	$	9,403,613					$	9,521,185

Net interest income(6)			$	189,335					$	206,390
Net interest rate spread(7)(8)					1.94						2.07
Net interest-earning assets	$	1,054,377					$	1,121,732
Net interest margin(8)(9)					2.12						2.26
Ratio of interest-earning assets to interest-bearing liabilities					1.13x						1.14x

For the Year Ended September 30,
2019 2018
Average Interest Average Interest
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Amount Paid Rate Amount Paid Rate
Assets: (Dollars in thousands)
Interest-earning assets:
One- to four-family loans $ 6,681,441
$ 240,919
3.61 % $ 6,792,670
$ 239,274
3.52 %
Commercial loans 701,771
34,810
4.90
318,915
13,852
4.29
Consumer loans 135,683
8,500
6.26
125,330
7,072
5.64
Total loans receivable⁽¹⁾
7,518,895
284,229
3.77
7,236,915
260,198
3.60
MBS⁽²⁾
977,925
25,730
2.63
961,251
22,619
2.35
Investment securities⁽²⁾⁽³⁾
281,490
6,366
2.26
291,726
4,670
1.60
FHLB stock 106,057
7,823
7.38
163,307
10,962
6.71
Cash and cash equivalents⁽⁴⁾
251,015
5,806
2.28
1,514,625
23,443
1.53
Total interest-earning assets⁽¹⁾⁽²⁾
9,135,382
329,954
3.61
10,167,824
321,892
3.16
Other non-interest-earning assets 385,803
313,902

Total assets $ 9,521,185
$ 10,481,726

Liabilities and stockholders' equity:
Interest-bearing liabilities:
Checking $ 1,073,825
615
0.06
$ 888,076
334
0.04
Savings 342,617
197
0.06
369,833
1,465
0.40
Money market 1,255,001
8,861
0.71
1,192,027
4,532
0.38
Retail/business certificates 2,531,923
48,496
1.92
2,441,982
39,779
1.63
Wholesale certificates 369,282
8,032
2.18
414,107
6,515
1.57
Total deposits 5,572,648
66,201
1.19
5,306,025
52,625
0.99
FHLB borrowings⁽⁵⁾
2,337,468
54,391
2.31
3,558,032
67,120
1.88
Other borrowings 103,534
2,972
2.83
122,886
3,374
2.71
Total borrowings 2,441,002
57,363
2.34
3,680,918
70,494
1.90
Total interest-bearing liabilities 8,013,650
123,564
1.54
8,986,943
123,119
1.36
Other non-interest-bearing liabilities 149,156
129,749

Stockholders' equity 1,358,379
1,365,034

Total liabilities and stockholders' equity $ 9,521,185
$ 10,481,726

Net interest income⁽⁶⁾
$ 206,390
$ 198,773

Net interest rate spread⁽⁷⁾⁽⁸⁾
2.07
1.80
Net interest-earning assets $ 1,121,732
$ 1,180,881

Net interest margin⁽⁸⁾⁽⁹⁾
2.26
1.95
Ratio of interest-earning assets to interest-bearing liabilities 1.14x
1.13x
(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 $13.8 million, and $21.6 million, for the years ended September 30, 2020 and 2019, respectively.


~~(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. 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 $21.6 million, and $24.9 million, for the years ended September 30, 2019 and 2018, respectively.~~


~~(4)~~	The average balance of cash and cash equivalents includes an average balance of cash related to the leverage strategy of $150.7 million and $1.33 billion for the years ended September 30, 2019 and 2018, respectively.

~~(5)~~

Included in this line, for the years ended September 30, 2019 and 2018, respectively, are FHLB borrowings related to the leverage strategy with an average outstanding balance of $157.8 million and $1.39 billion, respectively, and interest paid of $3.9 million and $22.1 million, respectively, at a weighted average rate of 2.46% and 1.57%, respectively, and FHLB borrowings not related to the leverage strategy with an average outstanding balance of $2.18 billion and $2.17 billion, respectively, and interest paid of $50.5 million and $45.0 million, respectively, at a weighted average rate of 2.30% and 2.07%, 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)~~

(4)There were no cash and cash equivalents related to the leverage strategy during the year ended September 30, 2020. The average balance of cash and cash equivalents includes an average balance of cash related to the leverage strategy of $150.7 million for the year ended September 30, 2019.

(5)There were no borrowings related to the leverage strategy during the year ended September 30, 2020. Included in this line item, for the year ended September 30, 2019, are borrowings related to the leverage strategy with an average outstanding balance of $157.8 million and interest paid of $3.9 million, at a weighted average rate of 2.46%, and borrowings not related to the leverage strategy with an average outstanding balance of $2.28 billion and interest paid of $53.4 million, at a weighted average rate of 2.33%. 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.

(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 average 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. The pre-tax yield on the leverage strategy was 0.03% and 0.15% for the years ended September 30, 2019 and 2018, respectively.

For the Year Ended September 30,
2019 2018
Actual Leverage Adjusted Actual Leverage Adjusted
(GAAP) Strategy (Non-GAAP) (GAAP) Strategy (Non-GAAP)
Net interest margin 2.26 % (0.04 )% 2.30 % 1.95 % (0.29 )% 2.24 %
Net interest rate spread 2.07
(0.03 ) 2.10
1.80
(0.26 ) 2.06


~~(9)~~	~~Net interest margin represents net interest income as a percentage of average interest-earning assets.~~

~~Rate/Volume Analysis.~~ ~~The table below presents the dollar amount of changes in interest income and interest expense for major components~~ of interest-earning assets and interest-bearing liabilities, ~~comparing~~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 small amount of earnings associated with the transaction in comparison to the size of the transaction, while increasing our net income. The leverage strategy was not in place during fiscal ~~years 2019 to 2018. For~~year 2020. The pre-tax yield on the ~~comparison of fiscal years 2018 to 2017, 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~~leverage strategy was 0.03% for the ~~fiscal~~ year ended September 30, ~~2018. For each category~~2019.


		For the Year Ended September 30,
	2019
		Actual		Leverage		Adjusted
		(GAAP)		Strategy		(Non-GAAP)
Net interest margin		2.26	%	(0.04)	%	2.30	%
Net interest rate spread		2.07		(0.03)		2.10

(9)Net interest margin represents net interest income as a percentage of average interest-earning assets and interest-bearing liabilities, information is provided 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 the previous year. The net changes attributable to the combined impact of both rate and volume have been allocated proportionately to the changes due to volume and the changes due to rate.assets.

For the Year Ended September 30,
2019 vs. 2018
Increase (Decrease) Due to
Volume Rate Total
(Dollars in thousands)
Interest-earning assets:
Loans receivable $ 14,735
$ 9,296
$ 24,031
MBS 398
2,713
3,111
Investment securities (169 ) 1,865
1,696
FHLB stock (4,139 ) 1,000
(3,139 )
Cash and cash equivalents (25,628 ) 7,991
(17,637 )
Total interest-earning assets (14,803 ) 22,865
8,062

Interest-bearing liabilities:
Checking 81
200
281
Savings (100 ) (1,168 ) (1,268 )
Money market 251
4,078
4,329
Certificates of deposit 742
9,492
10,234
FHLB borrowings (26,065 ) 13,336
(12,729 )
Other borrowings (294 ) (108 ) (402 )
Total interest-bearing liabilities (25,385 ) 25,830
445

Net change in net interest income $ 10,582
$ (2,965 ) $ 7,617

Comparison of Operating Results for the Years Ended September 30, ~~2019~~2020 and ~~2018~~2019

The Company recognized net income of $64.5 million, or $0.47 per share, for the year ended September 30, 2020 compared to net income of $94.2 million, or $0.68 per share, for the ~~current fiscal~~ year ~~compared to net income of $98.9 million, or $0.73 per share, for the prior fiscal year.~~ended September 30, 2019. The decrease in net income was due primarily to a ~~$10.0~~$21.6 million increase in ~~non-interest expense during the current year,~~provision for credit losses and a $17.1 million decrease in net interest income, partially offset by a ~~$7.6 million increase~~decrease in ~~net~~income tax expense.

Net interest income ~~due primarily~~decreased $17.1 million, or 8.3%, from the prior year to ~~higher yielding loans added in the acquisition of CCB. Additionally, income tax expense was $1.4~~$189.3 million ~~higher in~~for the current ~~fiscal year due primarily to income tax adjustments required in the prior fiscal year with the enactment of the Tax Act in December 2017.~~

year. The net interest margin ~~increased 31~~decreased 14 basis points, from ~~1.95%~~2.26% for the prior ~~fiscal~~ year to ~~2.26%~~2.12% for the current ~~fiscal~~ year. The leverage strategy was suspended at certain times during the prior year and during all of the current year due to the negative interest rate spreads between the related FHLB borrowings and cash held at the FRB of Kansas City, making the transaction unprofitable. When the leverage strategy is in place, it increases our net interest income but reduces the net interest margin due to the amount of earnings from the transaction in comparison to the size of the transaction. Excluding the effects of the leverage strategy, the net interest margin would have ~~increased six~~decreased 18 basis points, from ~~2.24%~~2.30% for the prior ~~fiscal~~ year to ~~2.30%~~2.12% for the current ~~fiscal~~ year. The ~~increase~~decrease in the net interest margin, excluding the effects of the leverage strategy, was due mainly to ~~the addition of higher yielding commercial loans~~a decrease in the ~~CCB acquisition, partially offset~~loan portfolio yield, specifically the yield on the correspondent one- to four-family loan portfolio.

The leverage strategy involves borrowing up to $2.10 billion either on the Bank's FHLB line of credit or by ~~an increase~~entering into short-term FHLB advances, depending on the rates offered by FHLB. The borrowings are repaid at quarter end, or earlier if the strategy is suspended. The proceeds from the borrowings, net of the required FHLB stock holdings, are deposited at the FRB of Kansas City. Net income attributable to the leverage strategy is largely derived from the dividends received on FHLB stock holdings, plus the net interest rate spread between the yield on the cash 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 $14 thousand during the prior year. The leverage strategy was not in place during the ~~cost~~current year. Management continues to monitor the net interest rate spread and overall profitability of ~~deposits.~~the strategy. It is expected that the strategy will be reimplemented if it reaches a position that is profitable.

Interest and Dividend Income

The weighted average yield on total interest-earning assets ~~increased 45~~decreased 21 basis points, from ~~3.16%~~3.61% for the prior ~~fiscal~~ year to ~~3.61%~~3.40% for the current ~~fiscal~~ year, ~~while~~and the average balance of interest-earning assets decreased ~~$1.03 billion from the prior fiscal year.~~$193.4 million. Absent the impact of the leverage strategy, the weighted average yield on total interest-earning assets would have ~~increased 23~~decreased 22 basis points, from ~~3.39%~~3.62% for the prior ~~fiscal~~ year to ~~3.62%~~3.40% for the current ~~fiscal~~ year, and the average balance of interest-earning assets would have ~~increased $202.1~~decreased $35.6 million. The decrease in the weighted average yield between periods was due primarily to a decrease in the loan portfolio yield. 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:
	2020		2019		Dollars		Percent
	(Dollars in thousands)
INTEREST AND DIVIDEND INCOME:
Loans receivable	$	270,494	$	284,229	$	(13,735)	(4.8)	%
MBS	23,009		25,730		(2,721)		(10.6)
FHLB stock	5,827		7,823		(1,996)		(25.5)
Investment securities	4,467		6,366		(1,899)		(29.8)
Cash and cash equivalents	1,181		5,806		(4,625)		(79.7)
Total interest and dividend income	$	304,978	$	329,954	$	(24,976)	(7.6)

For the Year Ended
September 30, Change Expressed in:
2019
2018
Dollars Percent
(Dollars in thousands)
INTEREST AND DIVIDEND INCOME:
Loans receivable $ 284,229
$ 260,198
$ 24,031
9.2 %
MBS 25,730
22,619
3,111
13.8
FHLB stock 7,823
10,962
(3,139 ) (28.6 )
Investment securities 6,366
4,670
1,696
36.3
Cash and cash equivalents 5,806
23,443
(17,637 ) (75.2 )
Total interest and dividend income $ 329,954
$ 321,892
$ 8,062
2.5

The ~~increase~~decrease in interest income on loans receivable was due mainly to a ~~$282.0~~decrease in yield on correspondent loans, including a $5.8 million increase in the amortization of premiums related to increases in payoff and endorsement activity. This was partially offset by a shift in the mix of the loan portfolio, as the average balance of lower-yielding one- to four-family loans decreased $152.2 million, or 2.3%, partially offset by a $64.9 million, or 9.2%, increase in the average balance of ~~the portfolio, as well as a 17 basis point increase in the~~higher-yielding commercial loans, excluding PPP loans. The weighted average yield on the loans receivable portfolio todecreased 14 basis points, from 3.77% for the prior year to 3.63% for the current ~~fiscal~~ year. The increase in the average balance was due mainly to the acquisition of CCB. The increase in the weighted average yield was also due mainly to the addition of higher yielding loans associated with the CCB acquisition, legacy adjustable-rate loans repricing to higher market rates, and the origination and purchase of new loans at higher market rates.

The ~~increase~~decrease in interest income on the MBS portfolio was due primarily to a 2822 basis point ~~increase~~decrease in the weighted average yield ~~on the portfolio~~ to ~~2.63% for~~2.41% in the current ~~fiscal~~ year ~~along with~~as a ~~$16.7 million increase in~~result of new purchases at lower market yields and the ~~average balance~~repricing of ~~the portfolio. The increase in the weighted average yield was due primarily to a decrease in the impact of net premium amortization, as well as~~existing adjustable-rate MBS ~~repricing~~ to ~~higher~~lower market rates. Net premium amortization of $1.3 million during the current fiscal year decreased the weighted average yield on the portfolio by 13 basis points. During the prior fiscal year, $3.0 million of net premiums were amortized, which decreased the weighted average yield on the portfolio by 31 basis points. As of September 30, 2019, the remaining net balance of premiums on our portfolio of MBS was $2.3 million.

yields. The decrease in dividend income on FHLB stock was due mainly to a decrease in the dividend rate paid by FHLB, as well as to the leverage strategy not being in place during the current year. The decrease in interest income on investment securities was due mainly to a 61 basis point decrease in the weighted average ~~balance of FHLB stock~~yield to 1.65% in the current year as a result of calls and maturities either being replaced at lower market rates or not being replaced. The decrease in interest income on cash and cash equivalents was due primarily to the leverage strategy being in place for a ~~shorter period~~portion of ~~time~~the prior year and not being in place during the current ~~fiscal~~ year, ~~as compared to the prior fiscal year. This was partially offset by~~along with a ~~higher dividend rate on FHLB stock during the current fiscal year.~~

The increase in interest income on the investment securities portfolio was due to a 66 basis point increase in the weighted average yield on the portfolio to 2.26%. The increase in the weighted average yield was primarily a result of replacing maturing securities at higher market rates.

The cash and cash equivalents line item in the table above includes interest income associated and not associated with the leverage strategy. Interest income on cash and cash equivalents not related to the leverage strategy decreased $705 thousand from the prior fiscal year due to an $86.8 million decrease in the ~~average balance, partially offset by a 68 basis point increase in the weighted average yield. Interest income~~yield earned on cash ~~associated with~~held at the ~~leverage strategy decreased $16.9 million from the prior fiscal year due to a $1.18 billion decrease in the average balance, as the leverage strategy was in place for a shorter period~~FRB of ~~time during the current fiscal year.~~Kansas City.

Interest Expense

The weighted average rate paid on total interest-bearing liabilities ~~increased 18~~decreased eight basis points, from ~~1.36%~~1.54% for the prior ~~fiscal~~ year to ~~1.54%~~1.46% for the current ~~fiscal~~ year, ~~while~~and the average balance of interest-bearing liabilities decreased ~~$973.3 million from the prior fiscal year.~~$126.0 million. Absent the impact of the leverage strategy, the weighted average rate paid on total interest-bearing liabilities would have ~~increased 19~~decreased six basis points, from ~~1.33%~~1.52% for the prior ~~fiscal~~ year to ~~1.52%~~1.46% for the current ~~fiscal~~ year, ~~and~~while the average balance of interest-bearing liabilities would have increased ~~$263.2~~$31.8 million. 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:
	2020		2019		Dollars		Percent
	(Dollars in thousands)
INTEREST EXPENSE:
Deposits	$	67,598	$	66,201	$	1,397	2.1	%
Borrowings	48,045		57,363		(9,318)		(16.2)
Total interest expense	$	115,643	$	123,564	$	(7,921)	(6.4)

For the Year Ended
September 30, Change Expressed in:
2019
2018
Dollars Percent
(Dollars in thousands)
INTEREST EXPENSE:
Deposits $ 66,201
$ 52,625
$ 13,576
25.8 %
FHLB borrowings 54,391
67,120
(12,729 ) (19.0 )
Other borrowings 2,972
3,374
(402 ) (11.9 )
Total interest expense $ 123,564
$ 123,119
$ 445
0.4

The increase in interest expense on deposits was due ~~primarily~~ to ~~a 20 basis point~~an increase in the ~~weighted average rate, to 1.19% for~~cost of the current fiscal year. The deposit accounts assumed in the CCB acquisition were at a lower average rate than our legacy deposit portfolio rate and our overall deposit portfolio rate, which partially offset the increase in the deposit portfolio rate in the current fiscal year. The increase in the weighted average rate was due primarily to increases in the average retail/business certificate of deposit portfolio, ~~rate~~partially offset by decreases in the cost of wholesale certificates of deposit and money market accounts. The weighted average rate of the retail/business certificate of deposit portfolio ~~rate, which~~ increased 2911 basis points, to 2.03% for the current year, and ~~33 basis points, respectively, as market interest rates~~the average balance increased ~~throughout both years. Additionally, late in~~$185.0 million, or approximately 7%. In the third quarter of ~~the current~~ fiscal year 2019, the Bank increased offered rates on short-term and certain intermediate-term certificates of deposit in an effort to encourage customers to move funds to those ~~terms and during~~terms. During the fourth quarter of ~~the current~~ fiscal year 2019, the Bank ~~ran an~~held the unTraditional campaign with above-market rates, resulting in growth in the short-term and certain intermediate-term certificates of deposit. Since the onset of the COVID-19 pandemic, the retail/business certificate of deposit portfolio has been gradually repricing down as certificates renew to lower offered rates.

