| Loans Receivable And Allowance For Credit Losses | LOANS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES Loans receivable, net at September 30, 2024 and 2023 is summarized as follows: 2024 2023 (Dollars in thousands) One- to four-family: Originated $ 3,941,952 $ 3,978,837 Correspondent purchased 2,212,587 2,405,911 Bulk purchased 127,161 137,193 Construction 22,970 69,974 Total 6,304,670 6,591,915 Commercial: Commercial real estate 1,191,624 995,788 Commercial and industrial 129,678 112,953 Construction 187,676 178,746 Total 1,508,978 1,287,487 Consumer: Home equity 99,988 95,723 Other 9,615 9,256 Total 109,603 104,979 Total loans receivable 7,923,251 7,984,381 Less: ACL 23,035 23,759 Deferred loan fees/discounts 30,336 31,335 Premiums/deferred costs (37,458) (41,662) $ 7,907,338 $ 7,970,949 As of September 30, 2024 and 2023, the Bank serviced loans for others aggregating $38.1 million and $44.2 million, respectively. Such loans are not included in the accompanying consolidated balance sheets. Servicing loans for others generally consists of collecting mortgage payments, maintaining escrow accounts, disbursing payments to investors and foreclosure processing. Loan servicing income includes servicing fees withheld from investors and certain charges collected from borrowers, such as late payment fees. The Bank held borrowers' escrow balances on loans serviced for others of $942 thousand and $972 thousand as of September 30, 2024 and 2023, respectively. Lending Practices and Underwriting Standards - Originating one- to four-family loans is the Bank's primary lending business. The Bank also originates consumer loans primarily secured by one- to four-family residential properties and originates and participates in commercial loans. The Bank has historically also purchased one- to four-family loans from correspondent lenders, but during the current fiscal year the Bank suspended its one- to four-family correspondent lending channels for the foreseeable future. The Bank has a loan concentration in one- to four-family loans and a geographic concentration of these loans in Kansas and Missouri. One- to four-family loans - Full documentation to support an applicant's credit and income, and sufficient funds to cover all applicable fees and reserves at closing, are required on all loans. Properties securing one- to four-family loans are appraised by either staff appraisers or fee appraisers, both of which are independent of the loan origination function. The underwriting standards for loans purchased from correspondent lenders were generally similar to the Bank's internal underwriting standards. The underwriting of loans purchased from correspondent lenders on a loan-by-loan basis was performed by the Bank's underwriters. The Bank also originates owner-occupied construction-to-permanent loans secured by one- to four-family residential real estate. Construction draw requests and the supporting documentation are reviewed and approved by designated personnel. The Bank also performs regular documented inspections of the construction project to ensure the funds are being used for the intended purpose and the project is being completed according to the plans and specifications provided. Commercial loans - The Bank's commercial portfolio includes loans that are originated by the Bank or in participation with a lead bank. For commercial participation loans, the Bank performs the same underwriting procedures as if the loan was originated by the Bank. The Bank's commercial loan portfolio has a concentration in commercial real estate and commercial construction loans and a geographic concentration in Kansas, Texas, and Missouri. When underwriting a commercial real estate or commercial construction loan, several factors are considered, such as the income producing potential of the property, cash equity provided by the borrower, the financial strength of the borrower, managerial expertise of the borrower or tenant, feasibility studies, lending