UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

FORM 10-K
ý☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 20172023
or
¨☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For transition period from              to             
Commission File Number 001-33390
___________________________________________ 
TFS FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
 ___________________________________________ 
United States of America52-2054948
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
7007 Broadway Avenue
Cleveland, Ohio44105
(Address of Principal Executive Offices)(Zip Code)
(216) 441-6000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, par value $0.01 per share
(Title of class)
The NASDAQ Stock Market, LLC
(Name of exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act: None
___________________________________________ 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes x    No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  o    No  x
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer", "accelerated filer,” "smaller reporting company," and "emerging growth company" Rule 12b-2 of the Exchange Act:
Large accelerated filer  x
Accelerated filer  o
Non-accelerated filer  o
(do not check if a smaller reporting company)

Smaller reporting company o
Emerging growth company o
If an emerging company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)    Yes  o    No x
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, computed by reference to the last sale price on March 31, 2017, as reported by the NASDAQ Global Select Market, was approximately $909.1 million.
At November 20, 2017, there were 281,071,072 shares of the Registrant’s common stock, par value $0.01 per share, outstanding, of which 227,119,132 shares, or 80.80% of the Registrant’s common stock, were held by Third Federal Savings and Loan Association of Cleveland, MHC, the Registrant’s mutual holding company.

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s Proxy Statement for the 2018 Annual Meeting of Shareholders are incorporated by reference in Part III hereof to the extent indicated therein.

TFS Financial Corporation
INDEX
Part I
Item 1.
Business
4
Item 1A.
Risk Factors
42
Item 1B.
Unresolved Staff Comments
47
Item 2.
Properties
47
Item 3.
Legal Proceedings
48
Item 4.
Mine Safety Disclosures
48
Part II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
48
Item 6.
Selected Financial Data
50
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operation
54
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
71
Item 8.
Financial Statements and Supplementary Data
75
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
75
Item 9A.
Controls and Procedures
76
Item 9B.
Other Information
78
Part III
Item 10.
Directors, Executive Officers and Corporate Governance
78
Item 11.
Executive Compensation
79
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
79
Item 13.
Certain Relationships and Related Transactions, and Director Independence
79
Item 14.
Principal Accounting Fees and Services
79
Part IV
Item 15.
Exhibits and Financial Statement Schedules
80
Item 16.
Form 10-K Summary
80


GLOSSARY OF TERMS
TFS Financial Corporation provides the following list of acronyms and other terms as a tool for the reader. The acronyms and other terms identified below are used throughout the document.
AOCI:  Accumulated Other Comprehensive Income
FRB-Cleveland: Federal Reserve Bank of Cleveland
ARM: Adjustable Rate Mortgage
FRS:  Board of Governors of the Federal Reserve System
ASC: Accounting Standards Codification
GAAP:  Generally Accepted Accounting Principles
ASU: Accounting Standards Update
Ginnie Mae:  Government National Mortgage Association
Association: Third Federal Savings and Loan
GVA:  General Valuation Allowances
Association of Cleveland
HARP:  Home Affordable Refinance Program
BOLI:  Bank Owned Life Insurance
HPI:  Home Price Index
CDs:  Certificates of Deposit
IRR:  Interest Rate Risk
CFPB:  Consumer Financial Protection Bureau
IRS:  Internal Revenue Service
CLTV:  Combined Loan-to-Value
IVA:  Individual Valuation Allowance
Company: TFS Financial Corporation and its
LIHTC: Low Income Housing Tax Credit
subsidiaries
LIP:  Loans-in-Process
DFA: Dodd-Frank Wall Street Reform and Consumer
LTV:  Loan-to-Value
Protection Act of 2010
MGIC:  Mortgage Guaranty Insurance Corporation
EaR:  Earnings at Risk
OCC:  Office of the Comptroller of the Currency
EPS:  Earnings per Share

OCI:  Other Comprehensive Income
ESOP:  Third Federal Employee (Associate) Stock
OTS:  Office of Thrift Supervision
Ownership Plan
PMI:  Private Mortgage Insurance
EVE:  Economic Value of Equity
PMIC:  PMI Mortgage Insurance Co.
FASB:  Financial Accounting Standards Board
QTL:  Qualified Thrift Lender
FICO:  Financing Corporation
REMICs:  Real Estate Mortgage Investment Conduits
FDIC:  Federal Deposit Insurance Corporation
SEC:  United States Securities and Exchange
FHFA:  Federal Housing Finance Agency
Commission
FHLB:  Federal Home Loan Bank
TDR:  Troubled Debt Restructuring
Fannie Mae:  Federal National Mortgage Association
Third Federal Savings, MHC: Third Federal Savings
Freddie Mac:  Federal Home Loan Mortgage Corporation
and Loan Association of Cleveland, MHC


PART I

Item 1.Business

Forward Looking Statements
This report contains forward-looking statements, which can be identified by the use of such words as estimate, project, believe, intend, anticipate, plan, seek, expect and similar expressions. These forward-looking statements include, among other things:
statements of our goals, intentions and expectations;
statements regarding our business plans and prospects and growth and operating strategies;
statements concerning trends in our provision for loan losses and charge-offs;
statements regarding the trends in factors affecting our financial condition and results of operations, including asset quality of our loan and investment portfolios; and
estimates of our risks and future costs and benefits.
These forward-looking statements are subject to significant risks, assumptions and uncertainties, including, among other things, the following important factors that could affect the actual outcome of future events:
significantly increased competition among depository and other financial institutions;
inflation and changes in the interest rate environment that reduce our interest margins or reduce the fair value of financial instruments;
general economic conditions, either globally, nationally or in our market areas, including employment prospects, real estate values and conditions that are worse than expected;
decreased demand for our products and services and lower revenue and earnings because of a recession or other events;
adverse changes and volatility in the securities markets, credit markets or real estate markets;
legislative or regulatory changes that adversely affect our business, including changes in regulatory costs and capital requirements and changes related to our ability to pay dividends and the ability of Third Federal Savings, MHC to waive dividends;
our ability to enter new markets successfully and take advantage of growth opportunities, and the possible short-term dilutive effect of potential acquisitions or de novo branches, if any;
changes in consumer spending, borrowing and savings habits;
changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board or the Public Company Accounting Oversight Board;
future adverse developments concerning Fannie Mae or Freddie Mac;
changes in monetary and fiscal policy of the U.S. Government, including policies of the U.S. Treasury and the FRS and changes in the level of government support of housing finance;
changes in policy and/or assessment rates of taxing authorities that adversely affect us;
changes in our organization, or compensation and benefit plans and changes in expense trends (including, but not limited to trends affecting non-performing assets, charge-offs and provisions for loan losses);
the continuing governmental efforts to restructure the U.S. financial and regulatory system;
the inability of third-party providers to perform their obligations to us;
a slowing or failure of the moderate economic recovery;
the adoption of implementing regulations by a number of different regulatory bodies under the DFA, and uncertainty in the exact nature, extent and timing of such regulations and the impact they will have on us;
the strength or weakness of the real estate markets and of the consumer and commercial credit sectors and its impact on the credit quality of our loans and other assets, and
the ability of the U.S. Government to manage federal debt limits.
Because of these and other uncertainties, our actual future results may be materially different from the results indicated by any forward-looking statements. Any forward-looking statement made by us in this report speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by law. Please see Item 1A. Risk Factors for a discussion of certain risks related to our business.

TFS FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
 ___________________________________________ 
United States of America52-2054948
(State or Other Jurisdiction of
Incorporation or Organization)		(I.R.S. Employer
Identification No.)
7007 Broadway Avenue
Cleveland,Ohio44105
(Address of Principal Executive Offices)(Zip Code)
(216) 441-6000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange in which registered
Common Stock, par value $0.01 per shareTFSLThe NASDAQ Stock Market, LLC

Securities registered pursuant to Section 12(g) of the Act: None
___________________________________________ 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes x    No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  o    No  x
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No o
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer", "accelerated filer,” "smaller reporting company," and "emerging growth company" Rule 12b-2 of the Exchange Act:
Large accelerated filerx
Accelerated filer o
Non-accelerated filero

Smaller reporting company☐
Emerging growth company☐
If an emerging company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. YesxNo☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)    Yes  ☐    No x
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, computed by reference to the last sale price on March 31, 2023, as reported by the NASDAQ Global Select Market, was approximately $651.97 million.
At November 20, 2023, there were 280,359,173 shares of the Registrant’s common stock, par value $0.01 per share, outstanding, of which 227,119,132 shares, or 81.01% of the Registrant’s common stock, were held by Third Federal Savings and Loan Association of Cleveland, MHC, the Registrant’s mutual holding company.

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s Proxy Statement for the 2024 Annual Meeting of Shareholders are incorporated by reference in Part III hereof to the extent indicated therein.


TFS Financial Corporation
INDEX
Part I
Item 1.
4
Item 1A.
36
Item 1B.
45
Item 2.
45
Item 3.
45
Item 4.
45
Part II
Item 5.
45
Item 6.
47
Item 7.
47
Item 7A.
63
Item 8.
66
Item 9.
66
Item 9A.
66
Item 9B.
69
Item 9C.
69
Part III
Item 10.
69
Item 11.
71
Item 12.
71
Item 13.
72
Item 14.
72
Part IV
Item 15.
72
Item 16.
72
121
123

2
Table of Contents
GLOSSARY OF TERMS
TFS Financial Corporation provides the following list of acronyms and other terms as a tool for the reader. The acronyms and other terms identified below are used throughout the document.
ACL: Allowance for Credit Losses
FDIC: Federal Deposit Insurance Corporation
ACT: Tax Cuts and Jobs Act
FHFA: Federal Housing Finance Agency
AOCI: Accumulated Other Comprehensive Income
FHLB: Federal Home Loan Bank
ARM: Adjustable-Rate Mortgage
FICO: Fair Isaac Corporation
ASC: Accounting Standards Codification
FRB-Cleveland: Federal Reserve Bank of Cleveland
ASU: Accounting Standards Update
Freddie Mac: Federal Home Loan Mortgage Corporation
Association: Third Federal Savings and Loan
FRS: Board of Governors of the Federal Reserve System
Association of Cleveland
GAAP: Generally Accepted Accounting Principles
BOLI: Bank Owned Life Insurance
Ginnie Mae: Government National Mortgage Association
BSA: Bank Secrecy Act
GVA: General Valuation Allowance
BTFP: Bank Term Funding Program
HOLA: Home Owners' Loan Act
CARES Act: Coronavirus Aid, Relief and Economic Security
HPI: Home Price Index
Act
IRR: Interest Rate Risk
CDs: Certificates of Deposit
IRS: Internal Revenue Service
CECL: Current Expected Credit Losses
IVA: Individual Valuation Allowance
CET1: Common Equity Tier 1
LDI: Liability Driven Investment
CFPB: Consumer Financial Protection Bureau
LIBOR: London Interbank Offer Rate
CLTV: Combined Loan-to-Value
LIHTC: Low Income Housing Tax Credit
Company: TFS Financial Corporation and its
LIP: Loans-in-Process
subsidiaries
LTV: Loan-to-Value
COSO: Committee of Sponsoring Organizations of the
MMK: Money Market Account
       Treadway Commission
OCC: Office of the Comptroller of the Currency
CRA: Community Reinvestment Act
OCI: Other Comprehensive Income
DFA: Dodd-Frank Wall Street Reform and Consumer
OTS: Office of Thrift Supervision
Protection Act
PCAOB: Public Company Accounting Oversight Board
DIF: Deposit Insurance Fund
PMI: Private Mortgage Insurance
EaR: Earnings at Risk
PMIC: PMI Mortgage Insurance Co.
EPS: Earnings per Share
QTL: Qualified Thrift Lender
ESG: Environmental, Social and Governance
REMICs: Real Estate Mortgage Investment Conduits
ESOP: Third Federal Employee (Associate) Stock
SEC: United States Securities and Exchange Commission
Ownership Plan
SOFR: Secured Overnight Financing Rate
EVE: Economic Value of Equity
TDR: Troubled Debt Restructuring
Fannie Mae: Federal National Mortgage Association
Third Federal Savings, MHC: Third Federal Savings
FASB: Financial Accounting Standards Board
and Loan Association of Cleveland, MHC

3
Table of Contents
PART I
Item 1.Business
Forward Looking Statements
     This report contains forward-looking statements, which can be identified by the use of such words as estimate, project, believe, intend, anticipate, plan, seek, expect and similar expressions. These forward-looking statements include, among other things:
●statements of our goals, intentions and expectations;
●statements regarding our business plans and prospects and growth and operating strategies;
●statements concerning trends in our provision for credit losses and charge-offs on loans and off-balance sheet exposures;
●statements regarding the trends in factors affecting our financial condition and results of operations, including credit quality of our loan and investment portfolios; and
●estimates of our risks and future costs and benefits.
     These forward-looking statements are subject to significant risks, assumptions and uncertainties, including, among other things, the following important factors that could affect the actual outcome of future events:
●significantly increased competition among depository and other financial institutions, including with respect to our ability to charge overdraft fees;
●inflation and changes in the interest rate environment that reduce our interest margins or reduce the fair value of financial instruments, or our ability to originate loans;
●general economic conditions, either globally, nationally or in our market areas, including employment prospects, real estate values and conditions that are worse than expected;
●the strength or weakness of the real estate markets and of the consumer and commercial credit sectors and its impact on the credit quality of our loans and other assets, and changes in estimates of the allowance for credit losses;
●decreased demand for our products and services and lower revenue and earnings because of a recession or other events;
●changes in consumer spending, borrowing and savings habits;
●adverse changes and volatility in the securities markets, credit markets or real estate markets;
●our ability to manage market risk, credit risk, liquidity risk, reputational risk, regulatory risk and compliance risk;
●our ability to access cost-effective funding;
●legislative or regulatory changes that adversely affect our business, including changes in regulatory costs and capital requirements and changes related to our ability to pay dividends and the ability of Third Federal Savings, MHC to waive dividends;
●changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board or the Public Company Accounting Oversight Board;
●the adoption of implementing regulations by a number of different regulatory bodies, and uncertainty in the exact nature, extent and timing of such regulations and the impact they will have on us;
●our ability to enter new markets successfully and take advantage of growth opportunities;
●future adverse developments concerning Fannie Mae or Freddie Mac;
●changes in monetary and fiscal policy of the U.S. Government, including policies of the U.S. Treasury, the Federal Reserve System, Fannie Mae, the OCC, FDIC, and others;
●the continuing governmental efforts to restructure the U.S. financial and regulatory system;
●the ability of the U.S. Government to remain open, function properly and manage federal debt limits;
●changes in policy and/or assessment rates of taxing authorities that adversely affect us or our customers;
●changes in accounting and tax estimates;
●changes in our organization and changes in expense trends, including but not limited to trends affecting non-performing assets, charge-offs and provisions for credit losses;
●changes in the value of our goodwill or other intangible assets;
●the inability of third-party providers to perform their obligations to us;
●our ability to retain key employees;
●civil unrest;
●cyber-attacks, computer viruses and other technological risks that may breach the security of our websites or other systems to obtain unauthorized access to confidential information, destroy data or disable our systems; and
●the impact of wide-spread pandemic, including COVID-19, and related government action, on our business and the economy.
      Because of these and other uncertainties, our actual future results may be materially different from the results indicated by any forward-looking statements. Any forward-looking statement made by us in this report speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by law. Please see Item 1A. Risk Factors for a discussion of certain risks related to our business.
4
Table of Contents
TFS FINANCIAL CORPORATION
TFS Financial Corporation (“we,” “us,” or “our”) was organized in 1997 as the mid-tier stock holding company for the Association. We completed our initial public stock offering on April 20,in 2007 and issued 100,199,618 shares of common stock, or 30.16% of our post-offering outstanding common stock, to subscribers in the offering. Additionally, at the time of the public offering, 5,000,000 shares of our common stock, or 1.50% of our outstanding shares, were issued to the newly formed charitable foundation, Third Federal Foundation. Third Federal Savings, MHC, our mutual holding company parent, holdsheld and continues to hold, the remainder of our outstanding common stock (227,119,132(227,119,132 shares). Net proceeds from our initial public stock offering were approximately $886 million and reflected the costs we incurred in completing the offering as well as a $106.5 million loan to the ESOP related to its acquisition of shares in the initial public stock offering.
Our ownership of the Association remains our primary business activity.
We also operate Third Capital, Inc. as a wholly-owned subsidiary. See Third Capital, Inc.THIRD CAPITAL, INC. below.
As the holding company of the Association, we are authorized to pursue other business activities permitted by applicable laws and regulations for savings and loan holding companies, which include making equity investments and the acquisition of banking and financial services companies.
Our cash flow depends primarily on earnings from the investment of the portion of the net offering proceeds we retained from the initial offering, and any dividends we receive from the Association and Third Capital, Inc. All of our officers are also officers of the Association. In addition, we use the services of the support staff of the Association from time to time. We may hire additional employees,associates, as needed, to the extent we expand our business in the future.
THIRD CAPITAL, INC.
Third Capital, Inc. is a Delaware corporation that was organized in 1998 as our wholly-owned subsidiary. At September 30, 2017,2023, Third Capital, Inc. had consolidated assets of $81.5$9.0 million,, and for the fiscal year ended September 30, 2017,2023, Third Capital, Inc. had consolidated net income of $1.0 million.$0.2 million. Third Capital, Inc. has no separate operations other than as the holding company for its operating subsidiaries, and as a minority investor or partner in other entities. The following is a descriptionAs of September 30, 2023, the entitiesonly remaining entity in which Third Capital, Inc. has an investment in is the owner, an investor or a partner.
Hazelmere Investment Group I, Ltd. This Ohio limited liability company engages in net lease transactions of commercial buildings in targeted markets. Third Capital, Inc. is a partner of this entity, receives a priority return on amounts contributed to acquire investment properties and has a 70% ownership interest in remaining earnings. Hazelmere Investment Group I, Ltd.recorded net income of $0.1 million during the fiscal year ended September 30, 2017.
Third Cap Associates, Inc. This, an Ohio corporation that owns 49% and 60% of two title agencies that provide escrow and settlement services in the StateStates of Ohio, Florida and Florida,New Jersey, primarily to customers of the Association. For the fiscal year ended September 30, 2017,2023, Third Cap Associates, Inc. recorded net income of $0.7 million.$0.2 million.
THIRD FEDERAL SAVINGS AND LOAN ASSOCIATION OF CLEVELAND
General
The Association is a federally chartered savings and loan association headquartered in Cleveland, Ohio, that was organized in 1938. In May 1997, the Association reorganized into its current two-tier mutual holding company structure. The Association’s principal business consists of originating and servicing residential real estate mortgage loans and attracting retail savings deposits.
The Association’s business strategy is to originate mortgage loans with interest rates that are competitive with those of similar products offered by other financial institutions in its markets. Similarly, the Association offers high-yield checking accounts, and high-yield savings accounts and certificate of deposit accounts, each bearing interest rates that are competitive with similar products offered by other financial institutions in its markets. The Association expects to continue to pursue this business philosophy. While this strategy does not enable the Association to earn the highest rates of interest on loans that it offers or to pay the lowest rates on its deposit accounts, the Association believes that this strategy is the primary reason for its successful growth in the past and will continue to be a successful strategy in the future.
The Association attracts retail deposits from the general public in the areas surrounding its main office and its branch offices. It also utilizes its internet website, direct mail solicitation and its customer service call center to generate loan applications and attract retail deposits. Since September 2013,Longer-term brokered CDs and more extensive use of longer-term advances from the FHLB of Cincinnati as well as shorter-term brokered CDs and advances from the FHLB of Cincinnati, hedged to longer effective

durations by interest rate exchange contracts, haveare also been used as cost effectivecost-effective funding alternatives. In addition to residential real estate mortgage loans, the Association originates residential construction loans to individuals for the construction of their personal residences by a qualified builder. The Association also offers home equity loans and lines of credit subject to certain property and credit performance conditions. The Association retains in its portfolio a large portion of the loans that it originates. Since 2013,The Association also purchases residential real estate mortgage loans through a correspondent lending partnership. Loans that the Association sells consist primarily of long-term, fixed-rate residential real estate mortgage loans. The Association retains the servicing rights on all loans that it sells. The Association’s revenues are derived primarily from interest on loans and, to a lesser extent,
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Table of Contents
interest on interest-earning deposits in other financial institutions, deposits maintained at the FRS, federal funds sold, and investment securities, including mortgage-backed securities and dividends from FHLB of Cincinnati stock. The Association also generates revenues from fees and service charges. The Association’s primary sources of funds are deposits, borrowings, principal and interest payments on loans and securities and proceeds from loan sales.
The Association’s website address is www.thirdfederal.com. Filings of the Company made with the SEC are available, without charge, on the Association’s website. Information on that website is not and should not be considered a part of this document.
Market Area
The Association conducts its operations from its main office in Cleveland, Ohio, and from 3837 additional, full-service branches and eightfour loan production offices located throughout the states of Ohio and Florida. In Ohio, the Association maintains 21 full-service offices located in the northeast Ohio counties of Cuyahoga, Lake, Lorain, Medina and Summit, fourone regional loan production officesoffice located in the central Ohio counties of Franklin and Delaware (Columbus, Ohio) and fourthree loan production offices located in the southern Ohio counties of Butler and Hamilton (Cincinnati, Ohio). In Florida, the Association maintains 1716 full-service branches located in the counties of Pasco, Pinellas, Hillsborough, Sarasota, Lee, Collier, Palm Beach and Broward.
The Association also provides savings products in all 50 states and first mortgage refinance loans in 21 states and homethe District of Columbia. Home equity lines of credit are provided in 2125 states and the District of Columbia. First mortgage loans and bridge loans to purchase homes are provided in 13 states while other equity loan products are provided in eight states. These products are provided through its branch network for customers in its core markets of Ohio, Florida, Kentucky and selected counties in Indiana as well as its customer service call center and its internet site for all customers not served by its branch network.
Competition
The Association faces intense competition in its market areas both in making loans and attracting deposits. Its market areas have a high concentration of financial institutions, including large money centercenters and regional banks, community banks and credit unions, and it faces additional competition for deposits from money market funds, brokerage firms, mutual funds and insurance companies. Some of its competitors offer products and services that the Association currently does not offer, such as commercial business loans, trust services and private banking.
The majority of the Association’s deposits are held in its offices located in Cuyahoga County, Ohio. As of June 30, 20172023 (the latest date for which information is publicly available), the Association had $4.6$5.0 billion of deposits in Cuyahoga County, and ranked fifth among all financial institutions with offices in the county in terms of deposits, with a market share of 8.85%4.67%. As of that date, the Association had $6.0$6.5 billion of deposits in the State of Ohio, and ranked nintheleventh among all financial institutions in the state in terms of deposits, with a market share of 1.77%1.19%. As of June 30, 2017,2023 (the latest date for which information is publicly available), the Association had $2.3$2.6 billion of deposits in the State of Florida, and ranked 33rd34th among all financial institutions in terms of deposits, with a market share of 0.41%0.31%. This market share data excludes deposits held by credit unions, whose deposits are not insured by the FDIC.
The DFA, which was signed into law in July 2010, required that the FDIC amend its regulations on assessing insured institutions in order to fund the DIF. The resulting change effectively eliminated the funding cost advantage that borrowed funds generally had when compared to the funding cost associated with deposits. As a result, manyMany financial institutions, including institutions that compete in our markets, have targeted retail deposit gathering as a more attractive funding source than borrowings, and have become more active and more competitive in their deposit product pricing. The combination of reduced demand for borrowed funds and more competition with respect to rates paid to depositors and low savings rates that lead to reduced appeal for investors that have traditionally allocated a portion of their portfolios to insured savings accounts, has created an increasingly difficult marketplace for attracting deposits, which could adversely affect future operating results.
From October 20162022 through September 30, 2017,August 2023 (the latest date for which information is publicly available), per data furnished by MarketTrac®, the Association had the second largest market share of conventional purchase mortgage loans originated in Cuyahoga County, Ohio. For the same period, it also had the second largest market share of conventional purchase mortgage loans originated in the seven northeast Ohio counties which comprise the Cleveland and Akron metropolitan statistical areas. In addition, based on the same statistics, the Association has

consistently been one of the tentwenty largest lenders in both Franklin County (Columbus, Ohio) and Hamilton County (Cincinnati, Ohio) since it entered those markets in 1999.
The Association’s primary strategy for increasing and retaining its customer base is to offer competitive deposit and loan rates and other product features, delivered with exceptional customer service, in each of the markets it serves.
We rely on the reputation that has been built during the Association’s almost 80-year85-year history of serving its customers and the communities in which it operates, the Association’s high capital levels, and the Association's extensive liquidity alternatives which, in combination, serve to maintain and nurture customer and marketplace confidence. The Company’s high capital ratio continues to reflect the beneficial impact of our April 2007 initial public offering, which raised net proceeds of $886 million. At September 30, 2017,2023, our ratio of shareholders’ equity to total assets was 12.3%11.4%. Our liquidity alternatives include management and monitoring of the level of liquid assets held in our portfolio as well as the maintenance of alternative wholesale funding sources. For the fiscal year ended September 30, 2017, our2023, the Association's liquidity ratio averaged 5.65%5.53% (which we compute as the sum of cash and cash equivalents plus unpledged investment securities for which
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ready markets exist, divided by total average assets) and, through the Association, we had the ability to immediately borrow an additional $41.0 million from the FHLB of Cincinnati under existing credit arrangements along with $72.3 million from the Federal Reserve Bank of Cleveland. From the perspective of collateral value securing FHLB of Cincinnati advances, our capacity limit for additional borrowings beyond the immediately available limit at September 30, 2017 was $4.87 billion, subject to satisfaction of the FHLB of Cincinnati's common stock ownership requirement. To satisfy the common stock ownership requirement we would have to increase our ownership of FHLB of Cincinnati common stock by an additional $97.4 million. See “Item Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation—Operation - Liquidity and Capital Resources.”
We continue to utilize a multi-faceted approach to support our efforts to instill customer and marketplace confidence. First, we provide thorough and timely information to all of our associates so as to prepare them for their day-to-day interactions with customers and other individuals who are not part of the Company. We believe that it is important that our customers and others sense the comfort level and confidence of our associates throughout their dealings. Second, we encourage our management team to maintain a presence and to be available in our branches and other areas of customer contact, so as to provide more opportunities for informal contact and interaction with our customers and community members. Third, our CEO remains accessible to both local and national media, as a spokesman for our institution as well as an observer and interpreter of financial marketplace situations and events. Fourth, we periodically include advertisements in local newspapers and online that display our strong capital levels and history of service. We also continue to emphasize our traditional tagline—“STRONG * STABLE * SAFE”—in our advertisements, website, online presence and branch displays. Finally, for customers who adhere to the old adage of trust but verify, we refer them to the safety/security rankings of a nationally recognized, independent rating organization that specializes in the evaluation of financial institutions, which has awarded the Association its highest rating for more than one hundred consecutive quarters.

Lending Activities
The Association’sCompany’s principal lending activity is the origination of fixed-rate and adjustable-rate, first mortgage loans to purchase or refinance residential real estate in its core markets in Ohio, Florida and Kentucky.estate. Adjustable-rate and 10-year fixed rateup to 30-year fixed-rate first mortgage loans to refinance real estate are offered in a total of 2221 states including its core markets and the District of Columbia. Also, the AssociationCompany offers adjustable-rate and 10-year fixedup to 30-year fixed- rate first mortgage loans to purchase real estate in a total of 13 states including its core markets.states. Further, the AssociationCompany originates residential construction loans to individuals (for the construction of their personal residences by a qualified builder) in Ohio and Florida. The AssociationCompany also purchases first mortgage loans originated in Ohio, Pennsylvania and North Carolina through a correspondent lending partnership. Additionally, the Company offers home equity lines of credit in a total of 2225 states including its core markets and the District of Columbia and home equity loans in a total of 8 states including its core markets. Between 2010 and 2015, the Association, in various steps, modified its home equity lending products and the markets they were offered in response to the 2008 financial crisis.eight states. Refer to Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation - MonitoringOperation-Monitoring and Limiting Our Credit Risk for additional information regarding home equity loans and lines of credit. At September 30, 2017, residential real estate,2023, fixed-rate and adjustable-rate, first mortgage residential real estate loans totaled $10.86$12.12 billion, or 87.1%79.7% of our loan portfolio, home equity loans and lines of credit totaled $1.55$3.03 billion, or 12.4%19.9% of our loan portfolio, and residential construction loans totaled $61.0$48.4 million, or 0.5%0.4% of our loan portfolio. At September 30, 2017,2023, adjustable-rate, residential real estate, first mortgage loans totaled $4.82$4.76 billion and comprised 38.6%31.3% of our loan portfolio.