The ~~FHLB~~ borrowings line item in the table above includes interest expense associated and not associated with the leverage strategy. Interest expense on ~~FHLB~~ borrowings not related to the leverage strategy ~~increased $5.5~~decreased $5.4 million from the prior ~~fiscal~~ year due primarily to a ~~23 basis point increase in the weighted average rate paid, to 2.30% for the current fiscal year, and a $14.0 million increase~~decrease in the average balance of such borrowings, as certain maturing FHLB advances and repurchase agreements were not replaced and the ~~portfolio. The~~Bank paid down its FHLB line of credit with funds generated from the increase in ~~the weighted average rate paid was due primarily to certain maturing advances being replaced at higher effective market interest rates.~~deposits. Interest expense on FHLB borrowings associated with the leverage strategy decreased ~~$18.2~~$3.9 million from the prior ~~fiscal~~ year due to the leverage strategy being in place for a ~~shorter period~~portion of ~~time~~the prior year and not being in place at all during the current ~~fiscal~~ year.

The decrease in interest expense on other borrowings was due mainly to the maturity of a $100.0 million repurchase agreement during the prior fiscal year, which was not replaced with a new repurchase agreement.

Provision for Credit Losses

The Bank recorded a provision for credit losses during the current ~~fiscal~~ year of ~~$750 thousand,~~$22.3 million, compared to ~~no provision for credit losses~~$750 thousand during the prior ~~fiscal~~ year. The ~~$750 thousand~~$22.3 million provision for credit losses in the current ~~fiscal~~ year ~~is due~~was primarily related to ~~commercial loan activities during~~ the ~~current fiscal year, specifically~~deterioration of economic conditions as a result of COVID-19. See "Part I, Item 1. Business – Asset Quality – Allowance for credit losses and Provision for credit losses" for additional discussion regarding management's evaluation of the ~~classification~~adequacy of ~~a large commercial loan as special mention, commercial loan growth and funding, certain commercial loans that renewed since being obtained in the CCB acquisition and are now in~~ the Bank's ACL ~~model, and commercial loan charge-offs.~~at September 30, 2020.

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:
	2020		2019		Dollars		Percent
	(Dollars in thousands)
NON-INTEREST INCOME:
Deposit service fees	$	11,285	$	12,740	$	(1,455)	(11.4)	%
Insurance commissions	2,487		2,821		(334)		(11.8)
Other non-interest income	5,827		6,397		(570)		(8.9)
Total non-interest income	$	19,599	$	21,958	$	(2,359)	(10.7)

For the Year Ended
September 30, Change Expressed in:
2019
2018
Dollars Percent
(Dollars in thousands)
NON-INTEREST INCOME:
Deposit service fees $ 12,740
$ 15,636
$ (2,896 ) (18.5 )%
Income from bank-owned life insurance ("BOLI") 2,432
1,875
557
29.7
Other non-interest income 6,786
4,524
2,262
50.0
Total non-interest income $ 21,958
$ 22,035
$ (77 ) (0.3 )

The decrease in deposit service fees was due mainly to a ~~change~~decrease in ~~the presentation of interchange network charges~~service charge income, primarily resulting from a decrease in consumer activity related to the ~~adoption~~COVID-19 pandemic, along with the discontinuation of a new revenue recognition accounting standard during the current fiscal year. Previously, interchange network charges were reported in deposit and loan expense. As a result of the adoption of the new revenue recognition accounting standard on October 1, 2018, interchange transaction fee income is now reported net of interchange networkpoint-of-sale service charges, which ~~totaled $3.4 million during~~ the ~~current fiscal year and $3.0 million during the prior fiscal year.~~

Bank ceased charging in April 2019. The ~~increase~~decrease in ~~income from BOLI~~insurance commissions was due primarily to a one-time adjustment during the prior fiscal year to the benchmark rate associated with one of the policies which reduced income from BOLI during that period, as well as to an increase in income related to policies acquireddecrease in the ~~CCB acquisition.~~

amount of annual contingent insurance commissions. The ~~increase~~decrease in other non-interest income was due mainly to ~~revenues from the trust asset management operations obtained~~a decrease in ~~the CCB acquisition, commercial loan fee related income, insurance commission income,~~loan-related fees, primarily prepayment fees and ~~income related~~late charges, compared to the ~~collateral pledged by the Bank on its interest rate swap agreements~~.prior year.

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:
	2020		2019		Dollars		Percent
	(Dollars in thousands)
NON-INTEREST EXPENSE:
Salaries and employee benefits	$	52,996	$	53,145	$	(149)	(0.3)	%
Information technology and related expense	16,974		17,615		(641)		(3.6)
Occupancy, net	13,870		13,032		838		6.4
Regulatory and outside services	5,762		5,813		(51)		(0.9)
Advertising and promotional	4,889		5,244		(355)		(6.8)
Deposit and loan transaction costs	2,890		2,478		412		16.6
Office supplies and related expense	2,195		2,439		(244)		(10.0)
Federal insurance premium	914		1,172		(258)		(22.0)

Other non-interest expense	5,514		6,006		(492)		(8.2)
Total non-interest expense	$	106,004	$	106,944	$	(940)	(0.9)

For the Year Ended
September 30, Change Expressed in:
2019
2018
Dollars Percent
(Dollars in thousands)
NON-INTEREST EXPENSE:
Salaries and employee benefits $ 53,145
$ 46,563
$ 6,582
14.1 %
Information technology and related expense 17,615
13,999
3,616
25.8
Occupancy, net 13,032
11,455
1,577
13.8
Regulatory and outside services 5,813
5,709
104
1.8
Advertising and promotional 5,244
5,034
210
4.2
Deposit and loan transaction costs 2,478
5,621
(3,143 ) (55.9 )
Office supplies and related expense 2,439
1,888
551
29.2
Federal insurance premium 1,172
3,277
(2,105 ) (64.2 )
Other non-interest expense 6,006
3,356
2,650
79.0
Total non-interest expense $ 106,944
$ 96,902
$ 10,042
10.4

The increase in salaries and employee benefits was due primarily to expense related to retained CCB employees. Management anticipates salaries and employee benefits will be approximately $4.0 million higher in fiscal year 2020 due primarily to an increase in staffing for commercial banking activities and related back office functions, along with an increase in information technology staff. The $4.0 million increase is expected to be approximately $1.2 million in each of the second and third quarters and $1.6 million in the fourth quarter. The increasedecrease in information technology and related expense was due mainly to ~~an increase in software licensing fees and~~the prior year including costs related to the integration of ~~CCB operations.~~the operations of CCB. The increase in occupancy, net was due primarily to ~~expenses related to properties acquired~~an increase in facility-related costs resulting from the ~~CCB acquisition.~~impact of the COVID-19 pandemic, along with an increase in depreciation expense. The decrease in advertising and promotional expenses was due mainly to adjustments in advertising schedules, postponements of campaigns, and cancellations of certain sponsorships as a result of the COVID-19 pandemic. The increase in deposit and loan transaction costs was due mainly to the ~~adoption~~timing of ~~the new revenue recognition standard discussed above. The increase in office supplies and related expense was due primarily to costs related to the integration of CCB customers and operations.~~loan origination-related costs. The decrease in the federal insurance premium was due mainly to the Bank ~~receiving a~~utilizing an assessment credit from the FDIC ~~as a result~~during the majority of the FDIC deposit insurance fund ratio reaching 1.40%. Pursuant to regulatory guidance, once the insurance fund exceeds 1.38% of insured deposits, deposit insurance assessment credits are allocated to banks with less than $10 billion in assets, to compensate for premiums previously paid that contributed to growth of the fund past 1.15%. These credits will continue to offset the Bank's premium assessments as long as the insurance fund ratio remains above 1.38% of insured deposits and the Bank still has a remaining credit balance. As of September 30, 2019, the Bank had a remaining credit of $1.6 million.current year. The ~~increase~~decrease in other non-interest expense was due primarily to a decrease in amortization of deposit intangibles, ~~associated with the acquisition of CCB. Management anticipates other non-interest expense may increase~~as well as a decrease in the first quarter of fiscal year 2020 due primarily to a potential $400 thousand write-down of an OREO property that was added in the CCB acquisition, related to an offer received on this property subsequent to September 30, 2019.debit card fraud losses.

The Company's efficiency ratio was 50.74% for the current year compared to 46.83% for the ~~current fiscal year compared to 43.89% for the~~ prior ~~fiscal~~ year. The change in the efficiency ratio was due to ~~higher non-interest expense~~lower net interest income in the current ~~fiscal~~ year compared to the prior ~~fiscal~~ year. The efficiency ratio is 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~~higher value indicates that the financial institution is generating revenue with a proportionally ~~lower~~higher level of ~~expense.~~expense, relative to the net interest margin.

Income Tax Expense

~~Income~~The following table presents pretax income, income tax expense, and net income for the time periods presented, along with the change measured in dollars and percent.


	For the Year Ended
	September 30,						Change Expressed in:
	2020			2019			Dollars		Percent
	(Dollars in thousands)
Income before income tax expense	$	80,630		$	120,654		$	(40,024)	(33.2)	%
Income tax expense	16,090			26,411			(10,321)		(39.1)
Net income	$	64,540		$	94,243		$	(29,703)	(31.5)

Effective Tax Rate	20.0		%	21.9		%

The decrease in income tax expense was ~~$26.4 million for~~due primarily to lower pretax income in the current ~~fiscal year compared to $25.0 million for the prior fiscal~~ year. The lower effective tax rate ~~was 21.9% for~~in the current ~~fiscal~~ year ~~compared to 20.2% for the prior fiscal year. The increase in the effective tax rate~~ compared to the prior year was due mainly to the enactment of the Tax Act in the prior fiscal year. In accordance with GAAP, the Company revalued its deferred tax assets and liabilities in December 2017 to account for the lower corporate tax rate which reduced income tax expense by $7.5 million. This benefit was partially offset, when comparing the two fiscal years,Company's permanent differences, such as the Company was required to apply a blended statutory federal tax rate, because we have a fiscal year end of September 30, of 24.5% in the prior fiscal year compared to 21% in the current fiscal year. Additionally, the tax credit benefits associated with the Company's low income housing partnership ~~investments were higher in~~tax credits, which generally reduce our tax expense, having a proportionately larger impact given the ~~current fiscal year compared to the prior fiscal year, which contributed to a reduction~~lower pretax income in the current year ~~effective~~period. Additionally, an income tax ~~compared~~benefit was recognized during the current year as a result of favorable federal tax guidance issued during the current year related to certain bank-owned life insurance policies added in the ~~prior fiscal year.~~CCB acquisition. Management anticipates the effective income tax rate for fiscal year ~~2020~~2021 will be approximately 21% to 22%.

Comparison of Operating Results for the Years Ended September 30, ~~2018~~2019 and ~~2017~~2018

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, ~~2018~~2019 and ~~2017"~~2018" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, ~~2018.~~2019.

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 the Bank's interest rate risk with the ~~intent~~intention to improve the earnings of the Bank while maintaining capital ratios in excess of 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. See the "Executive Summary" above for information regarding the impact of the COVID-19 pandemic on our liquidity.

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%~~See "Part I, Item 1. Business - Sources of ~~regulatory total assets without the pre-approval of FHLB senior management. The president of FHLB has approved an increase, through July 2020, in~~Funds" for information regarding limits on the Bank's ~~borrowing limit to 55% of Bank Call Report total assets. 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.~~borrowings. 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 trend 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, ~~2019,~~2020, the Bank had total borrowings, at par, of ~~$2.24~~$1.79 billion, or approximately ~~24%~~19% of total ~~assets.~~

assets, all of which were FHLB advances.

The amount of FHLB borrowings outstanding at September 30, ~~2019~~2020 was ~~$2.14~~$1.79 billion, of which ~~$990.0~~$843.0 million were advances scheduled to mature in the next 12 months, including $640.0 million of one-year floating-rate FHLB advances tied to interest rate swaps. All FHLB borrowings are secured by certain qualifying loans pursuant to a blanket collateral agreement with FHLB. At September 30, ~~2019,~~2020, the ratio of the par value of the Bank's FHLB borrowings to Call Report total assets was ~~23%~~19%. When the full leverage strategy is in place, FHLB borrowings may be in excess of 40% of the Bank's Call Report total assets, and may be in excess of 40% 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 FHLB borrowings in conjunction with the leverage strategy can be repaid at any point in time while the strategy is in effect, if necessary or desired.

At September 30, ~~2019,~~2020, the Bank had no repurchase ~~agreements of $100.0 million, or approximately 1% of total assets, all of which were 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 has pledged securities with an estimated fair value of $108.3 million as collateral for repurchase agreements as of September 30, 2019. 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, ~~2019,~~2020, the Bank had ~~$708.8 million~~$1.22 billion 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 certificates of deposit. As of September 30, ~~2019,~~2020, the Bank's policy allowed for combined brokered and public unit certificates of deposit up to 15% of total deposits. At September 30, ~~2019,~~2020, the Bank did not have any brokered certificates of deposit and public unit certificates of deposit were approximately 5%4% of total deposits. The Bank had pledged securities with an estimated fair value of ~~$381.1~~$331.0 million as collateral for public unit certificates of deposit at September 30, ~~2019.~~2020. The securities pledged as collateral for public unit certificates of deposit are held under joint custody with FHLB and generally will be released upon deposit maturity.

At September 30, ~~2019,~~2020, $1.51 billion of the Bank's certificate of deposit portfolio was scheduled to mature within the next 12 months, including ~~$260.0~~$237.5 million of public unit 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 anticipate the majority of the maturing public unit certificates of deposit will be replaced with similar wholesale funding ~~products.~~products, depending on availability and pricing.

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, ~~2019,~~2020, 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, ~~2019,~~2020, the amortized cost of investment securities in our portfolio which are callable or have pre-refunding dates within one year was ~~$230.8~~$228.0 million.


	Loans(1)				MBS				Investment Securities				Total
	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
	(Dollars in thousands)
Amounts due:
Within one year	$	261,605	4.17	%	$	3,664	2.63	%	$	4,009	1.47	%	$	269,278	4.11	%

After one year:
Over one to two years	110,991		3.11		1,715		3.08		5,583		1.84		118,289		3.05
Over two to three years	62,534		4.46		32,457		1.61		75,269		0.41		170,260		2.13
Over three to five years	128,088		4.46		24,752		2.19		295,286		0.68		448,126		1.84
Over five to ten years	777,216		3.70		272,681		2.34		—		—		1,049,897		3.35
Over ten to fifteen years	1,424,450		3.23		570,142		1.70		—		—		1,994,592		2.79
After fifteen years	4,460,112		3.59		275,392		2.06		—		—		4,735,504		3.50
Total due after one year	6,963,391		3.54		1,177,139		1.94		376,138		0.64		8,516,668		3.19

	$	7,224,996	3.57		$	1,180,803	1.94		$	380,147	0.65		$	8,785,946	3.22

(1)The maturity date for home equity loans, including those that do not have a stated maturity date, assumes the customer always makes the required minimum payment. All other loans that do not have a stated maturity date and overdraft loans are included in the amounts due within one year. Construction loans are presented based on the estimated term to complete construction.

Loans⁽¹⁾
MBS Investment Securities Total
Amount Yield Amount Yield Amount Yield Amount Yield
(Dollars in thousands)
Amounts due:
Within one year $ 238,884
4.82 % $ 159
4.10 % $ 57,633
1.53 % $ 296,676
4.18 %

After one year:
Over one to two years 125,155
4.23
13,886
2.68
79,376
2.13
218,417
3.37
Over two to three years 75,036
4.59
3,983
3.33
55,987
2.29
135,006
3.60
Over three to five years 125,688
4.74
67,795
1.66
75,380
2.40
268,863
3.31
Over five to ten years 658,678
3.74
359,492
2.38
—
—
1,018,170
3.26
Over ten to fifteen years 1,224,498
3.63
193,524
3.14
—
—
1,418,022
3.56
After fifteen years 4,964,534
3.77
297,648
2.93
—
—
5,262,182
3.72
Total due after one year 7,173,589
3.78
936,328
2.67
210,743
2.27
8,320,660
3.61

$ 7,412,473
3.81
$ 936,487
2.67
$ 268,376
2.11
$ 8,617,336
3.63


~~(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 (as evidenced by maintaining a CBLR greater than the required percentage), and 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.~~action ("PCA"). Qualifying institutions that elect to use the CBLR framework, such as the Bank and the Company, that maintain a the required minimum leverage ratio 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 capital requirements for the well capitalized category under the agencies' PCA framework. As of September 30, ~~2019,~~2020, the ~~Bank~~Bank's CBLR was 12.4% and ~~Company~~the Company's CBLR was 13.7%, which exceeded ~~all regulatory capital~~the minimum requirements. See "Part ~~II,~~I, Item ~~8. Financial Statements~~1. Business – Regulation and ~~Supplementary Data~~Supervision – ~~Notes to Consolidated Financial Statements – Note 14.~~ 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, ~~2019,~~2020, for the Bank and the Company (dollars in thousands):


	Bank		Company
Total equity as reported under GAAP	$	1,165,813	$	1,284,859
AOCI	16,505		16,505
Goodwill and other intangibles, net of associated deferred taxes	(13,510)		(13,510)

Total tier 1 capital	$	1,168,808	$	1,287,854

Contingencies

In the normal course of business, the Company and the Bank 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, 2020, or future periods.