experience with the borrower and the marketability of the property. At the time of origination, LTV ratios on commercial real estate loans generally do not exceed 85% of the appraised value of the property securing the loans and the minimum DSCR is generally 1.15x. The Bank generally requires a guaranty on all commercial real estate loans, but for an experienced borrower with a strong DSCR and low LTV ratio, the Bank may allow the guaranty percentage to be reduced, phased out, or originated as a non-recourse loan. For commercial construction loans, LTV ratios generally do not exceed 80% of the projected appraised value of the property securing the loans and the minimum DSCR is generally 1.15x, but it applies to the projected cash flows, and the borrower must have successful experience with the construction and operation of properties similar to the subject property. Appraisals on properties securing these loans are performed by independent state certified fee appraisers. For construction loans, guaranties are typically required during the period of construction. After construction is complete, for select experienced borrowers that have a strong DSCR and low LTV ratio, the guaranty may be reduced or phased out when the property meets certain performance metrics. Additionally, the Bank generally requires the borrower to contribute equity at the start of a project and prior to any Bank funding. The Bank's commercial and industrial loans are generally made to borrowers and secured by assets located in the Bank's market areas and are underwritten on the basis of the borrower's ability to service the debt from income. Working capital loans are primarily collateralized by short-term assets whereas term loans are primarily collateralized by longer-term assets. In general, commercial and industrial loans involve different types of credit risk than commercial real estate loans due to the nature of the loans and the type of collateral securing the loans. As a result of these different complexities, variables and risks, commercial and industrial loans generally require evaluation of different metrics and factors before origination, and require more monitoring and servicing after origination than other types of loans. Management regularly monitors the level of risk in the entire commercial loan portfolio, including concentrations in such factors as geographic locations, collateral types, tenant brand name, borrowing relationships, and lending relationships in the case of participation loans, among other factors. Annual reviews are performed for larger loans and lending relationships. The annual reviews include evaluating updated financials, as well as performing stress tests to measure the ability of the loans to withstand certain stress scenarios such as interest rate increases, revenue decreases and expense increases. Consumer loans - The Bank offers a variety of consumer loans, the majority of which are home equity loans and lines of credit for which the Bank also has the first mortgage or the first lien position. The underwriting standards for consumer loans include a determination of an applicant's payment history on other debts and an assessment of an applicant's ability to meet existing obligations and payments on the proposed loan. Although creditworthiness of an applicant is a primary consideration, the underwriting process also includes a comparison of the value of the security in relation to the proposed loan amount. Credit Quality Indicators - Based on the Bank's lending emphasis and underwriting standards, management has segmented the loan portfolio into three segments: (1) one- to four-family; (2) consumer; and (3) commercial. See discussion regarding the credit risks for these loan segments in "Note 1. Summary of Significant Accounting Policies - Allowance for Credit Losses on Loans Receivable." These segments are further divided into classes for purposes of providing disaggregated credit quality information about the loan