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Loan Portfolio Composition. The following table sets forth the composition of the portfolio of loans held for investment, by type of loan segregated by geographic location, forat the indicated periods, indicated, excluding loans held for sale. The majority of our constructionHome Today loan portfolio is secured by properties located in Ohio and the balances of consumerother loans are immaterial. Therefore, neither was segregated by geographic location.
 September 30,
 2017 2016 2015 2014 2013
 Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
 (Dollars in thousands)
Real estate loans:                   
Residential Core (1)                   
Ohio$6,061,515
   $5,937,114
   $5,903,051
   $5,986,801
   $5,947,791
  
Florida1,739,098
   1,678,798
   1,621,763
   1,570,087
   1,465,907
  
Other2,945,591
   2,453,740
   1,938,125
   1,271,951
   704,813
  
Total10,746,204
 86.2% 10,069,652
 85.5% 9,462,939
 83.9% 8,828,839
 82.2% 8,118,511
 79.4%
Residential Home
    Today (1)
                   
Ohio103,803
   116,253
   129,416
   146,974
   170,206
  
Florida4,924
   5,414
   6,050
   6,909
   7,826
  
Other237
   271
   280
   313
   321
  
Total108,964
 0.9
 121,938
 1.0
 135,746
 1.2
 154,196
 1.5
 178,353
 1.7
Home equity loans and
    lines of credit
                   
Ohio606,301
   597,735
   641,321
   675,911
   721,890
  
Florida340,530
   370,111
   421,904
   475,375
   539,152
  
California205,157
   210,004
   216,233
   213,309
   227,841
  
Other400,327
   353,432
   345,781
   332,334
   369,515
  
Total1,552,315
 12.4
 1,531,282
 13.0
 1,625,239
 14.4
 1,696,929
 15.8
 1,858,398
 18.2
Construction60,956
 0.5 61,382
 0.5
 55,421
 0.5
 57,104
 0.5
 72,430
 0.7
Other consumer loans3,050
 —
 3,116
 —
 3,468
 —
 4,721
 —
 4,100
 —
Total loans receivable12,471,489
 100.0% 11,787,370
 100.0% 11,282,813
 100.0% 10,741,789
 100.0% 10,231,792
 100.0%
Deferred loan expenses
    (fees), net
30,865
   19,384
   10,112
   (1,155)   (13,171)  
Loans in process(34,100)   (36,155)   (33,788)   (28,585)   (42,018)  
Allowance for loan
    losses
(48,948)   (61,795)   (71,554)   (81,362)   (92,537)  
Total loans receivable, net$12,419,306
   $11,708,804
   $11,187,583
   $10,630,687
   $10,084,066
  
 September 30,
 20232022
 AmountPercentAmountPercent
 (Dollars in thousands)
Real estate loans:
Residential Core (1)
Ohio$6,893,547 $6,432,780 
Florida2,135,853 2,120,892 
Other3,048,758 2,986,187 
Total12,078,158 79.4%11,539,859 80.4%
Residential Home Today Total (1)46,508 0.353,255 0.4
Home equity loans and lines of credit
Ohio773,324 706,641 
Florida666,517 537,724 
California513,904 432,540 
Other1,076,781 956,973 
Total3,030,526 19.92,633,878 18.4
Construction
Ohio41,153 111,098 
Florida7,253 10,661 
Total48,406 0.4121,759 0.8
Other loans4,411 —3,263 —
Total loans receivable15,208,009 100.0%14,352,014 100.0%
Deferred loan expenses, net60,807 50,221 
Loans in process(25,754)(72,273)
Allowance for credit losses on loans(77,315)(72,895)
Total loans receivable, net$15,165,747 $14,257,067 
 ______________________
(1)
Residential Core and Home Today loans are primarily one- to four-family residential mortgage loans. See the Residential Real Estate Mortgage Loans section which follows for a further description of Home Today and Core loans.

(1)Residential Core and Home Today loans are primarily one- to four-family residential mortgage loans. See the Residential Real Estate Mortgage Loans section which follows for a further description of Residential Core and Home Today loans.
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The following table provides an analysis of our residential mortgage loans disaggregated by refreshed FICO score, year of origination and portfolio at September 30, 2023. The Company treats the FICO score information as demonstrating that underwriting guidelines reduce risk rather than as a credit quality indicator utilized in the evaluation of credit risk. Balances are adjusted for deferred loan fees, expenses and any applicable loans-in-process.
Revolving LoansRevolving Loans
By fiscal year of originationAmortizedConverted
September 30, 202320232022202120202019PriorCost BasisTo TermTotal
Real estate loans:
Residential Core
          <680$39,088 $93,657 $69,306 $38,772 $20,754 $160,407 $— $— $421,984 
          680-740324,652 394,715 249,049 165,839 66,573 363,109 — — 1,563,937 
          741+1,300,323 2,656,836 1,701,389 1,118,710 469,516 2,674,638 — — 9,921,412 
          Unknown (1)
3,151 25,224 36,897 21,339 7,939 101,056 — — 195,606 
Total Residential Core1,667,214 3,170,432 2,056,641 1,344,660 564,782 3,299,210 — — 12,102,939 
Residential Home Today (2)
          <680— — — — — 23,144 — — 23,144 
          680-740— — — — — 9,063 — — 9,063 
          741+— — — — — 11,221 — — 11,221 
          Unknown (1)
— — — — — 2,602 — — 2,602 
Total Residential Home Today— — — — — 46,030 — — 46,030 
Home equity loans and lines of credit
          <6804,252 2,395 1,024 315 518 863 113,196 12,459 135,022 
          680-74050,262 9,496 3,062 783 924 1,997 521,282 14,177 601,983 
          741+155,451 60,174 19,947 5,938 4,621 10,316 2,006,341 36,179 2,298,967 
          Unknown (1)
166 293 96 77 161 750 23,888 5,878 31,309 
Total Home equity loans and lines of credit210,131 72,358 24,129 7,113 6,224 13,926 2,664,707 68,693 3,067,281 
Construction
          680-7404,958 531 — — — — — — 5,489 
          741+6,688 10,224 — — — — — — 16,912 
Total Construction11,646 10,755 — — — — — — 22,401 
Total net real estate loans$1,888,991 $3,253,545 $2,080,770 $1,351,773 $571,006 $3,359,166 $2,664,707 $68,693 $15,238,651 
(1) Market data necessary for stratification is not readily available.
(2) No new originations of Home Today loans since fiscal 2016.
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The following table provides an analysis of our residential mortgage loans by origination LTV, origination year and portfolio at September 30, 2023. LTVs are not updated subsequent to origination except as part of the charge-off process. Balances are adjusted for deferred loan fees, expenses and any applicable loans-in-process.
Revolving LoansRevolving Loans
By fiscal year of originationAmortizedConverted
September 30, 202320232022202120202019PriorCost BasisTo TermTotal
Real estate loans:
Residential Core
          <80%$622,590 $1,880,859 $1,415,562 $716,692 $255,603 $1,857,447 $— $— $6,748,753 
          80-89.9%819,230 1,073,057 593,771 570,026 279,224 1,330,002 — — 4,665,310 
          90-100%225,394 214,898 46,228 57,744 29,697 109,425 — — 683,386 
          >100%— — — — — 737 — — 737 
          Unknown (1)
— 1,618 1,080 198 258 1,599 — — 4,753 
Total Residential Core1,667,214 3,170,432 2,056,641 1,344,660 564,782 3,299,210 — — 12,102,939 
Residential Home Today (2)
          <80%— — — — — 9,286 — — 9,286 
          80-89.9%— — — — — 14,522 — — 14,522 
          90-100%— — — — — 22,222 — — 22,222 
Total Residential Home Today— — — — — 46,030 — — 46,030 
Home equity loans and lines of credit
<80%202,698 70,125 23,607 7,077 5,944 10,294 2,489,881 46,034 2,855,660 
80-89.9%7,433 2,201 522 36 227 1,420 173,237 20,619 205,695 
90-100%— — — — — 857 664 238 1,759 
>100%— 32 — — 53 1,352 545 350 2,332 
         Unknown (1)
— — — — — 3 380 1,452 1,835 
Total Home equity loans and lines of credit210,131 72,358 24,129 7,113 6,224 13,926 2,664,707 68,693 3,067,281 
Construction
<80%7,463 6,149 — — — — — — 13,612 
80-89.9%4,183 4,606 — — — — — — 8,789 
Total Construction11,646 10,755 — — — — — — 22,401 
Total net real estate loans$1,888,991 $3,253,545 $2,080,770 $1,351,773 $571,006 $3,359,166 $2,664,707 $68,693 $15,238,651 
(1) Market data necessary for stratification is not readily available.
(2) No new originations of Home Today loans since fiscal 2016.
Loan Portfolio Maturities. The following table summarizes the scheduled repayments of principal balances in the loan portfolio at September 30, 2017,2023, according to each loan's final due date. Demand loans, loans having no stated repayment schedule or maturity, are reported as being due in the fiscal year ending September 30, 2018.2024. Maturities are based on the final contractual payment date and do not reflect the impact of prepayments and scheduled principal amortization.
Due During the Years
Ending September 30,
Residential Real EstateHome Equity
Loans
and Lines of
Credit		Construction
Loans		Other
 Loans		Total
CoreHome
Today
 (In thousands)
2024$12,772 $38 $5,300 $1,162 $2,229 $21,501 
2025 to 2028311,246 83 62,414 338 — 374,081 
2029 to 20382,017,470 36,368 176,777 3,529 2,182 2,236,326 
2039 and beyond9,736,670 10,019 2,786,035 43,377 — 12,576,101 
Total loans receivable$12,078,158 $46,508 $3,030,526 $48,406 $4,411 $15,208,009 

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Due During the Years
Ending September 30,
Residential Real Estate 
Home  Equity
Loans
and Lines of
Credit
 
Construction
Loans
 Other Consumer Loans Total
Core 
Home
Today
 
 (In thousands)
2018$2,697
 $131
 $9,691
 $—
 $3,050
 $15,569
20198,801
 159
 8,024
 —
 —
 16,984
202014,180
 104
 1,377
 1,130
 —
 16,791
2021 to 2022148,770
 327
 14,626
 —
 —
 163,723
2023 to 20272,405,323
 1,133
 215,597
 —
 —
 2,622,053
2028 to 2032795,228
 3,823
 478,813
 6,640
 —
 1,284,504
2033 and beyond7,371,205
 103,287
 824,187
 53,186
 —
 8,351,865
Total$10,746,204
 $108,964
 $1,552,315
 $60,956
 $3,050
 $12,471,489
The following table sets forth the scheduled repayments of fixed- and adjustable-rate loans at September 30, 20172023 that are contractually due after September 30, 2018.
2024.
Due After September 30, 2018 Due After September 30, 2024
Fixed Adjustable Total FixedAdjustableTotal
(In thousands) (In thousands)
Real estate loans:     Real estate loans:
Residential Core$5,924,820
 $4,818,688
 $10,743,508
Residential Core$7,304,740 $4,760,646 $12,065,386 
Residential Home Today108,627
 207
 108,834
Residential Home Today46,405 65 46,470 
Home Equity Loans and Lines of Credit79,416
 1,463,207
 1,542,623
Home Equity Loans and Lines of Credit325,520 2,699,706 3,025,226 
Construction39,472
 21,484
 60,956
Construction47,244 — 47,244 
Total$6,152,335
 $6,303,586
 $12,455,921
Other LoansOther Loans2,182 — 2,182 
Total loans receivableTotal loans receivable$7,726,091 $7,460,417 $15,186,508 
Residential Real Estate Mortgage Loans. The Association’sCompany’s primary lending activity is the origination of residential real estate mortgage loans. A comparison of 20172023 data to the corresponding 20162022 data can be found in “Item Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.”Operation. The AssociationCompany currently offers fixed-rate conventional mortgage loans with terms of 30 years or less that are fully amortizing with monthly loan payments, and adjustable-rate mortgage loans that amortize over a period of up to 30 years, provide an initial fixed interest rate for three or five years and then adjust annually, subject to rate reset options as discussed later in this section. At September 30, 2017,2023, there were no “interest only” residential real estate mortgage loans held in the Association'sCompany's portfolio.
The AssociationCompany generally originates both fixed- and adjustable-rate mortgage loans in amounts up to the maximum conforming loan limits as established by the FHFA, which is currently $424,100 and $636,150, respectively,$2 million, for single-family homes in most of our lending markets. The Association also originates loans inoriginated for larger dollar amounts that exceed the lending limit for conforming loans, which the Association refersare generally referred to as “jumbo loans.” The AssociationCompany generally underwrites jumbo loans in a manner similar to conforming loans. Jumbo loans are not uncommon in the Association’sCompany’s market areas.
The Association has always considered the promotion of home ownership a primary goal. In that regard, it has historically offered affordable housing programs in all of its market areas. These programs are targeted toward low- and moderate-income home buyers. During the latter portion of fiscal 2016, the Association began to market its HomeReady mortgage loan product for low- and moderate-income homeowners.  Third Federal’s HomeReady product is designed to be salable to FannieMae under its HomeReady program. Previously, the Association’s primary program was referred to as "Home Today" and is described in detail below. Prior to March 27, 2009, loans originated under the Home Today program had higher risk characteristics. The Association did not classify Home Today as a sub-prime lending program based on the exclusion provided to community development loans in the Expanded Guidance for Sub-prime Lending issued by the OTS and the OCC. In the aftermath of the 2008 financial crisis, a great deal of attention was focused on sub-prime lending and its negative effect on borrowers and financial markets. Borrowers in our Home Today program were not charged higher fees or interest rates than our Core (non-Home Today) borrowers. Home Today loans were not "interest only" or negative amortizing and contain no low initial payment features or adjustable interest

rates, which are features often associated with sub-prime lending. While the credit risk profiles of the Association’s borrowers in the Home Today program were generally higher risk than the credit risk profiles of its Core borrowers, the Association attempted to mitigate that higher risk through the use of private mortgage insurance and continued pre- and post-purchase counseling. The Association’s philosophy has been to provide borrowers the opportunity for home ownership within their financial means.
Coinciding with the Association's marketing of the HomeReady mortgage loan product in 2016, the Association no longer originates loans under its Home Today program. Between March 27, 2009 and 2016, borrowers under the Home Today program were subject to substantially the same underwriting requirements as Core borrowers and borrowers must have completed a financial management education program. Prior to March 27, 2009, through the Home Today program, the Association originated loans with its standard terms to borrowers who might not have otherwise qualified for such loans. The Association originated loans with a LTV ratio of up to 90% through its Home Today program, provided that any loan originated through this program with a LTV ratio in excess of 80% must have met the underwriting criteria mandated by the Association's private mortgage insurance carrier. Because the Association previously applied less stringent underwriting and credit standards to these loans, the majority of loans originated under the Home Today program generally have greater credit risk than our Core residential real estate mortgage loans. Effective October 2007, the private mortgage insurance carrier that provides coverage for the Home Today loans with LTV ratios in excess of 80% imposed more restrictive lending requirements that decreased the volume of Home Today lending. As of September 30, 2017, the Association had $109.0 million of loans outstanding that were originated through its Home Today program, most of which were originated prior to March 27, 2009. At September 30, 2017, of the loans that were originated under the Home Today program, 11.5% were delinquent 30 days or more compared to 0.2% for the portfolio of Core loans as of that date. At September 30, 2017, $6.9 million, or 6.4%, of loans originated under the Home Today program were delinquent 90 days and over and $18.1 million of Home Today loans were non-accruing loans, representing 22.9% of total non-accruing loans as of that date. See “Non-performing Assets and Restructured Loans—Delinquent Loans” for a discussion of the asset quality of this portion of the Association’s loan portfolio.
Prior to November 2008, the Association also originated loans under its high LTV program. These loans had initial LTV ratios of 90% or greater and could be as high as 95%. To qualify for this program, the loan applicant was required to satisfy more stringent underwriting criteria (credit score, income qualification, and other criteria). Borrowers did not obtain private mortgage insurance with respect to these loans. High LTV loans were originated with higher interest rates than the Association’s other residential real estate loans. The Association believes that the higher credit quality of this portion of the portfolio offsets the risk of not requiring private mortgage insurance. While these loans were not initially covered by private mortgage insurance, the Association had negotiated with a private mortgage insurance carrier a contract under which, at the Association’s option, a pre-determined dollar amount of qualifying loans could be grouped and submitted to the carrier for pooled private mortgage insurance coverage. As of September 30, 2017, the Association had $55.8 million of loans outstanding that were originated through its High LTV program, $47.9 million of which the Association has insured through the private mortgage insurance carrier. The High LTV program was suspended in November 2008.
For loans with LTV ratios in excess of 85% but equal to or less than 95%, the Association requires private mortgage insurance. LTV ratios in excess of 80% are not available for refinance transactions except for adjustable-rate, first mortgage loans. The new HomeReady product will require private mortgage insurance on purchase transactions in excess of 80% to 97% LTV and refinance transactions in excess of 80% to 95% LTV.
The Association actively monitors its interest rate risk position to determine its desired level of investment in fixed-rate mortgages. While the sales of first mortgage loans remain strategically important for us, since fiscal 2010, they have played a lesser role in our management of interest rate risk.
The Association currently retains the servicing rights on all loans sold in order to generate fee income and reinforce its commitment to customer service. One- to four-family residential mortgage real estate loans that have been sold were underwritten generally to Fannie Mae guidelines and comply with applicable federal, state and local laws. At the time of the closing of these loans the Association owned the loans and subsequently sold them to Fannie Mae and others providing normal and customary representations and warranties, including representations and warranties related to compliance, generally with Fannie Mae underwriting standards. At the time of sale, the loans were free from encumbrances except for the mortgages filed by the Association which, with other underwriting documents, were subsequently assigned and delivered to Fannie Mae and others. For the fiscal years ended September 30, 2017 and 2016, the Association recognized servicing fees, net of amortization, related to these servicing rights of $4.3 million and $4.7 million, respectively. As of September 30, 2017 and September 30, 2016, the principal balance of loans serviced for others totaled $1.85 billion and $1.96 billion, respectively. In November 2013, the Association entered into a resolution agreement with Fannie Mae, pursuant to which the Association remitted $3.1 million to Fannie Mae. The remittance amount included $0.4 million related to outstanding mortgage insurance claim payments on 42 loans. Under the terms of the resolution agreement, Fannie Mae withdrew all outstanding repurchase and make-whole demands and generally waived its right to enforce future repurchase obligations with respect to all mortgage loans (approximately 23,400 active loans or loans with a remaining balance) that were originated by the Association between January 1, 2000 and December

31, 2008 and delivered to Fannie Mae prior to January 1, 2009. At September 30, 2017, substantially all of the loans serviced for Fannie Mae and others were performing in accordance with their contractual terms and management believes that it has no material repurchase obligations associated with these loans. However, an accrual for $0.6 million has been maintained for potential repurchase or loss reimbursement requests at September 30, 2017.
The Association currentlyCompany offers “Smart Rate” adjustable-rate mortgage loan products secured by residential properties with interest rates that are fixed for an initial period of three or five years, after which the interest rate generally resets every year based upon a contractual spread or margin abovelinked to the Prime Rate as published in the Wall Street Journal. TheseAs part of a loan retention program, these adjustable-rate loans provide the borrower with an attractive rate reset option, which allow the borrower to re-lock the rate an unlimited number of times at the Association’sCompany’s then current lending rates, for another three or five years (which must be the same as the original lock period). Re-lock eligibility is subject to a satisfactory payment performance history by the borrower (current at the time of re-lock, and no foreclosures or bankruptcies since the Smart Rate application was taken). In addition to a satisfactory payment history, re-lock eligibility requires that the property continues to be the borrower's primary residence. The loan term cannot be extended in connection with a re-lock, nor can new funds be advanced. All interest rate caps and floors remain as originated. "Smart Rate" adjustable-rate mortgage loans represent over 99% of the adjustable-rate mortgage loan portfolio, with the difference representing the remaining balance of legacy adjustable-rate mortgage loan products with slightly different interest rate reset terms. Many of the borrowers who select adjustable-rate mortgage loans have shorter-term credit needs than those who select long-term, fixed-rate mortgage loans. Adjustable-rate mortgage loans generally present different credit risks than fixed-rate mortgage loans primarily because the underlying debt service payments of the borrowers increase as interest rates increase, thereby increasing the potential for default. Prior to July 2010, the Association’s adjustable-rate mortgage loan products secured by residential properties offered interest rates that were fixed for an initial period ranging from one year to five years, after which the interest rate generally reset every year based upon a contractual spread or margin above the average yield on U.S. Treasury securities, adjusted to a constant maturity of one year, as published weekly by the FRS (“Traditional ARM”). All of the Association’sCompany’s adjustable-rate mortgage loans are subject to periodic and lifetime limitations on interest rate changes.
All adjustable-rate mortgage loans with initial fixed-rate periods of three or five years have initial and periodic caps of two percentage points on interest rate changes, with a cap of six percentage points for the life of the loan for Traditional ARM and five or six percentage points for the life of Smart Rate loans. Previously, the Association also offered Traditional ARM loans with an initial fixed-rate period of seven years. Loans originated under that program, which was discontinued in August 2007, had a cap of five percentage points on the initial change in interest rate, with a two percentage point cap on subsequent changes and a cap of five percentage points for the life of the loan. Many of the borrowers who select adjustable-rate mortgage loans have shorter-term credit needs than those who select long-term, fixed-rate mortgage loans. The Association will permit borrowers to convert Traditional ARMs into fixed-rate mortgage loans at no cost to the borrower. The AssociationCompany has never offered “Option ARM” loans, where borrowers can pay less than the interest owed on their loan, resulting in an increased principal balance during the life of the loan. At
The Company has always considered the promotion of home ownership a primary goal. In that regard, it has historically offered affordable housing programs in all of its market areas. These programs are targeted toward low- and moderate-income home buyers. The Company’s philosophy has been to provide borrowers the opportunity for home ownership within their financial means. During fiscal 2016, the Company began to market its Home Ready mortgage loan product for low- and moderate-income homeowners. Third Federal’s Home Ready product is designed to be saleable to Fannie Mae under its Home Ready program. Previously, the Company’s primary affordable housing program was referred to as "Home Today". The vast majority of loans originated under the Home Today program had higher risk characteristics than our Core residential real estate mortgage loan, but the Company attempted to mitigate that higher risk through the use of private mortgage insurance and continued pre- and post-purchase counseling. As of September 30, 2017, "Smart Rate" adjustable-rate mortgage2023, the Company had $46.5 million of loans totaled $4.75 billion, or 97.9%outstanding that were originated through its Home Today program, most of which were originated prior to March 2009. At September 30, 2023, of the adjustable-rate mortgage loanloans that were originated under the Home Today program, 4.0% were delinquent 30 days or more compared to
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0.1% for the portfolio and Traditional ARMs totaled $103.1of Core loans as of that date. At September 30, 2023, $0.9 million, or 2.1%1.9%, of loans originated under the Home Today program were delinquent 90 days and over and $4.6 million of Home Today loans were non-accruing loans, representing 14.5% of total non-accruing loans as of that date. See Delinquent Loans and Non-performing Assets and Restructured Loans for discussions of the adjustable-rate mortgageasset quality of this portion of the Company’s loan portfolio.
The AssociationCompany currently retains the servicing rights on all loans sold in order to generate fee income and reinforce its commitment to customer service. One- to four-family residential mortgage real estate loans that have been sold were underwritten generally to Fannie Mae guidelines. At the time of the closing of these loans the Company owns the loans and subsequently sells them to Fannie Mae and others providing normal and customary representations and warranties, including representations and warranties related to compliance, generally with Fannie Mae underwriting standards. At the time of sale, the loans are free from encumbrances except for the mortgages filed by the Company which, with other underwriting documents, are subsequently assigned and delivered to Fannie Mae and others. During the fiscal years ended September 30, 2023 and 2022, the Company recognized servicing fees, net of amortization, related to these servicing rights of $4.5 million and $4.3 million, respectively. As of September 30, 2023 and 2022, the principal balance of loans serviced for others totaled $1.93 billion and $2.05 billion, respectively. At September 30, 2023, substantially all of the loans serviced for Fannie Mae and others were performing in accordance with their contractual terms and management believes that it had no material repurchase obligations associated with these loans at that date. However, at September 30, 2023, a reserve of $0.4 million has been maintained to cover potential losses on repurchases or reimbursements that may arise in connection with representations and warranties made at time of sale.
The Company requires title insurance on all of its residential real estate mortgage loans. The AssociationCompany also requires that borrowers maintain fire and extended coverage casualty insurance (and, if appropriate, flood insurance up to $250 thousand) in an amount at least equal to the lesser of the loan balance or the replacement cost of the improvements. A majority of its residential real estate mortgage loans have a mortgage escrow account from which disbursements are made for real estate taxes and to a lesser extent for hazard insurance and flood insurance. The AssociationCompany does not conduct environmental testing on residential real estate mortgage loans unless specific concerns for hazards are identified by the appraiser used in connection with the origination of the loan.
For home purchase loans with LTV ratios at origination in excess of 85% but equal to or less than 90%, the Company generally requires private mortgage insurance. The Company offers a loan product allowing up to 95% LTV with no mortgage insurance for superior credit borrowers. LTV ratios in excess of 85% are not available for refinance transactions except for adjustable-rate, first mortgage loans and Home Ready loans. The Home Ready product requires private mortgage insurance on purchase transactions between 80.01% and 97% LTV and refinance transactions between 80.01% and 95% LTV. As of September 30, 2023, the Company had a total of $356.3 million of loans outstanding that were originated through the high LTV program. This program involves loans originated with higher interest rates than the Company's other residential real estate loans, and to qualify for this program the loan applicant must satisfy more stringent underwriting criteria (credit score, income qualification, and other criteria).
Home Equity Loans and Home Equity Lines of Credit. The AssociationCompany offers home equity loans and home equity lines of credit, which are primarily secured by a second mortgage on residences. Home equity products offered by the Association varied significantly between June 28, 2010 and September 30, 2016. Prior to June 28, 2010, the Association offered home equity loans and home equity lines of credit. The Association also offered a home equity lending product that was secured by a third mortgage, although the Association only originated this loan to borrowers where the Association also held the second mortgage. Between June 28, 2010 and March 19, 2012, we suspended the acceptance of new home equity credit applications with the exception of bridge loans (loans where borrowers can utilize the existing equity in their current home to fund the purchase of a new home before they have sold their current home) and, in accordance with a directive from our primary federal banking regulator, actively pursued strategies to decrease the outstanding balance of our home equity lending portfolio as well as our exposure to undrawn home equity lines of credit. Beginning March 20, 2012, we again offered new home equity lines of credit to qualifying existing home equity customers. In 2013, we further modified the product design and we extended the offer to both existing home equity customers and new consumers in Ohio, Florida, and selected counties in Kentucky. Over the course of the fiscal year ended September 30, 2014, we expanded the home equity product offering to include 21is offered in 25 states and the District of Columbia. Home equity lines of credit originated since 2013 contain a provision forrequire amortizing loan payments during the draw period. These offers were, and are, subject to certain property and credit performance conditions which, among other items, related to CLTV, geography, borrower income verification, minimum credit scores and draw period duration. At September 30, 20172023 and 2016,2022, home equity loans totaled $307.5$399.7 million, or 2.5%2.6%, and $223.6$261.0 million,, or 1.9%1.8%, respectively, of total loans receivable (which included $217.8$68.8 million and $182.6$97.0 million,, respectively, of home equity lines of credit which were in the amortization period and no longer eligible to be drawn upon and $17.3$9.5 million and $2.0$12.2 million of bridge loans), and home equity lines of credit totaled $1.24$2.63 billion,, or 10.0%17.3%, and $1.31$2.37 billion,, or 11.1%16.5%, respectively, of total loans receivable. Additionally, at September 30, 2023 and 2022, the undrawn amounts of home equity lines of credit totaled $4.70 billion and $4.08 billion, respectively. A bridge loan permits a borrower to utilize the existing equity in their current home to fund the purchase of a new home before the current

home is sold. Bridge loans are originated for a one-year term, with no prepayment penalties. These loans have fixed interest rates, and are currently limited to a combined 80% LTV ratio (first and second mortgage liens). The AssociationCompany charges a closing fee with respect to bridge loans. Additionally, at September 30, 2017 and 2016, the unadvanced amounts of home equity lines of credit totaled $1.43 billion and $1.25 billion, respectively.
Prior to June 28, 2010, the underwriting standards for home equity loans and home equity lines of credit were less restrictive than current underwriting standards, which impacted acceptable LTV ratios, minimum credit scores, income and employment verification and line amounts. Generally, the least restrictive qualifications and the most attractive product features from a borrower’s perspective were in place during portions of fiscal 2006 and 2007. Between 2007 and 2010 the home equity lending parameters became increasingly restrictive. The Association originatedCompany originates its home equity loans and home equity lines of credit without application fees (except for bridge loans) or borrower-paid closing costs. Home equity loans wereare offered with fixed interest rates, wereare fully amortizing and hadhave terms of up to 1530 years. The Association’sCompany’s home equity lines of credit wereare offered with adjustable rates of interest indexed to the Prime Rate, as reported in The Wall Street Journal.

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Table of Contents
The following table sets forth credit exposure, principal balance, percent delinquent 90 days or more, the mean CLTV percent at the time of origination and the current CLTV percent of our home equity loans, home equity lines of credit and bridge loan portfolio as of September 30, 2017. Home equity lines of credit in the draw period are reported according to geographical distribution.
 
Credit
Exposure
 
Principal
Balance
 
Percent
Delinquent
90 days or more
 
Mean CLTV
Percent at
Origination(2)
 
Current  Mean
CLTV
Percent(3)
 (Dollars in thousands)      
Home equity lines of credit in draw period (by
     state):
         
Ohio$1,177,766
 $469,137
 0.06% 60% 54%
Florida420,071
 227,093
 0.25% 58% 52%
California335,930
 182,641
 0.12% 64% 56%
Other (1)736,536
 365,992
 0.07% 64% 61%
Total home equity lines of credit in draw
     period
2,670,303
 1,244,863
 0.11% 61% 56%
Home equity lines in repayment, home equity
     loans and bridge loans
307,452
 307,452
 1.41% 67% 54%
Total$2,977,755
 $1,552,315
 0.35% 62% 55%
______________________
(1)No individual other state has a committed or drawn balance greater than 10% of total loans and 5% of equity products.
(2)Mean CLTV percent at origination for all home equity lines of credit is based on the committed amount.
(3)
Current Mean CLTV is based on best available first mortgage and property values as of September 30, 2017. Property values are estimated using HPI data published by the FHFA. Current Mean CLTV percent for home equity lines of credit in the draw period is calculated using the committed amount. Current Mean CLTV on home equity lines of credit in the repayment period is calculated using the principal balance.
At September 30, 2017, 45.0% of our home equity lending portfolio was either in first lien position (26.5%) or was in a subordinate (second) lien position behind a first lien that we held (13.2%) or behind a first lien that was held by a loan that we originated, sold and now service for others (5.3%). At September 30, 2017, 15.8% of our home equity line of credit portfolio in the draw period was making only the minimum payment on their outstanding line balance.