Bank Company
Total equity as reported under GAAP $ 1,168,986
$ 1,336,326
AOCI 14,899
14,899
Goodwill and other intangibles, net of deferred tax liabilities (14,848 ) (14,848 )
Total tier 1 capital 1,169,037
1,336,377
ACL 9,226
9,226
Total capital $ 1,178,263
$ 1,345,603

Off-Balance Sheet Arrangements, Commitments and Contractual Obligations

The following table summarizes our contractual obligations, along with associated weighted average contractual rates, as of September 30, ~~2019.~~2020.


				Maturity Range
				Less than			1 to 3			3 to 5			More than
	Total			1 year			years			years			5 years
	(Dollars in thousands)
Operating leases	$	20,842		$	1,192		$	2,512		$	1,830		$	15,308

Certificates of deposit	$	3,021,244		$	1,505,501		$	1,199,798		$	315,041		$	904
Rate	1.74		%	1.46		%	2.05		%	1.88		%	1.53		%

Borrowings	$	1,793,000		$	843,000		$	500,000		$	350,000		$	100,000
Rate	1.41		%	0.76		%	1.91		%	2.27		%	1.28		%

Maturity Range
Less than 1 to 3 3 to 5 More than
Total 1 year years years 5 years
(Dollars in thousands)
Operating leases $ 6,236
$ 1,298
$ 2,256
$ 1,567
$ 1,115

Certificates of deposit $ 2,987,625
$ 1,505,837
$ 1,124,342
$ 356,839
$ 607
Rate 2.10 % 1.98 % 2.14 % 2.46 % 2.15 %

FHLB advances $ 2,040,000
$ 990,000
$ 750,000
$ 300,000
$ —
Rate 2.23 % 2.15 % 2.26 % 2.45 % — %

Repurchase agreements $ 100,000
$ 100,000
$ —
$ —
$ —
Rate 2.53 % 2.53 % — % — % — %

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, along with standby letters of credit. Standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of an underlying contract with a third party. The credit risks associated with these off-balance-sheet commitments are essentially the same as those involved with extending loans to customers and these commitments are subject to normal credit policies. The contractual amounts of these off-balance sheet financial instruments as of September 30, ~~2019~~2020 were as follows (dollars in thousands):


Commitments to originate and purchase/participate in loans	$	248,607
Commitments to fund unused lines of credit	283,199
Standby letters of credit	1,372
Total	$	533,178

Commitments to originate and purchase/participate in loans $ 230,996
Commitments to fund unused lines of credit 265,226
Standby letters of credit 1,248
Total $ 497,470

It is expected that some of the commitments 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 lines of credit if a customer is delinquent or otherwise in violation of the loan agreement.

The Company has investments in several low income housing partnerships. These partnerships supply funds for the construction and operation of apartment complexes that provide affordable housing to that segment of the population with lower family income. If these developments successfully attract a specified percentage of residents falling in that lower income range, federal income tax credits are made available to the partners. The tax credits are normally recognized over ten years, and they play an important part in the anticipated yield from these investments. In order to continue receiving the tax credits each year over the life of the partnership, the low-income residency targets must be maintained. Under the terms of the partnership agreements, the Company has a commitment to fund a specified amount that will be due in installments over the life of the agreements. The majority of the commitments at September 30, ~~2019~~2020 are projected to be funded through the end of calendar year ~~2021.~~2022. At September 30, ~~2019,~~2020, the investments totaled ~~$82.6~~$89.7 million and are included in other assets in the consolidated balance sheet. Unfunded commitments, which are recorded as liabilities, totaled ~~$40.0~~$44.5 million at September 30, ~~2019.~~2020.

We anticipate we will continue to have sufficient funds, through 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, 2019, or future periods.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Asset and Liability Management and Market 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.

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 and 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 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 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 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 analyses 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 or becomes inverted, 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, ~~2019.~~2020.

Qualitative Disclosure about Market Risk

At September 30, ~~2019,~~2020, the Bank's gap between the amount of interest-earning assets and interest-bearing liabilities projected to reprice within one year was $435.0 million, or 4.58% of total assets, compared to $487.4 million, or 5.22% of total assets, ~~compared to $(14.9) million, or (0.16)% of total assets,~~ at September 30, ~~2018.~~2019. The ~~increase~~decrease in the one-year gap amount was due ~~primarily~~ to a shift in the cash flow projections on the Bank's non-maturity deposits compared to the prior year, related to the implementation of a new interest rate risk model. This change shortened the life of these liabilities and thus increased the amount of projected cash flows in the 12-month horizon compared to the previous model. This change was largely offset by lower interest rates as of September 30, ~~2019~~2020 compared to September 30, ~~2018, as well as an increase in~~2019, which increased the ~~amount of~~ cash ~~held at September 30, 2019 compared~~flow projections related to ~~September 30, 2018.~~the Bank's mortgage-related assets. As interest rates fall, borrowers have more economic incentive to refinance their mortgages and agency debt issuers have more economic incentive or opportunity to exercise their call options in order to issue new debt at lower interest rates, resulting in higher projected cash flows on these assets.

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, ~~2019,~~2020, the Bank's one-year gap is projected to be ~~$(361.8)~~$(611.0) million, or ~~(3.87)~~(6.44)% of total assets. The decrease in the gap compared to when there is no change in rates is due to lower anticipated cash flows in the higher rate environment. This compares to a one-year gap of ~~$(394.8)~~$(361.8) million, or ~~(4.18)~~(3.87)% of total assets, if interest rates were to have increased 200 basis points as of September 30, ~~2018.~~2019.

During the current fiscal year, loan repayments totaled ~~$1.23~~$1.89 billion and cash flows from the securities portfolio totaled ~~$524.9~~$668.0 million. The majority of these cash flows were reinvested into new loans and securities at current market interest rates. Total cash flows from term liabilities that matured ~~and~~and/or repriced into current market interest rates during the current fiscal year were ~~$2.28~~$2.97 billion, including ~~$875.0~~$1.16 billion in term borrowings, of which $640.0 million ~~in FHLB borrowings.~~was tied to interest rate swaps. 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.

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, ~~2019~~2020 was ~~1.4~~1.9 years. However, including the impact of interest rate swaps related to $640.0 million of adjustable-rate FHLB advances, the WAL of the Bank's term borrowings as of September 30, ~~2019~~2020 was ~~2.6~~3.0 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. Security purchases over the past few 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 into higher-yielding assets.

In addition to these wholesale strategies, the Bank has ~~sought to~~benefited from an increase in non-maturity deposits. ~~Non-maturity~~Rates paid on non-maturity 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. 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.

Over the last few 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. Like non-maturity deposits, longer-term certificates of deposit are expected to reduce the risk of higher interest rates when market interest rates rise. More recently, the Bank began pricing short-term certificates of deposit more aggressively as the Bank reduces its usage of public unit certificates of deposit, which are generally large dollar, short-term funds. This strategy is intended to allow the Bank to more quickly reprice certificate of deposit funds lower, as it has been management's expectation that short-term interest rates would decrease. Additionally, as we expand the commercial banking business, we expect to have the ability to obtain lower-costing commercial deposits, which could be used to reduce the cost of funds by replacing FHLB borrowings and wholesale deposits.

With the significant decrease in interest rates during the current year, the Bank has decreased the rates on certificates of deposit and money market accounts on pace with competitors in its market areas. The Bank will continue to adjust rates as market conditions allow.

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 adjustable-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 indicates more cash flows from assets are expected to reprice than cash flows from liabilities and would indicate, in a rising rate environment, that earnings should increase. A negative gap indicates more cash flows from liabilities are expected to reprice than cash flows from assets and would indicate, in a rising rate environment, that earnings should decrease. For additional 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 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)	$	2,180,950	$	2,209,189	$	1,087,823	$	1,745,032	$	7,222,994
Securities(2)	618,869		513,172		178,157		219,407		1,529,605
Other interest-earning assets	172,286		—		—		—		172,286
Total interest-earning assets	2,972,105		2,722,361		1,265,980		1,964,439		8,924,885

Interest-bearing liabilities:
Non-maturity deposits(3)	752,147		379,065		410,930		1,710,488		3,252,630
Certificates of deposit	1,505,599		1,199,700		315,477		468		3,021,244
Borrowings(4)	279,401		702,940		618,134		231,139		1,831,614
Total interest-bearing liabilities	2,537,147		2,281,705		1,344,541		1,942,095		8,105,488

Excess (deficiency) of interest-earning assets over
interest-bearing liabilities	$	434,958	$	440,656	$	(78,561)	$	22,344	$	819,397

Cumulative excess of interest-earning assets over
interest-bearing liabilities	$	434,958	$	875,614	$	797,053	$	819,397

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⁾
$ 1,944,038
$ 2,204,973
$ 1,292,009
$ 1,965,180
$ 7,406,200
Securities⁽²⁾
628,960
319,021
135,423
108,051
1,191,455
Other interest-earning assets 198,688
—
—
—
198,688
Total interest-earning assets 2,771,686
2,523,994
1,427,432
2,073,231
8,796,343

Interest-bearing liabilities:
Non-maturity deposits⁽³⁾
227,765
327,370
257,021
1,908,406
2,720,562
Certificates of deposit 1,507,319
1,123,151
356,684
471
2,987,625
Borrowings⁽⁴⁾
550,000
925,000
565,000
239,971
2,279,971
Total interest-bearing liabilities 2,285,084
2,375,521
1,178,705
2,148,848
7,988,158

Excess (deficiency) of interest-earning assets over
interest-bearing liabilities $ 486,602
$ 148,473
$ 248,727
$ (75,617 ) $ 808,185

Cumulative excess of interest-earning assets over
interest-bearing liabilities $ 486,602
$ 635,075
$ 883,802
$ 808,185

Cumulative (deficiency) excess of interest-earning assets over interest-bearing
liabilities as a percent of total Bank assets at:
September 30, 2019 5.21 % 6.80 % 9.46 % 8.65 %
September 30, 2018 (0.16 )

Cumulative one-year gap - interest rates +200 bps at:
September 30, 2019 (3.88 )
September 30, 2018 (4.18 )

More Than

Within

One Year to

Three Years

Over

One Year

Three Years

to Five Years

Five Years

Total

Cumulative excess of interest-earning assets over interest-bearing

liabilities as a percent of total Bank assets at:

September 30, 2020

4.58

9.23

8.40

8.64

September 30, 2019

5.21

Cumulative one-year gap - interest rates +200 bps at:

September 30, 2020

(6.44)

September 30, 2019

(3.88)

~~(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. Investment securities are presented based on contractual maturities, term to call dates or pre-refunding dates as of September 30, 2019, 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 $2.01 billion, for a cumulative one-year gap of (21.5)% of total assets.


~~(4)~~	Borrowings exclude deferred prepayment penalty costs. Included in this line are $640.0 million of FHLB adjustable-rate advances with interest rate swaps. The repricing for these liabilities is projected to occur at the maturity date of each interest rate swap.

(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. Investment securities are presented based on contractual maturities, term to call dates or pre-refunding dates as of September 30, 2020, 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 $2.07 billion, for a cumulative one-year gap of (21.8)% of total assets.

(4)Borrowings exclude deferred prepayment penalty costs. Included in this line item are $640.0 million of FHLB adjustable-rate advances with interest rate swaps. The repricing for these liabilities is projected to occur at the maturity date of each interest rate swap.

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 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. For the current year, multiple yields along the yield curve were less than one percent, so the -100 basis points scenario was 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.


Change	Net Interest Income At September 30,
(in Basis Points)	2020						2019
in Interest Rates(1)	Amount ($)		Change ($)		Change (%)		Amount ($)		Change ($)		Change (%)
	(Dollars in thousands)

000 bp	$	183,596	$	—	—	%	$	193,329	$	—	—	%
+100 bp	188,084		4,488		2.44		194,093		764		0.40
+200 bp	188,417		4,821		2.63		192,111		(1,218)		(0.63)
+300 bp	186,441		2,845		1.55		188,752		(4,577)		(2.37)

Change Net Interest Income At September 30,
(in Basis Points) 2019 2018
in Interest Rates⁽¹⁾
Amount ($) Change ($) Change (%) Amount ($) Change ($) Change (%)
(Dollars in thousands)
-100 bp $ 186,080
$ (7,249 ) (3.75 )% $ 201,434
$ 1,221
0.61 %
000 bp 193,329
—
—
200,213
—
—
+100 bp 194,093
764
0.40
196,272
(3,941 ) (1.97 )
+200 bp 192,111
(1,218 ) (0.63 ) 190,872
(9,341 ) (4.67 )
+300 bp 188,752
(4,577 ) (2.37 ) 184,603
(15,610 ) (7.80 )


~~(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 net interest income projection was lower in the base case scenario at September 30, ~~2019~~2020 compared to September 30, ~~2018~~2019 due ~~mainly~~ to lower ~~market~~ interest rates at September 30, ~~2019 as assets are expected~~2020 compared to ~~reprice lower at a faster pace than liabilities over the one-year horizon. The Bank's one-year gap amount was positive at~~ September 30, 2019. ~~Therefore, as market interest rates rise in the +100 basis point scenario,~~Because the Bank's gap was positive during the current year, assets ~~are projected to reprice higher~~have repriced downward at a faster pace than liabilities, resulting in a ~~higher~~lower base case net interest income projection at September 30, 2020.

The net interest income projections increase from the base case in ~~this scenario. However,~~all rising interest rate scenarios at September 30, 2020. The net interest income projection was more adversely impacted in the rising interest rate scenarios at September 30, 2019 compared to September 30, 2020, due primarily to higher interest rates at September 30, 2019. The positive impact of rising interest rates is diminished as interest rates ~~rise,~~increase. Higher interest rates decreased the ~~one-year gap will eventually become negative due to a reduction in~~projected cash flows from the Bank's mortgage-related assets, ~~and callable agency debentures. Therefore, as~~thus decreasing the positive impact of rising interest rates ~~move higher in the +200 and +300 basis point scenarios, liabilities are projected to reprice to higher interest rates at a faster pace than assets and have a negative impact~~compared to the ~~Bank's net interest income projection.~~base case.

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 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). Projected cash flows for each scenario are based upon varying prepayment assumptions to model likely customer behavior as market rates change. For the current year, multiple yields along the yield curve were less than one percent, so the -100 basis points scenario was 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.


Change	Market Value of Portfolio Equity At September 30,
(in Basis Points)	2020						2019
in Interest Rates(1)	Amount ($)		Change ($)		Change (%)		Amount ($)		Change ($)		Change (%)
	(Dollars in thousands)

000 bp	$	1,301,409	$	—	—	%	$	1,283,429	$	—	—	%
+100 bp	1,290,877		(10,532)		(0.81)		1,286,446		3,017		0.24
+200 bp	1,157,368		(144,041)		(11.07)		1,162,151		(121,278)		(9.45)
+300 bp	967,997		(333,412)		(25.62)		992,060		(291,369)		(22.70)

Change Market Value of Portfolio Equity At September 30,
(in Basis Points) 2019 2018
in Interest Rates⁽¹⁾
Amount ($) Change ($) Change (%) Amount ($) Change ($) Change (%)
(Dollars in thousands)
-100 bp $ 1,203,351
$ (80,078 ) (6.24 )% $ 1,498,631
$ 53,683
3.72 %
000 bp 1,283,429
—
—
1,444,948
—
—
+100 bp 1,286,446
3,017
0.24
1,281,910
(163,038 ) (11.28 )
+200 bp 1,162,151
(121,278 ) (9.45 ) 1,087,644
(357,304 ) (24.73 )
+300 bp 992,060
(291,369 ) (22.70 ) 888,611
(556,337 ) (38.50 )


~~(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, 2020 was negative in all scenarios. At September 30, 2019 the average life of the Bank's mortgage-related assets was shorter than that of the Bank's long-term borrowings and core deposits due to the low level of interest rates. Because of the low level of interest rates at September 30, 2019, prepayment projections for mortgage-related assets and call projections for callable agency debentures were high, thereby significantly reducing the average life of these assets by increasing near-term cash flows. As interest rates rise, the market values of the Bank's financial liabilities decrease at a faster pace than those of its assets. As a result,percentage change in the Bank's MVPE ~~increases in the +100 basis point interest rate environment. As interest rates move higher~~was negative in the +200 and +300 basis point scenarios. This change was due primarily to a change in the Bank's interest rate ~~environments,~~risk model, of which the most significant impact was on the valuation of the Bank's non-maturity deposit portfolio. The model changes resulted in a shorter duration for these liabilities than was modeled at September 30, 2019, which reduced their sensitivity to changes in interest rates. The Bank's MVPE decreases as interest rates rise, as the market value for assets decreases at a faster pace than these liabilities. The negative impact to the MVPE in the rising interest rate scenarios is due to slower prepayment projections ~~for~~on the Bank's mortgage-related assets ~~in general, are expected to decrease significantly~~ and ~~reduce near-term cash flows.~~investments. As interest rates ~~rise~~increase, 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, resulting in lower projected cash flows on these ~~levels, projected prepayments would~~assets. As interest rates increase in the rising 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 ~~life-changing~~ events as there is less economic incentive for borrowers to prepay their debt, resulting in an increase in the average life of ~~these~~mortgage-related assets. ~~Call~~Similarly, call projections for the Bank's callable agency debentures ~~would also~~ decrease ~~significantly~~ as interest rates rise, which results in cash flows related to these ~~levels, which would cause~~assets moving closer to the ~~cash flows from these assets to move toward their~~ contractual maturity dates. The ~~longer~~higher expected average lives of these assets, relative to the assumptions in the base case interest rate environment, ~~increase~~increases the sensitivity of their ~~sensitivity~~market value to changes in interest rates. ~~As a result, the Bank's sensitivity to rising interest rates increases to such a point that that expected decrease in the market value of the Bank's financial assets more than~~

~~offsets the decrease in the market value of its financial liabilities, resulting in a decrease in the MVPE in these interest rate environments.~~

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, ~~2019.~~2020. 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.