portfolio. The classes are: one- to four-family - originated, one- to four-family - correspondent purchased, one- to four-family - bulk purchased, consumer - home equity, consumer - other, commercial - commercial real estate, and commercial - commercial and industrial. One- to four-family construction loans are included in the originated class and commercial construction loans are included in the commercial real estate class. As part of the on-going monitoring of the credit quality of the Company's loan portfolio, management tracks certain credit quality indicators including trends related to loan classification and delinquency status. Loan Classification - In accordance with the Bank's asset classification policy, management regularly reviews the problem loans in the Bank's portfolio to determine whether any require classification. Loan classifications are defined as follows: • Special mention - These loans are performing loans on which known information about the collateral pledged or the possible credit problems of the borrower(s) have caused management to have doubts as to the ability of the borrower(s) to comply with present loan repayment terms and which may result in the future inclusion of such loans in the nonaccrual loan categories. • Substandard - A loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard loans include those characterized by the distinct possibility the Bank will sustain some loss if the deficiencies are not corrected. • Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses present make collection or liquidation in full on the basis of currently existing facts and conditions and values highly questionable and improbable. • Loss - Loans classified as loss are considered uncollectible and of such little value that their continuance as assets on the books is not warranted. The following tables set forth, as of the dates indicated, the amortized cost of loans by class of financing receivable, year of origination or most recent credit decision, and loan classification. All revolving lines of credit and revolving lines of credit converted to term loans are presented separately, regardless of origination year. Loans classified as doubtful or loss are individually evaluated for loss. At September 30, 2024 and September 30, 2023, there were no loans classified as doubtful, and all loans classified as loss were fully charged-off. September 30, 2024 Revolving Line of Current Fiscal Fiscal Fiscal Fiscal Revolving Credit Fiscal Year Year Year Year Prior Line of Converted Year 2023 2022 2021 2020 Years Credit to Term Total (Dollars in thousands) One- to four-family: Originated Pass $ 241,765 $ 325,492 $ 578,275 $ 809,643 $ 521,647 $ 1,447,237 $ — $ — $ 3,924,059 Special Mention — 295 1,229 1,982 772 9,565 — — 13,843 Substandard — 658 49 468 1,398 9,571 — — 12,144 Correspondent purchased Pass 798 325,384 482,103 570,970 225,650 623,496 — — 2,228,401 Special Mention — 993 659 658 398 977 — — 3,685 Substandard — — 1,662 265 — 5,130 — — 7,057 Bulk purchased Pass — — — — — 124,076 — — 124,076 Special Mention — — — — — — — — — Substandard — — — — — 3,514 — — 3,514 242,563 652,822 1,063,977 1,383,986 749,865 2,223,566 — — 6,316,779 Commercial: Commercial real estate Pass 326,158 400,649 284,493 135,935 74,174 110,309 23,865 — 1,355,583 Special Mention 12,440 2,543 — — 92 1,094 — — 16,169 Substandard 142 827 — — 647 636 50 — 2,302 Commercial and industrial Pass 46,335 32,112 18,131 8,075 1,350 2,051 20,876 — 128,930 Special Mention 401 — — — — — 12 — 413 Substandard 227 — — — — 82 26 — 335 385,703 436,131 302,624 144,010 76,263 114,172 44,829 — 1,503,732 Consumer: Home equity Pass 7,331 4,377 4,575 1,437 814 2,127 73,020 5,895 99,576 Special Mention — — — — — — 45 281 326 Substandard — 20 — — — 24 120 181 345 Other Pass 4,112 2,737 1,697 385 101 95 346 — 9,473 Special Mention — — — — — — — — — Substandard 80 14 44 — 4 — — — 142 11,523 7,148 6,316 1,822 919 2,246 73,531 6,357 109,862 Total $ 639,789 $ 1,096,101 $ 