The following table sets forth by calendar origination year, the credit exposure, principal balance, percent delinquent 90 days or more, the mean CLTV percent at the time of origination and the current mean CLTV percent of our home equity loans, home equity lines of credit and bridge loan portfolio as of September 30, 2017.2023. Home equity lines of credit in the draw period are included in the year originated:reported according to geographical distribution.
 
Credit
Exposure
 
Principal
Balance
 
Percent
Delinquent
90 Days or More
 
Mean CLTV
Percent at
Origination(1)
 
Current Mean
CLTV
Percent(2)
 (Dollars in thousands)      
Home equity lines of credit in draw period:         
2007 and Prior$270,725
 $141,511
 0.36% 65% 55%
2008465,906
 256,555
 0.20% 63% 57%
2009189,863
 78,588
 0.34% 55% 51%
201016,134
 5,943
 —% 57% 47%
2011—
 —
 —% —% —%
20124,632
 1,201
 —% 53% 43%
201349,669
 18,391
 —% 59% 45%
2014200,541
 80,912
 —% 60% 49%
2015286,645
 129,569
 0.02% 60% 53%
2016507,144
 234,496
 —% 62% 59%
2017679,044
 297,697
 —% 60% 60%
Total home equity lines of credit in
     draw period
2,670,303
 1,244,863
 0.11% 61% 56%
Home equity lines in repayment, home equity
     loans and bridge loans
307,452
 307,452
 1.41% 67% 54%
Total$2,977,755
 $1,552,315
 0.35% 62% 55%
Credit
Exposure		Principal
Balance		Percent
Delinquent
90 days or More		Mean CLTV
Percent at
Origination(2)		Current  Mean
CLTV
Percent(3)
 (Dollars in thousands)   
Home equity lines of credit in draw period (by
     state):
Ohio$2,169,190 $642,819 0.06 %60 %43 %
Florida1,368,292 558,121 0.11 %55 %41 %
California1,154,224 433,552 0.06 %60 %50 %
Other (1)2,635,585 996,287 0.15 %63 %50 %
Total home equity lines of credit in draw
     period		7,327,291 2,630,779 0.11 %60 %46 %
Home equity lines in repayment, home equity
     loans and bridge loans		399,747 399,747 0.28 %57 %44 %
Total$7,727,038 $3,030,526 0.13 %60 %46 %
______________________
(1)Mean CLTV percent at origination for all home equity lines of credit is based on the committed amount.
(2)
Current Mean CLTV is based on best available first mortgage and property values as of September 30, 2017.
(1)No other individual state has a committed or drawn balance greater than 10% of our total equity lending portfolio and 5% of total loans.
(2)Mean CLTV percent at origination for all home equity lines of credit is based on the committed amount.
(3)Current Mean CLTV is based on best available first mortgage and property values as of September 30, 2023. Property values are estimated using HPI data published by the FHFA. Current Mean CLTV percent for home equity lines of credit in the draw period is calculated using the committed amount. Current Mean CLTV on home equity lines of credit in the repayment period is calculated using the principal balance.

In general, the home equity line of credit product originated prior to June 2010 (when new home equity lending was temporarily suspended) was characterized by a ten year draw period followed by a ten year repayment period; however, there were two types of transactions that could result in a draw period that extended beyond ten years. The first transaction involved customer requests for increases in the amount of their home equity line of credit. When the customer’s credit performance and profile supported the increase, the draw period term was reset for the ten year period following the date of the increase in the home equity line of credit amount. A second transaction that impacted the draw period involved extensions. For a period of time prior to June 2008, the Association had a program that evaluated home equity lines of credit that were nearing the end of their draw period and made a determination as to whether or not the customer should be offered an additional ten year draw period. If the account and customer met certain pre-established criteria, an offer was made to extend the otherwise expiring draw period by ten years from the date of the offer. If the customer chose to accept the extension, the origination date of the account remained unchanged but the account would have a revised draw period that was extended by ten years. As a result of these two programs, the reported draw periods for certain home equity line of credit accounts exceed ten years.

The following table sets forth by fiscal year when the draw period expires, the principal balance of home equity lines of credit in the draw period as of September 30, 2017, segregated byis calculated using the current combined LTV range.
 Current CLTV Category
Home equity lines of credit in draw period (by End of Draw Fiscal Year):< 80% 80 - 89.9% 90 - 100% >100% Unknown (2) Total
 (Dollars in thousands)
2018 (1)$254,747 $35,569 $13,390 $11,103 $5,262 $320,071
2019 (1)212,853
 8,696
 1,783
 1,301
 4,080
 228,713
2020 (1)140,767
 547
 11
 62
 1,773
 143,160
2021 (1)49,391
 135
 9
 —
 172
 49,707
202258
 36
 —
 —
 —
 94
202322
 —
 —
 —
 —
 22
Post 2023487,901
 12,852
 50
 113
 2,180
 503,096
   Total$1,145,739 $57,835 $15,243 $12,579 $13,467 $1,244,863
______________________
(1)Home equity lines of credit whose draw period ends in fiscal years 2018, 2019, 2020 and 2021 include $17.7 million, $62.9 million, $126.5 million and $49.6 million respectively, of lines where the customer has an amortizing payment during the draw period. All home equity lines of credit whose draw period ends in fiscal years after 2021 have an amortizing payment during the draw period.
(2)Market data necessary for stratification is not readily available.
As shown in the origination by year table,which is the second preceding table above, the percentage of loans delinquent 90 days or more (seriously delinquent) originated during the years 2009 and earlier are comparatively higher than the years following 2009. Those years saw rapidly increasing housing prices, especially in our Florida market. As housing prices declined along with the general economic downturn and higher levels of unemployment that accompanied the 2008 financial crisis, we see that reflected in delinquencies for those years. Home equity lines of credit originated during those years also saw higher loan amounts, higher permitted LTV ratios, and lower credit scores. However, recent increases in home values have reversed the trend of the general decrease in housing values from the aftermath of the 2008 financial crisis, resulting in current meancommitted amount. Current Mean CLTV percentages becoming lower than the mean CLTV percentages at origination, which was not the case for a number of years. Increased home values have also allowed customers to refinance theiron home equity lines of credit approachingin the end of draw period. The combination ofrepayment period is calculated using the principal balance of all home equity products no longer in the draw period, plus those lines originated in 2009 and earlier, is $784.1 million, a reduction of $322.2 million during the current fiscal year. In addition, as shown in the table below, thebalance.
The principal balance of home equity lines of credit in the draw period that have a current mean CLTV over 80% or unknown is $99.1$9.8 million, or 0.4% at September 30, 2017, a reduction2023. In recognition of $108.1 million during the current fiscal year.
While there have been recent improvements, the previous past weakness in the housing market, and the uncertainty with respect to future employment levels and economic prospects, causes us towe continue to conduct an expanded loan level evaluation of our home equity lines of credit which are delinquent 90 days or more.

The following table sets forthAt September 30, 2023, 30.7% of the breakdown of current mean CLTV percentages for our home equity lineslending portfolio was either in a first lien position (16.0%), in a subordinate (second) lien position behind a first lien that we held (12.3%) or behind a first lien that was held by a loan that we originated, sold and now service for others (2.4%). At September 30, 2023, 12.9% of the home equity line of credit portfolio in the draw period as of September 30, 2017.
were making only the minimum payment on the outstanding line balance. Minimum payments include both a principal and interest component.
 
Credit
Exposure
 
Principal
Balance
 
Percent
of Total Principal Balance
 
Percent
Delinquent
90 days or
More
 
Mean
CLTV
Percent at
Origination(2)
 
Current
Mean
CLTV
Percent(3)
 (Dollars in thousands)        
Home equity lines of credit in draw period (by current mean CLTV):           
< 80%$2,513,063
 $1,145,813
 92.1% 0.08% 60% 54%
80 - 89.9%95,905
 57,834
 4.6% 0.49% 80% 83%
90 - 100%18,509
 15,243
 1.2% 0.16% 82% 94%
> 100%14,269
 12,579
 1.0% 0.67% 78% 128%
Unknown (1)28,557
 13,394
 1.1% —% 57% 
(1 
) 
 $2,670,303
 $1,244,863
 100.0% 0.11% 61% 56%
______________________
(1)Market data necessary for stratification is not readily available.
(2)Mean CLTV percent at origination for all home equity lines of credit is based on the committed amount.
(3)
Current Mean CLTV is based on best available first mortgage and property values as of September 30, 2017. Property values are estimated using HPI data published by the FHFA. Current Mean CLTV percent for home equity lines of credit in the draw period is calculated using the committed amount. Current Mean CLTV on home equity lines of credit in the repayment period is calculated using the principal balance.
Construction Loans. The AssociationCompany originates construction loans to individuals for the construction of their personal single-family residence by a qualified builder (construction/permanent loans). The Association’sCompany’s construction/permanent loans generally provide for disbursements to the builder or sub-contractors during the construction phase as work progresses. During the construction phase, the borrower only pays interest on the drawn balance. Upon completion of construction, the loan converts to a permanent amortizing loan without the expense of a second closing. The AssociationCompany offers construction/permanent loans with fixed or adjustable rates, and a current maximum loan-to-completed-appraised value ratio of 85%. At September 30, 2017,2023, construction loans totaled $61.0$48.4 million,, or 0.5%0.4% of total loans receivable. At September 30, 2017,2023, the unadvanced portion of these construction loans totaled $34.1 million.$25.8 million.
Construction financing generally involves greater credit risk than long-term financing on improved, owner-occupied real estate. Risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the value of the property at completion of construction compared to the estimated cost (including interest) of construction and other assumptions. If the estimate of construction cost proves to be inaccurate, the AssociationCompany may be required to advance additional funds beyond the amount originally committed in order to protect the value of the property. Moreover, if the estimated value of the completed project proves to be inaccurate, the borrower may hold a property with a value that is insufficient to assure full repayment of the construction loan upon the sale of the property. This is more likely to occur when home prices are falling.
Loan Originations, Purchases, Sales, Participations and Servicing. Lending activities are primarily conducted primarily by the Association’sCompany’s loan personnel (all of whom are non-commissioned associates) operating at our main and branch office locations and at our loan production offices. All loans that the AssociationCompany originates are underwritten pursuant to its policies and procedures, which, for real estate loans, are consistent with the ability to repay guidance provided by the CFPB. A small numberLoans
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Table of loans Contents
originated with the intent to sell and certain other long-term, fixed ratefixed-rate loans, as described below, are originated using Fannie Mae processing and underwriting guidelines. The majority of loans, however, are originated using guidelines that are similar, but not identical to Fannie Mae processing and underwriting guidelines. The AssociationCompany originates both adjustable-rate and fixed-rate loans and advertises extensively throughout its market area. Its ability to originate fixed- or adjustable-rate loans is dependent upon the relative consumer demand for such loans, which is affected by current market interest rates as well as anticipated future market interest rates. The Association’sCompany’s loan origination and sales activity may be adversely affected by a rising interest rate environment or economic recession, which typically results in decreased loan demand. The Association’sCompany’s residential real estate mortgage loan originations are generated by its in-house loan representatives, by direct mail solicitations, by referrals from existing or past customers, by referrals from local builders and real estate brokers, from calls to its telephone call center and from the internet. The Company also purchases first mortgage loans through a correspondent lending partnership.
Except forA vast majority of all loans originated in accordance with the guidelines of Fannie Mae's HARP II and HomeReady programs, which loans are originateddone so with the intent to sell, the Association decideshold. The Company later determines whether to retain, sell or securitize the loans that it originates,

holds, after evaluating current and projected market interest rates, its interest rate risk objectives, its liquidity needs and other factors. During the fiscal year ended September 30, 2017,2023, the AssociationCompany sold, or committed to sell, to Fannie Mae, in either whole loan or security form, $211.0 million of long-term, fixed-rate residential real estate mortgage loans and to the FHLB of Cincinnati, $38.4$77.2 million of long-term, fixed-rate residential real estate mortgage loans, all on a servicing retained basis. In addition to sales of long-term, fixed-rate residential real estate mortgage loans, during the fiscal year ended September 30, 2013, the AssociationThe Company has also previously sold to private parties, non-agency eligible, long-term fixed-rate and adjustable-rate loans on a servicing retained basis. Those fiscal 2013 sales evidenced the saleability of our loans that are not originated in accordance with agency specified procedures, including adjustable-rate loans. As described in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation - Controlling Our Interest Rate Risk Exposure, effective July 1, 2010, Fannie Mae, historically the Association’s primary loan investor, implemented certain loan origination requirement changes affecting loan eligibility that, prior to May 2013, we had not adopted. In May 2013, we implemented loan origination changes with respect toonly a small portion of our loan originations, which were approved by Fannie Mae on November 15, 2013, which allow that portion of ourthe Company's first mortgage loan originations that were processed using the revised procedures to beand purchases are eligible for securitization and sale in Fannie Mae mortgage backed security form. The balance of loans held for sale was $0.4$3.3 million at September 30, 2017, which were originated pursuant2023.
In fiscal year 2022, the Company started a new program to originate loans with the intent to sell following a more traditional mortgage banking model including risk-based pricing and loan level price adjustments. The program is marketed under the name Mortgage Passport and is considered a division of the Association. Both purchase and refinance products are offered through Mortgage Passport in 19 states and the District of Columbia, excluding Ohio and Florida. The impact to the guidelinesCompany from the program to date is considered immaterial and therefore no breakout is provided. The Company also purchases fixed-rate and adjustable-rate, first mortgage loans originated in Ohio, Pennsylvania and North Carolina through a correspondent lending partnership. These loans are underwritten by the correspondent lender with generally the same standards as our originated portfolio using Fannie Mae processing and underwriting guidelines. During the fiscal year ended September 30, 2023, we purchased approximately $275.1 million of Fannie Mae's HARP II and HomeReady programs.residential mortgage loans through our correspondent lending partnership.
Historically, the AssociationCompany has retained the servicing rights on all residential real estate mortgage loans that it has sold, and intends to continue this practice into the future. At September 30, 2017,2023, the AssociationCompany serviced loans owned by others with a principal balance of $1.85 billion, including $4.2 million of loans sold to Fannie Mae subject to recourse. All recourse sales occurred prior to the year 2000.$1.93 billion. Loan servicing includes collecting and remitting loan payments, accounting for principal and interest, contacting delinquent borrowers, supervising foreclosures and property dispositions in the event of unremedied defaults, making certain insurance and tax payments on behalf of the borrowers and generally administering the loans. The AssociationCompany retains a portion of the interest paid by the borrower on the loans it services as consideration for its servicing activities. The Association did not enter into any loan participations during the fiscal year ended September 30, 2017 and does not expect to do so in the near future.
Loan Approval Procedures and Authority. The Association’sCompany’s lending activities follow written non-discriminatory underwriting standards and loan origination procedures established by its Board of Directors. The loan approval process is intended to assess the borrower’s ability to repay the loan and the value of the property that will secure the loan. To assess the borrower’s ability to repay, the AssociationCompany reviews the borrower’s employment and credit history and information on the historical and projected income and expenses of the borrower.
The Association’sCompany’s policies and loan approval limits are established by its Board of Directors. The Association’sCompany’s Board of Directors has delegated authority to its Executive Committee (consisting of the Association’sCompany’s Chief Executive Officer and two directors) to review and assign lending authorities to certain individuals of the AssociationCompany to consider and approve loans within their designated authority. Residential real estate mortgage loans and construction loans require the approval of one individual with designated underwriting authority.
The AssociationCompany requires independent third-party valuations of real property. Appraisals are performed by independent licensedlicensed/certified appraisers.

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Delinquent Loans. The following tables set forth the number and recorded investmentamortized cost in loan delinquencies by type, segregated by geographic location and severityduration of delinquency atas of the dates indicated. The majority of our constructionHome Today loan portfolio is secured by properties located in Ohio; therefore, it was not segregated by geography.Ohio and there are no other loans with delinquent balances. There were no delinquencies in the construction loan portfolio for the fiscal years presented.
Loans Delinquent For
 30-89 Days90 Days or MoreTotal
 (Dollars in thousands)
September 30, 2023
Real estate loans:
Residential Core
Ohio$2,616 $4,410 $7,026 
Florida1,207 1,340 2,547 
Other1,620 2,518 4,138 
Total Residential Core5,443 8,268 13,711 
Residential Home Today989 855 1,844 
Home equity loans and lines of credit
Ohio910 600 1,510 
Florida973 813 1,786 
California529 790 1,319 
Other1,549 1,673 3,222 
Total Home equity loans and lines of credit3,961 3,876 7,837 
Total$10,393 $12,999 $23,392 
 Loans Delinquent For  
 30-89 Days 90 Days or Over Total
 Number Amount Number Amount Number Amount
 (Dollars in thousands)
September 30, 2017           
Real estate loans:           
Residential Core           
Ohio82
 $6,850
 114
 $8,756
 196
 $15,606
Florida12
 1,671
 26
 2,507
 38
 4,178
Other1
 149
 4
 712
 5
 861
Total Residential Core95
 8,670
 144
 11,975
 239
 20,645
Residential Home Today           
Ohio123
 5,244
 193
 6,678
 316
 11,922
Florida4
 319
 5
 173
 9
 492
Kentucky—
 —
 —
 —
 —
 —
Total Residential Home Today127
 5,563
 198
 6,851
 325
 12,414
Home equity loans and lines of credit           
Ohio117
 3,037
 133
 2,134
 250
 5,171
Florida48
 1,884
 99
 2,345
 147
 4,229
California7
 590
 9
 354
 16
 944
Other22
 859
 44
 575
 66
 1,434
Total Home equity loans and lines of credit194
 6,370
 285
 5,408
 479
 11,778
Construction—
 —
 —
 —
 —
 —
Total416
 $20,603
 627
 $24,234
 1,043
 $44,837


Loans Delinquent For
 30-89 Days90 Days or MoreTotal
 (Dollars in thousands)
September 30, 2022
Real estate loans:
Residential Core
Ohio$2,862 $4,332 $7,194 
Florida1,009 1,066 2,075 
Other345 3,883 4,228 
Total Residential Core4,216 9,281 13,497 
Residential Home Today2,111 861 2,972 
Home equity loans and lines of credit
Ohio630 679 1,309 
Florida438 694 1,132 
California427 444 871 
Other900 504 1,404 
Total Home equity loans and lines of credit2,395 2,321 4,716 
Total$8,722 $12,463 $21,185 
 Loans Delinquent For    
 30-89 Days 90 Days or Over Total
 Number Amount Number Amount Number Amount
 (Dollars in thousands)
September 30, 2016           
Real estate loans:           
Residential Core           
Ohio93
 $8,901
 155
 $10,957
 248
 $19,858
Florida5
 790
 39
 4,055
 44
 4,845
Other1
 119
 4
 581
 5
 700
Total Residential Core99
 9,810
 198
 15,593
 297
 25,403
Residential Home Today           
Ohio133
 7,456
 203
 6,954
 336
 14,410
Florida5
 398
 10
 378
 15
 776
Kentucky1
 —
 1
 24
 2
 24
Total Residential Home Today139
 7,854
 214
 7,356
 353
 15,210
Home equity loans and lines of credit           
Ohio94
 2,507
 172
 2,216
 266
 4,723
Florida34
 2,134
 122
 2,257
 156
 4,391
California8
 562
 5
 130
 13
 692
Other32
 1,213
 40
 329
 72
 1,542
Total Home equity loans and lines of credit168
 6,416
 339
 4,932
 507
 11,348
Construction—
 —
 —
 —
 —
 —
Total406
 $24,080
 751
 $27,881
 1,157
 $51,961


 Loans Delinquent For    
 30-89 Days 90 Days or Over Total
 Number Amount Number Amount Number Amount
 (Dollars in thousands)
September 30, 2015           
Real estate loans:           
Residential Core           
Ohio111
 $10,622
 188
 $14,746
 299
 $25,368
Florida10
 1,634
 70
 7,509
 80
 9,143
Other2
 309
 8
 1,051
 10
 1,360
Total Residential Core123
 12,565
 266
 23,306
 389
 35,871
Residential Home Today           
Ohio147
 8,021
 231
 8,371
 378
 16,392
Florida5
 352
 11
 674
 16
 1,026
Kentucky—
 —
 1
 23
 1
 23
Total Residential Home Today152
 8,373
 243
 9,068
 395
 17,441
Home equity loans and lines of credit           
Ohio128
 2,633
 189
 2,772
 317
 5,405
Florida36
 1,894
 124
 1,608
 160
 3,502
California9
 680
 13
 49
 22
 729
Other30
 967
 48
 1,146
 78
 2,113
Total Home equity loans and lines of credit203
 6,174
 374
 5,575
 577
 11,749
Construction—
 —
 1
 427
 1
 427
Total478
 $27,112
 884
 $38,376
 1,362
 $65,488
 Loans Delinquent For    
 30-89 Days 90 Days or Over Total
 Number Amount Number Amount Number Amount
 (Dollars in thousands)
September 30, 2014           
Real estate loans:           
Residential Core           
Ohio108
 $10,416
 263
 $22,218
 371
 $32,634
Florida14
 2,006
 141
 14,291
 155
 16,297
Other3
 544
 4
 942
 7
 1,486
Total Residential Core125
 12,966
 408
 37,451
 533
 50,417
Residential Home Today           
Ohio168
 9,797
 328
 14,256
 496
 24,053
Florida9
 643
 18
 849
 27
 1,492
Total Residential Home Today177
 10,440
 346
 15,105
 523
 25,545
Home equity loans and lines of credit           
Ohio123
 3,753
 214
 3,637
 337
 7,390
Florida36
 2,365
 184
 3,010
 220
 5,375
California11
 753
 16
 298
 27
 1,051
Other21
 958
 59
 2,092
 80
 3,050
Total Home equity loans and lines of credit191
 7,829
 473
 9,037
 664
 16,866
Construction1
 200
 —
 —
 1
 200
Total494
 $31,435
 1,227
 $61,593
 1,721
 $93,028


 Loans Delinquent For    
 30-89 Days 90 Days or Over Total
 Number Amount Number Amount Number Amount
 (Dollars in thousands)
September 30, 2013           
Real estate loans:           
Residential Core           
Ohio165
 $17,064
 340
 $31,498
 505
 $48,562
Florida17
 2,743
 200
 24,405
 217
 27,148
Other3
 465
 3
 581
 6
 1,046
Total Residential Core185
 20,272
 543
 56,484
 728
 76,756
Residential Home Today           
Ohio213
 14,213
 377
 17,748
 590
 31,961
Florida6
 373
 16
 593
 22
 966
Total Residential Home Today219
 14,586
 393
 18,341
 612
 32,927
Home equity loans and lines of credit           
Ohio151
 5,304
 200
 5,132
 351
 10,436
Florida56
 4,228
 170
 3,589
 226
 7,817
California9
 749
 27
 1,479
 36
 2,228
Other30
 1,990
 49
 1,842
 79
 3,832
Total Home equity loans and lines of credit246
 12,271
 446
 12,042
 692
 24,313
Construction—
 —
 2
 41
 2
 41
Total650
 $47,129
 1,384
 $86,908
 2,034
 $134,037
Total loans seriously delinquent (i.e. delinquent 90 days or over) decreased five basis points to 0.19%more) were 0.09% of total net loans at September 30, 2017, from 0.24%2023 and at September 30, 2016.2022. The percentage of loans seriously delinquent loans to total net loans decreased in the residential Core portfolio from 0.13%0.06% to 0.10%0.05%. Such loans in the residential Home Today portfolio decreasedremained at 0.01%. Home equity loans and lines of credit portfolio increased from 0.06%0.02% to 0.05%;0.03%.
Although delinquencies remain at or near historic lows, recent economic trends and rising interest rates have led to increased early stage delinquencies in the home equity loans and lines of credit portfolio the percentage was 0.04% asportfolio. Interest rates on home equity lines of both dates. Although regional employment levels have improved, we expect some borrowers whocredit are current on their loans at September 30, 2017 to experience payment problems in the future. In addition, Hurricane Irma affected much of our Florida markets when it made landfall in September, 2017. There was minimal damage to our branch office operations andtied to the bestprime rate of our knowledge, little damage to properties securing our mortgage loans. However we have offered homeownersinterest which has increased significantly over the fiscal year, resulting in the affected areas an option to defer three months of mortgagehigher and less affordable monthly payments to lessen any financial strain related to the storm. We expect there may be a related increase in short term delinquencies subsequent to September 30, 2017 as these payment deferrals are resolved through repayment plans, term extensions or other loan modifications, but we do not expect a material increase in loan losses as a result of these payment deferrals.for some borrowers.
Non-performing Assets and Restructured Loans: Collection ProceduresLoans. Within 15 days of a borrower’s delinquency, per the AssociationCompany's collection procedures, it attempts personal, direct contact with the borrower to determine the reason for the delinquency, to ensure that the borrower correctly understands the terms of the loan and to emphasize the importance of making payments on or before the due date. If necessary, subsequent late charges and delinquent notices are issued and the borrower’s account will be
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monitored on a regular basis thereafter. The AssociationCompany also mails system-generated reminder notices on a monthly basis. When a loan is more than 30 days past due, the AssociationCompany attempts to contact the borrower and develop a plan of repayment. By the 90th day of delinquency, the AssociationCompany may recommend foreclosure. By this date, if a repayment agreement has not been established, or if an agreement is established but is subsequently broken, the borrower’s credit file is reviewed and, if considered necessary, theThe loan will be evaluated for impairment.based on collateral prior to the 180th day of delinquency. For further discussion on evaluating collateral-dependent loans, for impairment, see Note 5. LOANS AND ALLOWANCE FOR LOANCREDIT LOSSES. A summary report of all loans 30 days or more past due is provided to the Association’s Board of Directors.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Loans are placed in non-accrual status when they are contractually 90 days or more past due or if collection of principal or interest in full is in doubt. Loans restructured in TDRs that were in non-accrual status prior to the restructurings remain in non-accrual status for a minimum of six months. Homemonths after restructuring. Loans with a partial charge-off remain in non-accrual until, at a minimum, the loss is recovered. Additionally, home equity loans and lines of credit which are subordinate to a first mortgage lien where the customer is seriouslyseverely delinquent are placed in non-accrual status. Loansand loans in Chapter 7 bankruptcy status where all borrowers have been discharged from their mortgage obligation are placed in non-accrual status. Beginning in 2014, loans in Chapter 7 bankruptcy status where all borrowers had filed, and had not reaffirmed or been dismissed, are also placed in non-accrual status. For discussion on interest recognition and further discussion on non-accrual, see Note 5. LOANS AND ALLOWANCE FOR LOAN LOSSES.CREDIT LOSSES of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

The table below sets forth the recorded investmentsamortized costs and categories of our non-performing assets and TDRs at the dates indicated.
There were no construction loans reported as non-accrual for the fiscal years presented.
September 30, September 30,
2017 2016 2015 2014 2013 20232022
(Dollars in thousands) (Dollars in thousands)
Non-accrual loans:         Non-accrual loans:
Real estate loans:         Real estate loans:
Residential Core$43,797
 $51,304
 $62,293
 $79,388
 $91,048
Residential Core$19,414 $22,644 
Residential Home Today18,109
 19,451
 22,556
 29,960
 34,813
Residential Home Today4,623 6,037 
Home equity loans and lines of credit(1)17,185
 19,206
 21,514
 26,189
 29,943
Construction—
 —
 427
 —
 41
Home equity loans and lines of creditHome equity loans and lines of credit7,877 6,925 
Total non-accrual loans(3)(2)79,091
 89,961
 106,790
 135,537
 155,845
31,914 35,606 
Real estate owned5,521
 6,803
 17,492
 21,768
 22,666
Real estate owned1,444 1,191 
Total non-performing assets$84,612
 $96,764
 $124,282
 $157,305
 $178,511
Total non-performing assets$33,358 $36,797 
Ratios:         Ratios:
Total non-accrual loans to total loans0.63% 0.76% 0.95% 1.27% 1.53%Total non-accrual loans to total loans0.21 %0.25 %
Total non-accrual loans to total assets0.58% 0.70% 0.86% 1.15% 1.38%Total non-accrual loans to total assets0.19 %0.23 %
Total non-performing assets to total assets0.62% 0.75% 1.00% 1.33% 1.58%Total non-performing assets to total assets0.20 %0.23 %
TDRs (not included in non-accrual
loans above):		         TDRs (not included in non-accrual loans above):
Real estate loans:         Real estate loans:
Residential Core$53,511
 $57,942
 $60,175
 $59,630
 $63,045
Residential Core$40,894 $43,101 
Residential Home Today28,751
 32,401
 35,674
 39,148
 46,435
Residential Home Today17,184 18,380 
Home equity loans and lines of credit20,864
 16,528
 11,904
 8,117
 7,092
Home equity loans and lines of credit19,775 22,060 
Construction—
 —
 —
 —
 259
Total$103,126
 $106,871
 $107,753
 $106,895
 $116,831
Total$77,853 $83,541 
__________________________________________
(1)The totals at September 30, 2017, 2016, 2015, 2014 and 2013 include $0.5 million, $1.3 million, $1.8 million, $2.5 million and $5.3 million of performing home equity lines of credit, pursuant
(1) At September 30, 2023 and 2022, the totals include $17.8 million and $21.9 million, respectively, in TDRs that are less than 90 days past due but included with non-accrual loans for a minimum period of six months from the restructuring date due to their non-accrual status or forbearance plan prior to restructuring, because of a prior partial charge-off or because all borrowers have filed Chapter 7 bankruptcy and have not reaffirmed or dismissed.
(2) At September 30, 2023 and 2022, the totals include $3.7 million and $3.6 million in TDRs that are 90 days or more past due, respectively.
Non-accrual loans continue to decline primarily due to a decrease in the population of TDRs, in general, and those moved to accruing after a sufficient period of demonstrated payment performance. Since many of the accounts exiting the non-accrual population are TDRs paying as agreed or paid in full and closed, we do not expect any material impact to regulatory guidance regarding senior lien delinquency issued in January 2012.
(2)
At September 30, 2017, 2016, 2015, 2014 and 2013 the totals include $47.0 million, $51.4 million, $55.5 million, $58.7 million and $54.3 million respectively, in TDRs which: are less than 90 days past due but included with non-accrual loans for a minimum period of six months from the restructuring date due to their non-accrual status prior to restructuring; because they have been partially charged off; or because all borrowers have filed Chapter 7 bankruptcy, and had not reaffirmed or been dismissed.
(3)
At September 30, 2017, 2016, 2015, 2014, and 2013 the totals include $11.9 million, $12.4 million, $15.0 million, $20.9 million and $$30.6 million in TDRs that are 90 days or more past due respectively.
The gross interest income that would have been recorded duringor the year ended September 30, 2017 onallowance once the non-accrual loans if they had been accruing during the entire period and TDRs if they had been current and performing in accordance with their original terms during the entire period was $10.2 million. The interest income recognized on those loans included in net income for the year ended September 30, 2017 was $6.8 million.population stabilizes.
ImpairedCollateral-Dependent Loans. A loan is considered impairedcollateral-dependent when, based on current information and events, itthe borrower is probable thatexperiencing financial difficulty and repayment is expected to be provided substantially through the Association will be unable to collect the scheduled payments of principal and interest according to the contractual termssale of the loan agreement.collateral or foreclosure is probable. For discussion on impairmentcollateral-dependent measurement, see Note 5. LOANS AND ALLOWANCE FOR LOANCREDIT LOSSES.of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
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The recorded investmentamortized cost of impairedcollateral-dependent loans includes accruing TDRs and loans that are returned to accrual status when contractual payments are less than 90 days past due. These loans continue to be individually evaluated based on collateral until, at a minimum, contractual payments are less than 30 days past due. Also, the recorded investmentamortized cost of non-accrual loans includes loans that are not included in the recorded investmentamortized cost of impairedcollateral-dependent loans because they are included in loans collectively evaluated for impairment. credit loss.
The table below sets forth a reconciliation of the recorded investmentsamortized costs and categories between non-accrual loans and impairedcollateral-dependent loans at the dates indicated.