	Amount		Yield/Rate		WAL	% of Category		% of Total
	(Dollars in thousands)
Investment securities	$	380,147	0.65	%	1.0	24.3	%	4.2	%
MBS - fixed	970,369		1.82		3.3	62.2		10.7
MBS - adjustable	210,434		2.49		3.1	13.5		2.3
Total securities	1,560,950		1.62		2.7	100.0	%	17.2
Loans receivable:
Fixed-rate one- to four-family:
<= 15 years	1,130,538		2.98		3.1	15.6	%	12.5
> 15 years	4,287,229		3.67		4.2	59.3		47.3
Fixed-rate commercial	556,195		4.14		3.5	7.7		6.1
All other fixed-rate loans	47,855		4.53		4.9	0.7		0.5
Total fixed-rate loans	6,021,817		3.59		3.9	83.3		66.4
Adjustable-rate one- to four-family:
<= 36 months	189,591		2.25		4.8	2.6		2.1
> 36 months	639,461		3.09		3.2	8.9		7.1
Adjustable-rate commercial	273,465		4.75		6.6	3.8		3.0
All other adjustable-rate loans	100,662		4.23		2.5	1.4		1.1
Total adjustable-rate loans	1,203,179		3.43		4.2	16.7		13.3
Total loans receivable	7,224,996		3.57		4.0	100.0	%	79.7
FHLB stock	93,862		4.64		1.9			1.0
Cash and cash equivalents	185,148		0.09		—			2.1
Total interest-earning assets	$	9,064,956	3.18		3.6			100.0	%

Non-maturity deposits	$	3,170,164	0.20		6.1	51.2	%	39.7	%
Retail/business certificates of deposit	2,766,461		1.83		1.5	44.7		34.6
Public unit certificates of deposit	254,783		0.74		0.5	4.1		3.2
Total deposits	6,191,408		0.95		3.8	100.0	%	77.5
Term borrowings	1,793,000		2.31		3.0			22.5


Total interest-bearing liabilities	$	7,984,408	1.26		3.6			100.0	%

Amount Yield/Rate WAL % of Category % of Total
(Dollars in thousands)
Investment securities $ 268,376
2.11 % 0.7
22.3 % 3.0 %
MBS - fixed 632,787
2.46
3.0
52.5
7.1
MBS - adjustable 303,700
3.10
2.4
25.2
3.4
Total securities 1,204,863
2.54
2.3
100.0 % 13.5
Loans receivable:
Fixed-rate one- to four-family:
<= 15 years 1,024,314
3.13
3.6
13.8 % 11.5
> 15 years 4,423,504
3.88
5.2
59.7
49.5
Fixed-rate commercial 450,577
4.52
3.1
6.1
5.0
All other fixed-rate loans 53,241
5.08
3.3
0.7
0.6
Total fixed-rate loans 5,951,636
3.81
4.8
80.3
66.6
Adjustable-rate one- to four-family:
<= 36 months 215,764
2.49
2.7
2.9
2.4
> 36 months 812,493
3.36
2.2
11.0
9.1
Adjustable-rate commercial 317,293
5.13
6.9
4.3
3.5
All other adjustable-rate loans 115,287
5.84
1.6
1.5
1.3
Total adjustable-rate loans 1,460,837
3.81
3.2
19.7
16.3
Total loans receivable 7,412,473
3.81
4.4
100.0 % 82.9
FHLB stock 98,456
7.47
1.4
1.1
Cash and cash equivalents 220,370
1.80
—
2.5
Total interest-earning assets $ 8,936,162
3.64
4.0
100.0 %

Non-maturity deposits $ 2,594,242
0.35
14.2
46.5 % 33.2 %
Retail/business certificates of deposit 2,692,770
2.08
1.5
48.2
34.4
Public unit certificates of deposit 294,855
2.29
0.5
5.3
3.8
Total deposits 5,581,867
1.29
7.3
100.0 % 71.4
Term borrowings 2,140,000
2.38
2.6
95.5 % 27.3
FHLB line of credit 100,000
2.20
—
4.5
1.3
Total borrowings 2,240,000
2.37
2.5
100.0 % 28.6
Total interest-bearing liabilities $ 7,821,867
1.60
5.9
100.0 %

Item 8. Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

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, ~~2019,~~2020, 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, ~~2019,~~2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

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, ~~2019,~~2020, of the Company and our report dated November ~~27, 2019,~~25, 2020, 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 ~~27, 2019~~25, 2020

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

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, ~~2019~~2020 and ~~2018,~~2019, 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, ~~2019,~~2020, 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, ~~2019~~2020 and ~~2018,~~2019, and the results of its operations and its cash flows for each of the three years in the period ended September 30, ~~2019,~~2020, 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, ~~2019,~~2020, 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 ~~27, 2019,~~25, 2020, 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 the 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 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, 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 regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical 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 on the financial statements, 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 5 to the financial statements

Critical Audit Matter Description

Management's methodology for assessing the appropriateness of the allowance for credit losses (ACL) consists of a formula analysis model, along with analyzing and considering several other relevant internal and external factors. In the formula analysis model, historical loss factors, as adjusted, are applied to each loan category and qualitative ~~loss~~ factors are applied to reflect risks inherent in each loan category that are not captured by the historical loss factors. Management reviews the ~~loss~~ factors quarterly to assess whether the factors adequately cover probable and estimable losses inherent in the loan portfolio. Management also analyzes and considers several other relevant internal and external factors, including the ~~trend~~national and ~~composition~~state unemployment rates, national and state unemployment benefit claim levels, the amount of and timing of financial assistance provided by the government and the Bank's COVID-19 loan modification program, residential real estate value trends, credit score trends, delinquent ~~loans and nonperforming loans,~~loan trends, ~~in foreclosed property transactions and charge-off activity, the current status~~consumer spending levels and trends, industries significantly impacted by the COVID-19 pandemic, commercial lending's review of ~~local and national employment levels, trends and current conditions in~~ the ~~housing markets,~~Bank's largest commercial loan ~~growth and concentrations,~~relationships, historical peer ACL to loan

ratios and industry and peer charge-off ~~and ACL information,~~percentages, among other considerations. Based

on management's review of these data elements, they evaluate the reasonableness of the ACL on an ongoing basis and whether any changes need to be made to the Bank's ACL ~~methodology.~~methodology, including the consideration of the economic conditions. During the current fiscal year, management increased the historical loss and qualitative factors applied in the formula analysis model for all loan categories and added a COVID-19 qualitative loss factor to the Bank's commercial loan portfolio.

~~Given~~Considering the ~~significant amount of~~estimation and judgment required by management ~~when considering the relevant data elements, performing~~in determining adjustments for qualitative factors, our audit ~~procedures to evaluate the reasonableness~~ of the ~~estimated~~ ACL and the related disclosures required a high degree of auditor ~~judgment.~~judgment with regard to the qualitative adjustments specifically to the commercial loan portfolio.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the ACL formula analysis model included the following, among others:

•We tested the effectiveness of controls over the Company's ACL formula analysis model inclusive of the controls over loan charge-off activity and including additional considerations with respect to current economic conditions and management's review of the adequacy of the ACL.

•We tested the classification and appropriate segregation of loan categories based on certain risk characteristics in order to evaluate the application of the relevant ~~data elements.~~economic and qualitative assumptions.

•We evaluated the appropriateness and relevance of the data elements by comparing to relevant internal and external sources.

•We tested the mathematical accuracy of (i) the historical charge-off activity, (ii) the quantitative measures of the qualitative loss factors, and (iii) the formula analysis model calculations.

•We assessed the reasonableness of, and evaluated support for, key qualitative adjustments based on market and economic conditions and/or portfolio performance metrics.

•We assessed the reasonableness of, and evaluated support for, the COVID-19 qualitative factor applied to the commercial portfolio including (i) industries significantly impacted by the COVID-19 pandemic, (ii) commercial lending's review of commercial loan relationships, and (iii) COVID-19 loan modifications.

•We evaluated analytics, trends, and peer ~~analyses~~analysis of the overall ACL formula analysis model to assess for reasonableness.

/s/ Deloitte & Touche LLP

Kansas City, Missouri

November ~~27, 2019~~25, 2020

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

CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2019 and 2018 (Dollars in thousands, except per share amounts)

2019
2018
ASSETS:
Cash and cash equivalents (includes interest-earning deposits of $198,809 and $122,733) $ 220,370
$ 139,055
Securities:
Available-for-sale ("AFS"), at estimated fair value (amortized cost of $1,191,455 and $718,564) 1,204,863
714,614
Held-to-maturity ("HTM"), at amortized cost (estimated fair value of $0 and $601,071) —
612,318
Loans receivable, net (allowance for credit losses ("ACL") of $9,226 and $8,463) 7,416,747
7,514,485
Federal Home Loan Bank Topeka ("FHLB") stock, at cost 98,456
99,726
Premises and equipment, net 96,784
96,005
Income taxes receivable, net 2
2,177
Other assets 302,796
271,167
TOTAL ASSETS $ 9,340,018
$ 9,449,547

LIABILITIES:
Deposits $ 5,581,867
$ 5,603,354
FHLB borrowings 2,139,989
2,174,981
Other borrowings 100,000
110,052
Advance payments by borrowers for taxes and insurance 65,686
65,264
Deferred income tax liabilities, net 14,282
21,253
Accounts payable and accrued expenses 101,868
83,021
Total liabilities 8,003,692
8,057,925

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, 141,440,030 and 141,225,516
shares issued and outstanding as of September 30, 2019 and 2018, respectively 1,414
1,412
Additional paid-in capital 1,210,226
1,207,644
Unearned compensation, Employee Stock Ownership Plan ("ESOP") (34,692 ) (36,343 )
Retained earnings 174,277
214,569
Accumulated other comprehensive (loss) income ("AOCI"), net of tax (14,899 ) 4,340
Total stockholders' equity 1,336,326
1,391,622
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,340,018
$ 9,449,547

See accompanying notes to consolidated financial statements.

CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED SEPTEMBER 30, 2019, 2018, and 2017 (Dollars in thousands, except per share amounts)

2019
2018
2017
INTEREST AND DIVIDEND INCOME:
Loans receivable $ 284,229
$ 260,198
$ 253,393
Mortgage-backed securities ("MBS") 25,730
22,619
23,809
FHLB stock 7,823
10,962
12,233
Investment securities 6,366
4,670
4,362
Cash and cash equivalents 5,806
23,443
19,389
Total interest and dividend income 329,954
321,892
313,186
INTEREST EXPENSE:
Deposits 66,201
52,625
42,968
FHLB borrowings 54,391
67,120
68,871
Other borrowings 2,972
3,374
5,965
Total interest expense 123,564
123,119
117,804
NET INTEREST INCOME 206,390
198,773
195,382
PROVISION FOR CREDIT LOSSES 750
—
—
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 205,640
198,773
195,382
NON-INTEREST INCOME:
Deposit service fees 12,740
15,636
15,053
Income from bank-owned life insurance ("BOLI") 2,432
1,875
2,233
Other non-interest income 6,786
4,524
4,910
Total non-interest income 21,958
22,035
22,196
NON-INTEREST EXPENSE:
Salaries and employee benefits 53,145
46,563
43,437
Information technology and related expense 17,615
13,999
11,282
Occupancy, net 13,032
11,455
10,814
Regulatory and outside services 5,813
5,709
5,821
Advertising and promotional 5,244
5,034
4,673
Deposit and loan transaction costs 2,478
5,621
5,284
Office supplies and related expense 2,439
1,888
1,981
Federal insurance premium 1,172
3,277
3,539
Other non-interest expense 6,006
3,356
2,827
Total non-interest expense 106,944
96,902
89,658
INCOME BEFORE INCOME TAX EXPENSE 120,654
123,906
127,920
INCOME TAX EXPENSE 26,411
24,979
43,783
NET INCOME $ 94,243
$ 98,927
$ 84,137

Basic earnings per share ("EPS") $ 0.68
$ 0.73
$ 0.63
Diluted EPS $ 0.68
$ 0.73
$ 0.63

See accompanying notes to consolidated financial statements.

CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
YEARS ENDED SEPTEMBER 30, 2019, 2018, and 2017 (Dollars in thousands)

2019
2018
2017
Net income $ 94,243
$ 98,927
$ 84,137
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on AFS securities arising during the period,
net of taxes of $(3,468), $2,499, and $1,595 10,804
(6,741 ) (2,625 )
Unrealized gains on securities reclassified from HTM to AFS
during the period, net of taxes of $(750), $0, and $0 2,336
—
—
Changes in unrealized gains (losses) on cash flow hedges,
net of taxes of $10,394, $(2,785), and $226 (32,379 ) 7,496
(372 )
Comprehensive income $ 75,004
$ 99,682
$ 81,140

See accompanying notes to consolidated financial statements.

CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 2019, 2018, and 2017 (Dollars in thousands, except per share amounts)

Additional Unearned Total
Common Paid-In Compensation Retained Stockholders'
Stock Capital ESOP Earnings AOCI Equity
Balance at September 30, 2016 $ 1,375
$ 1,156,855
$ (39,647 ) $ 268,466
$ 5,915
$ 1,392,964
Net income, fiscal year 2017 84,137
84,137
Other comprehensive loss, net of tax (2,997 ) (2,997 )
ESOP activity 784
1,652
2,436
Restricted stock activity, net 57
57
Stock-based compensation 506
506
Stock options exercised 7
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

Net income, fiscal year 2018 98,927

98,927
Other comprehensive income, net of tax 755
755
Reclassification of certain tax effects related to adopting Accounting Standards Update ("ASU") 2018-02 (667 ) 667
—
Cumulative effect of adopting ASU 2016-09 19
(19 ) —
Capital City Bancshares, Inc. ("CCB") acquisition 30
39,083
39,113
ESOP activity 541
1,652
2,193
Stock-based compensation 372
372
Stock options exercised 261
261
Cash dividends to stockholders ($0.88 per share) (118,312 ) (118,312 )
Balance at September 30, 2018 1,412
1,207,644
(36,343 ) 214,569
4,340
1,391,622

Net income, fiscal year 2019 94,243
94,243
Other comprehensive loss, net of tax (19,239 ) (19,239 )
Cumulative effect of adopting ASU 2014-09 394
394
ESOP activity 549
1,651
2,200
Restricted stock activity, net 1
(3 ) (2 )
Stock-based compensation 552
552
Stock options exercised 1
1,484
1,485
Cash dividends to stockholders ($0.98 per share) (134,929 ) (134,929 )
Balance at September 30, 2019 $ 1,414
$ 1,210,226
$ (34,692 ) $ 174,277
$ (14,899 ) $ 1,336,326

See accompanying notes to consolidated financial statements.


CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2020 and 2019 (Dollars in thousands, except per share amounts)

	2020		2019
ASSETS:
Cash and cash equivalents (includes interest-earning deposits of $172,430 and $198,809)	$	185,148	$	220,370
Available-for-sale ("AFS") securities, at estimated fair value	1,560,950		1,204,863

Loans receivable, net (allowance for credit losses ("ACL") of $31,527 and $9,226)	7,202,851		7,416,747
Federal Home Loan Bank Topeka ("FHLB") stock, at cost	93,862		98,456
Premises and equipment, net	101,875		96,784
Income taxes receivable, net	0		2

Other assets	342,532		302,796
TOTAL ASSETS	$	9,487,218	$	9,340,018

LIABILITIES:
Deposits	$	6,191,408	$	5,581,867
Borrowings	1,789,313		2,239,989

Advance payments by borrowers for taxes and insurance	65,721		65,686
Income taxes payable, net	795		0
Deferred income tax liabilities, net	8,180		14,282
Accounts payable and accrued expenses	146,942		101,868
Total liabilities	8,202,359		8,003,692

STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 100,000,000 shares authorized, 0 shares issued or outstanding	0		0
Common stock, $.01 par value; 1,400,000,000 shares authorized, 138,956,296 and 141,440,030 shares issued and outstanding as of September 30, 2020 and 2019, respectively	1,389		1,414
Additional paid-in capital	1,189,853		1,210,226
Unearned compensation, Employee Stock Ownership Plan ("ESOP")	(33,040)		(34,692)
Retained earnings	143,162		174,277
Accumulated other comprehensive (loss) income ("AOCI"), net of tax	(16,505)		(14,899)
Total stockholders' equity	1,284,859		1,336,326
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	9,487,218	$	9,340,018


See accompanying notes to consolidated financial statements.

CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2019, 2018, and 2017 (Dollars in thousands)

2019
2018
2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 94,243
$ 98,927
$ 84,137
Adjustments to reconcile net income to net cash provided by operating activities:
FHLB stock dividends (7,823 ) (10,962 ) (12,233 )
Provision for credit losses 750
—
—
Originations of loans receivable held-for-sale ("LHFS") —
(777 ) —
Proceeds from sales of LHFS —
16,423
6,816
Amortization and accretion of premiums and discounts on securities 1,242
3,150
4,479
Depreciation and amortization of premises and equipment 9,143
8,458
7,796
Amortization of intangible assets 2,316
234
—
Amortization of deferred amounts related to FHLB advances, net 8
1,173
1,419
Common stock committed to be released for allocation - ESOP 2,200
2,193
2,436
Stock-based compensation 552
372
506
Provision for deferred income taxes (361 ) (4,540 ) 922
Changes in:
Unrestricted cash collateral (provided to)/received from derivative counterparties, net (9,970 ) 10,701
(731 )
Other assets, net 6,220
1,712
51
Income taxes payable/receivable, net 2,173
(2,262 ) 590
Accounts payable and accrued expenses (19,746 ) (639 ) (10,743 )
Net cash provided by operating activities 80,947
124,163
85,445

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of AFS securities (386,702 ) (411,459 ) (37,425 )
Proceeds from calls, maturities and principal reductions of AFS securities 359,551
192,966
144,643
Proceeds from calls, maturities and principal reductions of HTM securities 165,336
212,267
268,689
Proceeds from sale of AFS securities —
2,078
—
Proceeds from the redemption of FHLB stock 197,054
291,506
386,900
Purchase of FHLB stock (187,961 ) (277,552 ) (365,651 )
Net change in loans receivable 95,358
(37,537 ) (246,882 )
Purchase of premises and equipment (11,732 ) (11,761 ) (9,128 )
Proceeds from sale of other real estate owned ("OREO") 2,053
2,240
5,138
Cash acquired from acquisition —
15,685
—
Proceeds from the redemption of common equity securities related to the redemption of junior subordinated debentures 302
—
—
Net cash provided by (used in) investing activities 233,259
(21,567 ) 146,284

(Continued)

CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2019, 2018, and 2017 (Dollars in thousands)

2019
2018
2017
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid (134,929 ) (118,312 ) (117,963 )
Net change in deposits (21,487 ) (58,988 ) 145,850
Proceeds from borrowings 5,518,700
17,275,100
2,700,100
Repayments on borrowings (5,563,752 ) (17,414,200 ) (2,900,100 )
Change in advance payments by borrowers for taxes and insurance 422
939
1,106
Stock options exercised 1,485
261
8,843
Excess tax benefits from stock options —
—
330
Net cash used in financing activities (199,561 ) (315,200 ) (161,834 )

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS 114,645
(212,604 ) 69,895

CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS:
Beginning of year 139,055
351,659
281,764
End of year $ 253,700
$ 139,055
$ 351,659

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Income tax payments $ 17,779
$ 24,785
$ 37,875
Interest payments $ 123,508
$ 119,699
$ 117,308

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Loans transferred to LHFS $ —
$ 15,814
$ 6,714
Acquisition:
Common stock issued $ —
$ 39,113
$ —
Fair value of assets acquired, excluding acquired cash and intangibles $ —
$ 418,062
$ —
Fair value of liabilities assumed $ —
$ 412,675
$ —
Transfer of HTM securities, at amortized cost, to AFS securities $ 444,732
$ —
$ —

See accompanying notes to consolidated financial statements. (Concluded)


CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED SEPTEMBER 30, 2020, 2019, and 2018 (Dollars in thousands, except per share amounts)

	2020		2019		2018
INTEREST AND DIVIDEND INCOME:
Loans receivable	$	270,494	$	284,229	$	260,198
Mortgage-backed securities ("MBS")	23,009		25,730		22,619
FHLB stock	5,827		7,823		10,962
Investment securities	4,467		6,366		4,670
Cash and cash equivalents	1,181		5,806		23,443
Total interest and dividend income	304,978		329,954		321,892
INTEREST EXPENSE:
Deposits	67,598		66,201		52,625
Borrowings	48,045		57,363		70,494

Total interest expense	115,643		123,564		123,119
NET INTEREST INCOME	189,335		206,390		198,773
PROVISION FOR CREDIT LOSSES	22,300		750		0

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES	167,035		205,640		198,773
NON-INTEREST INCOME:
Deposit service fees	11,285		12,740		15,636
Insurance commissions	2,487		2,821		2,469
Other non-interest income	5,827		6,397		3,930
Total non-interest income	19,599		21,958		22,035
NON-INTEREST EXPENSE:
Salaries and employee benefits	52,996		53,145		46,563
Information technology and related expense	16,974		17,615		13,999
Occupancy, net	13,870		13,032		11,455
Regulatory and outside services	5,762		5,813		5,709
Advertising and promotional	4,889		5,244		5,034
Deposit and loan transaction costs	2,890		2,478		5,621
Office supplies and related expense	2,195		2,439		1,888
Federal insurance premium	914		1,172		3,277

Other non-interest expense	5,514		6,006		3,356
Total non-interest expense	106,004		106,944		96,902
INCOME BEFORE INCOME TAX EXPENSE	80,630		120,654		123,906
INCOME TAX EXPENSE	16,090		26,411		24,979
NET INCOME	$	64,540	$	94,243	$	98,927

Basic earnings per share ("EPS")	$	0.47	$	0.68	$	0.73
Diluted EPS	$	0.47	$	0.68	$	0.73


See accompanying notes to consolidated financial statements.


CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
YEARS ENDED SEPTEMBER 30, 2020, 2019, and 2018 (Dollars in thousands)

	2020		2019		2018
Net income	$	64,540	$	94,243	$	98,927
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on AFS securities arising during the period, net of taxes of $(4,359), $(3,468), and $2,499	13,578		10,804		(6,741)
Unrealized gains on securities reclassified from held-to-maturity ("HTM") to AFS during the period, net of taxes of $0, $(750), and $0	0		2,336		0
Changes in unrealized gains (losses) on cash flow hedges, net of taxes of $4,875, $10,394, and $(2,785)	(15,184)		(32,379)		7,496
Comprehensive income	$	62,934	$	75,004	$	99,682

See accompanying notes to consolidated financial statements.


CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 2020, 2019, and 2018 (Dollars in thousands, except per share amounts)

			Additional		Unearned						Total
	Common		Paid-In		Compensation		Retained				Stockholders'
	Stock		Capital		ESOP		Earnings		AOCI		Equity
Balance at September 30, 2017	$	1,382	$	1,167,368	$	(37,995)	$	234,640	$	2,918	$	1,368,313

Net income, fiscal year 2018							98,927				98,927
Other comprehensive income, net of tax									755		755
Reclassification of certain tax effects related to adopting Accounting Standards Update ("ASU") 2018-02							(667)		667		0
Cumulative effect of adopting ASU 2016-09			19				(19)				0
Capital City Bancshares, Inc. ("CCB") acquisition	30		39,083								39,113
ESOP activity			541		1,652						2,193

Stock-based compensation			372								372

Stock options exercised			261								261
Cash dividends to stockholders ($0.88 per share)							(118,312)				(118,312)
Balance at September 30, 2018	1,412		1,207,644		(36,343)		214,569		4,340		1,391,622

Net income, fiscal year 2019							94,243				94,243
Other comprehensive loss, net of tax									(19,239)		(19,239)
Cumulative effect of adopting ASU 2014-09							394				394


ESOP activity			549		1,651						2,200
Restricted stock activity, net	1		(3)								(2)
Stock-based compensation			552								552

Stock options exercised	1		1,484								1,485
Cash dividends to stockholders ($0.98 per share)							(134,929)				(134,929)
Balance at September 30, 2019	1,414		1,210,226		(34,692)		174,277		(14,899)		1,336,326

Net income, fiscal year 2020							64,540				64,540
Other comprehensive loss, net of tax									(1,606)		(1,606)


Cumulative effect of adopting ASU 2016-02							88				88

ESOP activity			336		1,652						1,988
Restricted stock activity, net			(19)								(19)
Stock-based compensation			570								570
Repurchase of common stock	(26)		(21,897)				(1,881)				(23,804)
Stock options exercised	1		637								638
Cash dividends to stockholders ($0.68 per share)							(93,862)				(93,862)
Balance at September 30, 2020	$	1,389	$	1,189,853	$	(33,040)	$	143,162	$	(16,505)	$	1,284,859


See accompanying notes to consolidated financial statements.


CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2020, 2019, and 2018 (Dollars in thousands)

	2020		2019		2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	64,540	$	94,243	$	98,927
Adjustments to reconcile net income to net cash provided by operating activities:
FHLB stock dividends	(5,827)		(7,823)		(10,962)
Provision for credit losses	22,300		750		0
Originations of loans receivable held-for-sale ("LHFS")	0		0		(777)
Proceeds from sales of LHFS	0		0		16,423
Amortization and accretion of premiums and discounts on securities	1,661		1,242		3,150
Depreciation and amortization of premises and equipment	9,133		9,143		8,458
Amortization of intangible assets	1,964		2,316		234
Amortization of deferred amounts related to FHLB advances, net	539		8		1,173
Common stock committed to be released for allocation - ESOP	1,988		2,200		2,193
Stock-based compensation	570		552		372
Provision for deferred income taxes	(5,588)		(361)		(4,540)
Changes in:
Unrestricted cash collateral (provided to)/received from derivative counterparties, net	0		(9,970)		10,701
Other assets, net	9,105		6,220		1,712
Income taxes payable/receivable, net	774		2,173		(2,262)

Accounts payable and accrued expenses	(8,231)		(19,746)		(639)
Net cash provided by operating activities	92,928		80,947		124,163

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of AFS securities	(1,007,763)		(386,702)		(411,459)

Proceeds from calls, maturities and principal reductions of AFS securities	667,952		359,551		192,966
Proceeds from calls, maturities and principal reductions of HTM securities	0		165,336		212,267
Proceeds from sale of AFS securities	0		0		2,078
Proceeds from the redemption of FHLB stock	10,421		197,054		291,506
Purchase of FHLB stock	0		(187,961)		(277,552)
Net change in loans receivable	191,359		95,358		(37,537)
Purchase of premises and equipment	(14,742)		(11,732)		(11,761)
Proceeds from sale of other real estate owned ("OREO")	993		2,053		2,240
Cash acquired from acquisition	0		0		15,685
Proceeds from the redemption of common equity securities related to the redemption of junior subordinated debentures	0		302		0

Proceeds from bank-owned life insurance ("BOLI") death benefit	490		0		0
Net cash (used in) provided by investing activities	(151,290)		233,259		(21,567)

					(Continued)


CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2020, 2019, and 2018 (Dollars in thousands)

	2020		2019		2018
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid	(93,862)		(134,929)		(118,312)
Net change in deposits	609,541		(21,487)		(58,988)
Proceeds from borrowings	1,665,600		5,518,700		17,275,100
Repayments on borrowings	(2,112,600)		(5,563,752)		(17,414,200)

Change in advance payments by borrowers for taxes and insurance	35		422		939
Payment of FHLB prepayment penalties	(4,215)		0		0
Repurchase of common stock	(20,767)		0		0
Stock options exercised	638		1,485		261

Net cash provided by (used in) financing activities	44,370		(199,561)		(315,200)

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS	(13,992)		114,645		(212,604)

CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS:
Beginning of year	253,700		139,055		351,659
End of year	$	239,708	$	253,700	$	139,055

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Income tax payments	$	13,045	$	17,779	$	24,785
Interest payments	$	118,610	$	123,508	$	119,699

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Loans transferred to LHFS	$	0	$	0	$	15,814
Operating lease right-of-use assets obtained	$	16,841	$	0	$	0
Operating lease liabilities obtained	$	16,726	$	0	$	0
Acquisition:
Common stock issued	$	0	$	0	$	39,113
Fair value of assets acquired, excluding acquired cash and intangibles	$	0	$	0	$	418,062
Fair value of liabilities assumed	$	0	$	0	$	412,675
Transfer of HTM securities, at amortized cost, to AFS securities	$	0	$	444,732	$	0

See accompanying notes to consolidated financial statements.					(Concluded)

CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2020, 2019, and 2018 ~~and 2017~~

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 4445 traditional and 109 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. The Bank emphasizes mortgage lending, primarily originating and purchasing one- to four-family loans, and providing personal retail financial services, along with offering commercial banking and lending products. The Bank is subject to competition from other financial institutions and other companies that provide financial services.

Basis of Presentation - The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, the Bank. The Bank has two wholly owned subsidiaries, Capitol Funds, Inc. and Capital City Investments, Inc. Capitol Funds, Inc. has a wholly-owned subsidiary, Capitol Federal Mortgage Reinsurance Company. Capital City Investments, Inc. is a real estate and investment holding company. All intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("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.

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - Cash, cash equivalents, restricted cash and restricted cash equivalents reported in the statement of cash flows include cash and cash equivalents of ~~$220.4~~$185.1 million and ~~$139.1~~$220.4 million at September 30, 2020 and 2019, ~~and 2018~~respectively, and restricted cash and cash equivalents of $54.6 million and $33.3 million at September 30, 2020 and 2019, respectively, which was included in other assets on the consolidated balance sheet. ~~There was 0 restricted cash and cash equivalents at September 30, 2018.~~ The restricted cash and cash equivalents relate to the collateral postings to/from the Bank's derivative counterparties associated with the Bank's interest rate swaps. See additional discussion regarding the interest rate swaps in Note 9. Deposits and Borrowed Funds.

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 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, 2020 and 2019 ~~and 2018~~ was ~~$198.6~~$172.2 million and ~~$120.8~~$198.6 million, respectively. The Bank is in compliance with the FRB requirements. For the years ended September 30, ~~2019~~2020 and ~~2018,~~2019, the average daily balance of required reserves at the FRB of Kansas City was ~~$21.5~~$6.6 million and ~~$11.0~~$21.5 million, respectively.

Net Presentation of Cash Flows Related to Borrowings - At times, the Bank enters 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"), including Federal National Mortgage Association, Federal Home Loan Mortgage Corporation and the Federal Home Loan Banks, United States Government agencies, including Government National Mortgage Association, and municipal bonds. Securities are classified as 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.

Securities that management has the ~~intent~~intention 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, 2020 and 2019, 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 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 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-party pricing services to determine the fair value of securities. See additional discussion of fair value of AFS securities in "Note 15. 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, ~~2019~~2020 and ~~2018,~~2019, neither the Company nor the Bank maintained a trading securities portfolio.

Management monitors 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, but is not limited to, such factors as: the nature of the investment, the length of time the security has had a fair value less than the amortized cost basis, the cause(s) and severity of the loss, expectation of an anticipated recovery period, 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, external credit ratings and recent downgrades in such ratings, management's ~~intent~~intention to sell and whether it is more likely than not management would be required 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 impairment has occurred and the difference between amortized cost and fair value will be recognized as a loss in earnings and the security will be written down to fair value.

Loans Receivable - Loans receivable that management has the ~~intent~~intention and ability to hold for the foreseeable future are carried at 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. Interest on loans is credited to income as earned and accrued only if deemed collectible.

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 ~~cash~~ fee, to endorse their original loan terms to current loan terms being offered by the Bank. The fee received for each endorsement is deferred and amortized as an adjustment to interest income over the life of the loan. If the change in loan terms resulting from the endorsement is deemed to be more than minor, the loan is treated as a new loan and all existing unamortized deferred loan origination fees and costs are recognized at the time of endorsement. If the change in loan terms is deemed to be minor, the fee received for the endorsement is added to the net remaining unamortized deferred fee or deferred cost balance.

Coronavirus Disease 2019 ("COVID-19") loan modification programs -In March 2020, the Bank announced loan modification programs to support and provide relief for its borrowers during the COVID-19 pandemic. Generally, loan modifications under these programs ("COVID-19 loan modifications") for one- to four-family loans and consumer loans consist of a three-month payment forbearance of principal, interest, and in some cases, escrow. COVID-19 loan modifications of commercial loans mainly consist of up to a six-month interest-only payment period, but an option for a three- to six-month forbearance of principal and interest was also available to our borrowers. The Company has followed the loan modification criteria within the Coronavirus Aid, Relief, and Economic Security ("CARES") Act or Interagency guidance when determining if a borrower's modification is subject to troubled debt restructuring ("TDR") classification. If it is determined that the modification does not meet the criteria under the CARES Act or Interagency guidance to be excluded from TDR classification, the Company evaluates the loan modifications under its existing TDR framework. Loans subject to forbearance under the COVID-19 loan modification program are not reported as past due or placed on nonaccrual status during the forbearance time period, and interest income continues to be recognized over the contractual life of the loans.

Troubled debt restructurings ~~("TDRs")~~ - For borrowers experiencing financial difficulties, the Bank may grant a concession to the borrower. Such concessions generally involve extensions of loan maturity dates, the granting of periods during which

reduced payment amounts are required, and/or reductions in interest 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 delinquent interest and/or escrow on one- to four-family loans and consumer loans, not to exceed the original loan amount. In the case of commercial loans, the Bank does not forgive principal or interest or commit to 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 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 credited 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. A nonaccrual commercial loan is returned to accrual status once the loan has been current for a minimum of six months, all fees and interest are paid current, the loan has a sufficient debt service coverage ratio, and the loan is well secured and within policy.

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, in which case interest income is no longer recognized.

Acquired ~~Loans~~loans - Acquired loans are initially recorded at fair value based on a discounted cash flow valuation methodology that considers, among other things, interest rates, projected prepayments, projected default rates, loss given default and recovery rates, with no carryover of any existing ACL. Acquired loans with evidence of credit quality deterioration at acquisition are reviewed to determine if it is probable that the Company will not be able to collect all contractual amounts due, including both principal and interest. When both conditions exist, such loans are categorized and accounted for as purchased credit impaired ("PCI") loans. When these conditions do not exist, the loans are categorized as non-PCI loans.

For PCI loans with cash flows that the Company has determined can be reasonably estimated, which is the majority of the PCI loans, interest income is recognized on a level-yield basis over the life of the loan based upon the excess of expected cash flows over the original investment in the loan.