1,372,917 $ 1,529,818 $ 827,047 $ 2,339,984 $ 118,360 $ 6,357 $ 7,930,373 September 30, 2023 Revolving Line of Fiscal Fiscal Fiscal Fiscal Fiscal Revolving Credit Year Year Year Year Year Prior Line of Converted 2023 2022 2021 2020 2019 Years Credit to Term Total (Dollars in thousands) One- to four-family: Originated Pass $ 318,569 $ 597,298 $ 874,518 $ 568,081 $ 251,773 $ 1,398,616 $ — $ — $ 4,008,855 Special Mention — 1,883 1,468 767 1,863 8,067 — — 14,048 Substandard 292 155 221 564 939 7,954 — — 10,125 Correspondent purchased Pass 346,084 517,976 607,968 246,926 62,744 643,520 — — 2,425,218 Special Mention 308 674 1,674 420 357 1,133 — — 4,566 Substandard — — — 564 — 5,402 — — 5,966 Bulk purchased Pass — — — — — 134,464 — — 134,464 Special Mention — — — — — — — — — Substandard — — — — — 3,208 — — 3,208 665,253 1,117,986 1,485,849 817,322 317,676 2,202,364 — — 6,606,450 Commercial: Commercial real estate Pass 403,269 301,164 208,942 81,478 82,027 79,170 10,448 — 1,166,498 Special Mention 2,483 — — — — — — — 2,483 Substandard 67 — — 594 219 255 — — 1,135 Commercial and industrial Pass 30,206 23,166 11,740 3,228 2,693 748 27,104 — 98,885 Special Mention 13,191 — — — — — 699 — 13,890 Substandard — — — 73 — 82 — — 155 449,216 324,330 220,682 85,373 84,939 80,255 38,251 — 1,283,046 Consumer: Home equity Pass 5,501 5,624 1,955 1,069 746 2,224 72,119 6,205 95,443 Special Mention — 46 — — — 21 62 195 324 Substandard — — — — — 15 125 48 188 Other Pass 4,758 2,693 787 338 133 129 412 — 9,250 Special Mention — — — 4 — — — 1 5 Substandard 2 — — — — — — — 2 10,261 8,363 2,742 1,411 879 2,389 72,718 6,449 105,212 Total $ 1,124,730 $ 1,450,679 $ 1,709,273 $ 904,106 $ 403,494 $ 2,285,008 $ 110,969 $ 6,449 $ 7,994,708 Delinquency Status - The following tables set forth, as of the dates indicated, the amortized cost of current loans, loans 30 to 89 days delinquent, and loans 90 or more days delinquent or in foreclosure ("90+/FC"), by class of financing receivable and year of origination or most recent credit decision as of the dates indicated. All revolving lines of credit and revolving lines of credit converted to term loans are presented separately, regardless of origination year. September 30, 2024 Revolving Line of Current Fiscal Fiscal Fiscal Fiscal Revolving Credit Fiscal Year Year Year Year Prior Line of Converted Year 2023 2022 2021 2020 Years Credit to Term Total (Dollars in thousands) One- to four-family: Originated Current $ 241,765 $ 326,211 $ 578,430 $ 811,455 $ 521,550 $ 1,459,500 $ — $ — $ 3,938,911 30-89 — 64 1,074 638 1,666 5,422 — — 8,864 90+/FC — 170 49 — 601 1,451 — — 2,271 Correspondent purchased Current 798 326,377 482,598 571,182 226,048 624,961 — — 2,231,964 30-89 — — 164 446 — 2,479 — — 3,089 90+/FC — — 1,662 265 — 2,163 — — 4,090 Bulk purchased Current — — — — — 125,982 — — 125,982 30-89 — — — — — 69 — — 69 90+/FC — — — — — 1,539 — — 1,539 242,563 652,822 1,063,977 1,383,986 749,865 2,223,566 — — 6,316,779 Commercial: Commercial real estate Current 338,511 403,193 284,493 135,932 74,266 110,448 23,055 — 1,369,898 30-89 229 807 — 3 — 1,094 860 — 2,993 90+/FC — 19 — — 647 497 — — 1,163 Commercial and industrial Current 46,736 32,112 17,990 8,052 1,350 2,051 20,914 — 129,205 30-89 227 — 141 23 — — — — 391 90+/FC — — — — — 82 — — 82 385,703 436,131 302,624 144,010 76,263 114,172 44,829 — 1,503,732 Consumer: Home equity Current 7,331 4,378 4,540 1,437 814 2,133 72,721 6,084 99,438 30-89 — — 35 — — — 349 87 471 90+/FC — 19 — — — 18 115 186 338 Other Current 4,109 2,728 1,641 327 101 95 344 — 9,345 30-89 3 9 100 58 — — 2 — 172 90+/FC 80 14 — — 4 — — — 98 11,523 7,148 6,316 1,822 919 2,246 73,531 6,357 109,862 Total $ 639,789 $ 1,096,101 $ 1,372,917 $ 1,529,818 $ 827,047 $ 2,339,984 $ 118,360 $ 6,357 $ 7,930,373 September 30, 2023 Revolving Line of Fiscal Fiscal Fiscal Fiscal Fiscal Revolving Credit Year Year Year Year Year Prior Line of Converted 2023 2022 2021 2020 2019 Years Credit to Term Total (Dollars in thousands) One- to