For the Years Ended September 30,
20232022
(Dollars in thousands)
Non-Accrual Loans$31,914 $35,606 
Accruing Collateral-Dependent TDRs4,299 7,279 
Other Accruing Collateral-Dependent Loans6,663 6,426 
Less: Loans Collectively Evaluated(4,647)(2,190)
Total Collateral-Dependent Loans$38,229 $47,121 
  At or For the Years Ended September 30,
  2017 2016 2015 2014 2013
  (Dollars in thousands)
Balance of Non-Accrual Loans $79,091
 $89,961
 $106,790
 $135,537
 $155,845
Accruing TDRs 103,126
 106,871
 107,753
 106,895
 116,831
Performing Impaired Loans 3,607
 4,022
 5,276
 5,389
 7,761
Less Loans Collectively Evaluated (5,264) (6,004) (7,647) (14,435) (17,396)
Balance of Total Impaired loans $180,560
 $194,850
 $212,172
 $233,386
 $263,041
The balance of total (accrual and non-accrual) TDRs was $162.0 million at September 30, 2017, $8.6 million decrease from September 30, 2016. OfIn response to the $162.0 million of TDRs recorded at September 30, 2017, $86.6 million is in the Residential Core portfolio, $44.0 million is in the Home Today portfolio and $31.4 million is in the Home equity loans and lines of credit portfolio.
economic challenges facing many borrowers, we continue to restructure loans. Loan restructuring is a method used to help families keep their homes and preserve our neighborhoods. This involves making changes to the borrowers’ loan terms through interest rate reductions, either for a specific period or for the remaining term of the loan; term extensions including those beyond that provided in the original agreement; principal forgiveness; capitalization of delinquent payments in special situations; or some combination of the above.aforementioned. Loans discharged through Chapter 7 bankruptcy are also reported as TDRs per OCC interpretive guidance. For discussion on impairmentTDR measurement, see Note 5. LOANS AND ALLOWANCE FOR LOANCREDIT LOSSESof the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. We had $99.5 million of TDRs (accrual and non-accrual) recorded at September 30, 2023, of which $53.9 million are Residential Core, $21.2 million are Home Today and $24.4 million are Home equity loans and lines of credit. This is a $9.5 million decrease in the amortized cost of TDRs from September 30, 2022.
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The following table sets forth the recorded investmentsamortized cost of accrual and non-accrual TDRs, by the types of concessions granted, as of September 30, 2017.2023. Initial concessions granted by loans restructured as TDRs can include reduction of interest rate, extension of amortization period, forbearance or other actions. Some TDRs have experienced a combination of concessions. TDRs also can occur as a result of bankruptcy proceedings. Loans discharged in Chapter 7 bankruptcy are classified as multiple restructurings if the loan's original terms had also been restructured by the Company.
Initial RestructuringMultiple RestructuringsBankruptcyTotal
 (Dollars in thousands)
Accrual
Residential Core$26,229 $10,342 $4,323 $40,894 
Residential Home Today8,903 7,485 796 17,184 
Home equity loans and lines of credit18,536 966 273 19,775 
Total$53,668 $18,793 $5,392 $77,853 
Non-Accrual, Performing
Residential Core$1,363 $4,304 $5,029 $10,696 
Residential Home Today460 2,270 833 3,563 
Home equity loans and lines of credit1,540 1,443 606 3,589 
Total$3,363 $8,017 $6,468 $17,848 
Non-Accrual, Non-Performing
Residential Core$954 $1,084 $225 $2,263 
Residential Home Today27 359 62 448 
Home equity loans and lines of credit987 51 — 1,038 
Total$1,968 $1,494 $287 $3,749 
Total TDRs
Residential Core$28,546 $15,730 $9,577 $53,853 
Residential Home Today9,390 10,114 1,691 21,195 
Home equity loans and lines of credit21,063 2,460 879 24,402 
Total$58,999 $28,304 $12,147 $99,450 
 
Reduction in
Interest Rates
 
Payment
Extensions
 
Forbearance
or Other
Actions
 
Multiple
Concessions
 Multiple Restructurings Bankruptcy Total
 (Dollars in thousands)
Accrual             
Residential Core$10,847
 $498
 $6,483
 $17,891
 $10,710
 $7,082
 $53,511
Residential Home Today4,217
 —
 3,177
 9,450
 10,977
 930
 28,751
Home equity loans and lines of credit106
 5,551
 236
 12,241
 226
 2,504
 20,864
Total$15,170
 $6,049
 $9,896
 $39,582
 $21,913
 $10,516
 $103,126
Non-Accrual, Performing             
Residential Core$1,006
 $—
 $485
 $2,715
 $8,161
 $15,039
 $27,406
Residential Home Today688
 —
 838
 866
 5,358
 2,562
 10,312
Home equity loans and lines of credit—
 272
 54
 2,202
 1,202
 5,562
 9,292
Total$1,694
 $272
 $1,377
 $5,783
 $14,721
 $23,163
 $47,010
Non-Accrual, Non-Performing             
Residential Core$632
 $23
 $1,208
 $672
 $1,588
 $1,548
 $5,671
Residential Home Today536
 —
 796
 222
 2,543
 845
 4,942
Home equity loans and lines of credit—
 210
 83
 218
 43
 717
 1,271
Total$1,168
 $233
 $2,087
 $1,112
 $4,174
 $3,110
 $11,884
Total TDRs             
Residential Core$12,485
 $521
 $8,176
 $21,278
 $20,459
 $23,670
 $86,589
Residential Home Today5,441
 —
 4,811
 10,538
 18,877
 4,337
 44,004
Home equity loans and lines of credit106
 6,033
 373
 14,661
 1,471
 8,783
 31,427
Total$18,032
 $6,554
 $13,360
 $46,477
 $40,807
 $36,790
 $162,020



TDRs onin accrual status are loans accruing interest and performing according to the terms of the restructuring. To be performing, a loan must be less than 90 days past due as of the report date. Non-accrual, performing status indicates that a loan was:was not accruing interest or in a forbearance plan at the time of restructuring, continues to not accrue interest, and is performing according to the terms of the restructuring,restructuring; but it has not been current for at least six consecutive months since its restructuring;restructuring, has a partial charge-off;charge-off, or is being classified as non-accrual per the OCC guidance on loans in Chapter 7 bankruptcy status, where all borrowers have filed and have not reaffirmed or been dismissed. Non-accrual, non-performing status includes loans that are not accruing interest because they are greater than 90 days past due and therefore not performing according to the terms of the restructuring.
Real Estate Owned. Real estate acquired as a result of foreclosure or by deed in lieu of foreclosure is classified as real estate owned until sold. When property is acquired, it is recorded at the estimated fair market value at the date of foreclosure, less estimated costs to sell, establishing a new cost basis. Estimated fair value generally represents the sale price a buyer would be willing to pay on the basis of current market conditions. Subsequent to acquisition, real estate owned is carried at the lower of the cost basis or estimated fair market value, less estimated costs to sell. Increases in the fair market value are recognized through income not exceeding the valuation allowance. Holding costs and declines in estimated fair market value result in charges to expense after acquisition. At September 30, 2017,2023, we had $5.5$1.4 million in real estate owned.
Classification of Assets. Our policies, consistent with regulatory guidelines, provide for the classification of loans and other assets that are considered to be of lesser quality as substandard, doubtful, or loss assets. An asset is considered substandard if it is inadequately protected by the current payment capacity of the borrower or the collateral pledged has a defined weakness that jeopardizes the liquidation of the debt. Substandard assets include those assets characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. Assets classified as doubtful have all of the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable or
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improbable. Assets (or portions of assets) classified as loss are those considered uncollectible and of such little value that their continuance as assets is not warranted. Assets that do not expose us to risk sufficient to warrant classification in one of the aforementioned categories, but which possess potential weaknesses that deserve management's attention and may result in further deterioration in their repayment prospects and/or the Association'sCompany's credit position, are required to be designated as special mention.
When we classify assets asmeet the classification criteria for either substandard or doubtful, we allocatethey exhibit similar risk characteristics that result in expected credit losses through the model outputs or qualitative factors. As a result of the allowance analysis, a portion of the related generalcredit loss allowancesallowance is allocated to such assets as we deem prudent.assets. The allowance for loancredit losses is the amount estimated by management as necessary to absorb creditrepresent the lifetime losses incurred in theour loan portfolio that are both probable and reasonably estimable at the balanceoff-balance sheet date.commitments. When we classify a problem asset as loss, we charge-off that portion of the asset that is uncollectible. Our determinations as to the classification of our assets and the amount of our credit loss allowances are subject to review by the Association'sCompany's primary federal regulator, the OCC, which can require that we establish additional credit loss allowances. We regularly review our asset portfolio to determine whether any assets require classification in accordance with applicable regulations. On the basis of our review of assets at September 30, 2017,2023, the recorded investmentamortized cost of classified assets consists of substandard assets of $96.8$44.3 million,, including $5.5$1.4 million of real estate owned, and $3.8$5.3 million of assets designated special mention. As of September 30, 2017,2023, there were no individual assets with balances exceeding $1$1.0 million that were classified as substandard. Substandard assets at September 30, 20172023 include $24.2$12.4 million of loans 90 or more days past due and $67.1$37.3 million of loans less than 90 days past due displaying a weakness sufficient to warrant an adverse classification,classification. Of the majority$37.3 million of whichloans less than 90 days past due, $29.2 million are TDRs.TDRs, and the remaining $8.1 million are non-TDRs primarily made up of loans that had their forbearance term extended greater than 12 months, regardless of forbearance plan status at September 30, 2023.
Allowance for LoanCredit Losses. We provide for loancredit losses based on the allowance method.a life of loan methodology. Accordingly, all loancredit losses are charged to, the related allowance and all recoveries are credited to, it.the related allowance. Additions to the allowance for loancredit losses are provided by charges to income based on various factors which, in our judgment, deserve current recognition in estimating probablelifetime credit losses. We regularly review the loan portfolio and off-balance sheet exposures and make provisions (or releases) for loan losses in order to maintain the allowance for loancredit losses in accordance with accounting principles generally accepted in the United States of America.U.S. GAAP. Our allowance for loancredit losses consists of twothree components:
(1)individual valuation allowances (IVAs) established for any impaired loans dependent on cash flows, such as performing TDRs, and IVAs related to a portion of the allowance on loans individually reviewed that represents further deterioration in the fair value of the collateral not yet identified as uncollectible.
(2)general valuation allowances (GVAs), which are comprised of quantitative GVAs, which are general allowances for loan
(1)individual valuation allowances (IVAs) established for any loans dependent on cash flows, such as performing TDRs;
(2)general valuation allowances (GVAs) for loans, which are comprised of quantitative GVAs, general allowances for credit losses for each loan type based on historical loan loss experience and qualitative GVAs which are adjustments to the quantitative GVAs, maintained to cover uncertainties that affect our estimate of incurred probable losses for each loan type.

We evaluate the allowance for loan losses based upon the combined total of the quantitative and qualitative GVAs, which are adjustments to the quantitative GVAs, maintained to cover uncertainties that affect the estimate of expected credit losses for each loan type; and IVAs.
(3)GVAs for off-balance sheet credit exposures, which are comprised of expected lifetime losses on unfunded loan commitments to extend credit where the obligations are not unconditionally cancellable.
The qualitative GVAs expand our ability to identify and estimate probable losses and are based on our evaluation of the following factors, some of which are consistent with factors that impact the determination of quantitative GVAs. For example,

delinquency statistics (both current and historical) are used in developing the quantitative GVAs while the trending of the delinquency statistics is considered and evaluated in the determination of the qualitative GVAs. Factors impacting the determination of qualitative GVAs include:
•changes in lending policies and procedures including underwriting standards, collection, charge-off or recovery practices;
•management's view of changes in national, regional, and local economic and business conditions and trends including treasury yields, housing market factors and trends, such as the status of loans in foreclosure, real estate in judgment and real estate owned, and unemployment statistics and trends;trends and how it aligns with economic modeling forecasts;
•changes in the nature and volume of the portfolios including home equity lines of credit nearing the end of the draw period;period and adjustable-rate mortgage loans nearing a rate reset;
•changes in the experience, ability or depth of lending management;
•changes in the volume or severity of past due loans, volume of nonaccrualnon-accrual loans, or the volume and severity of adversely classified loans including the trending of delinquency statistics (both current and historical), historical loan loss experience and trends, the frequency and magnitude of multiple restructurings of loans previously the subject of TDRs, and uncertainty surrounding borrowers’ ability to recover from temporary hardships for which short-term loan restructurings are granted;
•changes in the quality of the loan review system;
•changes in the value of the underlying collateral including asset disposition loss statistics (both current and historical) and the trending of those statistics, and additional charge-offs and recoveries on individually reviewed loans;
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•existence of any concentrations of credit;
•effect of other external factors such as competition, market interest rate changes or legal and regulatory requirements including market conditions and regulatory directives that impact the entire financial services industry.industry; and
•limitations within our models to predict life of loan net losses.
When loan restructurings qualify as TDRs and the loans are performing according to the terms of the restructuring, we record an IVA based on the present value of expected future cash flows, which includes a factor for potential subsequent potential defaults, discounted at the effective interest rate of the original loan contract. Potential defaults are distinguished from multiple restructurings as borrowers who default are generally not eligible for a subsequent restructuring.restructurings. At September 30, 2017,2023, the balance of such IVAsindividual valuation allowances was $11.1 million.$9.5 million. In instances when loans require multiple restructurings, additional valuation allowances may be required. The new valuation allowance on a loan that has multiple restructurings is calculated based on the present value of the expected cash flows, discounted at the effective interest rate of the original loan contract, considering the new terms of the restructured agreement. DueThe estimated exposure for additional loss related to the immaterial amount of this exposure to date, we continue to capture this exposuremultiple loan restructurings as well as additional losses on individually reviewed TDRs are included as a $1.4 million component of our qualitative GVA evaluation. The significance of this exposure will be monitored and if warranted, we will enhance our loan loss methodology to include a new default factor (developed to reflect the estimated impact to the balance of the allowance for loan losses that will occur as a result of subsequent future restructurings) that will be assessed against all loans reviewed collectively. If new default factors are implemented, the qualitative GVA methodology will be adjusted to preclude duplicative loss consideration.at September 30, 2023.
Home equity loans and lines of credit generally have higher credit risk than traditional residential mortgage loans. These loans and credit lines are usually in a second lien position and when combined with the first mortgage, result in generally higher overall LTVloan-to-value ratios. In a stressed housing market with high delinquencies and decreasing housing prices, as arose beginning in 2008, these higher LTVloan-to-value ratios represent a greater risk of loss to the Company. A borrower with more equity in the property has a vested interest in keeping the loan current when compared to a borrower with little or no equity in the property. WeIn light of the past weakness in the housing market and uncertainty with respect to future employment levels and economic prospects, we conduct an expanded loan level evaluation of our home equity loans and lines of credit, including bridge loans used to aid borrowers in buying a new home before selling their old one, which are delinquent 90 days or more. This expanded evaluation is in addition to our traditional evaluation procedures. Although the level of home equity loans and lines of credit charge-offs has been reduced during the year from previous levels and recoveriesWe have actually exceeded gross charge-offs,established an allowance for our unfunded commitments on this portfolio, which is recorded in other liabilities. Our home equity loans and lines of credit portfolio continuedcontinues to comprise a significant portion of our gross charge-offs during the current year.charge-offs. At September 30, 2017,2023, we had a recorded investmentan amortized cost of $1.57$3.07 billion in home equity loans and home equity lines of credit outstanding, 0.3%of which $3.9 million, or 0.1%, were delinquent 90 days or more.
Construction loans generally have greaterThe allowance for credit risk than traditional residential real estate mortgage loans as discussed inlosses is evaluated based upon the Construction Loans section above.
We periodically evaluatecombined total of the quantitative and qualitative GVAs and IVAs. Periodically, the carrying value of loans and factors impacting our credit loss analysis are evaluated and the allowance is adjusted accordingly. While we use the best information available to make evaluations, future additions to the allowance may be necessary based on unforeseen changes in

loan quality and economic conditions.
For more information regarding the allowance for loancredit losses, see Item 7 “Management’sManagement’s Discussion and Analysis of Financial Condition and Results of Operations.”Operations.


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The following table sets forth activity in our allowance for loancredit losses segregated by geographic location for the periods indicated. The majority of our constructionHome Today loan portfolio is secured by properties located in Ohio, and the balances of Other consumer loans are immaterial; therefore neither was segregated.not segregated by state.
 At or For the Years Ended September 30,
 202320222021
 (Dollars in thousands)
Allowance balance for credit losses on loans (beginning of the year)$72,895 $64,289 $46,937 
Adoption of ASU 2016-13 for allowance for credit losses on loans— — 24,095 
Charge-offs on real estate loans:
Residential Core
Ohio257 234 1,587 
Florida— — 377 
Other— 13 1 
Total Residential Core257 247 1,965 
Total Residential Home Today320 249 552 
Home equity loans and lines of credit
Ohio293 625 1,112 
Florida78 154 784 
California14 29 168 
Other280 146 632 
Total Home equity loans and lines of credit665 954 2,696 
Total charge-offs1,242 1,450 5,213 
Recoveries on real estate loans:
Residential Core1,126 2,932 2,385 
Residential Home Today2,451 2,648 2,362 
Home equity loans and lines of credit4,079 5,352 5,621 
Construction— 175 20 
Total recoveries7,656 11,107 10,388 
Net recoveries6,414 9,657 5,175 
Release of allowance for credit losses on loans(1,994)(1,051)(11,918)
Allowance balance for loans (end of the year)$77,315 $72,895 $64,289 
Allowance balance for credit losses on unfunded commitments (beginning of the year)$27,021 $24,970 $— 
Adoption of ASU 2016-13 for allowance for credit losses on unfunded commitments— — 22,052 
Provision for credit losses on unfunded commitments494 2,051 2,918 
Allowance balance for unfunded loan commitments (end of the year)27,515 27,021 24,970 
Allowance balance for all credit losses (end of the year)$104,830 $99,916 $89,259 
Ratios:
Allowance for credit losses to non-accrual loans at end of the year242.26 %204.73 %145.96 %
Allowance for credit losses to the total amortized cost in loans at end of the year0.51 %0.51 %0.51 %

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 At or For the Years Ended September 30,
 2017 2016 2015 2014 2013
 (Dollars in thousands)
Allowance balance (beginning of the year)$61,795
 $71,554
 $81,362
 $92,537
 $100,464
Charge-offs:         
Real estate loans:         
Residential Core         
Ohio1,728
 3,214
 4,522
 8,406
 10,534
Florida1,272
 981
 1,703
 7,782
 6,129
Other29
 99
 641
 32
 56
Total Residential Core3,029
 4,294
 6,866
 16,220
 16,719
Residential Home Today         
Ohio2,172
 2,649
 3,277
 7,336
 11,869
Florida83
 112
 175
 286
 433
Other21
 —
 —
 —
 —
Total Residential Home Today2,276
 2,761
 3,452
 7,622
 12,302
Home equity loans and lines of credit         
Ohio2,707
 3,095
 5,241
 4,879
 4,604
Florida2,560
 2,885
 4,017
 8,004
 14,147
California199
 76
 498
 1,021
 2,490
Other707
 1,790
 1,278
 2,039
 2,302
Total Home equity loans and lines of credit6,173
 7,846
 11,034
 15,943
 23,543
Construction—
 —
 —
 192
 294
Total charge-offs11,478
 14,901
 21,352
 39,977
 52,858
Recoveries:         
Real estate loans:         
Residential Core5,458
 3,708
 5,369
 2,742
 2,061
Residential Home Today1,311
 1,433
 1,533
 1,909
 775
Home equity loans and lines of credit8,862
 7,969
 7,468
 4,918
 4,964
Construction—
 32
 174
 233
 131
Total recoveries15,631
 13,142
 14,544
 9,802
 7,931
Net recoveries (charge-offs)4,153
 (1,759) (6,808) (30,175) (44,927)
Provision (credit) for loan losses(17,000) (8,000) (3,000) 19,000
 37,000
Allowance balance (end of the year)$48,948
 $61,795
 $71,554
 $81,362
 $92,537
Ratios:         
Net charge-offs (recoveries) to average loans outstanding(0.03)% 0.02% 0.06% 0.29% 0.44%
Allowance for loan losses to non-accrual loans at end
     of the year
61.89 % 68.69% 67.00% 60.03% 59.38%
Allowance for loan losses to the total recorded investment
     in loans at end of the year
0.39 % 0.52% 0.64% 0.76% 0.91%
The following table sets forth additional information with respect to net recoveries (charge-offs) by category for the periods indicated.
Charge-offs decreased during the year ended September 30, 2017 in all portfolios when compared to the year ended September 30, 2016, reflecting the improving market conditions.
For the Years Ended September 30,
202320222021
(Dollars in thousands)
Net recoveries to average loans outstanding during the year
Real estate loans:
Residential Core0.01 %0.02 %— %
Residential Home Today0.01 %0.02 %0.02 %
Home Equity loans and lines of credit0.02 %0.03 %0.02 %
Total net recoveries to average loans outstanding0.04 %0.07 %0.04 %
We continue to evaluate loans becoming delinquent for potential losses and record provisions for the estimate of those losses. We reported net recoveries in each quarter for the past five years, primarily due to improvements in the values of properties used to secure loans that were fully or partially charged off after the 2008 collapse of the housing market. Charge-offs are recognized on loans identified as collateral-dependent and subject to individual review when the collateral value does not sufficiently support full repayment of the obligation. Recoveries are recognized on previously charged-off loans as borrowers perform their repayment of the obligations or as loans with improved collateral positions reach final resolution. During the fiscal year ended September 30, 2023, recoveries exceeded loan charge-offs by $6.4 million.

Gross charge-offs decreased and delinquent loans continue to be evaluated for potential losses, and provisions are recorded for the estimate of potential losses of those loans. Subject to changes in the economic environment, a moderate level of charge-offs are expected as delinquent loans are resolved in the future and uncollected balances are charged against the allowance.
Allocation of Allowance for LoanCredit Losses. The following tables settable sets forth the allowance for loancredit losses allocated by loan category, the percent of allowance in each category to the total allowance on loans, and the percent of loans in each category to total loans at the dates indicated. The allowance for loancredit losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories. This table does not include allowance for credit losses on unfunded loan commitments, which are primarily related to undrawn home equity lines of credit.
 At September 30,
 20232022
 AmountPercent of
Allowance
to Total
Allowance		Percent of
Loans in
Category to
Total Loans		AmountPercent of
Allowance
to Total
Allowance		Percent of
Loans in
Category to
Total Loans
 (Dollars in thousands)
Real estate loans:
Residential Core$55,375 71.6 %79.4 %$53,506 73.4 %80.4 %
Residential Home Today(1,236)(1.6)0.3 (997)(1.4)0.4 
Home equity loans and lines of credit23,047 29.8 19.9 20,032 27.5 18.4 
Construction129 0.2 0.4 354 0.5 0.8 
Allowance for credit losses on loans$77,315 100.0 %100.0 %$72,895 100.0 %100.0 %

 At September 30,
 2017 2016 2015
 Amount 
Percent of
Allowance
to Total
Allowance
 
Percent of
Loans in
Category to
Total Loans
 Amount 
Percent of
Allowance
to Total
Allowance
 
Percent of
Loans in
Category to
Total Loans
 Amount 
Percent of
Allowance
to Total
Allowance
 
Percent of
Loans in
Category to
Total Loans
 (Dollars in thousands)
Real estate loans:                 
Residential Core$14,186
 29.0% 86.2% $15,068
 24.4% 85.5% $22,596
 31.6% 83.9%
Residential Home
     Today
4,508
 9.2
 0.9
 7,416
 12.0
 1.0
 9,997
 14.0
 1.2
Home equity loans
  and lines of credit
30,249
 61.8
 12.4
 39,304
 63.6
 13.0
 38,926
 54.4
 14.4
Construction5
 —
 0.5
 7
 —
 0.5
 35
 —
 0.5
Total allowance$48,948
 100.0% 100.0% $61,795
 100.0% 100.0% $71,554
 100.0% 100.0%

 At September 30,
 2014 2013
 Amount 
Percent of
Allowance
to Total
Allowance
 
Percent of
Loans in
Category to
Total Loans
 Amount 
Percent of
Allowance
to Total
Allowance
 
Percent of
Loans in
Category to
Total Loans
 (Dollars in thousands)
Real estate loans:           
Residential Core$31,080
 38.2% 82.2% $35,427
 38.3% 79.4%
Residential Home Today16,424
 20.2
 1.5
 24,112
 26.0
 1.7
Home equity loans and lines of credit33,831
 41.6
 15.8
 32,818
 35.5
 18.2
Construction27
 —
 0.5
 180
 0.2
 0.7
Total allowance$81,362
 100.0% 100.0% $92,537
 100.0% 100.0%
During the fiscal year ended September 30, 2017,2023, the total allowance for loancredit losses decreased $12.9increased to $104.8 million, to $48.9 millionfrom $61.8$99.9 million at September 30, 2016, as we recorded a negative $17.0 million provision for loan losses, which offset the impact to the allowance of recorded net recoveries of $4.2 million for the year.2022. The total allowance for loancredit losses related to loans evaluated collectively decreased by $11.3 million during the year ended September 30, 2017, and the allowance for loan losses related to loans evaluated individually decreased by $1.6 million. Refer to the "Activity in the Allowance for Loan Losses" and "Analysisis comprised of the Allowance for Loan Losses" tables in Note 5 of the Notesasset portion, which is applied to Consolidated Financial Statements for more information. Other than the less significant construction and other consumer loans segments, changes during the year ended September 30, 2017 in the balances of the GVAs, excluding changes in IVAs, related to the significant loan segments are described as follows:

Residential Core– The total balance of this segment of the loan portfolio increased 6.8% or $681.4 million while the total allowance for loan losses for this segment decreased 5.2% or $0.8 million. The portion of this loan segment’s allowance for loan losses that was determined by evaluating groups of loans collectively (i.e. those loans that were not individually evaluated), increased $0.8 million, or 13.0%, from $6.1 million at September 30, 2016 to $6.9 million at September 30, 2017. The ratio of this portion of the allowance for loan losses to the total balance of loans in this loan segment that were evaluated collectively, was 0.06% as of both dates. The decreases in the balance and ratio of the allowance for loan losses were reflective of the improvements in the levels of loan delinquencies and the reduction inliability portion, which is applied to off-balance sheet exposures, primarily related to undrawn equity exposures. During the amount of net charge offs during the current year when compared to prior periods. These improvements occurred as the balance of this loan segment grew during the year due to the addition of high credit quality, residential first mortgage loans. Total delinquencies decreased 18.7% to $20.6 million at September 30, 2017 from $25.4 million at September 30, 2016. Loans 90 or more days delinquent decreased 23.2% to $12.0 million at September 30, 2017 from $15.6 million at September 30, 2016. There were net recoveries during the current year of $2.4 million as compared to