Allowance for Credit Losses - The ACL represents management's best estimate of the amount of inherent losses in the loan portfolio as of the balance sheet date. It involves a high degree of complexity and requires management to make difficult and subjective judgments and assumptions about highly uncertain matters. Management's methodology for assessing the appropriateness of the ACL consists of a formula analysis model, along with analyzing and considering several other relevant internal and external factors. The use of different judgments and assumptions could cause reported results to differ significantly. Management maintains the ACL through provisions for credit losses that are either charged or credited to income.

One- to four-family loans, including home equity loans, are individually evaluated for loss when the loan is generally 180 days delinquent and any losses are charged-off. 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. When a non-real estate secured consumer loan is 120 days delinquent, any identified losses are charged-off. For commercial loans, generally 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 with regards to the borrower, that the borrower is not able to service the debt and there is little or no prospect for near term improvement, or, in the case of secured loans, it is determined, through the analysis of current information with regards to the Bank's collateral position, that the amounts due from the borrower are in excess of the calculated current fair value of the collateral after

consideration of estimated costs to sell. Charge-offs for any loan type may also occur at any time if the Bank has knowledge of the existence of a probable loss.

The primary risk characteristics inherent in the 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. Any one or a combination of these events may adversely affect the ability of borrowers to repay their loans, resulting in increased delinquencies, non-performing assets, loan losses, and future loan loss provisions. Although the commercial 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 the ability to utilize personal 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 more limited than that for a residential property. Therefore, the Bank could hold the property for an extended period of time, or ~~potentially~~ be forced to sell at a discounted price, resulting in additional losses. Our commercial and industrial loans are primarily secured by

accounts receivable, inventory and equipment, which may be difficult to appraise, may be illiquid and may fluctuate in value based on the success of the business.

~~Each~~As of each quarter end, a formula analysis is prepared which segregates the loan portfolio into categories based on certain risk characteristics. The categories include the following: one- to four-family loans; commercial loans; consumer home equity loans; and other consumer loans. Home equity loans 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 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 geographic location. The categories were derived by management based on reviewing the historical performance of the one- to four-family loan portfolio and taking into consideration current economic conditions, such as trends in residential real estate values in certain areas of the U.S. and unemployment rates. The commercial loan portfolio is segregated into additional categories based on the type of loan (real estate loan, construction loan or commercial and industrial). Impaired loans are 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~~As of each quarter end, management reviews historical losses over a look-back time period and utilizes the historical loss time periods believed to be the most appropriate considering the ~~current~~then-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, and delinquent loan trends. The qualitative ~~loss~~ factors for the commercial 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 on the performance of the loan portfolio.

Management increased the historical loss and qualitative factors for the one- to four-family and consumer loan portfolios during the current fiscal year to account for a higher level of estimated inherent losses in the loan portfolio as a result of the deterioration of economic conditions due to the COVID-19 pandemic. When determining the appropriate historical loss and qualitative factors for the one- to four-family and consumer loan portfolios, management took into consideration such factors as the national and state unemployment rates and related trends, national and state unemployment benefit claim levels and related trends, the amount of and timing of financial assistance provided by the government, and the Bank's COVID-19 loan modification program. Unemployed individuals benefited from additional unemployment benefits afforded under the CARES Act; however, the majority of the financial assistance provided by the federal government, which may be masking the Bank's actual credit exposure, tapered off significantly by September 30, 2020. In late March 2020, the Bank began offering a COVID-19 loan modification program for one- to four-family and consumer loans. While the intention of the COVID-19 loan modification program was to keep customers current on their payments and therefore in their homes during

the worst of the economic downturn, the program could be masking the Bank's actual credit exposure on these loans. After considering the factors noted above, management evaluated the Bank's historical ACL to loans ratios compared to historical unemployment rates and housing price index trends and the Bank's historical charge-off percentages. After reviewing historical information and considering the economic conditions at September 30, 2020, management selected the worst historical time periods and used those historical loss and qualitative factors in the ACL formula analysis model at September 30, 2020. Management then compared the ACL (calculated by the formula analysis model) to loans ratio to the Bank's historical ACL to loan ratios to determine the appropriate amount of ACL at September 30, 2020 considering the economic conditions at that point in time.

Management also increased the qualitative factors and applied a COVID-19 qualitative factor to the Bank's commercial loan portfolio at September 30, 2020. To determine the appropriate qualitative factors for the Bank's commercial loan portfolio at September 30, 2020, management considered the factors noted above, along with such factors as consumer spending levels and trends, industries significantly impacted by the COVID-19 pandemic, the commercial lending team's review of the Bank's largest commercial loan relationships, and the Bank's COVID-19 loan modification program. The Bank's commercial lending team's loan analysis through September 30, 2020 primarily focused on the lending relationships considered most at risk of short-term operational cash flow issues and/or collateral concerns. Those considered most at risk were among the categories with the highest usage of the Bank's COVID-19 loan modification program. We believe the Bank's COVID-19 loan modification program has been very beneficial to the majority of the Bank's borrowers that took advantage of the program; however, as is the case with one- to four-family loans, the modifications may be masking the Bank's actual credit exposure. The commercial lending team also considered the largest credits and LTVs for loans in the industries most impacted by the COVID-19 pandemic. After considering the factors noted above and the very limited historical loan loss experience for the Bank's commercial loan portfolio, management reviewed historical peer ACL to loan ratios and peer charge-off percentages and the economic conditions during those time periods. After reviewing peer historical information and considering the economic conditions at September 30, 2020, management increased the commercial loan qualitative factors and applied a COVID-19 qualitative factor. Management then compared the ACL (calculated by the formula analysis model) to loans ratio to peer historical ACL to loan ratios to determine the appropriate amount of ACL at September 30, 2020 considering the economic conditions at that point in time.

For non-PCI loans, the Company estimates a hypothetical amount of ~~ACL. The Company uses~~ACL using the ~~acquired bank's past~~same historical loss ~~history adjusted for~~and qualitative factors as the Bank's formula analysis model to establish the hypothetical amount of ACL. This amount is compared with the remaining net purchase discount for the non-PCI loans to test for credit quality deterioration and the possible need for an additional loan loss provision. To the extent the remaining net purchase discount of the pool is greater than the hypothetical ACL, no additional ACL is necessary. If the remaining net purchase discount of the pool is less than the hypothetical ACL, the difference results in an increase to the ACL recorded through a provision for credit losses.

Management ~~utilizes the formula analysis model, along~~will continue to closely monitor economic conditions and will work with analyzing and considering several other relevant internal and external factors when evaluating the adequacy of the ACL. Such factors include the trend and composition of delinquent loans and non-performing loans, trends in foreclosed property transactions and charge-off activity, the current status and trends of local and national employment levels, trends and currentborrowers as necessary to assist them through this challenging economic climate. If economic conditions worsen or do not improve in the ~~housing markets, loan growth~~near term, 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 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 sections of the U.S. by reference to various industry and market reports, economic releases and surveys, and management's general and specific knowledge of the real estate markets in which the Bank lends, in order to determine what impact,if future government programs, if any, such trends may have 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 needdo not provide adequate relief to ~~be made to~~borrowers, it is possible the Bank's ACL ~~methodology.~~will need to increase in future periods. Management seeks to apply the ACL methodology in a consistent manner; however, the methodology may be modified in response to changing ~~conditions.~~conditions, such as was the case during the current fiscal year. Although management believes the ACL was at a level adequate to absorb inherent losses in the loan portfolio at September 30, ~~2019,~~2020, the level of the ACL remains an estimate that is subject to significant judgment and short-term changes.

Federal Home Loan Bank Stock - As a member of FHLB, 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 FHLB. Stock and cash dividends received on FHLB stock are reflected as dividend income in the consolidated statements of income.

Premises and Equipment - 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. Leasehold improvements are amortized over the

shorter of their estimated useful lives or the term of the respective 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.

Revenue Recognition - Non-interest income within the scope of Accounting Standards Codification ("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 17. Revenue Recognition for additional information.

Leases - The Company leases real estate property for branches, ATMs, and certain equipment. All of the leases in which the Company is the lessee are classified as operating leases. The Company determines if an arrangement is a lease at inception and if 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 Company's consolidated balance sheets. The lease liabilities associated with operating leases are included in accounts payable and accrued expenses on the consolidated balance 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 discount 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. For operating leases existing prior to October 1, 2019, the rate for the remaining lease term as of October 1, 2019 was applied. 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 lease term. Variable lease expense primarily represents payments such as common area maintenance, real estate taxes, and utilities and are recognized as expense in the period 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.

Other Assets - Included in other assets on the consolidated balance sheet are the Company's intangible assets, recognized as a result of the acquisition of CCB, 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 less than the carrying amount, an impairment is recorded.

The Company's intangible assets primarily relate to core deposits. These intangible assets are amortized based upon the expected economic benefit over an estimated life of approximately 8 years and are tested for impairment whenever events or circumstances change.

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 and changes in the market value of restricted stock awards between the grant date and vesting date. 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.

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 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.

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 as liabilities on the consolidated balance sheet, with the related expense reported as interest expense on the consolidated statements of income, as the Bank maintains effective control over the transferred securities and the securities continue to be carried in the Bank's securities portfolio.

The Bank has obtained borrowings from FHLB in the form of advances 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."

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.

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.

100

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. ~~See "Note 7. 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.

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.

Recent Accounting Pronouncements - In ~~May 2014,~~February 2016, the Financial Accounting Standards Board ("FASB") ~~issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers.~~ The ASU, as amended, implements a common revenue standard that clarifies the principles for recognizing revenue included in Accounting Standards Codification ("ASC") Topic 606. The core principle of the amended guidance is that an entity should recognize revenue to depict the transfer 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. The majority of the Company's revenue is composed of interest income from loans and securities which are explicitly excluded from the amended ASU. The Company elected to implement the amended ASU using the modified retrospective application with a cumulative adjustment to opening retained earnings at October 1, 2018. Upon adoption of the amended ASU, the Company recorded a cumulative adjustment, which increased opening retained earnings by $394 thousand related to contracts that were not complete upon adoption. The amount was related to the change in the recognition of revenue related to certain insurance commissions. Additionally, effective October 1, 2018, interchange network charges are reported as a reduction in deposit service fees. Previously, these charges were reported as expense in deposit and loan transaction costs in the consolidated statements of income. The Company concluded the ASU did not significantly change the Company's revenue recognition methods. This ASU did not have a material impact on the Company's consolidated financial condition or results of operations at the time of adoption. The new disclosure requirements of the ASU are included in Note 17. Revenue Recognition.

~~In January 2016, the FASB issued ASU 2016-01,~~ ~~Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial 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 scope of this ASU. The ASU requires public business entities to utilize the exit price notion when determining fair value for financial instruments measured at amortized cost on the balance sheet. The ASU also requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or in the notes to the financial statements. ASU 2016-01 became effective for the Company on October 1, 2018. The adoption of this ASU did not have a material impact on the Company's consolidated financial condition or results of operations. The new disclosure requirements of the ASU are included in Note 15. Fair Value of Financial Instruments.

~~In February 2016, the FASB~~ issued ASU 2016-02, Leases. The ASU, as amended, revises 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. The accounting applied by a lessor is largely unchanged from that applied under the previous guidance. In July 2018, the FASB issued ASU 2018-11, Leases, which provides entities with relief from the costs of implementation by allowing the option to not restate comparative periods as part of the transition. The ASU, as amended, ~~will be~~became effective for the Company on October 1, 2019. Upon adoption, the Company ~~intends to elect~~elected the modified retrospective approach and the optional transition method under which the Company ~~can use~~used the effective date as the date of initial application of the amendments. The ~~cumulative-effect adjustment at the time of adoption is not anticipated to be material. The~~ optional practical expedients the Company ~~intends to elect~~elected include: (1) not reassessing whether any expired or existing contracts are or contain leases, (2) not reassessing the classification of any expired or existing contracts, (3) not reassessing initial direct costs for existing leases, and (4) using hindsight for leases existing at adoption date. For leases with an initial term of 12 months or less, the Company ~~intends to elect~~elected the short-term lease option, which entails not recognizing right-of-use assets and lease liabilities for these leases. Additionally, the Company ~~intends to elect,~~elected, for facility-related leases, the practical expedient that allows an entity to elect, by lease class, the ability to not separate lease and non-lease components. The Company developed a lease inventory and an internal lease data collection, organization, and computing platform for compliance with this ASU and implemented processes to ensure adequate internal controls were in place to assess contracts and enable proper accounting and reporting upon adoption and going forward. Upon adoption, the Company ~~will~~ recognized~~recognize~~ a right-of-use asset of $15.7 million and a lease liability of ~~approximately $15~~$15.5 million, related to the Company's non-cancellable operating lease commitments based on the present value of the expected remaining lease payments as of October 1, 2019. The cumulative-effect adjustment to retained earnings at the time of adoption totaled $88 thousand. These ASUs ~~are~~did not ~~expected to~~ have a material impact on the Company's results of operations and cash flows at the time of adoption. The disclosures required by the ASU ~~will be provided beginning with the Company's Form 10-Q for the first quarter of fiscal year 2020.~~are included in Note 18. Leases.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments. The ASU, as amended, replaces the incurred loss impairment methodology in current GAAP, which requires credit losses to be recognized when it is probable that a loss has been 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 ~~continues~~intends to ~~work~~apply a modified retrospective approach when adopting the ASU. Upon adoption, a cumulative-effect adjustment for the change in the allowance for credit losses and reserves on unfunded commitments will be recognized in retained earnings, net of tax. The Company worked with a software provider on the

101

application and implementation of the new accounting guidance. The ~~integration~~Company has determined its loan segmentation and the methodologies that will be utilized for each loan segment, and has also developed several assumptions including a reasonable and supportable forecast time period, a reversion methodology, and prepayment and curtailment speeds, among others. Management is in the process of finalizing supporting documentation and internal controls, policies, and procedures. Based on analysis performed by the Company with consideration given to the loan portfolio at September 30, 2020 and current expectation of future economic conditions, our ACL and reserves on unfunded commitments upon adoption will be $26.8 million and $7.8 million, respectively, which would result in a cumulative effect adjustment to retained earnings, net of tax, of $2.3 million. However, management continues to evaluate the impact of adoption. The preliminary results may change as the model is finalized and the remaining implementation steps are completed. The enhanced disclosures required by this ASU will be presented beginning with the Company's December 31, 2020 Quarterly Report on Form 10-Q. Under this new accounting standard, the Company's ACL may fluctuate more significantly from period to period than it has historically as a result of changes in forecasted economic conditions and changes in the composition of the Company's data with the software provider is substantially complete. Management anticipates model development, with the assistance of the software provider, will begin in late calendar year 2019 and will take several months to complete. While we are currently unable to reasonably estimate the impact of adopting this ASU, we expect the impact of adoption will be influenced by the composition of our loan ~~and securities portfolios as well as the economic conditions and forecasts at the time of adoption.~~

portfolio.

~~In November 2016, the FASB issued ASU 2016-18,~~
~~Statement of Cash Flows: Restricted Cash (a consensus of the FASB Emerging Issues Task Force)~~. The ASU addresses diversity in the classification and presentation of changes in restricted cash and cash equivalents on the statement of cash flows. The ASU requires that amounts described as restricted cash and cash equivalents be included with cash and cash equivalents when reconciling the beginning and ending amounts presented on the statement of cash flows, requires disclosures on the nature of restrictions on cash and cash equivalents, and the amount and financial statement line presentation of restricted cash and cash equivalents. The Company adopted this ASU on October 1, 2018 and it did not have a material impact on the Company's consolidated financial condition or results of operations at the time of adoption.

~~In August 2017, the FASB issued ASU 2017-12,~~ ~~Derivatives and Hedging: Targeted 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 Company elected to early-adopt this ASU, along with the components of ASU 2019-04 that are applicable to ASU 2017-12, on September 30, 2019. See below for more information regarding ASU 2019-04. As part of the adoption, the Company reclassified $444.7 million of HTM securities, at amortized cost, which were eligible to be hedged under the last-of-layer method, to AFS securities. The adoption of this ASU did not have a material impact on the Company's consolidated financial condition or results of operations at the time of adoption.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement: Disclosure Framework - Changes to the Disclosures Requirements for Fair Value Measurement. This ASU eliminates, modifies and adds certain disclosure requirements for fair value measurements. The ASU adds disclosure requirements for the changes in unrealized gains and losses included in other comprehensive income for recurring Level 3 fair value measurements and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The effective date of this ASU for the Company is October 1, 2020, with early adoption permitted. Entities are allowed to elect early adoption of the eliminated or modified disclosure requirements and delay adoption of the new disclosure requirements until their effective date. Since this ASU only requires disclosure changes, it ~~will~~is not expected to have a significant impact on the Company's consolidated financial condition and results of operations.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include internal-use software license). The effective date of this ASU for the Company is October 1, 2020, with early adoption permitted. ~~The Company~~This ASU is ~~currently evaluating the effect of the ASU~~not expected to have a significant impact on the Company's consolidated financial condition, results of operations and disclosures.

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. This ASU makes clarifications and corrections to the application of the guidance contained in each of the amended topics. According to the provisions of the ASU, entities that have not adopted ASU 2017-12 prior to the issuance of ASU 2019-04 shall adopt the provisions of both ASUs at the same time. The effective date of the non-hedging amendments contained in ASU 2019-04 for the Company is

October 1, 2020. The ~~Company is currently evaluating the effect of the~~ non-hedging amendments contained in this ASU are not expected to have a significant impact on the Company's consolidated financial condition, results of operations and disclosures.

2. ACQUISITION

On August 31, 2018, the Company completed the acquisition of CCB and its wholly-owned subsidiary, Capital City Bank. Capital City Bank was headquartered in Topeka, ~~Kansas. Capital City Bank~~Kansas and owned and leased banking locations in Topeka, Lawrence, and Overland Park, Kansas. The acquisition was not considered material to the Company's financial statements; therefore, pro-forma financial data and related disclosures are not included.