four-family: Originated Current $ 318,211 $ 598,283 $ 875,563 $ 567,975 $ 253,546 $ 1,407,090 $ — $ — $ 4,020,668 30-89 358 898 644 1,437 820 5,960 — — 10,117 90+/FC 292 155 — — 209 1,587 — — 2,243 Correspondent purchased Current 346,084 518,650 608,573 247,346 62,652 643,739 — — 2,427,044 30-89 308 — 1,069 564 449 2,862 — — 5,252 90+/FC — — — — — 3,454 — — 3,454 Bulk purchased Current — — — — — 136,577 — — 136,577 30-89 — — — — — 153 — — 153 90+/FC — — — — — 942 — — 942 665,253 1,117,986 1,485,849 817,322 317,676 2,202,364 — — 6,606,450 Commercial: Commercial real estate Current 404,867 301,164 208,942 81,478 82,027 79,188 10,448 — 1,168,114 30-89 36 — — — — — — — 36 90+/FC 916 — — 594 219 237 — — 1,966 Commercial and industrial Current 43,397 23,166 11,740 3,228 2,690 748 27,684 — 112,653 30-89 — — — — 2 — 57 — 59 90+/FC — — — 73 1 82 62 — 218 449,216 324,330 220,682 85,373 84,939 80,255 38,251 — 1,283,046 Consumer: Home equity Current 5,428 5,631 1,955 990 746 2,195 71,986 6,312 95,243 30-89 73 39 — 79 — 50 239 125 605 90+/FC — — — — — 15 81 11 107 Other Current 4,737 2,613 765 338 132 129 412 — 9,126 30-89 17 80 22 4 1 — — 1 125 90+/FC 6 — — — — — — — 6 10,261 8,363 2,742 1,411 879 2,389 72,718 6,449 105,212 Total $ 1,124,730 $ 1,450,679 $ 1,709,273 $ 904,106 $ 403,494 $ 2,285,008 $ 110,969 $ 6,449 $ 7,994,708 Gross Charge-Offs - Since the adoption of ASU 2022-02 on October 1, 2023, the Company has been required to present gross charge-offs by class of financing receivable and year of origination or most recent credit decision. The following table sets forth the required gross charge-off information for the year ended September 30, 2024. Revolving Lines Current Fiscal Fiscal Fiscal Fiscal Revolving of Credit Fiscal Year Year Year Year Prior Lines of Converted to Year 2023 2022 2021 2020 Years Credit Term Total (Dollars in thousands) One- to four-family: Originated $ — $ — $ — $ — $ — $ — $ — $ — $ — Correspondent purchased — — — — — — — — — Bulk purchased — — — — — — — — — — — — — — — — — — Commercial: Commercial real estate 50 — — — — 30 — — 80 Commercial and Industrial — — — — — — — — — 50 — — — — 30 — — 80 Consumer: Home Equity 46 1 — — — — — — 47 Other — 9 15 — — 9 — — 33 46 10 15 — — 9 — — 80 Total $ 96 $ 10 $ 15 $ — $ — $ 39 $ — $ — $ 160 Delinquent and Nonaccrual Loans - The following tables present the amortized cost, at the dates indicated, by class, of loans 30 to 89 days delinquent, loans 90 or more days delinquent or in foreclosure, total delinquent loans, current loans, and total loans. At September 30, 2024 and 2023, all loans 90 or more days delinquent were on nonaccrual status. September 30, 2024 90 or More Days Total Total 30 to 89 Days Delinquent or Delinquent Current Amortized Delinquent in Foreclosure Loans Loans Cost (Dollars in thousands) One- to four-family: Originated $ 8,864 $ 2,271 $ 11,135 $ 3,938,911 $ 3,950,046 Correspondent purchased 3,089 4,090 7,179 2,231,964 2,239,143 Bulk purchased 69 1,539 1,608 125,982 127,590 Commercial: Commercial real estate 2,993 1,163 4,156 1,369,898 1,374,054 Commercial and industrial 391 82 473 129,205 129,678 Consumer: Home equity 471 338 809 99,438 100,247 Other 172 98 270 9,345 9,615 $ 16,049 $ 9,581 $ 25,630 $ 7,904,743 $ 7,930,373 September 30, 2023 90 or More Days Total Total 30 to 89 Days Delinquent or Delinquent Current Amortized Delinquent in Foreclosure Loans Loans Cost (Dollars in thousands) One- to four-family: Originated $ 10,117 $ 2,243 $ 12,360 $ 4,020,668 $ 4,033,028 Correspondent purchased 5,252 3,454 8,706 2,427,044 2,435,750 Bulk purchased 153 942 1,095 136,577 137,672 Commercial: Commercial real estate 36 1,966 2,002 1,168,114 1,170,116 Commercial and industrial 59 218 277 112,653 112,930 Consumer: Home equity 605 107 712 95,243 95,955 Other 125 6 131 9,126 9,257 $ 16,347 $ 8,936 $ 25,283 $ 7,969,425 $ 7,994,708 The amortized cost of mortgage loans secured by residential real estate for which formal foreclosure proceedings were in process