$0.6 million of net charge-offs during thefiscal year ended September 30, 2016. As there continues2023 the asset and liability portions of the total allowance increased to be$77.3 million from $72.9 million and to $27.5 million from $27.0 million, respectively. We recorded a consistent improving trend$1.5 million net release for credit losses for the year, consisting of a $2.0 million release from credit losses on loans and a $0.5 million reclassification to credit losses on off-balance sheet exposures.
Because many variables are considered in asset qualitydetermining the appropriate level of this portfolio, additional reductionsgeneral valuation allowances, directional changes in individual considerations do not always align with the directional change in the balance of a particular component of the general valuation allowance. Changes in the allowance may be warranted, offset by any increase that may be warranted fromfor credit losses on loan balances during the overall risefiscal year ended
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September 30, 2023 were generally related to new growth in the portfolio balance.
Residential Home Today – The total balance of this segment of the loan portfolio decreased 10.6% or $12.8 million as newresidential Core and home equity loans are no longer being originated in this portfolio. The total allowance for loan losses for this segment decreased by $2.9 million or 39.2%. The portion of this loan segment’s allowance for loan losses that was determined by evaluating groups of loans collectively (i.e. those loans that were not individually evaluated), decreased by 49.1% from $4.4 million at September 30, 2016 to $2.3 million at September 30, 2017. Similarly, the ratio of this portion of the allowance to the total balance of loans in this loan segment that were evaluated collectively, decreased 2.7% to 3.7% at September 30, 2017 from 6.4% at September 30, 2016. Total delinquencies decreased from $15.2 million at September 30, 2016 to $12.4 million at September 30, 2017. Delinquencies greater than 90 days decreased from $7.4 million to $6.9 million during the same period. The credit profile of the remaining Home Today portfolio segment in total improved during the year and net charge-offs were less at $1.0 million during the year ended September 30, 2017 as compared to $1.3 million during the year ended September 30, 2016. Despite the improving trends, there still remains concern surrounding the overall credit profile of Home Today borrowers based on the generally less stringent credit requirements that were in place at the time that these borrowers qualified for their loans. This increases the risk when impairment is identified through discharged Chapter 7 bankruptcy, restructurings and a high portfolio delinquency when compared to the other portfolios.
Home Equity Loans and Lines of Credit – The total balance of this segment of the loan portfolio increased 1.8% or $27.5 million from $1.54 billion at September 30, 2016 to $1.57 billion at September 30, 2017. The total allowance for loan losses for this segment decreased 23.0% to $30.2 million from $39.3 million at September 30, 2016. The portion of this loan segment's allowance for loan losses that was determined by evaluating groups of loans collectively (i.e. those loans that were not individually evaluated) decreased by $9.8 million, or 25.4%, from $38.6 million to $28.8 million during the year ended September 30, 2017. The ratio of this portion of the allowance to the total balance of loans in this loan segment that were evaluated collectively also decreased to 1.9% at September 30, 2017 from 2.6% at September 30, 2016. Net charge-offs for this loan segment during the current year were less due to a decrease in gross charge-offs and an increase in loan recoveries, resulting in net recoveries of $2.7 million for the current year as compared to net recoveries of $123 thousand for the year ended September 30, 2016. Total delinquencies for this portfolio segment increased 3.8% to $11.8 million at September 30, 2017 as compared to $11.3 million at September 30, 2016. Delinquencies greater than 90 days increased 9.7% to $5.4 million at September 30, 2017 from $4.9 million at September 30, 2016. The credit metrics of this loan segment were mixed as recoveries exceeded charge-offs, while total delinquencies slightly increased during the current year, but the overall downward shift of risk level in the portfolio led to the reduction of the total allowance. The reduction in the allowance is also supported by a reduction of the principal balance of home equity lines of credit coming toportfolios, partially offset by some deterioration in the endeconomic forecasts.
The amortized cost of the draw period. In recent years, a large portionresidential Core portfolio increased 4.5%, or $543.7 million, and its total allowance increased 3.5% or $1.9 million as of the overall allowance has been allocatedSeptember 30, 2023 compared to September 30, 2022. The amortized cost of the home equity loans and lines of credit portfolio increased 15.0%, or $401.1 million, and its total allowance increased 15.1% to address exposure$23.0 million from customers whose lines of credit were originated without amortizing payments during the draw period and who could face potential increased payment shock at the end of the draw period. In general, home equity lines of credit originated prior to June 2010 were characterized by a ten-year draw period, with interest only payments, followed by a ten-year repayment period. However, a large number of those lines of credit approaching the end of draw period have been paid off or refinanced without significant loss. The principal balance of home equity lines of credit originated prior to 2010 without amortizing payments during the draw period that are coming to the end of the draw period through fiscal 2020 is $482.4$20.0 million at September 30, 2017, compared to $891.22022. As we are no longer originating loans under our Home Today program, there is an expected net recovery position for this portfolio which was $1.2 million at September 30, 2016. As this exposure decreases without incurring significant loss,2023 and $1.0 million at September 30, 2022. Under the portionCECL methodology, the life of loan concept allows for qualitative adjustments for the expected future recoveries of previously charged-off loans, which is driving the allowance balance for the Home Today loans negative. Refer to the "Activity in the Allowances for Credit Losses" and "Analysis of the overall allowance allocated toAllowance for Credit Losses" tables in Note 5. LOANS AND ALLOWANCES FOR CREDIT LOSSES of the home equity loans and lines of credit category can be decreased. Generally, there were minimal home equity lines of credit originated between June 2010 and February 2013 and those originated after February 2013 require an amortizing payment during the draw period and do not face the same end-of-draw increased payment shock risk. However, the balance and ratio of this loan segment's NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for more information.
The allowance for credit losses represents the estimate of lifetime loss in our loan losses continue to reflect our consideration of the potentially adverse impact that required payment increases that occur as home equity lines of credit near the end of their draw periods may have on our borrowers ability to meet their debt service obligations.
While the portfolio performance has improved,and unfunded loan losses on home equity loans and lines of credit continued to comprise a large component of our gross charge-offs for 2017 and are expected to continue to represent a large portion of our charge-offs for the foreseeable future until non-performing loan balances begin to decrease by more than the charge-offs.
commitments. Our analysis for evaluating the adequacy of and the appropriateness of our loan loss provision and allowance for loancredit losses is continually refined as newrelevant information, becomes availablerelating to past events, current conditions and actual loss experience is acquired.supportable forecasts become available. During the years ended September 30, 2017, 2016, 2015, 20142023 and 20132022, no material changes were made to the allowance or allowance methodology.for credit losses.

Investments
The Association’s Board of Directors is responsible for establishing and overseeing the Association’s investment policy. The investment policy is reviewed at least annually by management and any changes to the policy are recommended to the Board of Directors, or a committee thereof, and are subject to its approval. This policy dictates that investment decisions be made based on the safety of the investment, liquidity requirements, potential returns, the ability to provide collateral for pledging requirements, and consistency with our interest rate risk management strategy. The Association’s Investment Committee, which consists of itsthe Association's chief operating officer, chief financial officer and other members of management, oversees itsthe Association's investing activities and strategies. The portfolio manager is responsible for making securities portfolio decisions in accordance with established policies. The portfolio manager has the authority to purchase and sell securities within specific guidelines established in the investment policy, but historically the portfolio manager has executed purchases only after extensive discussions with other Investment Committee members. All transactions are formally reviewed by the Investment Committee at least quarterly. Any investment which, subsequent to its purchase, fails to meet the guidelines of the policy is reported to the Investment Committee, whichwho decides whether to hold or sell the investment.
The Association’s investment policy requires that itthe Association invest primarily in debt securities issued by the U.S. Government, agencies of the U.S. Government, and government-sponsored entities, which include Fannie Mae and Freddie Mac. The policy also permits investments in mortgage-backed securities, including pass-through securities issued and guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae as well as collateralized mortgage obligations and real estate mortgage investment conduits issued or backed by securities issued by these governmental agencies and government-sponsored entities. The investment policy also permits investments in asset-backed securities, banker’s acceptances, money market funds, term federal funds, repurchase agreements and reverse repurchase agreements.
The Association’s investment policy does not permit investment in municipal bonds, corporate debt obligations, preferred or common stock of government agencies or equity securities other than itsthe Association's required investment in the common stock of the FHLB of Cincinnati. As of September 30, 2017,2023, we held no asset-backed securities or securities with sub-prime credit risk exposure, nor did we hold any banker’s acceptances, term federal funds, repurchase agreements or reverse repurchase agreements. As a federal savings association, the Association is not permitted to invest in equity securities. This general restriction does not apply to the Company. The Association’s investment policy permits the use of interest rate agreements (caps, floors and collars) and interest rate exchange contracts (swaps) in managing our interest rate risk exposure. The use of financial futures, however, is prohibited without specific approval from its Board of Directors.
FASB ASC 320, “Investments-Debt and Equity Securities,” requires that, at the time of purchase, we designate a security as held to maturity, available-for-sale,available for sale, or trading, depending on our ability and intent. Securities designated as available-for-saleavailable- for- sale are reported at fair value, while securities designated as held to maturity are reported at amortized cost. As a result of previous guidance from the Company's primary regulator that indicated that the Company's reported balance of liquid assets could not include any investment security not classified as available foravailable- for- sale, all investment securities held by the Company are classified as available for sale. We do not have a trading portfolio.
Our
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The fair value of our investment portfolio at September 30, 2017,2023 consisted of $8.5$0.8 million in primarily fixed-rate securities guaranteed by Fannie Mae, and $533.4$443.0 million of REMICs collateralized only by securities guaranteed by Fannie Mae, $1.0 million of securities guaranteed by Freddie Mac, or Ginnie Mae.
and $63.5 million of U.S. Government and Federal Agencyobligations.
U.S. Government Obligations. While U.S. Government and federal agency securities generally provide lower yields than other investment options authorized in the Association's and Company's investment policies, we maintain these investments, to the extent appropriate, for liquidity purposes, as collateral for borrowings and interest rate exchange contracts (swaps) and as an interest rate risk hedge in the event of significant mortgage loan prepayments.
Mortgage-Backed Securities. We purchase mortgage-backed securities insured or guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae. We invest in mortgage-backed securities to achieve positive interest rate spreads with minimal administrative expense, and to lower our credit risk as a result of the guarantees provided by Freddie Mac, Fannie Mae or Ginnie Mae. The U.S. Treasury Department has established financing agreements to ensure that Fannie Mae and Freddie Mac meet their obligations to holders of mortgage-backed securities that they have issued or guaranteed.
Mortgage-backed securities are created by the pooling of mortgages and the issuance of a security with an interest rate that is less than the interest rate on the underlying mortgages. Mortgage-backed securities typically represent a participation interest in a pool of single-family or multi-family mortgages, although we invest primarily in mortgage-backed securities backed by one- to four-family mortgages. The issuers of such securities (generally Ginnie Mae, Fannie Mae and Freddie Mac) pool and resell the participation interests in the form of securities to investors such as the Association, and guarantee the payment of principal and interest to investors. Mortgage-backed securities generally yield less than the loans that underlie such securities because of the cost of payment guarantees and credit enhancements. However, mortgage-backed securities are more

liquid than individual mortgage loans since there is an active trading market for such securities. While there has been significant disruption in the demand for private issuer mortgage-backed securities, the U.S. Treasury support for Fannie Mae and Freddie Mac guarantees has maintained an orderly market for the mortgage-backed securities the Company typically purchases. In addition, mortgage-backed securities may be used to collateralize our specific liabilities and obligations. Investments in mortgage-backed securities involve a risk that the timing of actual payments will be earlier or later than the timing estimated when the mortgage-backed security was purchased, which may require adjustments to the amortization of any premium or accretion of any discount relating to such interests, thereby affecting the net yield on our securities. We periodically review current prepayment speeds to determine whether prepayment estimates require modifications that could cause amortization or accretion adjustments.
REMICs are types of debt securities issued by a special-purpose entity that aggregates pools of mortgages and mortgage-backed securities and creates different classes of securities with varying maturities and amortization schedules, as well as a residual interest, with each class possessing different risk characteristics. The cash flows from the underlying collateral are generally divided into “tranches” or classes that have descending priorities with respect to the distribution of principal and interest cash flows, while cash flows on pass-through mortgage-backed securities are distributed pro rata to all security holders.
The following table sets forth the amortized cost and fair value of our securities portfolio (excluding FHLB of Cincinnati common stock) at the dates indicated.
 At September 30,
 2017 2016 2015
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 (Dollars in thousands)
Investments available for sale:           
U.S. Government and agency obligations$—
 $—
 $—
 $—
 $2,000
 $2,002
REMICs533,427
 528,536
 508,044
 507,997
 570,194
 572,451
Fannie Mae certificates8,537
 8,943
 9,184
 9,869
 9,897
 10,600
Total investment securities available for sale$541,964
 $537,479
 $517,228
 $517,866
 $582,091
 $585,053

Portfolio Maturities and Yields. The composition and maturities of our securities portfolio at September 30, 2017 are summarized in the following table. Maturities are based on the final contractual payment dates, and do not reflect the impact of prepayments or early redemptions that may occur. All of our securities at September 30, 2017 were taxable securities.
 One Year or Less 
More than
One Year Through
Five years
 
More than
Five Years Through
Ten Years
 
More than Ten
Years
 Total Securities
 
Amortized
Cost
 
Weighted
Average
Yield
 
Amortized
Cost
 
Weighted
Average
Yield
 
Amortized
Cost
 
Weighted
Average
Yield
 
Amortized
Cost
 
Weighted
Average
Yield
 
Amortized
Cost
 
Fair
Value
 
Weighted
Average
Yield
     (Dollars in thousands)  
Investments
available-for-sale:
                     
REMICs—
 —% 5
 2.68% 90,890
 1.69% 442,532
 1.82% 533,427
 528,536
 1.80%
Fannie Mae certificates—
 —% 5,345
 2.35% 604
 7.90% 2,588
 6.19% 8,537
 8,943
 3.91%
Total investment securities available-for-sale$—
 —% $5,350
 2.35% $91,494
 1.73% $445,120
 1.84% $541,964
 $537,479
 1.83%
Sources of Funds
General. Deposits traditionally have been the primary source of funds for the Association’s lending and investment activities. The Association also borrows, primarily from the FHLB of Cincinnati, and the FRB-Cleveland Discount Window, to supplement cash flow, to lengthen the maturities of liabilities for interest rate risk management purposes and to manage its cost of funds. Additional sources of funds are borrowings from the FRB-Cleveland Discount Window, scheduled loan payments, maturing investments, loan prepayments, collateralized wholesale borrowings, Fed Fund purchases, income on other earning assets, the proceeds from loan sales, and brokered CDs.deposits. As a result of unfavorable market conditions, proceeds from loan sales decreased during fiscal year 2023, which required an increase of borrowings from the FHLB of Cincinnati.
Deposits. The Association obtains deposits primarily from the areas in which its branch offices are located, as well as from its customer service call center, its internet website, and from brokered CDs.deposits. It relies on its competitive pricing,

convenient locations, and customer service to attract and retain its non-brokered deposits. It offers a variety of retail deposit accounts with a range of interest rates and terms. Its retail deposit accounts consist of savings accounts, (primarily high-yield savings),money market accounts, checking accounts, CDs, individual retirement accounts, and other qualified plan accounts.
Interest rates paid, maturity terms, service fees, and withdrawal penalties are established on a periodic basis. Deposit rates and terms are based primarily on current operating strategies and market interest rates, liquidity requirements, interest rates paid by competitors, and our deposit growth goals.
At September 30, 2017,2023, deposits totaled $8.15 billion.$9.45 billion. Checking accounts totaled $987.0$983.4 million (including $911.6$891.0 million of high-yieldinterest-bearing checking accounts) and savings accounts totaled $1.47$1.81 billion (including $1.36$1.72 billion of high-yieldhigher yield savings accounts)accounts and MMKs). At September 30, 2017,2023, the Association had a total of $5.69$6.65 billion in CDs (including $620.7 million$1.16
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billion of brokered CDs), of which $2.13$3.42 billion had remaining maturities of one year or less. Based on historical experience and its current pricing strategy, management believes the Association will retain a large portion of these accounts upon maturity.
The following table sets forth the distribution of the Association’s average total deposit accounts, by account type, for the fiscal years indicated. Additional details on deposit accounts can be found in Note 9. DEPOSITS of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
 For the Years Ended September 30,
 202320222021
 Average
Balance		PercentWeighted
Average
Rate		Average
Balance		PercentWeighted
Average
Rate		Average
Balance		PercentWeighted
Average
Rate
 (Dollars in thousands)
Deposit type:
Checking$1,093,036 12.1 %0.56 %$1,326,882 14.7 %0.32 %$1,079,699 11.8 %0.11 %
Savings1,798,663 20.0 %1.37 %1,859,990 20.7 %0.24 %1,742,042 19.0 %0.17 %
Certificates of deposit6,123,979 67.9 %2.34 %5,826,286 64.6 %1.17 %6,339,412 69.2 %1.47 %
Total Deposits$9,015,678 100.0 %1.93 %$9,013,158 100.0 %0.85 %$9,161,153 100.0 %1.06 %
 For the Years Ended September 30,
 2017 2016 2015
 
Average
Balance
 Percent 
Weighted
Average
Rate
 
Average
Balance
 Percent 
Weighted
Average
Rate
 
Average
Balance
 Percent 
Weighted
Average
Rate
 (Dollars in thousands)
Deposit type:                 
Checking992,042
 12.1% 0.09% $990,592
 11.9% 0.13% $995,736
 11.8% 0.14%
Savings1,514,275
 18.5% 0.14% 1,563,448
 18.8% 0.18% 1,636,093
 19.3% 0.19%
Certificates of deposit5,672,212
 69.4% 1.49% 5,756,861
 69.3% 1.49% 5,836,053
 68.9% 1.53%
Total deposits$8,178,529
 100.0% 1.07% $8,310,901
 100.0% 1.08% $8,467,882
 100.0% 1.12%
The following table sets forth the distribution of the Association’s total deposit accounts, by account type, at September 30, 2023.
 At September 30, 2023
 BalancePercentWeighted Average Cost of Funds
 (Dollars in thousands)
Deposit type
Interest Bearing:
Checking$983,396 10.4 %0.05 %
Savings accounts, excluding money market accounts1,460,601 15.5 %1.49 %
Money market accounts346,479 3.7 %2.62 %
Certificates of deposit, including accrued interest6,659,344 70.4 %3.47 %
Total Deposits$9,449,820 100.0 %2.77 %
As of September 30, 2017,2023 and September 30, 2022, the total amount of the Association's uninsured deposits were $322.5 million and $366.7 million, respectively. As of September 30, 2023, the aggregate amount of the Association’s outstanding CDscertificate of deposits in amounts greater than or equal to $100,000$250 thousand was approximately $2.69 billion.$230.9 million. The following table sets forth the maturity of those CDs as of September 30, 2017.2023.
At September 30, 2023
(In thousands)
Three months or less$35,616 
Over three months through six months38,758 
Over six months through one year16,466 
More than one year140,029 
Total$230,869 

 At September 30, 2017
 (In thousands)
Three months or less$323,026
Over three months through six months141,048
Over six months through one year485,879
Over one year to three years1,294,243
Over three years441,466
Total$2,685,662

The following table sets forth the Association's CDs, by interest rate range and length of time until maturity, at September 30, 2017.
 Period to Maturity
 
Less Than or
Equal to
One Year
 
More
Than One
to Two
Years
 
More
Than Two
to Three
Years
 
More Than
Three Years
 Total 
Percent
of Total
 (Dollars in thousands)  
Interest Rate Range:           
0.99% and below$531,640
��$254,524
 $43,597
 $47,923
 $877,684
 15.43%
1.00% to 1.99%1,473,180
 1,229,516
 1,062,747
 583,475
 4,348,918
 76.44%
2.00% to 2.99%122,270
 356
 27,132
 299,600
 449,358
 7.90%
3.00% to 3.99%515
 4,977
 3,156
 —
 8,648
 0.15%
4.00% and above3,960
 668
 —
 —
 4,628
 0.08%
Total$2,131,565
 $1,490,041
 $1,136,632
 $930,998
 $5,689,236
 100.00%
The following table sets forth the Association’s CDs classified by interest rate range at the dates indicated.
 At September 30,
 2017 2016 2015
 (Dollars in thousands)
Interest Rate     
0.99% and below$877,684
 $1,164,802
 $1,641,838
1.00% to 1.99%4,348,918
 4,214,976
 3,293,964
2.00% to 2.99%449,358
 411,229
 552,902
3.00% to 3.99%8,648
 9,487
 158,504
4.00% and above4,628
 19,148
 31,410
Total$5,689,236
 $5,819,642
 $5,678,618

Borrowings. At September 30, 2017,2023, the Association had $3.67$5.27 billion of borrowings outstanding, consisting of $5.25 billion from the FHLB of Cincinnati. During the fiscal year ended September 30, 2017, the Association’s only third party borrowings consistedCincinnati and $22.8 million of loans, commonly referred to as “advances,” from the FHLB of Cincinnati.accrued interest. Borrowings from the FHLB of Cincinnati are secured by the Association’s investment in the common stock of the FHLB of Cincinnati as well as by a blanket pledge of its mortgage portfolio not otherwise pledged. Our current, immediate additionalmaximum borrowing capacity with the FHLB of Cincinnati is $41.0$6.63 billion. The Association also has the ability to purchase overnight Fed Funds up to $585.0 million as limited by the amount of FHLB of Cincinnati common stock that we own. Based on the amount of collateral that is subject to the blanket pledge that secures advances, in addition to the existing available capacity, our capacity limit for additional borrowings from the FHLB of Cincinnati at September 30, 2017 was $4.87 billion, subject to satisfaction of the FHLB of Cincinnati common stock ownership requirement. To satisfy the common stock ownership requirement, we would have to increase our ownership of FHLB of Cincinnati common stock by an additional $97.4 million.through arrangements with other institutions. The ability to borrow from the FRB-Cleveland Discount Window is also available to the Association and is secured by a pledge of specific loans in the Association’s mortgage portfolio. At September 30, 2017,2023, the Association had the
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capacity to borrow up to $72.3$126.4 million from the FRB-ClevelandFRB-Cleveland. A maturity schedule and had no amount outstanding as of that date.

The following table sets forth information concerning balances and interest rates on the Association’s borrowings at and for the periods shown:
 
At or For The Fiscal Years
Ended September 30,
 2017 2016 2015
 (Dollars in thousands)
Balance at end of year$3,671,377
 $2,718,795
 $2,168,627
Average balance during year$3,231,709
 $2,284,881
 $2,312,977
Maximum outstanding at any month end$3,679,225
 $2,720,903
 $2,745,262
Weighted average interest rate at end of year1.36% 1.01% 1.14%
Average interest rate during year1.32% 1.23% 0.86%
The Association has utilized borrowings from the FHLB of Cincinnati to manage its on-balance sheet liquidity, to replace maturing, high rate CDs at a lower cost and to lengthen the maturity of our funding through the use of interest rate swaps discussedavailable borrowing capacity schedule can be found in Note 17. Derivative Instruments 10. BORROWED FUNDS of the Notes to Consolidated Financial Statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
The following table setstables set forth information relating to a category of short-term borrowings for which the average balance outstanding during the period was at least 30% of shareholders' equity at the end of each period shown. There are no borrowings with original terms between 30 and 90 days.
At or For the Fiscal Years Ended
 September 30,
202320222021
(Dollars in thousands)
Borrowings (30 days and under):
Balance at end of year$592,000 $2,000,000$— 
Maximum outstanding at any month-end$1,806,000 $2,000,000 $— 
Average balance during year$810,263 $682,487 $— 
Average interest rate during the fiscal year4.16 %1.59 %— %
Weighted average interest rate at end of year5.38 %3.04 %— %
At or For the Fiscal Years Ended
 September 30,
202320222021
(Dollars in thousands)
Borrowings (90 days to 12 months):
Balance at end of year$3,150,000 $1,550,000 $2,450,000 
Maximum outstanding at any month-end$3,600,000 $2,425,000 $2,925,000 
Average balance during year$2,668,420 $2,000,323 $2,693,533 
Average interest rate during the fiscal year5.00 %0.77 %0.23 %
Weighted average interest rate at end of year5.58 %3.12 %0.23 %

 
At or For the Fiscal Years Ended
 September 30,
 2017 2016 2015
 (Dollars in thousands)  
FHLB borrowings (30 days and under):     
Balance at end of year$1,110,000
 $851,000
 $755,000
Maximum outstanding at any month-end$1,234,000
 $851,000
 $1,535,000
Average balance during year$970,733
 $678,883
 $1,242,380
Average interest rate during the fiscal year0.81% 0.36% 0.15%
Weighted average interest rate at end of year1.17% 0.40% 0.18%
During the 2015 fiscal year, the Association implemented a strategy to increase net income which involved borrowing, on an overnight basis, approximately $1.00 billion of additional funds from the FHLB at the beginning of a particular quarter and repaying it prior to the end of that quarter. The proceeds of the overnight borrowings, net of the required investment in FHLB stock, were deposited at the Federal Reserve. The strategy was not utilized at or during the fiscal years ended September 30, 2017, 2016, or 2015, however, dependent upon market rates, remains an option in the future.
Federal Taxation
General. The Company and the Association are subject to federal income taxation in the same general manner as other corporations, with certain exceptions. Prior to the completion of our initial public stock offering on April 20,in 2007, the Company and the Association were included as part of Third Federal Savings, MHC’s consolidated tax group. However, upon completion of the offering, the Company and the Association were no longer a part of Third Federal Savings, MHC’s consolidated tax group because Third Federal Savings, MHC no longer owned at least 80% of the common stock of the Company. As a result of the Company's stock repurchase program over the past few years, which reduced the number of outstanding shares of the Company, at September 30, 2017,2023, Third Federal Savings, MHC, owned 80.74%81.01% of the common stock of the Company and it is possible in the future for the Company and the Association to oncecan, again, be a part of Third Federal Savings, MHC’s consolidated tax group. Beginning on September 30, 2007 and for each subsequent fiscal year thereafter, the Company has filed consolidated tax returns with the Association and Third Capital Inc., its wholly-owned subsidiaries. On November 27, 2012, the IRS completed an audit of the federal tax returns of the Company and its subsidiaries for fiscal years ended September 30, 2008, 2009 and 2010.
The following discussion of federal taxation is intended only to summarize certain pertinent federal income tax matters and is not a comprehensive description of the tax rules applicable to the Company or its subsidiaries.
Bad Debt Reserves. Historically, the Third Federal Savings, MHC consolidated group used the specific charge-off method to account for bad debt deductions for income tax purposes, and the Company has used and intends to use the specific charge offcharge-off method to account for tax bad debt deductions in the future.

Taxable Distributions and Recapture. Prior to 1996, bad debt reserves created prior to 1988 were subject to recapture into taxable income if the Association failed to meet certain thrift asset and definitional tests or made certain distributions. Tax law changes in 1996 eliminated thrift-related recapture rules. However, under current law, pre-1988 tax bad debt reserves remain subject to recapture if the Association makes certain non-dividend distributions, repurchases any of its common stock, pays dividends in excess of earnings and profits, or fails to qualify as a bank for tax purposes.
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At September 30, 2017,2023, the total federal pre-base year bad debt reserve of the Association was approximately $105.0 million.
State Taxation
Following its initial public stock offering in 2007, the Company converted from a qualified passive investment company domiciled in the State of Delaware to a qualified holding company in Ohio. Through 2013, the Company was subject to Ohio tax levied on income and a significant majority of state taxes paid by the remaining entities in our corporate structure were also paid to the State of Ohio. The Association was subject to Ohio franchise tax based on equity capital reduced by certain exempted assets taxed at a rate of 1.3%. The other Ohio subsidiaries of the Company were taxed on the greater of a tax based on net income or net worth.
Effective January 1, 2014 for Ohio tax filings based on 2013 financial results, the Third Federal Savings, MHC consolidated group is subject to the Ohio Financial Institutions Tax. The Financial Institutions Tax is based on total equity capital apportioned to Ohio using a single gross receipts factor. Ohio equity capital is taxed at a three-tiered rate of 0.8% on the first $200 million, 0.4% on amounts greater than $200 million and less than or equal to $1.3 billion, and 0.25% on amounts greater than $1.3 billion.
On April 29, 2013, the State of Ohio Department of Taxation completed an audit of the Association's Ohio Franchise Tax Returns for fiscal years ended September 30, 2009, 2010 and 2011, which resulted in no adjustments.
SUPERVISION AND REGULATION
General
The Company is a savings and loan holding company, and is required to file certain reports with, is subject to examination by, and otherwise must comply with the rules and regulations of, the FRS. The Company is also subject to the rules and regulations of the Securities and Exchange CommissionSEC under the federal securities laws.
The Association is a federal savings association that is currently examined and supervised by the OCC and the CFPB, and is subject to examination by the FDIC.FDIC under certain circumstances. This regulation and supervision establishes a comprehensive framework of activities in which an institution may engage and is intended primarily for the protection of the FDIC’s deposit insurance fund and depositors. Under this system of federal regulation, financial institutions are periodically examined to ensure that they satisfy applicable standards with respect to their capital adequacy, assets, management, earnings, liquidity and sensitivity to market risk. Following completion of its examination, the federal agency critiques the institution’s operations and assigns its rating (known as an institution’s CAMELS rating). Under federal law, an institution may not disclose its CAMELS rating to the public. The Association also is a member of and owns stock in the FHLB of Cincinnati, which is one of the eleven regional banks in the FHLB System. The Association is also regulated to a lesser extent by the FRS, governing reserves to be maintained against deposits and other matters.FRS. The OCC will examine the Association and prepare reports for the consideration of the Association’s Board of Directors on any operating deficiencies. The CFPB which is discussed further in the Dodd-Frank Act section that follows, has examination and enforcement authority over the Association.Association with respect to consumer protection laws and regulations. The Association’s relationship with its depositors and borrowers also is regulated to a great extent by federal law and, to a much lesser extent, state law, especially in matters concerning the ownership of deposit accounts and the form and content of the Association’s mortgage documents.
Any change in these laws or regulations, whether by the FDIC, OCC, FRS, CFPB or Congress, could have a material impact on the Company, the Association, and their operations.
Certain statutes and regulations of the regulatory requirements that are applicable to the Association and the Company are described below. This description of statutes and regulations is not intended to be a complete explanation of such statutes and regulations and their effects on the Association and the Company, and is qualified in its entirety by reference to the actual statutes and regulations.