The Company acquired loans and deposits with fair values of $299.7 million and $352.5 million, respectively, at the date of acquisition. Included in the loans acquired from CCB at August 31, 2018 were PCI loans with contractually required cash flows totaling $2.6 million. Of that amount, the Company expected to collect $1.9 million, which was also the fair value at the date of acquisition. Under the terms of the acquisition agreement, the Company issued 3.0 million shares of common stock for all outstanding shares of CCB capital stock, for a total merger consideration of $39.1 million, based on the Company's closing stock price of $13.21 on August 31, 2018. See "Note 8. Intangible Assets" for additional information regarding the acquisition of CCB.

102

There were 0 merger-related expenses incurred during fiscal year 2020. During fiscal years 2019 and 2018, the Company incurred $30 thousand and $872 thousand, respectively, of pre-tax merger-related expenses attributable to the CCB acquisition. The merger-related expenses were reflected on the Company's consolidated statement of income and were reported primarily in regulatory and outside services.

3. EARNINGS PER SHARE

Shares acquired by the ESOP are not included in 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,
	2020		2019		2018
	(Dollars in thousands, except per share amounts)
Net income	$	64,540	$	94,243	$	98,927
Income allocated to participating securities	(52)		(55)		(40)
Net income available to common stockholders	$	64,488	$	94,188	$	98,887

Average common shares outstanding	137,834,304		137,614,465		134,635,886
Average committed ESOP shares outstanding	62,400		62,458		62,458
Total basic average common shares outstanding	137,896,704		137,676,923		134,698,344

Effect of dilutive stock options	4,484		58,478		60,647

Total diluted average common shares outstanding	137,901,188		137,735,401		134,758,991

Net EPS:
Basic	$	0.47	$	0.68	$	0.73
Diluted	$	0.47	$	0.68	$	0.73

Antidilutive stock options, excluded from the diluted average
common shares outstanding calculation	437,731		470,938		541,418

For the Year Ended September 30,
2019
2018
2017
(Dollars in thousands, except per share amounts)
Net income $ 94,243
$ 98,927
$ 84,137
Income allocated to participating securities (55 ) (40 ) (44 )
Net income available to common stockholders $ 94,188
$ 98,887
$ 84,093

Average common shares outstanding 137,614,465
134,635,886
134,019,962
Average committed ESOP shares outstanding 62,458
62,458
62,458
Total basic average common shares outstanding 137,676,923
134,698,344
134,082,420

Effect of dilutive stock options 58,478
60,647
161,442

Total diluted average common shares outstanding 137,735,401
134,758,991
134,243,862

Net EPS:
Basic $ 0.68
$ 0.73
$ 0.63
Diluted $ 0.68
$ 0.73
$ 0.63

Antidilutive stock options, excluded from the diluted average
common shares outstanding calculation 470,938
541,418
200,800

103

4. 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. ~~Upon the adoption of ASU 2017-12 and certain components of ASU 2019-04 on September 30, 2019, the Company reclassified $444.7 million of HTM securities, at amortized cost, to AFS securities.~~


	September 30, 2020
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(Dollars in thousands)

MBS	$	1,149,922	$	31,212	$	331	$	1,180,803
GSE debentures	369,967		414		41		370,340

Municipal bonds	9,716		91		0		9,807
	$	1,529,605	$	31,717	$	372	$	1,560,950

September 30, 2019
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
(Dollars in thousands)
AFS:
MBS $ 923,256
$ 15,571
$ 2,340
$ 936,487
GSE debentures 249,828
304
178
249,954
Municipal bonds 18,371
52
1
18,422
$ 1,191,455
$ 15,927
$ 2,519
$ 1,204,863

September 30, 2018
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
(Dollars in thousands)
AFS:
MBS $ 445,883
$ 3,270
$ 4,063
$ 445,090
GSE debentures 268,525
30
3,157
265,398
Municipal bonds 4,156
—
30
4,126
$ 718,564
$ 3,300
$ 7,250
$ 714,614
HTM:
MBS $ 591,900
$ 4,514
$ 15,589
$ 580,825
Municipal bonds 20,418
—
172
20,246
$ 612,318
$ 4,514
$ 15,761
$ 601,071


	September 30, 2019
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(Dollars in thousands)

MBS	$	923,256	$	15,571	$	2,340	$	936,487
GSE debentures	249,828		304		178		249,954

Municipal bonds	18,371		52		1		18,422
	$	1,191,455	$	15,927	$	2,519	$	1,204,863

104

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, 2020
	Less Than 12 Months				Equal to or Greater Than 12 Months
	Estimated		Unrealized		Estimated		Unrealized
	Fair Value		Losses		Fair Value		Losses
	(Dollars in thousands)

MBS	$	207,071	$	330	$	118	$	1
GSE debentures	74,959		41		0		0

Municipal bonds	0		0		0		0
	$	282,030	$	371	$	118	$	1

September 30, 2019
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:
MBS $ 111,368
$ 126
$ 199,442
$ 2,214
GSE debentures —
—
74,812
178
Municipal bonds 1,755
1
—
—
$ 113,123
$ 127
$ 274,254
$ 2,392

September 30, 2018
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:
MBS $ 324,563
$ 3,797
$ 8,129
$ 266
GSE debentures 101,735
1,231
148,049
1,926
Municipal bonds 4,126
30
—
—
$ 430,424
$ 5,058
$ 156,178
$ 2,192

HTM:
MBS $ 58,233
$ 904
$ 362,806
$ 14,685
Municipal bonds 18,345
171
685
1
$ 76,578
$ 1,075
$ 363,491
$ 14,686


	September 30, 2019
	Less Than 12 Months				Equal to or Greater Than 12 Months
	Estimated		Unrealized		Estimated		Unrealized
	Fair Value		Losses		Fair Value		Losses
	(Dollars in thousands)

MBS	$	111,368	$	126	$	199,442	$	2,214
GSE debentures	0		0		74,812		178

Municipal bonds	1,755		1		0		0
	$	113,123	$	127	$	274,254	$	2,392

The unrealized losses at September 30, 2020 and 2019 ~~and 2018~~ 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 changes in fair value caused by changes in ~~interest rates~~market yields as temporary. Therefore, these securities have not been classified as other-than-temporarily impaired. The impairment is also considered temporary because scheduled coupon payments have been made, it is anticipated that the entire principal balance will be collected as scheduled, and management neither intends 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 0 other-than-temporary impairments existed at September 30, ~~2019~~2020 or ~~2018.~~2019. See "Note 1. Summary of Significant Accounting Policies - Securities" for additional information regarding our impairment review and classification process for securities.

105

The amortized cost and estimated fair value of AFS debt securities as of September 30, ~~2019,~~2020, 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.



	Amortized		Estimated
	Cost		Fair Value
	(Dollars in thousands)
One year or less	$	3,987	$	4,009
One year through five years	375,696		376,138


	379,683		380,147
MBS	1,149,922		1,180,803
	$	1,529,605	$	1,560,950

Amortized Estimated
Cost Fair Value
(Dollars in thousands)
One year or less $ 57,744
$ 57,633
One year through five years 210,455
210,743
268,199
268,376
MBS 923,256
936,487
$ 1,191,455
$ 1,204,863

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,
	2020		2019		2018
	(Dollars in thousands)
Taxable	$	4,242	$	6,020	$	4,275
Non-taxable	225		346		395
	$	4,467	$	6,366	$	4,670

For the Year Ended September 30,
2019
2018
2017
(Dollars in thousands)
Taxable $ 6,020
$ 4,275
$ 3,847
Non-taxable 346
395
515
$ 6,366
$ 4,670
$ 4,362

The following table summarizes the carrying value of securities pledged as collateral for the obligations indicated below as of the dates presented.


	September 30,
	2020		2019
	(Dollars in thousands)
Public unit deposits	$	330,986	$	381,143
FRB of Kansas City	259,851		6,636
Repurchase agreements	0		108,271

	$	590,837	$	496,050

September 30,
2019
2018
(Dollars in thousands)
Public unit deposits $ 381,143
$ 515,553
Repurchase agreements 108,271
108,360
FRB of Kansas City 6,636
9,529
$ 496,050
$ 633,442

During fiscal year 2018, the Company sold trust preferred securities and received proceeds of $2.1 million. The Company recognized a gain of $9 thousand on the sale. All other dispositions of securities during fiscal years 2020, 2019, ~~2018,~~ and ~~2017~~2018 were the result of principal repayments, calls, or maturities.

106

~~101~~

5. LOANS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES

Loans receivable, net at September 30, ~~2019~~2020 and ~~2018~~2019 is summarized as follows:


	2020		2019
	(Dollars in thousands)
One- to four-family:
Originated	$	3,937,310	$	3,873,851
Correspondent purchased	2,101,082		2,349,877
Bulk purchased	208,427		252,347
Construction	34,593		36,758
Total	6,281,412		6,512,833
Commercial:
Commercial real estate	626,588		583,617
Commercial and industrial	97,614		61,094
Construction	105,458		123,159
Total	829,660		767,870


Consumer:
Home equity	103,838		120,587
Other	10,086		11,183
Total	113,924		131,770

Total loans receivable	7,224,996		7,412,473

Less:
ACL	31,527		9,226
Discounts/unearned loan fees	29,190		31,058
Premiums/deferred costs	(38,572)		(44,558)
	$	7,202,851	$	7,416,747

2019
2018
(Dollars in thousands)
One- to four-family:
Originated $ 3,873,851
$ 3,965,692
Correspondent purchased 2,349,877
2,505,987
Bulk purchased 252,347
293,607
Construction 36,758
33,149
Total 6,512,833
6,798,435
Commercial:
Commercial real estate 583,617
426,243
Commercial and industrial 61,094
62,869
Construction 123,159
80,498
Total 767,870
569,610
Consumer:
Home equity 120,587
129,588
Other 11,183
10,012
Total 131,770
139,600

Total loans receivable 7,412,473
7,507,645

Less:
ACL 9,226
8,463
Discounts/unearned loan fees 31,058
33,933
Premiums/deferred costs (44,558 ) (49,236 )
$ 7,416,747
$ 7,514,485



Maryland			27-2631712
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
700 South Kansas Avenue,	Topeka,	Kansas	66603
(Address of principal executive offices)			(Zip Code)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	CFFN	The NASDAQ Stock Market LLC


							Page No.
PART I			Item 1.		Business		2
			Item 1A.		Risk Factors		32
			Item 1B.		Unresolved Staff Comments		39
			Item 2.		Properties		39
			Item 3.		Legal Proceedings		39
			Item 4.		Mine Safety Disclosures		39


PART II						~~Page No.~~
~~PART I~~	Item 1.5.	~~Business~~		2
	~~Item 1A.~~	~~Risk Factors~~	31
	~~Item 1B.~~	~~Unresolved Staff Comments~~	37
	~~Item 2.~~	~~Properties~~	37
	~~Item 3.~~	~~Legal Proceedings~~	37
	~~Item 4.~~	~~Mine Safety Disclosures~~	37


~~PART II~~	~~Item 5.~~	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	3840
			Item 6.		Selected Financial Data		4042
			Item 7.		Management's Discussion and Analysis of Financial Condition and Results of Operations		4244
			Item 7A.		Quantitative and Qualitative Disclosures About Market Risk		7478
			Item 8.		Financial Statements and Supplementary Data		8185
			Item 9.		Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		~~135~~139
			Item 9A.		Controls and Procedures		~~135~~139
			Item 9B.		Other Information		~~135~~139


PART III			Item 10.		Directors, Executive Officers and Corporate Governance		~~136~~140
			Item 11.		Executive Compensation		~~136~~140
			Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		~~136~~140
			Item 13.		Certain Relationships and Related Transactions, and Director Independence		~~137~~141
			Item 14.		Principal Accounting Fees and Services		~~137~~141


PART IV			Item 15.		Exhibits and Financial Statement Schedules		~~137~~141
			Item 16.		Form 10-K Summary		141


INDEX TO EXHIBITS							~~138~~142


SIGNATURES							~~140~~144


				Total Number of	Approximate Dollar
	Total			Shares Purchased as	Value of Shares
	Number of	Average		Part of Publicly	that May Yet Be
	Shares	Price Paid		Announced Plans	Purchased Under the
	Purchased	per Share		or Programs	Plans or Programs
July 1, 2020 through
July 31, 2020	—	$	—	—	$	70,000,000
August 1, 2020 through
August 31, 2020	—	—		—	70,000,000
September 1, 2020 through
September 30, 2020	2,558,100	9.31		2,558,100	46,196,180
Total	2,558,100	9.31		2,558,100	46,196,180



				Total Number of		Approximate Dollar
	Total			Shares Purchased as		Value of Shares
	Number of	Average		Part of Publicly		that May Yet Be
	Shares	Price Paid		Announced Plans		Purchased Under the
	Purchased	per Share		or Programs		Plans or Programs
July 1, 2019 through
July 31, 2019	—	$	—	—		$	70,000,000
August 1, 2019 through
August 31, 2019	—	—		—		70,000,000
September 1, 2019 through
September 30, 2019	—	—		—	��	70,000,000
Total	—	—		—		70,000,000



	One- to Four-Family				Commercial				Construction⁽²⁾				Home Equity⁽³⁾				Other Consumer				Total
	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount			Yield
	(Dollars in thousands)
Amounts due:
Within one year⁽¹⁾	$	2,590	5.21	%	$	76,410	5.05	%	$	156,707	4.68	%	$	2,084	6.69	%	$	1,093	4.92	%	$	238,884		4.82	%

After one year:
Over one to two	2,977		4.47		117,508		4.13		3,210		6.81		211		6.26		1,249		5.96		125,155			4.23
Over two to three	6,402		4.06		66,485		4.61		—		—		331		5.85		1,818		5.55		75,036			4.59
Over three to five	50,480		3.98		68,080		5.30		—		—		1,637		5.84		5,491		4.48		125,688			4.74
Over five to ten	498,638		3.34		146,247		4.87		—		—		12,967		6.30		826		6.32		658,678			3.74
Over ten to fifteen	1,052,008		3.38		125,011		4.68		—		—		47,015		6.19		464		6.04		1,224,498			3.63
After fifteen years	4,862,980		3.73		44,970		4.88		—		—		56,342		6.04		242		5.24		4,964,534			3.77
Total due after one year	6,473,485		3.65		568,301		4.70		3,210		6.81		118,503		6.13		10,090		5.10		7,173,589			3.78

Totals loans	$	6,476,075	3.65		$	644,711	4.74		$	159,917	4.72		$	120,587	6.14		$	11,183	5.08		7,412,473			3.81

Less:
ACL																					9,226
Discounts/unearned loan fees																					31,058
Premiums/deferred costs																					(44,558		)
Total loans receivable, net																					$	7,416,747


	Period Ending							Period Ending
Index	9/30/2014	9/30/2015	9/30/2016	9/30/2017	9/30/2018	9/30/2019	Index	9/30/2015	9/30/2016	9/30/2017	9/30/2018	9/30/2019	9/30/2020
Capitol Federal Financial, Inc.	100.00	109.75	135.82	150.42	139.26	162.21	Capitol Federal Financial, Inc.	100.00	123.80	137.11	127.06	148.12	104.91
NASDAQ Composite Index	100.00	104.00	121.08	149.75	187.44	188.43	NASDAQ Composite Index	100.00	116.42	144.00	180.24	181.19	255.40
SNL U.S. Bank & Thrift Index	100.00	102.09	105.56	148.46	159.59	157.62	SNL U.S. Bank & Thrift Index	100.00	103.39	145.42	156.32	154.40	113.66



	September 30, 2019					September 30, 2018
	Amount			Rate		Amount			Rate
	(Dollars in thousands)
One- to four-family:
Originated	$	3,873,851		3.74	%	$	3,965,692		3.74	%
Correspondent purchased	2,349,877			3.64		2,505,987			3.59
Bulk purchased	252,347			2.94		293,607			2.60
Construction	36,758			4.00		33,149			4.03
Total	6,512,833			3.68		6,798,435			3.64
Commercial:
Commercial real estate	583,617			4.48		426,243			4.33
Commercial and industrial	61,094			5.14		62,869			5.00
Construction	123,159			4.81		80,498			4.59
Total	767,870			4.58		569,610			4.44
Consumer loans:
Home equity	120,587			6.15		129,588			5.97
Other	11,183			4.57		10,012			4.59
Total	131,770			6.02		139,600			5.87
Total loans receivable	7,412,473			3.81		7,507,645			3.74

Less:
ACL	9,226					8,463
Discounts/unearned loan fees	31,058					33,933
Premiums/deferred costs	(44,558		)			(49,236		)
Total loans receivable, net	$	7,416,747				$	7,514,485



	For the Three Months Ended
	September 30, 2019					June 30, 2019					March 31, 2019					December 31, 2018
	Amount			Rate		Amount			Rate		Amount			Rate		Amount			Rate
	(Dollars in thousands)
Beginning balance	$	7,501,741		3.83	%	$	7,564,076		3.82	%	$	7,518,887		3.78	%	$	7,507,645		3.74	%
Originated and refinanced:
Fixed	188,753			3.60		121,871			4.09		78,678			4.58		116,032			4.59
Adjustable	59,550			4.37		63,341			4.87		123,006			4.80		73,711			4.98
Purchased and participations:
Fixed	49,161			4.12		29,447			4.65		35,387			5.46		72,140			4.60
Adjustable	12,305			3.55		10,018			3.85		11,331			4.01		42,651			4.88
Change in undisbursed loan funds	12,293					34,742					30,500					(25,315		)
Repayments	(410,624		)			(321,439		)			(233,625		)			(267,469		)
Principal (charge-offs) recoveries, net	(110		)			(33		)			61					95
Other	(596		)			(282		)			(149		)			(603		)
Ending balance	$	7,412,473		3.81		$	7,501,741		3.83		$	7,564,076		3.82		$	7,518,887		3.78