as of September 30, 2024 and 2023 was $1.6 million and $2.5 million, respectively, which is included in loans 90 or more days delinquent or in foreclosure in the tables above. The carrying value of residential OREO held as a result of obtaining physical possession upon completion of a foreclosure or through completion of a deed in lieu of foreclosure was $55 thousand at September 30, 2024 and $219 thousand at September 30, 2023. The following table presents the amortized cost at September 30, 2024 and September 30, 2023, by class, of loans classified as nonaccrual. Nonaccrual loans with no ACL were individually evaluated for loss and any losses have been charged off. 2024 2023 Nonaccrual Loans Nonaccrual Loans with No ACL Nonaccrual Loans Nonaccrual Loans with No ACL (Dollars in thousands) One- to four-family: Originated $ 2,271 $ 764 $ 2,457 $ 471 Correspondent purchased 4,090 182 3,739 285 Bulk purchased 1,539 812 942 630 Commercial: Commercial real estate 1,495 901 1,984 446 Commercial and industrial 335 335 218 155 Consumer: Home equity 338 — 107 3 Other 98 16 6 — $ 10,166 $ 3,010 $ 9,453 $ 1,990 Loan Modifications - The following table presents the amortized cost basis of loans as of September 30, 2024 that were both experiencing financial difficulties and modified during the year ended September 30, 2024, by class of financing receivable and by type of modification. Also presented in the table is the percentage of the amortized cost basis of loans as of September 30, 2024 that were modified for borrowers experiencing financial difficulties as compared to the amortized cost basis of each class of financing receivable as of September 30, 2024. During the year ended September 30, 2024, there was a $50 thousand charge-off related to a commercial real estate loan modified during the year ended September 30, 2024. The Company has not committed to lend additional amounts to borrowers included in these tables. Term Extension, Term Payment Extension Delay, and Total Interest and Interest Class of Principal Rate Payment Term Payment Rate Financing Forgiveness Reduction Delay Extension Delay Reduction Total Receivable (Dollars in thousands) One- to four-family: Originated $ — $ — $ — $ 1,547 $ 6,992 $ — $ 8,539 0.22 % Correspondent — — — 338 1,716 — 2,054 0.09 Bulk purchased — — — — — — — — — — — 1,885 8,708 — 10,593 0.17 Commercial: Commercial real estate — — 8,196 — 192 — 8,388 0.61 Commercial and industrial — — — — 653 12 665 0.51 — — 8,196 — 845 12 9,053 0.60 Consumer loans: Home equity — — 89 — — — 89 0.09 Other — — — — — — — — — — 89 — — — 89 0.08 Total $ — $ — $ 8,285 $ 1,885 $ 9,553 $ 12 $ 19,735 0.25 Financial effect of loan modifications - The table below presents the financial effects of loan modifications during the year ended September 30, 2024, including the weighted average term extension, weighted average payment delay, and weighted average interest rate reduction. For the Year Ended September 30, 2024 Term Payment Interest Rate Extension Delays Reduction One- to four-family: Originated 33 months 4 months N/A Correspondent 36 months 4 months N/A Commercial: Commercial real estate 24 months 6 months N/A Commercial and industrial 6 months 6 months 0.50 % Consumer home equity N/A 7 months N/A Performance of loan modifications - The following table provides information about the subsequent performance during the year ended September 30, 2024 of loans modified for borrowers experiencing financial difficulty. For the Year Ended September 30, 2024 30 to 89 Days 90 or More Days Total Current Total (Dollars in thousands) One- to four-family: Originated $ 1,800 $ 720 $ 2,520 $ 6,019 $ 8,539 Correspondent 284 425 709 1,345 2,054 Bulk purchased — — — — — Commercial: Commercial real estate 142 50 192 8,196 8,388 Commercial & industrial 227 — 227 438 665 Consumer loans: Home equity — — — 89 89 Other — — — — — $ 2,453 $ 1,195 $ 3,648 $ 16,087 $ 19,735 TDRs - Prior to the adoption of ASU 2022-02 on October 1, 2023, loans were