Dodd-Frank Act
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, has changed bank regulation and the lending, investment, trading and operating activities of depository institutions and their holding companies. The DFA eliminated our former primary federal regulator, the OTS, and required the Association to be regulated by the OCC (the primary federal

regulator for national banks). The DFA also authorized the FRS to supervise and regulate all savings and loan holding companies, including mutual holding companies and their mid-tier holding companies, like Third Federal Savings, MHC and the Company, in addition to bank holding companies that the FRS already regulated. Third Federal Savings, MHC requires the non-objection of the FRS before it may waive the receipt of any dividends from the Company under the standards specified in the DFA and implementing FRS regulations. The DFA also required the FRS to set minimum capital levels for depository institution holding companies that are as stringent as those required for the insured depository subsidiaries with the components of Tier 1 capital restricted to capital instruments that are currently considered to be Tier 1 capital for insured depository institutions. The legislation also established a floor for capital of insured depository institutions that cannot be lower than the standards in effect on July 21, 2010, and directed the federal banking regulators to implement new leverage and capital requirements within 18 months from the enactment of the DFA that take into account off-balance sheet activities and other risks, including risks relating to securitized products and derivatives. A final rule implementing these requirements was effective January 1, 2015.
The DFA also created the CFPB with substantial power to supervise and enforce consumer protection laws. The CFPB has broad rulemaking authority for a wide range of consumer protection laws that apply to all banks and savings institutions such as the Association, including the authority to prohibit “unfair, deceptive or abusive” acts and practices. The CFPB has examination and enforcement authority over all banks and savings institutions with more than $10 billion in assets. Banks and savings institutions with $10 billion or less in assets are examined by their applicable federal bank regulators. The banking agencies used June 30, 2011 financial information for purposes of initially determining CFPB authority. Since the Association had more than $10 billion of total assets on that date, it is subject to CFPB examination and enforcement authority. The legislation also weakened the federal preemption available for national banks and federal savings associations, and gives state attorneys general the ability to enforce applicable federal consumer protection laws.
The legislation broadened the base for FDIC insurance assessments. Assessments are now based on the average consolidated total assets less tangible equity capital of a financial institution. The DFA also permanently increased the maximum amount of deposit insurance for banks, savings institutions and credit unions to $250,000 per depositor, retroactive to January 1, 2008, and non-interest bearing transaction accounts had unlimited deposit insurance through December 31, 2012. The DFA increased stockholder influence over boards of directors by requiring companies to give stockholders a non-binding vote on executive compensation and so-called “golden parachute” payments. The legislation also directed the FRS to promulgate rules prohibiting excessive compensation paid to bank holding company executives, regardless of whether the company is publicly traded. The DFA provided for originators of certain securitized loans to retain a percentage of the risk for transferred loans, directed the FRS to regulate pricing of certain debit card interchange fees and contained a number of reforms related to mortgage origination. Many of the provisions of the DFA have delayed effective dates and the legislation requires various federal agencies to promulgate numerous and extensive implementing regulations. Although the full impact of these regulations cannot be completely determined at this time, it is expected that the legislation and implementing regulations has and will continue to increase our operating and compliance costs.
Federal Banking Regulation
Business Activities. A federal savings association derives its lending and investment powers from the Home Owners’ Loan Act, as amended,HOLA, and federal regulations. Under these laws and regulations, the Association may invest in mortgage loans secured by residential real estate without limitations as a percentage of assets, and may invest in non-residential real estate loans up to 400% of capital in the aggregate. The Association may also invest in commercial business loans up to 20% of assets in the aggregate and consumer loans up to 35% of assets in the aggregate, and in certain types of debt securities and certain other assets. An associationThe Association may also establish subsidiaries that may engage in certain activities not otherwise permissible for an association, including real estate investment and securities and insurance brokerage.
A federal savings association may elect to exercise national bank powers without converting to a national bank charter. Among other things, the election allows a federal savings association to engage in commercial and commercial real estate lending without the aggregate limits applicable to federal savings associations. By exercising the election, the federal savings association also becomes subject to many of the same duties, restrictions, liabilities, conditions and limitations applicable to national banks, some of which are more restrictive than those applicable to federal savings associations. A federal savings association making the election retains its federal savings association charter and continues to be treated as a federal savings association for purposes of corporate governance. The election is available to federal savings associations that had total consolidated assets of $20 billion or less as of December 31, 2017. The Association has not exercised the election as of September 30, 2023.
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Capital Requirements. Federal regulations require FDIC insured depository institutions to meet several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio, a Tier 1 capital to risk-based assets ratio, a total capital to risk-based assets ratio, and a Tier 1 capital to total assets leverage ratio. The existing capital requirements were effective January 1, 2015 and are the result of a final rule implementing regulatory amendments based on recommendations of the Basel Committee on Banking Supervision and certain requirements of the DFA.
The capital standards require the maintenance of common equity Tier 1 capital, Tier 1 capital and total capital to risk-weighted assets of at least 4.5%, 6% and 8%, respectively, and a leverage ratio of at least 4% Tier 1 capital. Common equity Tier 1 capital is generally defined as common stockholders’ equity and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and additional Tier 1 capital. Additional Tier 1 capital includes certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1 capital plus additional Tier 1 capital) and Tier 2 capital. Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative preferred stock and long-

termlong-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt. Also included in Tier 2 capital is the allowance for loan and leasecredit losses limited to a maximum of 1.25% of risk-weighted assets and, for institutions that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive Income (“AOCI”),AOCI, up to 45% of net unrealized gains on available-for-saleavailable for sale equity securities with readily determinable fair market values. Institutions that have not exercised the AOCI opt-out have AOCI incorporated into common equity Tier 1 capital (including unrealized gains and losses on available-for-sale-securities)available for sale-securities). The Association exercised its opt-out election during the first quarter of calendar 2015. Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations.
In determining the amount of risk-weighted assets for purposes of calculating risk-based capital ratios, all assets, including certain off-balance sheet assets (e.g., recourse obligations, direct credit substitutes, residual interests) are multiplied by a risk weight factor assigned by the regulations based on the risks believed inherent in the type of asset. Higher levels of capital are required for asset categories believed to present greater risk. For example, a risk weight of 0% is assigned to cash and U.S. government securities, a risk weight of 50% is generally assigned to prudently underwritten first lien one to four- family residential mortgages, a risk weight of 100% is assigned to commercial and consumer loans, a risk weight of 150% is assigned to certain past due loans and a risk weight of between 0% to 600% is assigned to permissible equity interests, depending on certain specified factors.
Federal savings associations must also meet a statutory “tangible capital” standard of 1.5% of total adjusted assets. Tangible capital is generally defined as Tier 1 capital less intangible assets other than certain mortgage servicing rights.for this purpose.
In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% in addition to the minimum capital requirements. The capital conservation buffer requirement is being phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and increasing each year until fully implemented at 2.5% on January 1, 2019. At September 30, 2017,2023, the Association exceeded the fully phased in regulatory requirement for the "capital conservation buffer".buffer." In assessing an institution’s capital adequacy, the OCC takes into consideration, not only these numeric factors, but qualitative factors as well, and has the authority to establish higher capital requirements for individual institutions where deemed necessary. As presented in Note 3. Regulatory MattersREGULATORY MATTERS of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, at September 30, 2017,2023, the Association exceeded all regulatory capital requirements to be considered “Well Capitalized”.Capitalized.”
Loans-to-One Borrower. Generally, a federal savings association may not make a loan or extend credit to a single or related group of borrowers in excess of 15% of unimpaired capital and surplus. An additional amount may be loaned, equal to 10% of unimpaired capital and surplus, if the loan is secured by readily marketable collateral, which generally does not include real estate. As of September 30, 2017,2023, the Association was in compliance with the loans-to-one borrower limitations.
Qualified Thrift Lender Test. As a federal savings association, the Association must satisfy the qualified thrift lender test. Under the QTL test, the Association must maintain at least 65% of its “portfolio assets” in “qualified thrift investments” (primarily residential mortgages and related investments, including mortgage-backed securities) in at least nine months of the most recent 12-month period. “Portfolio assets” generally means total assets of a federal savings institution,association, less the sum of specified liquid assets up to 20% of total assets, goodwill and other intangible assets, and the value of property used in the conduct of the federal savings association’s business.
The Association also may satisfy the QTL test by qualifying as a “domestic building and loan association” as defined in the Internal Revenue Code.
A federal savings association that fails the qualified thrift lenderQTL test must operate under specified restrictions. Under the DFA, non-compliance with the QTL test may subject the Association to agency enforcement action for a violation of law. At September 30, 2017,2023, the Association satisfied the QTL test.
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Capital Distributions. Federal regulations govern capital distributions by a federal savings association, which include cash dividends, stock repurchases and other transactions charged to the capital account. A federal savings association must file an application with the OCC and the FRS for approval of a capital distribution if:
•the total capital distributions for the applicable calendar year exceed the sum of the savings association’s net income for that year to date plus the savings association’s retained net income for the preceding two years;
•the savings association would not be at least adequately capitalized following the distribution;
•the distribution would violate any applicable statute, regulation, agreement or condition imposed by a regulator; or
•the savings association is not eligible for expedited treatment of its filings.

Even ifRegardless of whether an application is not otherwise required, every federal savings association that is a subsidiary of a holding company must still file a notice with the FRS at least 30 days before the board of directors declares a dividend or approves a capital distribution.
The OCC and the FRS have established similar criteria for approving an application or notice, and may disapprove an application or notice if:
•the savings association would be undercapitalized following the distribution;
•the proposed capital distribution raises safety and soundness concerns; or
•the capital distribution would violate a prohibition contained in any statute, regulation or agreement.
In addition, the Federal Deposit Insurance Act provides that an insured depository institution may not make any capital distribution if the institution would be undercapitalized after the distribution.
The Association, in compliance with the preceding requirements, paid an $81 million, a $60 million and a $66$40 million cash dividend to the Company during the fiscal years endingyear ended September 30, 2017, 20162023, a $56 million cash dividend to the Company during the fiscal year ended September 30, 2022 and 2015, respectively.a $55 million cash dividend to the Company during the fiscal year ended September 30, 2021. There were no dividends paid to the Company by Third Capital, the Company's other wholly owned subsidiary, during the fiscal years ended September 30, 2017, 20162023, 2022 or 2015. Additionally, the Association paid a special dividend of $150 million to the Company in the fiscal year ended September 30, 2016. This amount was equal to the voluntary contribution of capital that the Company made to the Association in October 2010.2021.
The Company's sixtheighth stock repurchase program, for the repurchase of 10,000,000 shares of its equitycommon stock, was announced on September 9, 2014 and completed August 3, 2015. The seventh stock repurchase program, for 10,000,000 shares, was announced on July 30, 2015 and completed January 6, 2017. The eighth stock repurchase program, also for 10,000,000 shares, was announced on October 27, 2016 and began on January 6, 2017. As of September 30, 2023, 5,191,951 shares remain to be purchased under the program.
Under current FRS regulations, Third Federal Savings, MHC is required to obtain the approval of its members (depositors and certain loan customers of the Association) every 12 months to enable Third Federal Savings, MHC to waive its right to receive dividends on the Company’s common stock that Third Federal Savings, MHC owns. Starting in 2014, Third Federal Savings, MHC has received this approval of its members at meetings held July 19, 2017, July 26, 2016, August 5, 2015 and July 31, 2014.every meeting held. Third Federal Savings, MHC has the approval to waive the receipt of dividends up to a totalan aggregate of $0.68$1.13 per share on the common stock of dividends from the Company overfor the four quarterly periods ending June 30, 2018.12 months following the special meeting of members held on July 11, 2023. Third Federal Savings, MHC waived its right to receive a $0.17$0.2825 per share dividend payment on September 25, 2017.26, 2023. As a result of the 2016, 20152022, 2021, and 20142020 approvals, Third Federal Savings, MHC previously waived its right to receive four separate $0.125an aggregate of $1.13 per share dividend payments duringon common stock for the four quarterly periods endingperiod ended June 30, 2017, four separate $0.102023, $1.13 per share dividend payments duringfor the four quarterly periods endingperiod ended June 30, 20162022, and four separate $0.07$1.12 per share dividend payments duringfor the four quarterly periods endingperiod ended June 30, 2015.2021.
Liquidity. A federal savings association is required to identify, measure, monitor and control its funding and liquidity risk and maintain a sufficient amount of liquid assets to ensure its safe and sound operation. The Association maintains a liquid asset portfolio comprised of agency securities that are collateralized by mortgages, in addition to cash and cash equivalents, to maintain sufficient liquidity to fund business operations.
Community Reinvestment Act and Fair Lending Laws. All savings associations have a responsibility under the Community Reinvestment ActCRA and federal regulations to help meet the credit needs of their communities, including low- and moderate-income neighborhoods. In connection with its examination of a federal savings association, the OCC is required to assess the savings association’s record of compliance with the Community Reinvestment Act.CRA. In addition, the Equal Credit Opportunity Act and the Fair Housing Act prohibit lenders from discriminating in their lending practices on the basis of characteristics specified in those statutes. A federal savings association’s failure to comply with the provisions of the Community Reinvestment ActCRA could, at a minimum, result in denial of certain corporate applications such as branches, mergers, minority stock offerings or mergers,second-step conversion, or in restrictions on its activities. The failure to comply with the Equal Credit Opportunity Act and the Fair Housing Act could result in enforcement actions by the OCC, as well as other federal regulatory agencies andand/or the Department of Justice.
TheIn March 2021, the Association received a satisfactory Community Reinvestment Act"Needs to Improve" CRA rating in its most recent federal examination.evaluation dated February 24, 2020.
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On October 24, 2023, the FDIC, the Federal Reserve and the OCC released a final rule revising the framework used to evaluate banks' records of community reinvestment under the CRA. Under the revised framework, banks with assets of at least $2 billion, such as the Association, are considered large banks and will have their retail lending, retail services and products, community development financing, and community development services subject to periodic evaluation. Depending on a large bank's geographic concentrations of lending, the evaluation of retail lending may include assessment areas in which the bank extends loans but does not operate any deposit-taking facilities, in addition to assessment areas in which the bank has deposit-taking facilities. The rule becomes effective April 1, 2024. Most provisions of the final rule will apply beginning January 1, 2026, and the remaining provisions will apply beginning January 1, 2027. The Association is evaluating the impact of the final rule.
Transactions with Related Parties. A federal savings association’s authority to engage in transactions with its affiliates is limited by FRS regulations and by Sections 23A and 23B of the FRSFederal Reserve Act and its implementing Regulation W. An affiliate isincludes a company that controls, is controlled by, or is under common control with an insured depository institution such as the Association. Third Federal Savings, MHC and the Company are affiliates of the Association. In general, loanspecified covered transactions between an insured depository institution and its affiliates are subject to certain quantitative and collateral requirements. In this regard, covered transactions between an insured depository institution and its affiliates are limited to 10% of the institution’s unimpaired capital and unimpaired surplus for transactions with any one affiliate and 20% of unimpaired capital and unimpaired surplus for transactions in the aggregate with all affiliates. Collateral in specified amounts ranging from 100% to 130% of the amount of the transaction must be provided by affiliates in order to receive loans from the savings association.insured depository institution. In

addition, federal regulations prohibit a savings association from lending to any of its affiliates that are engaged in activities that are not permissible for bank holding companies and from purchasing the securities of any affiliate, other than a subsidiary. Finally, transactions with affiliates must be consistent with safe and sound banking practices, not involve low-quality assets and be on terms that are substantially the same or at least as favorable to the institution as comparable transactions with non-affiliates. SavingsFederal savings associations are required to maintain detailed records of all transactions with affiliates.
The Association’s authority to extend credit to its directors, executive officers and 10% shareholders, as well as to entities controlled by such persons, is currently governed by the requirements of Sections 22(g) and 22(h) of the FRSFederal Reserve Act and Regulation O of the FRS. Among other things, these provisions require that extensions of credit to insiders:
(i)are subject to certain exceptions for loan programs made available to all employees, be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present other unfavorable features; and
(ii)do not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based, in part, on the amount of the Association’s capital.
(i)subject to certain exceptions for loan programs made available to all employees, be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than those prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present other unfavorable features; and
(ii)do not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based, in part, on the amount of the Association’s capital.
In addition, extensions of credit in excess of certain limits must be approved by the Association’s Board of Directors.
Enforcement. The OCC has primary enforcement responsibility over federal savings institutionsassociations and has the authority to bring enforcement action against all “institution-affiliated parties,” includinga term that includes shareholders who participate in the affairs of the association, as well as attorneys, appraisers and accountants who knowingly or recklessly participate in wrongful action likely to have an adverse effect on an insured institution.violations of law or regulation, breaches of fiduciary duty, or unsafe or unsound practices. Formal enforcement actionactions by the OCC may range from theinclude issuance of a capital directive, formal agreement, or cease and desist order toagainst institutions, and can also include the removal of officers and/or directors of the institution. Civil money penalties can be assessed for various types of conduct against the institution and/or its officers and directors. The maximum civil money penalties that can be assessed are generally based on the appointmenttype and severity of a receiverthe violation, unsafe and unsound practice or conservator. Civil penalties cover a wide range of violationsother action, and actions,are adjusted annually for inflation. The OCC can appoint receivers and range up to $25,000 per day, unless a finding of reckless disregard is made, in which case penalties may be as high as $1 million per day.conservators for the institutions it supervises if certain circumstances are met. The FDIC also has the authority to terminate deposit insurance or to recommend to the OCC that enforcement action be taken with respect to a particular federal savings institution. If action is not taken by the OCC, the FDIC has authority to take action under specified circumstances.
Standards for Safety and Soundness. Federal law requires each federal banking agency to prescribe certain standards for all insured depository institutions. These standards relate to, among other things, internal controls, information systems, audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, compensation, and other operational and managerial standards as the agency deems appropriate. The federal banking agencies adopted Interagency Guidelines Prescribing Standards for Safety and Soundness to implement the safety and soundness standards required under federal law. The guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired. If the appropriate federal banking agency determines that an institution fails to meet any standard prescribed by the guidelines, the agency may require the institution to
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submit to the agency an acceptable plan to achieve compliance with the standard. If an institution fails to meet these standards, the appropriate federal banking agency may require the institution to submit a compliance plan.
Prompt Corrective Action Regulations. Under the prompt corrective action regulations, the OCC is required and authorized to take supervisory actions against undercapitalized federal savings associations. For this purpose, a federal savings association is placed in one of the following five categories based on the savings association’sits capital:
well-capitalized•well capitalized (at least 5% leverage capital, 8% Tier 1 risk-based capital, 10% total risk-based capital, and 6.5% common equity Tier 1 ratios, and is not subject to any written agreement, order, capital directive or prompt corrective action directive issued under certain statutes and regulations, to maintain a specific capital level for any capital measure);
•adequately capitalized (at least 4% leverage capital, 6% Tier 1 risk-based capital, 8% total risk-based capital and 4.5% common equity Tier 1 ratios);
•undercapitalized (less than 4% leverage capital, 6% Tier 1 risk-based capital, 8% total risk-based capital, or 4.5% common equity Tier 1 ratios);
•significantly undercapitalized (less than 3% leverage capital, 4% Tier 1 risk-based capital, 6% total risk-based capital or 3% common equity Tier 1 ratios); and
•critically undercapitalized (less than or equal to 2% tangible capital to total assets).
The final rule that strengthened regulatory capital requirements adjusted the prompt corrective actions categories to incorporate the new standards, as reflected above.

Generally, the banking regulatorOCC is required to appoint a receiver or conservator for a federal savings association that is “critically undercapitalized” within specific time frames. The regulations also provide that a capital restoration plan must be filed with the OCC within 45 days of the date a federal savings association receives notice that it is “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized.” The criteria for an acceptable capital restoration plan include, among other things, the establishment of the methodology and assumptions for attaining adequately capitalized status on an annual basis, procedures for ensuring compliance with restrictions imposed by applicable federal regulations, the identification of the types and levels of activities the federal savings association will engage in while the capital restoration plan is in effect, and assurances that the capital restoration plan will not appreciably increase the current risk profile of the federal savings association. Any holding company for a federal savings association required to submit a capital restoration plan must guarantee the lesser of an amount equal to 5% of the federal savings association’s assets at the time it was notified or deemed to be undercapitalized by the OCC, or the amount necessary to restore the federal savings association to adequately capitalized status. This guarantee remains in place until the OCC notifies the federal savings association that it has maintained adequately capitalized status for each of four consecutive calendar quarters, and the OCC has the authority to require payment and collect payment under the guarantee. Failure by a holding company to provide the required guarantee will result in certain operating restrictions on the federal savings association, such as restrictions on the ability to declare and pay dividends, pay executive compensation and management fees, and increase assets or expand operations. The OCC may also take any one of a number of discretionary supervisory actions against undercapitalized federal savings associations, including the issuance of a capital directive and the replacement of senior executive officers and directors.
As of September 30, 20172023, the Association exceeded all regulatory requirements to be considered “Well Capitalized” as presented in the table below (dollar amounts in thousands).
Actual 
Required 
(Well Capitalized)
 ActualRequired 
(Well Capitalized)
Amount Ratio Amount     Ratio     AmountRatioAmountRatio
Total Capital to Risk Weighted Assets$1,555,903
 21.37% $728,192
 10.00%Total Capital to Risk Weighted Assets$1,709,596 17.87 %$956,762 10.00 %
Tier 1 (Leverage) Capital to Net Average Assets1,506,952
 11.16% 675,242
 5.00%Tier 1 (Leverage) Capital to Net Average Assets1,640,657 9.82 %834,948 5.00 %
Tier I Capital to Risk-Weighted Assets1,506,952
 20.69% 582,553
 8.00%Tier I Capital to Risk-Weighted Assets1,640,657 17.15 %765,410 8.00 %
Common Equity Tier I to Risk-Weighted Assets

1,506,938
 20.69% 473,325
 6.50%Common Equity Tier I to Risk-Weighted Assets1,640,657 17.15 %621,896 6.50 %


Insurance of Deposit Accounts. The DFA permanently increasedDIF of the FDIC insures deposits at FDIC-insured depository institutions such as the Association. Deposit accounts in the Association are insured by the FDIC, generally up to a maximum amount of deposit insurance for banks, savings institutions and credit unions to $250,000 per depositor, retroactive to January 1, 2008.
Effective April 1, 2011,separately insured depositor. As of September 30, 2023, 96.1% of our $8.29 billion retail deposit base consists of accounts structured under the FDIC implemented a requirementinsured limit of $250,000.
The FDIC charges insured depository institutions assessments to maintain the DFA to reviseDIF. The FDIC bases its assessment system to base the assessments on each institution’s total assets less Tier 1 capital, instead of deposits. The FDIC also revised itswith an assessment schedule so that it ranged from 2.5 basis points forbased on perceived risk to the least risky institutions to 45 basis points for the riskiest.DIF. Institutions with over $10 billion of total assets, such as the Association, are classified for assessment purposes as "Large Institutions", and unless otherwise classified,. Such Large Institutions are subjectedgenerally subject to a large institution pricing system that includes a separate “scorecard” methodology also adopteddesigned to
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measure risk to the DIF. The assessment range for Large Institutions (inclusive of adjustments specified by the FDIC) is 2.5 to 42 basis points.
On November 16, 2023, the FDIC approved a final rule to implement a special assessment on certain banking organizations with financial institution subsidiaries with more than $5 billion in 2011. In conjunctionassets, in order to recover the costs associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank in March 2023. The special assessment will be collected beginning with the FDIC Deposit Insurance Fund’s reserve ratio reaching 1.15%, thefirst quarterly assessment range was lowered to 1.5 to 40period of 2024 at an annual rate of approximately 13.4 basis points effective July 1, 2016. In addition, “Large Institutions” (those with assetsfor an anticipated total of $10 billion or more) will now be assessed a surcharge required by the DFA until the earliereight quarterly periods and is subject to periodic adjustments. The assessment base is equal to uninsured deposits reported as of the Deposit Insurance Fund reaching 1.35% or December 31, 2018. The surcharge is 4.5 basis points of the Large Institution’s “surcharge base,” which is generally its regular assessment base reduced by $10 billion. The FDIC has indicated that it expects that the surcharges will be sufficient2022, adjusted to achieve the 1.35% ratio by December 31, 2018. However, in the event that ratio is not achieved by that date, Large Institutions will be required to pay a short-fall assessment duringexclude the first half of 2019.$5 billion. Because the Association's uninsured deposits at the measurement date were below $5 billion, the Association will not be subject to this special assessment.
Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC. The Association does not believe that it is taking, or is subject to, any action, condition or violation that could lead to termination of its deposit insurance.
All FDIC-insured institutions are required to pay a pro rata portion of the interest due on obligations issued by the FICO for anticipated payments, issuance costs and custodial fees on bonds issued by the FICO in the 1980s to recapitalize the Federal Savings and Loan Insurance Corporation. The bonds issued by the FICO are due to mature in 2017 through 2019. For the quarter ended September 30, 2017, the annualized FICO assessment was equal to 0.54 basis points of total assets less Tier 1 capital.

For the fiscal year ended September 30, 2017, the Association paid $629 thousand related to the FICO bonds and $7.2 million, applicable to deposit insurance assessments. The deposit insurance payments are assessed on an arrears basis. At September 30, 2017, the balance of the Association's accrued deposit insurance assessment was $1.9 million.
Prohibitions Against Tying Arrangements. Federal savings associations are prohibited, subject to some exceptions, from extending credit to or offering any other service, or fixing or varying the consideration for such extension of credit or service, on the condition that the customer obtain some additional service from the institution or its affiliates or not obtain services of a competitor of the institution.
Federal Home Loan Bank System. The Association is a member of the FHLB System, which consists of 11 regional FHLBs. The FHLB System provides a central credit facility primarily for member institutions. As a member of the FHLB of Cincinnati, the Association is required to acquire and hold shares of capital stock in the FHLB.
As of September 30, 2017,2023, outstanding borrowings (including accrued interest) from the FHLB of Cincinnati were $3.67$5.27 billion and the Association was in compliance with the stock investment requirement.
Other Regulations
Interest and other charges collected or contracted for by the Association are subject to state usury laws and federal laws concerning interest rates. The Association’s operations are also subject to federal laws and regulations applicable to credit transactions, such as the:
•Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;
•Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;
•Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit;
•Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies;
•Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and
rules and•Implementing regulations of the variousrelevant federal agencies charged with the responsibility of implementing such federal laws.laws that have supervisory authority over the Association.
The operations of the Association also are subject to:
•The Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records;
•The Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services;
•
The Check Clearing for the 21st
•The Check Clearing for the 21st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from those images, the same legal standing as the original paper check;
•The Bank Secrecy Act and copies made from those images, the same legal standing as the original paper check;
Title III of The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (referred to as the “USA PATRIOT Act”), which significantly expandedrequire the responsibilities of financial institutions, including savings associations, in preventingAssociation to implement a compliance program to detect and prevent money laundering, terrorist financing, and illicit crime. Together, the use of the U.S. financial system to fund terrorist activities. Among other provisions, theBSA and USA PATRIOT Act andrequire the related regulations of the OCC require savings associations operating in the United StatesAssociation to develop new anti-money laundering compliance programs,implement internal controls, conduct customer due diligence, policiesmaintain records, and controls to ensure the detection and reportingfile reports.
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•Regulations of the Office of Foreign Assets Control Regulations;that enforce economic and trade sanctions against targeted foreign countries, regimes, and other designated individuals and organizations; and
•The Gramm-Leach-Bliley Act, which placed limitations on the sharing of consumer financial information by financial institutions with unaffiliated third parties. Specifically, the Gramm-Leach-Bliley Act requires all financial institutions offering financial products or services to retail customers to provide such customers with the financial institution’s privacy policy and provide such customers the opportunity to “opt out” of the sharing of certain personal financial information with unaffiliated third parties.