	FHLB Advances Amount				Repurchase
Maturity by			Interest rate		Agreements		Total		Contractual	Effective
Fiscal Year	Fixed-rate		swaps⁽¹⁾		Amount		Amount		Rate	Rate⁽²⁾
	(Dollars in thousands)
2020	350,000		640,000		100,000		1,090,000		2.18	2.44
2021	550,000		—		—		550,000		2.27	2.27
2022	200,000		—		—		200,000		2.23	2.23
2023	200,000		—		—		200,000		1.98	1.98
2024	100,000		—		—		100,000		3.39	3.39
	$	1,400,000	$	640,000	$	100,000	$	2,140,000	2.25	2.38



	Retail/Business				Public Unit				Term
Maturity by	Certificate		Repricing		Certificate		Repricing		Borrowings		Repricing				Repricing
Quarter End	Amount		Rate		Amount		Rate		Amount		Rate		Total		Rate
	(Dollars in thousands)
December 31, 2019	$	336,610	1.65	%	$	112,275	2.18	%	$	350,000	2.40	%	$	798,885	2.05	%
March 31, 2020	249,725		1.78		56,767		2.37		65,000		2.57		371,492		2.01
June 30, 2020	403,455		2.11		54,246		2.40		200,000		2.35		657,701		2.21
September 30, 2020	256,086		2.09		36,673		2.24		475,000		2.48		767,759		2.34
	$	1,245,876	1.91		$	259,961	2.27		$	1,090,000	2.44		$	2,595,837	2.17



	For the Year Ended September 30,
	2019 vs. 2018
	Increase (Decrease) Due to
	Volume			Rate			Total
	(Dollars in thousands)
Interest-earning assets:
Loans receivable	$	14,735		$	9,296		$	24,031
MBS	398			2,713			3,111
Investment securities	(169		)	1,865			1,696
FHLB stock	(4,139		)	1,000			(3,139		)
Cash and cash equivalents	(25,628		)	7,991			(17,637		)
Total interest-earning assets	(14,803		)	22,865			8,062

Interest-bearing liabilities:
Checking	81			200			281
Savings	(100		)	(1,168		)	(1,268		)
Money market	251			4,078			4,329
Certificates of deposit	742			9,492			10,234
FHLB borrowings	(26,065		)	13,336			(12,729		)
Other borrowings	(294		)	(108		)	(402		)
Total interest-bearing liabilities	(25,385		)	25,830			445

Net change in net interest income	$	10,582		$	(2,965	)	$	7,617



	Loans⁽¹⁾				MBS				Investment Securities				Total
	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
	(Dollars in thousands)
Amounts due:
Within one year	$	238,884	4.82	%	$	159	4.10	%	$	57,633	1.53	%	$	296,676	4.18	%

After one year:
Over one to two years	125,155		4.23		13,886		2.68		79,376		2.13		218,417		3.37
Over two to three years	75,036		4.59		3,983		3.33		55,987		2.29		135,006		3.60
Over three to five years	125,688		4.74		67,795		1.66		75,380		2.40		268,863		3.31
Over five to ten years	658,678		3.74		359,492		2.38		—		—		1,018,170		3.26
Over ten to fifteen years	1,224,498		3.63		193,524		3.14		—		—		1,418,022		3.56
After fifteen years	4,964,534		3.77		297,648		2.93		—		—		5,262,182		3.72
Total due after one year	7,173,589		3.78		936,328		2.67		210,743		2.27		8,320,660		3.61

	$	7,412,473	3.81		$	936,487	2.67		$	268,376	2.11		$	8,617,336	3.63



Commitments to originate and purchase/participate in loans	$	230,996
Commitments to fund unused lines of credit	265,226
Standby letters of credit	1,248
Total	$	497,470



CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2019 and 2018 (Dollars in thousands, except per share amounts)

	2019			2018
ASSETS:
Cash and cash equivalents (includes interest-earning deposits of $198,809 and $122,733)	$	220,370		$	139,055
Securities:
Available-for-sale ("AFS"), at estimated fair value (amortized cost of $1,191,455 and $718,564)	1,204,863			714,614
Held-to-maturity ("HTM"), at amortized cost (estimated fair value of $0 and $601,071)	—			612,318
Loans receivable, net (allowance for credit losses ("ACL") of $9,226 and $8,463)	7,416,747			7,514,485
Federal Home Loan Bank Topeka ("FHLB") stock, at cost	98,456			99,726
Premises and equipment, net	96,784			96,005
Income taxes receivable, net	2			2,177
Other assets	302,796			271,167
TOTAL ASSETS	$	9,340,018		$	9,449,547

LIABILITIES:
Deposits	$	5,581,867		$	5,603,354
FHLB borrowings	2,139,989			2,174,981
Other borrowings	100,000			110,052
Advance payments by borrowers for taxes and insurance	65,686			65,264
Deferred income tax liabilities, net	14,282			21,253
Accounts payable and accrued expenses	101,868			83,021
Total liabilities	8,003,692			8,057,925

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, 141,440,030 and 141,225,516
shares issued and outstanding as of September 30, 2019 and 2018, respectively	1,414			1,412
Additional paid-in capital	1,210,226			1,207,644
Unearned compensation, Employee Stock Ownership Plan ("ESOP")	(34,692		)	(36,343		)
Retained earnings	174,277			214,569
Accumulated other comprehensive (loss) income ("AOCI"), net of tax	(14,899		)	4,340
Total stockholders' equity	1,336,326			1,391,622
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	9,340,018		$	9,449,547


See accompanying notes to consolidated financial statements.



CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED SEPTEMBER 30, 2019, 2018, and 2017 (Dollars in thousands, except per share amounts)

	2019		2018		2017
INTEREST AND DIVIDEND INCOME:
Loans receivable	$	284,229	$	260,198	$	253,393
Mortgage-backed securities ("MBS")	25,730		22,619		23,809
FHLB stock	7,823		10,962		12,233
Investment securities	6,366		4,670		4,362
Cash and cash equivalents	5,806		23,443		19,389
Total interest and dividend income	329,954		321,892		313,186
INTEREST EXPENSE:
Deposits	66,201		52,625		42,968
FHLB borrowings	54,391		67,120		68,871
Other borrowings	2,972		3,374		5,965
Total interest expense	123,564		123,119		117,804
NET INTEREST INCOME	206,390		198,773		195,382
PROVISION FOR CREDIT LOSSES	750		—		—
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES	205,640		198,773		195,382
NON-INTEREST INCOME:
Deposit service fees	12,740		15,636		15,053
Income from bank-owned life insurance ("BOLI")	2,432		1,875		2,233
Other non-interest income	6,786		4,524		4,910
Total non-interest income	21,958		22,035		22,196
NON-INTEREST EXPENSE:
Salaries and employee benefits	53,145		46,563		43,437
Information technology and related expense	17,615		13,999		11,282
Occupancy, net	13,032		11,455		10,814
Regulatory and outside services	5,813		5,709		5,821
Advertising and promotional	5,244		5,034		4,673
Deposit and loan transaction costs	2,478		5,621		5,284
Office supplies and related expense	2,439		1,888		1,981
Federal insurance premium	1,172		3,277		3,539
Other non-interest expense	6,006		3,356		2,827
Total non-interest expense	106,944		96,902		89,658
INCOME BEFORE INCOME TAX EXPENSE	120,654		123,906		127,920
INCOME TAX EXPENSE	26,411		24,979		43,783
NET INCOME	$	94,243	$	98,927	$	84,137

Basic earnings per share ("EPS")	$	0.68	$	0.73	$	0.63
Diluted EPS	$	0.68	$	0.73	$	0.63

See accompanying notes to consolidated financial statements.


	September 30, 2020
			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	$	3,001	$	4,347	$	7,348	$	3,950,387	$	3,957,735
Correspondent purchased	3,170		2,433		5,603		2,122,085		2,127,688
Bulk purchased	2,558		2,938		5,496		203,844		209,340
Commercial:
Commercial real estate	40		1,206		1,246		728,191		729,437
Commercial and industrial	5		157		162		96,124		96,286
Consumer:
Home equity	323		296		619		103,210		103,829
Other	75		8		83		9,980		10,063
	$	9,172	$	11,385	$	20,557	$	7,213,821	$	7,234,378


	For the Year Ended September 30, 2020
	Number	Pre-		Post-
	of	Restructured		Restructured
	Contracts	Outstanding		Outstanding
	(Dollars in thousands)
One- to four-family:
Originated	5	$	241	$	242
Correspondent purchased	1	192		191
Bulk purchased	1	75		134
Commercial:
Commercial real estate	1	837		837
Commercial and industrial	1	1,683		1,709
Consumer:
Home equity	2	45		44
Other	0	0		0
	11	$	3,073	$	3,157



	For the Year Ended September 30, 2019
	Number	Pre-		Post-
	of	Restructured		Restructured
	Contracts	Outstanding		Outstanding
	(Dollars in thousands)
One- to four-family:
Originated	3	$	385	$	386
Correspondent purchased	—	—		—
Bulk purchased	2	377		377
Commercial:
Commercial real estate	—	—		—
Commercial and industrial	—	—		—
Consumer:
Home equity	—	—		—
Other	—	—		—
	5	$	762	$	763



	For the Year Ended September 30, 2018
	Number	Pre-		Post-
	of	Restructured		Restructured
	Contracts	Outstanding		Outstanding
	(Dollars in thousands)
One- to four-family:
Originated	5	$	264	$	281
Correspondent purchased	2	406		406
Bulk purchased	—	—		—
Commercial:
Commercial real estate	—	—		—
Commercial and industrial	—	—		—
Consumer:
Home equity	—	—		—
Other	—	—		—
	7	$	670	$	687



	For the Year Ended September 30, 2017
	Number	Pre-		Post-
	of	Restructured		Restructured
	Contracts	Outstanding		Outstanding
	(Dollars in thousands)
One- to four-family:
Originated	112	$	11,940	$	12,402
Correspondent purchased	12	2,443		2,459
Bulk purchased	3	1,031		1,048
Commercial:
Commercial real estate	—	—		—
Commercial and industrial	—	—		—
Consumer:
Home equity	17	368		380
Other	—	—		—
	144	$	15,782	$	16,289


	For the Years Ended
	September 30, 2020			September 30, 2019			September 30, 2018
	Number of	Recorded		Number of	Recorded		Number of	Recorded
	Contracts	Investment		Contracts	Investment		Contracts	Investment
	(Dollars in thousands)
One- to four-family:
Originated	1	$	38	1	$	45	22	$	1,416
Correspondent purchased	0	0		0	0		1	124
Bulk purchased	1	134		0	0		3	1,040
Commercial:
Commercial real estate	—	0		0	0		0	0
Commercial and industrial	0	0		0	0		0	0
Consumer:
Home equity	1	9		0	0		4	133
Other	0	0		0	0		0	0
	3	$	181	1	$	45	30	$	2,713



2020	$	1,298
2021	1,187
2022	1,069
2023	930
2024	637
Thereafter	1,115
	$	6,236


			Core Deposit and
	Goodwill		Other Intangibles
	(Dollars in thousands)
Balance at September 30, 2017	$	0	$	0
Acquisition of CCB	7,989		10,052
Less: Amortization	0		(234)
Balance at September 30, 2018	7,989		9,819
Purchase accounting adjustments	1,335		0
Less: Amortization	0		(2,316)
Balance at September 30, 2019	9,324		7,503
Purchase accounting adjustments	0		0
Less: Amortization	0		(1,964)
Balance at September 30, 2020	$	9,324	$	5,539


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


	FHLB		Certificates
	Advances		of Deposit
	Amount		Amount
	(Dollars in thousands)
2021	$	843,000	$	1,505,501
2022	200,000		773,278
2023	300,000		426,520
2024	100,000		239,650
2025	250,000		75,391
Thereafter	100,000		904
	$	1,793,000	$	3,021,244


									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, 2020
CBLR	$	1,168,808	12.4	%	$	754,884	8.0	%	N/A	N/A




As of September 30, 2019
Tier 1 leverage	1,169,037		12.1		387,427		4.0		484,284	5.0
Common Equity Tier 1 ("CET1") capital	1,169,037		24.1		218,042		4.5		314,949	6.5
Tier 1 capital	1,169,037		24.1		290,722		6.0		387,630	8.0
Total capital	1,178,263		24.3		387,630		8.0		484,537	10.0

Company
As of September 30, 2020
CBLR	1,287,854		13.7		754,767		8.0		N/A	N/A




As of September 30, 2019
Tier 1 leverage	1,336,377		13.8		387,346		4.0		N/A	N/A
CET1 capital	1,336,377		27.6		218,070		4.5		N/A	N/A
Tier 1 capital	1,336,377		27.6		290,759		6.0		N/A	N/A
Total capital	1,345,603		27.8		387,679		8.0		N/A	N/A


	September 30, 2020
			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:
MBS	$	1,180,803	$	0	$	1,180,803	$	0
GSE debentures	370,340		0		370,340		0
Municipal bonds	9,807		0		9,807		0

	$	1,560,950	$	0	$	1,560,950	$	0



Liabilities:
Interest rate swaps	$	53,149	$	0	$	53,149	$	0


	2020
	Carrying		Estimated Fair Value
	Amount		Total		Level 1		Level 2		Level 3
	(Dollars in thousands)
Assets:
Cash and cash equivalents	$	185,148	$	185,148	$	185,148	$	0	$	0
AFS securities	1,560,950		1,560,950		0		1,560,950		0

Loans receivable	7,202,851		7,663,000		0		0		7,663,000

FHLB stock	93,862		93,862		93,862		0		0


Liabilities:
Deposits	6,191,408		6,259,080		3,170,164		3,088,916		0
Borrowings	1,789,313		1,840,605		0		1,840,605		0
Interest rate swaps	53,149		53,149		0		53,149		0


Operating lease expense	$	1,511
Variable lease expense	201
Short-term lease expense	17
Cash paid for amounts included in the measurement of lease liabilities	1,357



Fiscal year 2021	1,192
Fiscal year 2022	1,302
Fiscal year 2023	1,210
Fiscal year 2024	1,003
Fiscal year 2025	827
Thereafter	15,308
Total future minimum lease payments	20,842
Amounts representing interest	(6,129)
Present value of net future minimum lease payments	$	14,713


	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter		Total
	(Dollars and counts in thousands, except per share amounts)
2020
Total interest and dividend income	$	80,036	$	78,955	$	74,381	$	71,606	$	304,978
Net interest and dividend income	48,697		48,668		46,287		45,683		189,335
Provision for credit losses	225		22,075		0		0		22,300
Net income	22,511		4,276		19,474		18,279		64,540
Basic EPS	0.16		0.03		0.14		0.13		0.47
Diluted EPS	0.16		0.03		0.14		0.13		0.47
Dividends declared per share	0.425		0.085		0.085		0.085		0.68
Average number of basic shares outstanding	137,898		137,968		138,018		137,705		137,897
Average number of diluted shares outstanding	137,976		138,000		138,018		137,705		137,901



2018
Total interest and dividend income	$	80,644	$	81,774	$	82,161	$	77,313	$	321,892
Net interest and dividend income	49,374		49,889		49,433		50,077		198,773
Provision for credit losses	—		—		—		—		—
Net income	31,836		23,330		22,372		21,389		98,927
Basic EPS	0.24		0.17		0.17		0.16		0.73
Diluted EPS	0.24		0.17		0.17		0.16		0.73
Dividends declared per share	0.375		0.085		0.335		0.085		0.88
Average number of basic shares outstanding	134,373		134,428		134,484		135,500		134,698
Average number of diluted shares outstanding	134,467		134,475		134,530		135,556		134,759


2019
Total interest and dividend income	$	82,421	$	82,037	$	82,211	$	83,285	$	329,954
Net interest and dividend income	52,301		52,597		51,681		49,811		206,390
Provision for credit losses	0		0		450		300		750
Net income	24,383		24,554		22,897		22,409		94,243
Basic EPS	0.18		0.18		0.17		0.16		0.68
Diluted EPS	0.18		0.18		0.17		0.16		0.68
Dividends declared per share	0.475		0.085		0.335		0.085		0.98
Average number of basic shares outstanding	137,551		137,635		137,720		137,801		137,677
Average number of diluted shares outstanding	137,592		137,691		137,788		137,867		137,735


BALANCE SHEETS
SEPTEMBER 30, 2020 and 2019
(Dollars in thousands, except per share amounts)

	2020		2019
ASSETS:
Cash and cash equivalents	$	82,466	$	126,320
Investment in the Bank	1,165,813		1,168,986
Note receivable - ESOP	38,614		39,971
Other assets	707		711
Income taxes receivable, net	492		429

TOTAL ASSETS	$	1,288,092	$	1,336,417

LIABILITIES:


Accounts payable and accrued expenses	3,142		91
Deferred income tax liabilities, net	91		0
Total liabilities	3,233		91

STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 100,000,000 shares authorized, 0 shares issued or outstanding	0		0
Common stock, $.01 par value; 1,400,000,000 shares authorized, 138,956,296 and 141,440,030 shares issued and outstanding as of September 30, 2020 and 2019, respectively	1,389		1,414
Additional paid-in capital	1,189,853		1,210,226
Unearned compensation - ESOP	(33,040)		(34,692)
Retained earnings	143,162		174,277
AOCI, net of tax	(16,505)		(14,899)
Total stockholders' equity	1,284,859		1,336,326
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,288,092	$	1,336,417