accounted for as TDRs if the Bank granted a concession to a borrower experiencing financial difficulties. The following tables present the amortized cost for the periods presented, prior to restructuring and immediately after restructuring in all loans restructured during the years presented. For the Year Ended September 30, 2023 Number Pre- Post- of Restructured Restructured Contracts Outstanding Outstanding (Dollars in thousands) One- to four-family: Originated 1 $ 110 $ 110 Correspondent purchased 1 282 285 Bulk purchased 1 239 257 Commercial: Commercial real estate — — — Commercial and industrial — — — Consumer: Home equity 1 38 38 Other — — — 4 $ 669 $ 690 For the Year Ended September 30, 2022 Number Pre- Post- of Restructured Restructured Contracts Outstanding Outstanding (Dollars in thousands) One- to four-family: Originated 3 $ 156 $ 156 Correspondent purchased — — — Bulk purchased — — — Commercial: Commercial real estate — — — Commercial and industrial 2 124 124 Consumer: Home equity 1 19 19 Other — — — 6 $ 299 $ 299 The following table provides information on TDRs that became delinquent during the periods presented within 12 months after being restructured. For the Years Ended September 30, 2023 September 30, 2022 Number of Amortized Number of Amortized Contracts Cost Contracts Cost (Dollars in thousands) One- to four-family: Originated 1 $ 8 2 $ 697 Correspondent purchased — — — — Bulk purchased — — — — Commercial: Commercial real estate — — — — Commercial and industrial — — — — Consumer: Home equity — — 1 19 Other — — — — 1 $ 8 3 $ 716 Allowance for Credit Losses - The following table summarizes ACL activity, by loan portfolio segment, for the periods presented. For the Year Ended September 30, 2024 One- to Four-Family Correspondent Bulk Originated Purchased Purchased Total Commercial Consumer Total (Dollars in thousands) Beginning balance $ 2,149 $ 2,972 $ 207 $ 5,328 $ 18,180 $ 251 $ 23,759 Adoption of ASU 2022-02 3 1 14 18 2 — 20 Balance at October 1, 2023 2,152 2,973 221 5,346 18,182 251 23,779 Charge-offs — — — — (80) (80) (160) Recoveries 28 — — 28 5 16 49 Provision for credit losses (514) (1,112) (75) (1,701) 1,047 21 (633) Ending balance $ 1,666 $ 1,861 $ 146 $ 3,673 $ 19,154 $ 208 $ 23,035 For the Year Ended September 30, 2023 One- to Four-Family Correspondent Bulk Originated Purchased Purchased Total Commercial Consumer Total (Dollars in thousands) Beginning balance $ 2,066 $ 2,734 $ 206 $ 5,006 $ 11,120 $ 245 $ 16,371 Charge-offs — — — — (75) (40) (115) Recoveries 6 — — 6 1 2 9 Provision for credit losses 77 238 1 316 7,134 44 7,494 Ending balance $ 2,149 $ 2,972 $ 207 $ 5,328 $ 18,180 $ 251 $ 23,759 For the Year Ended September 30, 2022 One- to Four-Family Correspondent Bulk Originated Purchased Purchased Total Commercial Consumer Total (Dollars in thousands) Beginning balance $ 1,612 $ 2,062 $ 304 $ 3,978 $ 15,652 $ 193 $ 19,823 Charge-offs (9) — — (9) (40) (21) (70) Recoveries 138 — — 138 101 17 256 Provision for credit losses 325 672 (98) 899 (4,593) 56 (3,638) Ending balance $ 2,066 $ 2,734 $ 206 $ 5,006 $ 11,120 $ 245 $ 16,371 The key assumptions in the Company's ACL model at September 30, 2024 include the economic forecast, the forecast and reversion to mean time periods, and prepayment and curtailment assumptions. Management also considered certain qualitative factors when evaluating the adequacy of the ACL at September 30, 2024. The key assumptions utilized in estimating the Company's ACL at September 30, 2024 are discussed below. • Economic Forecast - Management considered several economic forecasts provided by a third party and selected an economic forecast that was the most appropriate considering the facts and circumstances at September 30, 2024. The forecasted economic indices applied to the model at September 30, 2024 were the national unemployment rate, changes in commercial real estate price index, changes in home values, and changes in the U.S. gross domestic product. The economic index most impactful to all loan pools within the model at September 30, 2024 was the national unemployment rate. The forecasted national unemployment rate in the economic scenario selected by management at September 30, 2024 had the national unemployment rate gradually increasing to 4.1% by September 30, 2025, which was the end of our four-quarter forecast time period. • Forecast and reversion to mean time periods - The forecasted time period and the reversion to mean time period were each four quarters for all of the economic indices at September 30, 2024. • Prepayment and curtailment assumptions - The assumptions used at September 30, 2024 were generally based on actual historical prepayment and curtailment speeds, adjusted by management as deemed necessary. The prepayment and curtailment assumptions vary for each respective loan pool in the model. • Qualitative factors - Management applied qualitative factors at September 30, 2024 to account for large dollar commercial loan concentrations and potential downside market risk with the recent housing price appreciation related to one-to four-family loans. These qualitative factors were applied to account for credit risks not fully reflected in the discounted cash flow model. ◦ The Company's commercial real estate and construction loans generally have low LTV ratios and strong DSCRs which serve as indicators that losses in the commercial real estate and construction loan portfolios might be unlikely; however, because there is uncertainty surrounding the nature, timing and amount of expected losses, management believes that in the event of a realized loss within the large dollar commercial loan pools, the magnitude of such a loss is likely to be significant. The large dollar commercial loan concentration qualitative factor addresses the risk associated with a large dollar relationship deteriorating due to a loss event. As part of its analysis, management considered external data including historical loss information for the industry and commercial real estate price index trending information from a variety of reputable sources to help determine the amount of this qualitative factor. ◦ For one- to four-family loans, management believes there is potential downside market risk with the recent housing price appreciation related to, in particular, newer originations and developed a qualitative factor to account for this risk. To determine the appropriate amount of the one- to four-family loan qualitative factor as of September 30, 2024, management considered external historical home price index trending information, along with the Bank's recent origination/purchase activity, historical loan loss experience and portfolio balance trending, the one-to four-family loan portfolio composition with regard to loan size, and management's knowledge of the Bank's loan portfolio and the one- to four-family lending industry. This qualitative factor replaced the economic uncertainties qualitative factor that was in place at September 30, 2023 and was less than the amount of the economic uncertainty qualitative factor at September 30, 2024 resulting in a decrease in ACL for one- to four-family loans compared to the prior year. Reserve for Off-Balance Sheet Credit Exposures - The following is a summary of the changes in the reserve for off-balance sheet credit exposures during the periods indicated. At September 30, 2024 and 2023, the Bank's off-balance sheet credit exposures totaled $826.5 million and $837.7 million, respectively. The increase in the reserve for off-balance sheet credit exposures during the current year was due to an increase in the balance of commercial off-balance sheet credits along with an increase in the ACL to loan ratio, specifically for commercial construction loans. For the Years Ended September 30, 2024 September 30, 2023 (Dollars in thousands) Beginning balance $ 4,095 $ 4,751 Adoption of ASU 2022-02 16 — Provision for credit losses 1,892 (656) Ending balance $ 6,003 $ 4,095 |