•The Dodd-Frank Act, which holds lenders accountable for ensuring a borrower's ability to repay a mortgage. Loans defined as a "qualified mortgage" must be made to a borrower whose total monthly debt-to-income ratio does not exceed 43%, as well as the verification and documentation of the income and financial resources relied upon to qualify the borrower on the loan. Upon the loan being underwritten based on a fully amortizing payment schedule and maximum interest rate during the first five years, as well as meeting the other qualifications above, the loan is determined to be a "qualified mortgage" and therefore presumed to have complied with the ability-to-repay standard under the Dodd-Frank Act.
Holding Company Regulation
General. Third Federal Savings, MHC, and the Company are non-diversified savings and loan holding companies within the meaning of the Home Owners’ Loan Act.HOLA. As such, Third Federal Savings, MHC and the Company are registered with the FRS and subject to FRS regulations, examinations, supervision and reporting requirements. In addition, the FRS has enforcement authority over Third Federal Savings, MHC the Company and the Association.Company. Among other things, this authority permits the FRS to restrict or prohibit activities that are determined to be a serious risk to the Association. As federal corporations, Third Federal Savings, MHC and the Company are generally not subject to state business organization laws.
Permitted Activities. Pursuant to Section 10(o) of the Home Owners’ Loan ActHOLA and FRS regulations, a mutual holding company, such as Third Federal Savings, MHC and its mid-tier companies, such asholding company, the Company, may, with appropriate regulatory approval, engage in the following activities:
(i)investing in the stock of a savings association;
(ii)acquiring a mutual association through the merger of such association into a savings association subsidiary of such holding company or an interim savings association subsidiary of such holding company;
(iii)merging with or acquiring another holding company, one of whose subsidiaries is a savings association;
(iv)investing in a corporation, the capital stock of which is available for purchase by a savings association under federal law or under the law of any state where the subsidiary savings association has its home offices;
(v)furnishing or performing management services for a savings association subsidiary of such company;
(vi)holding, managing or liquidating assets owned or acquired from a savings association subsidiary of such company;
(vii)holding or managing properties used or occupied by a savings association subsidiary of such company;
(viii)acting as trustee under deeds of trust;
(ix)any other activity:
(i)investing in the stock of a savings association;
(ii)acquiring a mutual association through the merger of such association into a savings association subsidiary of the Company or an interim savings association subsidiary of the Company;
(iii)merging with or acquiring another holding company, one of whose subsidiaries is a savings association;
(iv)investing in a corporation, the capital stock of which is available for purchase by a savings association under federal law or under the law of any state where the subsidiary savings association has its home offices;
(v)furnishing or performing management services for a savings association subsidiary of such company;
(vi)holding, managing or liquidating assets owned or acquired from a savings association subsidiary of such company;
(vii)holding or managing properties used or occupied by a savings association subsidiary of such company;
(viii)acting as trustee under deeds of trust;
(ix)any other activity:
(A) that the FRS, by regulation, has determined to be permissible for bank holding companies under Section 4(c) of the Bank Holding Company Act of 1956, unless the FRS, by regulation, prohibits or limits any such activity for savings and loan holding companies; or
(B) in which multiple savings and loan holding companies were authorized (by regulation) to directly engage on March 5, 1987;
(x) if the savings and loan holding company meets the criteria to qualify as a financial holding company, any activity permissible for financial holding companies under Section 4(k) of the Bank Holding Company Act, including securities and insurance underwriting; and
(xi) purchasing, holding, or disposing of stock acquired in connection with a qualified stock issuance if the purchase of such stock by such savings and loan holding company is approved by the FRS. If a mutual holding company acquires or merges with another holding company, the holding company acquired or the holding company resulting from such merger or acquisition may only invest in assets and engage in activities listed in (i) through (x) above, and has a period of two years to cease any nonconforming activities and divest any nonconforming investments.
The Home Owners’ Loan ActHOLA prohibits a savings and loan holding company, includingsuch as the Company, from directly or indirectly or through one or more subsidiaries, from acquiring more than 5% of a class of voting securities of, or acquiring "control" as defined in FRS regulations of, another savings institution or savings and loan holding company, thereof, without prior written approval of the FRS. It also prohibits the acquisition or
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retention of, with certain exceptions, more than 5% of a non-subsidiary company engaged in activities other than those permitted by the Home Owners’ Loan ActHOLA or acquiring or retaining control of an institution that is not federally insured. In evaluating applications by holding companies to acquire savings institutions, the FRS must consider the financial and managerial resources, future prospects of the company and institution involved, the effect of the acquisition on the risk to the federal deposit insurance fund,DIF, the convenience and needs of the community and competitive factors.
The FRS is prohibited from approving any acquisition that would result in a multiple savings and loan holding company controlling savings institutions in more than one state, subject to two exceptions:
(i)
(i)the approval of interstate supervisory acquisitions by savings and loan holding companies; and
(ii)the acquisition of a savings institution in another state if the laws of the state of the target savings institution specifically permit such acquisition.
The states vary in the extent to which they permit interstate savings and loan holding company acquisitions.companies; and

(ii)the acquisition of a savings institution in another state if the laws of the state of the target savings institution specifically permit such acquisition.
Capital. Savings and loan holding companies were historically not subject to specific regulatory capital requirements. The DFA, however, required the FRS to promulgate consolidated capital requirements for all depository institution holding companies that are no less stringent, both quantitatively and in terms of components of capital, than those applicable to depository institutions themselves. Instruments such as cumulative preferred stock and trust preferred securities cancould no longer be included as Tier 1 capital, as was previously permitted for bank holding companies.

The previously discussed final rule regarding regulatory capital requirements implements the DFA’s directive as to savings and loan holding companies. Consolidated regulatory capital requirements identical to those applicable to the subsidiary depository institutions, generally appliedincluding the capital conservation buffer, apply to savings and loan holding companies as of January 1, 2015. As iscompanies. We are in compliance with the case with institutions themselves,holding company consolidated capital requirements and the capital conservation buffer is being phased in between 2016 and 2019.as of September 30, 2023.
Dividendsand Repurchases. The FRS has issued a policy statement regarding the payment of dividends and the repurchase of shares of common stock by bank holding companies that it has made applicable to savings and loan holding companies as well. In general, the policy provides that dividends should be paid only out of current earnings and only if the prospective rate of earnings retention by the holding company appears consistent with the organization's capital needs, asset quality and overall financial condition. Regulatory guidance provides for prior regulatory review of capital distributions in certain circumstances such as where the company's net income for the past four quarters, net of dividends previously paid over that period, is insufficient to fully fund the dividend, the proposed dividend is not covered by earnings for the period for which it is being paid or the company's overall rate of earnings retention is inconsistent with the company's capital needs and overall financial condition. The guidance also provides for prior consultation with supervisory staff for material increases in the amount of a company's common stock dividend. The ability of a holding company to pay dividends may be restricted if a subsidiary bankdepository institution becomes undercapitalized. The policy statement also provides for regulatory review prior to a holding company redeeming or repurchasing regulatory capital instruments when the holding company is experiencing financial weaknesses or redeeming or repurchasing common stock or perpetual preferred stock that would result in a net reduction as of the end of a quarter in the amount of such equity instruments outstanding compared with the beginning of the quarter in which the redemption or repurchase occurred. These regulatory policies could affect the ability of the Company to pay dividends, repurchase shares of common stock or otherwise engage in capital distributions.
Source of Strength. The DFA extended the “source of strength” doctrine, which hashad traditionally been applicable to bank holding companies, to savings and loan holding companies as well. Thecompanies. FRS has issued regulations requiringrequire that all savings and loan holding companies serve as a source of strength to their subsidiary depository institutions by providing capital, liquidity and other support in times of financial stress.
Waivers of Dividends by Third Federal Savings, MHC. Federal regulations require Third Federal Savings, MHC to notify the FRS of any proposed waiver of its receipt of dividends from the Company. The OTS, the previous regulator for Third Federal Savings, MHC, allowed dividend waivers provided the mutual holding company’sthat its Board of Directors determined that the waiver was consistent with itsthe Board's fiduciary duties and the waiver would not be detrimental to the safety and soundness of its subsidiary institution. In February 2008, the Company declared its first quarterly dividend and continued to declare and pay quarterly dividends through May 2010, when the Company suspended future dividend payments until concerns expressed by the OTS regarding the Association’s home equity line of credit portfolio were satisfactorily resolved. Prior to the suspension of the dividends, Third Federal Savings, MHC waived its right to receive each dividend paid by the Company. Section 625(a) of DFA preserved, for mutual holding companies including Third Federal Savings, MHC, that had reorganized into mutual holding company form, issued minority stock and waived dividends prior to December 1, 2009, including Third Federal Savings, MHC, the right to waive dividends if the waiver was not detrimental to the safe and sound operation of the savings association and the board of directors expressly determinesdetermined that the waiver iswas consistent with the fiduciary duties of the board to the mutual members of the mutual holding company. However, on August 12, 2011, the FRS issued an interim final rule that added a requirement that a majority of the mutual holding company’s members eligible to vote must approve a dividend waiver by a mutual holding company within 12 months prior to the declaration of the dividend being waived. The FRS is reviewing comments on the interim final rule, which were required to be submitted by November 1, 2011, as part of its rulemaking process, and there can be no assurance that the final rule will not require such a member vote. On July 19, 2017, Third Federal Savings, MHC received the approval of its members (depositors and certain loan customers of the Association) with respect to the waiver of dividends, and subsequently received the non-objection of the FRB-Cleveland, to waive receipt of dividends aggregating up to $1.13 per share on the Company’s common stock of the MHC owns up to a totalCompany for the 12
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Table of $0.68 per share duringContents
months following the four quarterly periods ending June 30, 2018.special meeting of members held on July 11, 2023. Third Federal Savings, MHC previously received the approval of its members at: (1) a July 26, 2016 meeting to waive receipt of dividends up to a total of $0.50 per share during the four quarterly periods ending June 30, 2017: (2) an August 5, 2015 meeting to waive receipt of dividends up to $0.40 per share during the four quarterly periods ending June 30, 2016; and (3) a July 31, 2014 meeting to waive receipt of dividends up to $0.28 per share during the four quarterly periods ending June 30, 2015.every calendar year beginning in 2014.
Conversion of Third Federal Savings, MHC to Stock Form. Federal regulations permit Third Federal Savings, MHC to convert from the mutual form of organization to the capital stock form of organization (a “Conversion Transaction”). There can be no assurance when, if ever, a Conversion Transaction will occur, and the Board of Directors has no current intention or plan to undertake a Conversion Transaction. In a Conversion Transaction, a new stock holding company would be formed as the

successor to the Company, Third Federal Savings, MHC’s corporate existence would end, and certain depositors of the Association would receive the right to subscribe for additional shares of common stock of the new holding company. In a Conversion Transaction, each share of common stock held by stockholders other than Third Federal Savings, MHC (“Minority Stockholders”) would be automatically converted into a number of shares of common stock of the new holding company determined pursuant to an exchange ratio that ensures that Minority Stockholders own the same percentage of common stock in the new holding company as they owned in the Company immediately prior to the Conversion Transaction. Under a provision of the DFA applicable to Third Federal Savings, MHC, Minority Stockholders should not be diluted because of any dividends waived by Third Federal Savings, MHC (and waived dividends should not be considered in determining an appropriate exchange ratio), in the event Third Federal Savings, MHC converts to stock form. Any such Conversion Transaction would require various member and stockholder approvals, as well as regulatory approval.
Sarbanes-Oxley Act of 2002
2002. The Sarbanes-Oxley Act of 2002 and related regulations address, among other issues, corporate governance, auditing and accounting, executive compensation, and enhanced and timely disclosure of corporate information. We have prepared policies, procedures and systems designed to ensure compliance with thesethis law and related regulations.

Human Capital Resources
At September 30, 2023, we employed 995 associates, nearly all of whom are full-time and of which approximately 74% are women. At September 30, 2022, we employed 1,025 associates. As a financial institution, approximately 42% of our associates are employed at our branch and loan production offices, and another 14% are employed at our customer care call center. The success of our business is highly dependent on our associates, who provide value to our customers and communities through their dedication to our mission, helping customers achieve the American dream of home ownership and financial security. Our workplace culture is grounded in a set of core values – love (a genuine concern for others), trust, respect, a commitment to excellence and a little bit of fun – which is lived out daily in our work. We seek to hire well-qualified associates who are also a good fit for our value system. Our selection and promotion processes are without bias and include the active recruitment of minorities and women.
We encourage and support the growth and development of our associates and, wherever possible, seek to fill positions by promotion and transfer from within the organization. Continual learning and career development is advanced through quarterly performance and development conversations between associates and their managers, internally developed training programs, customized corporate training engagements and educational reimbursement programs. Reimbursement is available to associates enrolled in pre-approved degree or certification programs at accredited institutions that teach skills or knowledge relevant to our business, in compliance with Section 127 of the Internal Revenue Code, and for seminars, conferences, and other training events associates attend in connection with their job duties.
On an ongoing basis, we further promote the health and wellness of our associates by strongly encouraging work-life balance, offering flexible work schedules, keeping the associate portion of health care premiums to a minimum and sponsoring various wellness programs, whereby associates are compensated for incorporating healthy habits into their daily routines.
Associate retention helps us operate efficiently and achieve one of our business objectives, which is being a low-cost provider. Our voluntary turnover rate, at 4.4% for the twelve months ending September 30, 2023, excluding retirements, remains one of the lowest in the industry. We believe our commitment to living out our core values, actively prioritizing concern for our associates’ well-being, supporting our associates’ career goals, offering competitive wages and providing valuable fringe benefits aids in retention of our top-performing associates. In addition, nearly all of our associates are stockholders of the Company through participation in our Associate Stock Ownership Plan, which aligns associate and stockholder interests by providing stock ownership on a tax-deferred basis at no investment cost to our associates. At September 30, 2023, 38% of our current staff had been with us for fifteen years or more.

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Item 1A.Risk Factors
The material risks and uncertainties that management believes affect us are described below. You should carefully consider the risks and uncertainties described below, together with all of the other information included or incorporated by reference herein, as well as in other documents we file with the SEC. The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties that management is not aware of or focused on, or that management currently deems immaterial may also impair our business operations. This report is qualified in its entirety by these risk factors. See also, “Forward-Looking Statements.”
Risks Related to Economic Conditions
Our financial condition, results of operation, and stock price may be negatively impacted by unrelated bank failures and negative depositor confidence in depository institutions. Further, if we are unable to adequately manage our liquidity, deposits, capital levels, and interest rate risk, which have come under greater scrutiny in light of recent bank failures, it may have a material adverse effect on our financial condition and results of operations.
On March 8, 2023, Silvergate Bank, La Jolla, CA, announced its decision to voluntarily liquidate its assets and wind down operations. On March 10, 2023, Silicon Valley Bank, Santa Clara, CA, was closed by the California Department of Financial Protection and Innovation, and on March 12, 2023, Signature Bank, New York, NY, was closed by the New York State Department of Financial Services. Additionally, on May 1, 2023, First Republic Bank, San Francisco, CA, was closed by the FDIC and sold to JP Morgan Chase & Co. These events led to volatility and declines in the market for bank stocks and questions about depositor confidence in depository institutions.
Notably, the liquidation of Silvergate Bank and the failures of Silicon Valley Bank and Signature Bank were not generally related to the credit quality of their assets, but to poor liquidity management, mismatched funding of long-term assets with short-term funds, and unique business models. The financial distress these banks experienced appears to have been caused in large part by high exposure to certain industries, including cryptocurrency and venture capital and start-up companies operating in the technology space, which have experienced significant volatility and fluctuations in cash flows over the past several years. These banks also had high levels of uninsured deposits, which may be less likely to remain at the bank over time and less stable as a source of funding than insured deposits. Silicon Valley Bank in particular appears to have experienced a severe lack of liquidity, forcing it to sell long-term investment securities at significant losses. Ultimately, it was unable to meet its financial commitments and satisfy the cash requirements of its customers.
These bank failures led to volatility and declines in the market for bank stocks and questions about depositor confidence in depository institutions, which in turn led to a greater focus by institutions, investors, and regulators on the on-balance sheet liquidity of and funding sources for financial institutions and the composition of its deposits. Notwithstanding, our efforts to promote deposit insurance coverage with our customers and otherwise effectively manage our liquidity, deposit portfolio retention, and other related matters, our financial condition, results of operation, and stock price may be adversely affected by future negative events within the banking sector and adverse customer or investor responses to such events.
Inflation can have an adverse impact on our business and on our customers.
Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. Recently, there has been a rise in inflation and the Federal Reserve Board has raised certain benchmark interest rates in an effort to combat inflation. As inflation increases, the value of our investment securities, particularly those with longer maturities, would decrease, although this effect can be less pronounced for floating rate instruments. In addition, inflation increases the cost of goods and services we use in our business operations, such as electricity and other utilities, which increases our non-interest expense. Furthermore, our customers are also affected by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us.
The reversal of the historically low interest rate environment may further adversely affect our net interest income and profitability.
The Federal Reserve Board decreased benchmark interest rates significantly, to near zero, in response to the COVID-19 pandemic. The Federal Reserve Board is reversing its policy of near zero interest rates given its concerns over inflation. Market interest rates have risen in response to the Federal Reserve Board's recent rate increases. The increase in market interest rates has had and, as discussed below, is expected to continue to have an adverse effect on our net interest income and profitability.
Future changes in interest rates could reduce our net income.
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Our net income largely depends on our net interest income, which could be negatively affected by changes in interest rates. Net interest income is the difference between the interest income we earn on our interest-earning assets, such as loans and securities, and the interest we pay on our interest-bearing liabilities, such as deposits and borrowings.
The vast majority of our assets and liabilities are financial in nature, and as a result, changes in market and competitive interest rates can impact our customers’ actions as well as the types and amount of business opportunities that are available to us. In general, when changes occur in interest rates that prompt our existing customers to pursue strategies that are beneficial to them, the results are generally unfavorable for us.
Generally, induring a period of rising interest rates, the interest income earned on our assets may not increase as rapidly as the interest paid on our liabilities because, like many savings institutions, our liabilities generally have shorter contractual maturities than our assets. An example of this occurs when interest rates paid on certificates of deposit experience a significant increase. In this circumstance, a CD customer may determine that it is in his/her best interest to incur the existing penalty for early withdrawal, tender the certificate for cash and either reinvest the proceeds in a new CD with us, or withdraw the funds and leave us. As a result, we either establish a new, higher rate certificate (if the customer stays with us), or we must fund the customer’s withdrawal by: (1) reducing our cash reserves; (2) selling assets to generate cash to fund the withdrawal; (3) attracting deposits from another customer at the then-higher interest rate; or (4) borrowing from a wholesale lender like the FHLB of Cincinnati, again at the then-higher interest rate. Each of these alternatives can have an unfavorable impact on us.
As another example of changesChanges in interest rates that can also have an unfavorable impact on our net interest income if mortgage interest rates decline, ourdecline. Our customers may seek to refinance, without penalty, their mortgage loans with us or repay their mortgage loans with us and borrow from another lender. When that happens, either the yield that we earn on the customer’s loan is reduced (if the customer refinances with us), or the mortgage is paid off and we are faced with the challenge of reinvesting the cash received to repay the mortgage in a lower interest rate environment. This is frequently referred to as reinvestment risk, which is the risk that we may not be able to reinvest the proceeds of loan prepayments at rates that are comparable to the rates we earned on the loans prior to receipt of the repayment. Reinvestment risk also exists with the securities in our investment portfolio that are backed by mortgage loans.
Our net interest income can also be negatively impacted when assets and funding sources with seemingly similar, but not identical re-pricing characteristics, react differently to changing interest rates. An example is our home equity lines of credit loan portfolio and our high yieldinterest-bearing checking and high yield savings deposit products. Interest rates charged on our home equity lines of credit loans are linked to the prime rate of interest, which generally adjusts in a direct relationship to changes in the FRS’s Federal Funds target rate. Similarly, our High Yield Checkinginterest-bearing checking and High Yield Savingssavings deposit products are generally expected to adjust when changes are made to the Federal Funds target rate. However, to the extent that increases or decreases are made to the Federal Funds target rate, and those increases or decreases translate into increases or decreases of the prime rate and the rate charged on our home equity lines of credit loans, but do not extend to equivalent adjustments to our High Yield Checkinginterest-bearing checking and High Yield Savingssavings deposit products, we can experience a reduction in our net interest income. At September 30, 2017,2023, we held $1.46$2.70 billion of home equity lines of credit loans and $2.27$2.61 billion of High Yield Checkinginterest-bearing checking and High Yield Savingssavings deposits.
Our net income can also be reduced by the impact that changes in interest rates can have on the value of our capitalized mortgage servicing rights. As of September 30, 2017,2023, we serviced $1.85$1.93 billion of loans sold to third parties, and the mortgage servicing rights associated with such loans had an amortized cost of $8.4$7.4 million and an estimated fair value, at that date, of $16.1$15.9 million. Because the estimated life and estimated income to be derived from servicing the underlying mortgage loans generally increase with rising interest rates and decrease with falling interest rates, the value of mortgage servicing rights generally increases as interest rates rise and decreases as interest rates fall. If interest rates fall and the value of our capitalized servicing rights decrease, we may be required to recognize an additional impairment charge against income for the amount by which amortized cost exceeds estimated fair market value.
Our securities portfolio may be impacted by fluctuations in market value, potentially reducing accumulated other comprehensive incomeAOCI and/or earnings. Fluctuations in market value may be caused by changes in market interest rates, lower market prices for securities and limited investor demand. Changes in interest rates can also have an adverse effect on our financial condition, as our available-for-saleavailable for sale securities are reported at their estimated fair value, and therefore are impacted by fluctuations in interest rates. We increase or decrease our stockholders’ equity by the amount of change in the estimated fair value of the available-for-saleavailable for sale securities, net of taxes. The declines in market value could result in other-than-temporary

impairments of these assets, which would lead to accounting charges that could have a material adverse effect on our net income and capital levels.
In general, changes in market and competitive interest rates result from events that we do not control and over which we generally have little or no influence. As a result, mitigation of the adverse affectseffects of changing interest rates is generally limited to controlling the composition of the assets and liabilities that we hold. To monitor our positions, we maintain an interest rate risk modeling system which is designed to measure our interest rate risk sensitivity. Using customized modeling software, the Association prepares periodic estimates of the amounts by which the net present value of its cash flows from assets, liabilities and off balance sheet items (the institution’s economic value of equity)EVE) would change in the event of a range of assumed changes in market interest rates. The simulation model uses a discounted cash flow analysis and an option-based pricing approach in measuring the interest rate sensitivity of EVE. At September 30, 2017,2023, in the event of an immediate 200 basis point increase in all interest rates, our model projects that we would experience a $386.6$324.7 million, or 18.33%31.45%, decrease in EVE. Our calculations further
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project that, at September 30, 2017,2023, in the event that market interest rates used in the simulation were adjusted in equal monthly amounts (termed a "ramped" format) during the 12twelve month measurement period to an aggregate increase in 200 basis points, we would expect our projected net interest income for the twelve months ended September 30, 20182024 to decrease by 1.63%2.71%. See “ItemItem 7A. Quantitative and Qualitative Disclosures about Market Risk.”Risk.
A continuationworsening of historically low interest rateseconomic conditions could reduce demand for our products and the possibility that we may access higher-cost funds to support our growth may adversely affect our net interest income and profitability.
During the past several years, it has been the policy of the Board of Governors of the FRS to maintain interest rates at historically low levels through its targeted federal funds rate and the purchase of U.S. Treasury and mortgage-backed securities. As aservices and/or result market rates on the loans we have originated and the yields on securities we have purchased have been at lower levels than available prior to 2008. This has been a significant factor in the decrease in the amount of our interest income to $409.0 million for the fiscal year ended September 30, 2017 from $550.2 million for the fiscal year ended September 30, 2008 while the average balance of total interest earning assets increased to $12.93 billion for the fiscal year ended September 30, 2017 from $10.10 billion for the fiscal year ended September 30, 2008. As a general matter, our interest-bearing liabilities reprice or mature more quickly than our interest-earning assets, which, as interest rates declined, has generally resulted in progressive increases in net interest income since 2008. However, because interest rates have been low for so long, our ability to further lower our interest expense may become increasingly difficult while the average yield on our interest-earning assets may continue to decrease, and our interest expense may increase as we access non-core funding sources or increase deposit rates to fund our operations.
Accordingly, our net interest income (the difference between interest income earned on assets and interest expense paid on liabilities) may be adversely affectedlevel of non-performing loans, which maycould have an adverse effect on our profitability.
Difficult market conditions, geographic concentration and heightened regulatory scrutiny have already affected us and our industry and may continue to do so.results of operations.
Our performance is significantly impacted by the general economic conditions in our primary markets in the states of Ohio and Florida, and surrounding areas,areas. We also originate loans in other states which were severely affected during the 2008 financial crisis and its aftermath.will be impacted by national or regional economic conditions. A recurrence of those or similar difficult marketdeterioration in economic conditions is likely to again result in high levels of unemployment, which will furtherwould weaken recently, and in some cases, continuing distressed local economies and could result in additional defaults of mortgage loans. Most of the loans in our loan portfolio are secured by real estate located in our primary market areas. Negative conditions, such as layoffs, in the markets where collateral for a mortgage loan is located could adversely affect a borrower’s ability to repay the loan and the value of the collateral securing the loan. Declines in the U.S. housing market, during and in the aftermath of the 2008 financial crisis, as manifested by falling home prices and increasing foreclosures, as well as unemployment and under-employment, all negatively impactedimpact the credit performance of mortgage loans and resultedcan result in significant write-downs of asset values by financial institutions.
In response to the financial crisis of 2008,a significant decline in general economic conditions, many lenders and institutional investors reducedmay reduce or ceasedcease providing funding to borrowers, including other financial institutions. This market turmoil and tightening of credit ledcould lead to an increased level of commercial and consumer delinquencies, lack of consumer confidence, increased market volatility and widespread reduction of general business activity generally.activity. The resulting economic pressure on consumers and lack of confidence in the financial markets could adversely affectedaffect our business, financial condition and results of operations. While the economy has progressed on a tenuous road to recovery andIn response, we have experienced significant improvements in the credit metrics in our mortgage portfolio, a relapse or worsening of the conditions associated with the 2008 financial crisis would likely exacerbate the adverse effects that those difficult market conditions had on us and others in the financial industry. In particular, we already face and would expect to continue to face the following risks in connection with these events:

•Increased regulation of our industry, heightened supervisory scrutiny related to the USA PatriotPATRIOT Act, Bank Secrecy Act, Fair Lending and other laws and regulations, including those still contemplated by the DFA, along with enhanced monitoring of compliance with such regulation, including, as an institution with assets in excess of $10 billion, direct supervision by the CFPB.regulation. Each aspect of amplified supervision and regulation will in all likelihood increase our costs, may be accompanied by the risk of unexpected fines, sanctions, penalties, litigation and corresponding management diversion and may limit our ability to pursue business opportunities and return capital to our shareholders.
•Our ability to assess the creditworthiness of our customers may be impaired if the models and approaches we use to select, manage, and underwrite our customers become less predictive of future behaviors.
•The processes we use to estimate losses inherent in our credit exposure require difficult, subjective, and complex judgments, including forecasts of economic conditions and how these economic predictions might impair the ability of our borrowers to repay their loans, which may no longer be capable of viable estimation and which may, in turn, impact the reliability of our evaluation processes, the comfort of our regulators with respect to the adequacy of our allowance for loancredit losses and who may require adjustments thereto, and ultimately could result in increased provisions for loan losses and reduced levels of earnings and capital.
•Our ability to engage in sales of mortgage loans to third parties (including mortgage loan securitization transactions with governmental entities) on favorable terms or at all could be adversely affected by further disruptions in the capital markets or other events, including deteriorating investor expectations.
•Competition in our industry could intensify as a result of increasing consolidation of financial services companies in connection with current market conditions.
Risks Related to Laws and Regulations
Changes in laws and regulations and the cost of compliance with new laws and regulations may adversely affect our operations and our income.
We are subject to extensive regulation, supervision and examination by the FRS, the OCC, the CFPB and the FDIC. These regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the ability to impose restrictions on a bank’s operations, reclassify assets, determine the adequacy of a bank’s allowance for loancredit losses and determine the level of deposit insurance premiums assessed. Because our business is highly regulated, the laws and applicable regulations are subject to frequent change. Any change in these regulations and oversight, whether in the form of regulatory policy, new regulations or legislation or additional deposit insurance premiums could have a material impact on our operations.
The potential exists for additional federal or state laws and regulations, or changes in policy, affecting lending and funding practices and liquidity standards. Moreover, bank regulatory agencies have been active in responding to concerns and trends identified in examinations, and have issued many formal enforcement orders requiring capital ratios in excess of regulatory requirements. Bank regulatory agencies, such as the FRS, the OCC, the CFPB and the FDIC, govern the activities in
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which we may engage, primarily for the protection of depositors, and not for the protection or benefit of potential investors. In addition, new laws and regulations may increase our costs of regulatory compliance and of doing business, and otherwise affect our operations. New laws and regulations may significantly affect the markets in which we do business, the markets for and value of our loans and investments, the fees we can charge and our ongoing operations, costs and profitability.
Strong competition within our market areas may limit our growth and profitability.
Competition in the banking and financial services industry is intense. In our market areas, we compete with commercial banks, savings institutions, mortgage brokerage firms, credit unions, finance companies, mutual funds, money market funds, insurance companies, and brokerage and investment banking firms operating locally and elsewhere. Some of our competitors have greater name recognition and market presence that benefit them in attracting business, and offer certain services that we do not or cannot provide. In addition, larger competitors may be ableWe received a “Needs to price loans and deposits more aggressively than we do. Troubled financial institutions may significantly increase the interest rates paid to depositors in pursuit of retail deposits when wholesale funding sources are not available to them. Furthermore, the wide acceptance of Internet-based commerce has resulted in a number of alternative payment processing systems and lending platforms in which banks play only minor roles. Customers can now maintain funds in prepaid debit cards or digital currencies, and pay bills and transfer funds directly without the direct assistance of banks. Our profitability depends upon our continued ability to successfully competeImprove” Community Reinvestment Act rating in our market areas. For additional information see PARTmost recent federal examination. This could, at a minimum, result in denial of certain corporate applications such as those related to branches, mergers, minority stock offerings or a second-step conversion.
All savings associations have a responsibility under the Community Reinvestment Act and federal regulations to help meet the credit needs of their communities, including low- and moderate-income neighborhoods. In connection with its examination of a federal savings association, the OCC is required to assess the savings association’s record of compliance with the Community Reinvestment Act. The Association received a “Needs to Improve” Community Reinvestment Act rating in its most recent federal examination that analyzed home mortgage lending data for the period January 1, Item 1. Business-THIRD FEDERAL SAVINGS AND LOAN ASSOCIATION OF CLEVELAND-Competition.2015 through December 31, 2019. A savings association’s failure to comply with the provisions of the Community Reinvestment Act could, at a minimum, result in denial of certain corporate applications such as those related to branches, mergers, minority stock offerings or a second-step conversion, or in restrictions on its activities.
We continually encounter technological change,The FRS may require the Company to commit capital resources to support the Association, and we may not have sufficient access to such capital resources.
Federal law requires that a holding company act as a source of financial and managerial strength to its subsidiary bank and to commit resources to support such subsidiary bank. Under the “source of strength” doctrine, the FRS may require a holding company to make capital injections into a troubled subsidiary bank and may have fewer resources than many of our larger competitors to continue to invest in technological improvements
The financial services industry is undergoing rapid technological changes, with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better

serve customers and to reduce costs. Our future success will depend, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands for convenience, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements. We also may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers.
Certain aspects of our corporate structure related to dividend payment ability and governance could adversely affect the value of our common stock.
The value of the Company’s common stock is significantly affected by our ability to pay dividends to our public stockholders. The Company’s ability to pay dividends to our stockholders is subject to the availability of cash atcharge the holding company with engaging in unsafe and inunsound practices for failure to commit resources to a subsidiary bank. A capital injection may be required at times when the event earnings areholding company may not sufficienthave the resources to fundprovide it and therefore may be required to attempt to borrow the dividends, eventually, the abilityfunds or raise capital. Thus, any borrowing of funds needed to raise capital required to make a capital injection becomes more difficult and expensive, and could have an adverse effect on our business, financial condition and results of operations. Moreover, it is possible that we will be unable to borrow funds when we need to do so.
Monetary policies and regulations of the Association to make capital distributions to the Company. Moreover, our ability to pay dividends and the amount of such dividends is affected by the ability of Third Federal Savings, MHC, our mutual holding company, to waive the receipt of dividends declared by the Company.
Federal regulations require Third Federal Savings, MHC to notify the FRS of any proposed waiver of its receipt of dividends from the Company. In August 2011, the FRS issued an interim final rule pursuant to the DFA, providing that the FRS “may not” object to dividend waivers by grandfathered mutual holding companies, such as Third Federal Savings, MHC, under standards substantially similar to those previously required by the OTS. However, the interim final rule added a requirement that a majority of the mutual holding company’s members eligible to vote must approve a dividend waiver by a mutual holding company within 12 months prior to the declaration of the dividend being waived. As part of its rulemaking process, the FRS is reviewing comments on the interim final rule and there can be no assurance that the final rule will not require such a member vote. Third Federal Savings, MHC has received the approval of its members in four separate meetings (in July 2014, August 2015, July 2016 and July 2017) to waive the receipt of dividends for a twelve-month period, and the FRS has “non-objected” to Third Federal Savings, MHC’s waiver each time However, future approvals of members and non-objections from the FRS are not assured and if not obtained, the discontinuance of dividend payments would adversely affect the value of our common stock.
Third Federal Savings, MHC, as our majority shareholder, is able to control the outcome of virtually all matters presented to our shareholders for their approval, including any proposal to acquire us. Accordingly, Third Federal Savings, MHC may prevent the sale of control or merger of the Company or its subsidiaries even if such a transaction were favored by a majority of the public shareholders of the Company.
Cyber-attacks, other security breaches or failure or interruption of information systems could adversely affect our operations, net income or reputation.
We rely heavily on communications and information systems to conduct our business. We regularly collect, process, transmit and store significant amounts of data and confidential information regarding our customers, employees and others and concerning our own business, operations, plans and strategies. In some cases, this confidential or proprietary information is collected, compiled, processed, transmitted or stored by third parties on our behalf.
Information security risks have generally increased in recent years because of the proliferation of new technologies, the use of the Internet and telecommunications technologies to conduct financial and other transactions and the increased sophistication and activities of perpetrators of cyber-attacks and mobile phishing. Mobile phishing, a means for identity thieves to obtain sensitive personal information through fraudulent e-mail, text or voice mail, is an emerging threat targeting the customers of popular financial entities. A failure in or breach of our operational or information security systems, or those of our third-party service providers, as a result of cyber-attacks or information security breaches or due to employee error, malfeasance or other disruptions could adversely affect our business, resultfinancial condition and results of operations.
In addition to being affected by general economic conditions, our earnings and growth are affected by the policies of the FRS. An important function of the FRS is to regulate the money supply and credit conditions. Among the instruments used by the FRS to implement these objectives are open market purchases and sales of U.S. government securities, adjustments of the discount rate and changes in banks’ reserve requirements against bank deposits. These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits. Their use also affects interest rates charged on loans or paid on deposits.
The monetary policies and regulations of the FRS have had a significant effect on the operating results of financial institutions in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and/or cause losses.
If this confidential or proprietary information were to be mishandled, misused or lost, we could be exposed to significant regulatory consequences, reputational damage, civil litigationpast and financial loss.
Although we employ a variety of physical, procedural and technological safeguards to protect this confidential and proprietary information from mishandling, misuse or loss, these safeguards do not provide absolute assurance that mishandling, misuse or loss of the information will not occur, and that if mishandling, misuse or loss of the information did occur, those events will be promptly detected and addressed. Similarly, when confidential or proprietary information is collected, compiled, processed, transmitted or stored by third parties on our behalf, our policies and procedures require that the third party agree to maintain the confidentiality of the information, establish and maintain policies and procedures designed to preserve the

confidentiality of the information, and permit us to confirm the third party’s compliance with the terms of the agreement. As information security risks and cyber threats continue to evolve, we may be required to expend additional resourcesare expected to continue to enhancedo so in the future. The effects of such policies upon our information security measures and/orbusiness, financial condition and results of operations cannot be predicted.
Risks Related to investigate and remediate any information security vulnerabilities.
We have experienced no known material breaches.our Lending Activities
Our operations relylending activities provide lower interest rates than financial institutions that originate more commercial loans.
Our principal lending activity consists of originating, and essentially all of our loan portfolio consists of, residential real estate mortgage loans. We originate our loans with a focus on numerous external vendors.
We rely on numerous external vendorslimiting credit risk exposure and not necessarily to provide us with productsgenerate the highest return possible or maximize our interest rate spread. In addition, residential real estate mortgage loans generally have lower interest rates than commercial business loans, commercial real estate loans and services necessary to maintain our day-to-day operations. Accordingly, our operations are exposed to risk that these vendors will not perform in accordance with the contracted arrangements under service level agreements. The failureconsumer loans. As a result, we may generate lower interest rate spreads and rates of an external vendor to perform in accordance with the contracted arrangements under service level agreements because of changes in the vendor's organizational structure, financial condition, support for existing products and services or strategic focus or for any other reason, could be disruptivereturn when compared to our operations, which in turncompetitors who originate more consumer or commercial loans than we do. We intend to continue our focus on residential real estate lending.
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Secondary mortgage market conditions could have a material negative impact on our financial condition and results of operations. We also could be adversely affected to the extent such an agreement is not renewed by the third-party vendor or is renewed on terms less favorable to us.
Hurricanes or other adverse weather events could negatively affect the economy in our Florida market area or cause disruptions to our branch office locations, which could have an adverse effect on our business or results of operations.
ALoan sales provide a significant portion of our branch operationsnon-interest income. In addition to being affected by interest rates, the secondary mortgage markets are conductedalso subject to investor demand for residential real estate loans and increased investor yield requirements for these loans. These conditions may fluctuate or worsen in the Statefuture. A prolonged period of Florida, a geographic region with coastal areas that are susceptible to hurricanes and tropical storms. Such weather events can disrupt our operations, result in damage to our branch office locations and negatively affect the local economy in which we operate. We cannot predict whether or to what extent damage caused by future hurricanes or tropical storms will affect our operations or the economy in oursecondary market area, but such weather eventsilliquidity could result in fewer loan originations and greater delinquencies, foreclosures or loan losses. These and other negative effects of future hurricanes or tropical storms may adversely affect our business or results of operations.
A new accounting standard may require us to increase our allowance for loan losses and may have a material adverse effect on our financial condition and results of operations.

The Financial Accounting Standards Board has adopted a new accounting standard that will be effective for the Company for our fiscal year beginning October 1, 2020. This standard, referred to as Current Expected Credit Loss, or CECL, will require financial institutions to determine periodic estimates of lifetime expected credit losses on loans, and recognize the expected credit losses as allowances for loan losses. This will change the current method of providing allowances for loan losses that are probable, which may require us to increase our allowance for loan losses, and to greatly increase the types of data we would need to collect and review to determine the appropriate level of the allowance for loan losses. Any increase in our allowance for loan losses or expenses incurred to determine the appropriate level of the allowance for loan losses may have a material adverse effect on our financial condition and results of operations.
If we are required to repurchase mortgage loans that we have previously sold, it would negatively affect our earnings.
We sell mortgage loans in the secondary market under agreements that contain representations and warranties related to, among other things, the origination, characteristics of the mortgage loans and subsequent servicing. We may be required to repurchase mortgage loans that we have sold in cases of borrower default or breaches of these representations and warranties, and we would be subject to increased risk of disputes and repurchase demands as our volume of loan sales increases. If we are required to repurchase mortgage loans or provide indemnification or other recourse, this could significantly increase our costs and thereby affect our future earnings.
Recently adopted final regulationsIf our allowance for credit losses is not sufficient to cover actual loan losses, our earnings could restrictdecrease.
We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. In determining the amount of the allowance for credit losses, we review our loans, our loss and delinquency experience, and evaluate economic conditions. If our assumptions or the results of our analyses are incorrect, our allowance for credit losses may not be sufficient to cover future losses, resulting in additions to our allowance. Material additions to our allowance would materially decrease our net income. See Note 5. LOANS AND ALLOWANCES FOR CREDIT LOSSES for additional information on the CECL methodology.
In addition, bank regulators periodically review our allowance for credit losses and, as a result of such reviews, we may decide to increase our provision for loans losses or recognize further loan charge-offs. Any increase in our allowance for credit losses or loan charge-offs as a result of such review or otherwise, may have a material adverse effect on our financial condition and results of operation.
Risks Related to Competitive Matters
Strong competition within our market areas may limit our growth and profitability.
Competition in the banking and financial services industry is intense. In our market areas, we compete with commercial banks, savings institutions, mortgage brokerage firms, credit unions, finance companies, mutual funds, money market funds, insurance companies, and brokerage and investment banking firms operating locally and elsewhere. Some of our competitors have greater name recognition and market presence that benefit them in attracting business, and offer certain services that we do not or cannot provide. In addition, larger competitors may be able to price loans and deposits more aggressively than we do. Competitive factors driven by consumer sentiment or otherwise can also reduce our ability to originategenerate fee income, such as through overdraft fees. Troubled financial institutions may not significantly increase the interest rates paid to depositors in pursuit of retail deposits when wholesale funding sources are not available to them. Furthermore, the wide acceptance of Internet-based commerce has resulted in a number of alternative payment processing systems and sell loans.lending platforms in which banks play only minor roles. Customers can now maintain funds in prepaid debit cards or digital currencies, and pay bills and transfer funds directly without the direct assistance of banks. Our profitability depends upon our continued ability to successfully compete in our market areas. For additional information see PART 1 Item 1. Business-THIRD FEDERAL SAVINGS AND LOAN ASSOCIATION OF CLEVELAND-Competition.
We continually encounter technological change, and may have fewer resources than many of our larger competitors to continue to invest in technological improvements.
The Consumer Financial Protection Bureau has issuedfinancial services industry is undergoing rapid technological changes, with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs. Our future success will depend, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands for convenience, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements. We also may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers.
Risks Related to Our Operations
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Cyber-attacks, other security breaches or failure or interruption of information systems could adversely affect our operations, net income or reputation.
We rely heavily on communications and information systems to conduct our business. We regularly collect, process, transmit and store significant amounts of data and confidential information regarding our customers, associates and others and concerning our own business, operations, plans and strategies. In some cases, this confidential or proprietary information is collected, compiled, processed, transmitted or stored by third parties on our behalf. A number of our associates work at remote locations, increasing the number of surfaces that require protection.
Information security risks have generally increased in recent years because of the proliferation of new technologies, the use of the Internet and telecommunications technologies to conduct financial and other transactions and the increased sophistication and activities of perpetrators of cyber-attacks and mobile phishing. Mobile phishing, a rulemeans for identity thieves to obtain sensitive personal information through fraudulent e-mail, text or voice mail, is an on-going threat targeting the customers of popular financial entities. A failure in or breach of our operational or information security systems, or those of our third-party service providers, as a result of cyber-attacks or information security breaches or due to associate error, malfeasance or other disruptions could adversely affect our business, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and/or cause losses.
If this confidential or proprietary information were to be mishandled, misused or lost, we could be exposed to significant regulatory consequences, reputational damage, civil litigation and financial loss.
Although we employ a variety of physical, procedural and technological safeguards to protect this confidential and proprietary information from mishandling, misuse or loss, these safeguards do not provide absolute assurance that mishandling, misuse or loss of the information will not occur. If mishandling, misuse or loss of the information did occur, the Company would make all commercially reasonable efforts to detect and address any such event. Similarly, when confidential or proprietary information is collected, compiled, processed, transmitted or stored by third parties on our behalf, our policies and procedures require that the third party agree to maintain the confidentiality of the information, establish and maintain policies and procedures designed to clarify for lenders how they can avoid legal liability underpreserve the Dodd-Frank Act, which holds lenders accountable for ensuring a borrower’s abilityconfidentiality of the information, and permit us to repay a mortgage. Loans that meet this “qualified mortgage” definition will be presumed to have compliedconfirm the third party’s compliance with the new ability-to-repay standard. Under the rule, a “qualified mortgage” loan must not contain certain specified features, including:
excessive upfront points and fees (those exceeding 3%terms of the total loan amount, less “bona fide discount points” for prime loans);agreement. As information security risks and cyber threats continue to evolve, we may be required to expend additional resources to continue to enhance our information security measures and/or to investigate and remediate any information security vulnerabilities.
interest-only payments;We believe that we have not experienced any material breaches.
negative amortization;Customer or associate fraud subjects us to additional operational risks.
Associate errors, as well as associate and
terms of longer than 30 years.

Also, customer misconduct, could subject us to qualify as a “qualified mortgage,” a loan must be made to a borrower whose total monthly debt-to-income ratio does not exceed 43%. Lenders must also verifyfinancial losses or regulatory sanctions and document the income and financial resources relied upon to qualify the borrower on the loan and underwrite the loan based on a fully amortizing payment schedule and maximum interest rate during the first five years, taking into account all applicable taxes, insurance and assessments.
 In addition, the Dodd-Frank Act requires the regulatory agencies to issue regulations that require securitizers ofseriously harm our reputation. Our loans to retain “not less than 5%individuals, our deposit relationships and related transactions are also subject to exposure to the risk of the credit risk for any asset thatloss due to fraud and other financial crimes. Misconduct by our associates could include hiding unauthorized activities from us, improper or unauthorized activities on behalf of our customers or improper use of confidential information. It is not a qualified residential mortgage.” The regulatory agenciesalways possible to prevent associate errors and misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases. Associate errors could also subject us to financial claims for negligence. We have issued a final rulenot experienced any material financial losses from associate errors, misconduct or fraud. However, if our internal controls fail to implement this requirement. The final rule provides that the definition of “qualified residential mortgage” includes loans that meet the definition of qualified mortgage issued by the Consumer Financial Protection Bureau.
 The final ruleprevent or promptly detect an occurrence, or if any resulting loss is not insured or exceeds applicable insurance limits, it could have a significantmaterial adverse effect on the secondary market for loansour financial condition and results of operations.
If our enterprise risk management framework is not effective at mitigating risk and loss to us, we could suffer unexpected losses and our results of operations could be materially adversely affected.
Our enterprise risk management framework seeks to achieve an appropriate balance between risk and return, which is critical to optimizing stockholder value. We have established processes and procedures intended to identify, measure, monitor, report and analyze the types of loansrisk to which we originate,are subject to, including credit, liquidity, operational, regulatory compliance and restrictreputational. However, as with any risk management framework, there are inherent limitations to our abilityrisk management strategies as risks may exist, or develop in the future, that we have not appropriately anticipated or identified. If our risk management framework proves ineffective, we could suffer unexpected losses and our business and results of operations could be materially adversely affected.
Our operations rely on numerous external vendors.
We rely on numerous external vendors to make loans. Similarly,provide us with products and services necessary to maintain our day-to-day operations. Accordingly, our operations are exposed to risk that these vendors will not perform in accordance with the Consumer Financial Protection Bureau’s rule
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contracted arrangements under service level agreements. The failure of an external vendor to perform in accordance with the contracted arrangements under service level agreements because of changes in the vendor's organizational structure, financial condition, support for existing products and services or strategic focus or for any other reason, could be disruptive to our operations, which in turn could have a material negative impact on qualified mortgagesour financial condition and results of operations. We also could limitbe adversely affected to the extent that such an agreement is not renewed by the third-party vendor, or is renewed on terms less favorable to us. Our Vendor Management program helps mitigate risks and is structured to minimize the cost and time required to replace a vendor in the event of a failure or the vendor's inability to meet service level agreements.
Our board of directors relies to a large degree on management and outside consultants in overseeing cybersecurity risk management.
The Association has a standing Technology Steering Committee, consisting of several senior managers (CFO, CIO, CSO, CXO, and CRO/ISO). The Committee meets quarterly, or more frequently if needed, and reports to the Board of Directors after each meeting through Committee minutes. The Association also engages outside consultants to support its cybersecurity efforts. The directors of the Association do not have significant experience in cybersecurity risk management in other business entities comparable to the Association and rely on the Information Security Officer (ISO) and Chief Information Officer (CIO) for cybersecurity guidance.
Our funding sources may prove insufficient to replace deposits at maturity and support our ability or desirefuture growth. A lack of liquidity could adversely affect our financial condition and results of operations and result in regulatory limits being placed on us.
We must maintain funds to make certain typesrespond to the needs of depositors and borrowers. As a part of our liquidity management, we use a number of funding sources in addition to core deposit growth and repayments and maturities of loans and investments. These sources may include FHLB advances, federal funds purchased, and brokered certificates of deposits. While we emphasize the generation of low-cost core deposits as a source of funding, there is strong competition for such deposits in our market area. Additionally, deposit balances can decrease if customers perceive alternative investments as providing a better risk/return trade-off. Adverse operating results or loanschanges in industry conditions could lead to certain borrowers, which could limitdifficulty or an inability to access these additional funding sources. Our financial flexibility will be severely constrained if we are unable to maintain our access to funding or if adequate financing is not available to accommodate future growth at acceptable interest rates.
Further, if we are required to rely more heavily on more expensive funding sources to support liquidity and future growth, our revenues may not increase proportionately to cover our increased costs. In this case, our operating margins and profitability would be adversely affected. Alternatively, we may need to sell a portion or profitability.
Any future action by the U.S. Congress lowering the federal corporate income tax rateour investment and/or eliminating the federal corporate alternative minimum taxloan portfolio in order to raise funds, which, depending upon market conditions, could result in the need to establishus realizing a deferred tax assets valuation allowance and a corresponding charge against earnings.
Deferred tax assets are reported as assetsloss on the Company’s balance sheet and represent the decrease in taxes expected to be paid in the future becausesale of future reversalssuch assets.
A lack of temporary differences in the bases of assets and liabilities as measured by enacted tax laws and their bases as reported in the financial statements. As of September 30, 2017, the Company’s net federal deferred tax asset was $15.5 million. The Company did not have a federal net operating loss carryforward, a federal tax credit carryforward, an alternative minimum tax credit carryforward or a federal alternative minimum tax net operating loss carryforward that impacted the deferred tax asset as of September 30, 2017. The President of the U.S. and the majority political party in the U.S. Congress have announced plans to lower the federal corporate income tax rate from its current level of 35%. If enacted, this reduction could result in a decrease in the value of our deferred tax assets and a reduction to our net income and total equity during the period in which a tax rate change is enacted. The reduction in corporate income tax rateliquidity could also reduce our income tax provision expense in future periods.attract increased regulatory scrutiny and potential restraints imposed on us by regulators. Depending on the capitalization status and regulatory treatment of depository institutions, including whether an institution is subject to a supervisory prompt corrective action directive, certain additional regulatory restrictions and prohibitions may apply, including restrictions on growth, restrictions on interest rates paid on deposits, restrictions or prohibitions on payment of dividends, and restrictions on the acceptance of brokered deposits.
Risk Related to Our Corporate Structure
Our sources of funds are limited because of our holding company structurestructure.
The Company is a separate legal entity from its subsidiaries and does not have significant operations of its own. Dividends from the Association provide a significant source of cash for the Company. The availability of dividends from the Association is limited by various statutes and regulations. Under these statutes and regulations, the Association is not permitted to pay dividends on its capital stock to the Company, its sole stockholder, if the dividend would reduce the stockholders' equity of the Association below the amount of the liquidation account established in connection with the mutual-to-stock conversion. Federal savings associations may pay dividends without the approval of its primary federal regulator only if they meet applicable regulatory capital requirements before and after the payment of the dividends and total dividends do not exceed net income to date over the calendar year plus its retained net income over the preceding two years. If in the future, the Company utilizes its available cash and the BankAssociation is unable to pay dividends to the Company, the Company may not have sufficient funds to pay dividends or fund stock repurchases.
Restrictions on our ability to pay dividends to stockholders could adversely affect the value of our common stock.
The value of the Company’s common stock is significantly affected by our ability to pay dividends to our public stockholders. The Company’s ability to pay dividends to our stockholders is subject to the availability of cash at the Company,
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which is dependent on the Association having sufficient earnings to make capital distributions to the Company. Moreover, our ability to pay dividends, and the amount of such dividends, is affected by the ability of Third Federal Savings, MHC, our mutual holding company, to waive the receipt of dividends declared by the Company.
Federal regulations require Third Federal Savings, MHC, to notify the FRS of any proposed waiver of its receipt of dividends from the Company. In August 2011, the FRS issued an interim final rule pursuant to the DFA, providing that the FRS “may not” object to dividend waivers by grandfathered mutual holding companies, such as Third Federal Savings, MHC, under standards substantially similar to those previously required by the OTS. However, the interim final rule added a requirement that a majority of the mutual holding company’s members eligible to vote must approve a dividend waiver by a mutual holding company within twelve months prior to the declaration of the dividend being waived. As part of its rule making process, the FRS is reviewing comments on the interim final rule and there can be no assurance that the final rule will not require such a member vote. Third Federal Savings, MHC, has received the approval of its members in 10 separate meetings (held in either July or August of each year from 2014 through 2023) to waive the receipt of dividends for a twelve-month period, and the FRS has “non-objected” to Third Federal Savings, MHC’s waiver each time. However, future approvals of members and non-objections from the FRS are not assured and if not obtained, the discontinuance of dividend payments would adversely affect the value of our common stock.
Public stockholders own a minority of the outstanding shares of our common stock and are not able to exercise voting control over most matters put to a vote of stockholders.
Third Federal Savings, MHC, as our majority shareholder, is able to control the outcome of virtually all matters presented to our shareholders for their approval, including any proposal to acquire us. The same directors and officers who manage the Association also manage the Company and Third Federal Savings, MHC. The board of directors of Third Federal Savings, MHC must ensure that the interests of depositors of the Association (as members of Third Federal Savings, MHC) are represented and considered in matters put to a vote of stockholders of the Company. Therefore, Third Federal Savings, MHC, may take action that the public stockholders believe to be contrary to their interests. For example, Third Federal Savings, MHC, may exercise its voting control to defeat a stockholder nominee for election to the board of directors of the Company. Additionally, Third Federal Savings, MHC, may prevent the sale of control or merger of the Company or its subsidiaries, or a second-step conversion of Third Federal Savings, MHC, even if such a transaction were favored by a majority of the public shareholders of the Company.
Risks Related to Accounting Matters
Changes in management’s estimates and assumptions may have a material impact on our consolidated financial statements and on our financial condition and/or operating results.
In preparing periodic reports we are required to file under the Securities Exchange Act of 1934, including our consolidated financial statements, our management is and will be required under applicable rules and regulations to make estimates and assumptions as of a specified date. These estimates and assumptions are based on management’s best estimates and experience as of that date and are subject to substantial risk and uncertainty.Materially different results may occur as circumstances change and additional information becomes known.Areas requiring significant estimates and assumptions by management include our evaluation of the adequacy of our allowance for credit losses and the determination of pension obligations.
Changes in accounting standards could affect reported earnings.
The bodies responsible for establishing accounting standards, including the Financial Accounting Standards Board, the Securities and Exchange Commission and other regulatory bodies, periodically change the financial accounting and reporting guidance that governs the preparation of our financial statements. These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply new or revised guidance retroactively.
Other Risks Related to Our Business
Hurricanes or other adverse weather events could negatively affect the economy in our Florida market area or cause disruptions to our branch office locations, which could have an adverse effect on our business or results of operations.
A significant portion of our branch operations are conducted in Florida, a geographic region with coastal areas that are susceptible to hurricanes and tropical storms. Such weather events can disrupt our operations, result in damage to our branch office locations and negatively affect the local economy in which we operate. We cannot predict whether or to what extent damage caused by future hurricanes or tropical storms will affect our operations or the economy in our market area, but such
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weather events could result in fewer loan originations and greater delinquencies, foreclosures or loan losses. These, and other negative effects of future hurricanes or tropical storms may adversely affect our business or results of operations.
We are subject to environmental liability risk associated with lending activities or properties we own.
A significant portion of our loan portfolio is secured by real estate, and we could become subject to environmental liabilities with respect to one or more of these properties, or with respect to properties that we own in operating our business. During the ordinary course of business, we may foreclose on and take title to properties securing defaulted loans. In doing so, there is a risk that hazardous or toxic substances could be found on these properties. If hazardous conditions or toxic substances are found on these properties, we may be liable for remediation costs, as well as for personal injury and property damage, civil fines and criminal penalties regardless of when the hazardous conditions or toxic substances first affected any particular property. Environmental laws may require us to incur substantial expenses to address unknown liabilities and may materially reduce the affected property’s value or limit our ability to use or sell the affected property. In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase our exposure to environmental liability. Our policies, which require us to perform an environmental review before initiating any foreclosure action on non-residential real property, may not be sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on us.
Societal responses to climate change could adversely affect our business and performance, including indirectly through impacts on our customers.
Concerns over the long-term impacts of climate change have led and will continue to lead to governmental efforts around the world to mitigate those impacts. Consumers and businesses also may change their behavior on their own as a result of these concerns.We and our customers will need to respond to new laws and regulations, as well as consumer and business preferences resulting from climate change concerns. We and our customers may face cost increases, asset value reductions, operating process changes, and the like. The impact on our customers will likely vary depending on their specific attributes, including reliance on or role in carbon intensive activities. Among the impacts to us could be a drop in demand for our products and services, particularly in certain sectors. In addition, we could face reductions in creditworthiness on the part of some customers or in the value of assets securing loans. Our efforts to take these risks into account in making lending and other decisions, including increasing our business with climate-friendly companies, may not be effective in protecting us from the negative impact of new laws and regulations or changes in consumer or business behavior.
Our ability to maintain our reputation is critical to the success of our business, and the failure to do so may materially adversely affect our performance.
Our reputation is one of the most valuable components of our business and is critical to our success. The ability to attract and retain customers, investors, employees and advisors may depend upon external perceptions of the Company. Damage to the Company's reputation could cause significant harm to our business and prospects and may arise from numerous sources, including litigation or regulatory actions, failing to deliver minimum standards of service and quality, compliance failures, unethical behavior and the misconduct of employees, advisors and counterparties. Adverse developments with respect to the financial services industry may also, by association, negatively impact the Company's reputation or result in greater regulatory or legislative scrutiny or litigation against the Company.
Furthermore, shareholders, customers and other stakeholders have begun to consider how corporations are addressing ESG issues. Governments, investors, customers and the general public are increasingly focused on ESG practices and disclosures, and views about ESG are diverse and rapidly changing. These shifts in investing priorities may result in adverse effects on the trading price of the Company’s common stock if investors determine that the Company has not made sufficient progress on ESG matters. We could also face potential negative ESG-related publicity in traditional media or social media if shareholders or other stakeholders determine that we have not adequately considered or addressed ESG matters. If the Company, or our relationships with certain customers, vendors or suppliers, became the subject of negative publicity, our ability to attract and retain customers and employees, and our financial condition and results of operations, could be adversely impacted.
A protracted government shutdown may result in reduced loan originations and related gains on sales and could negatively affect our financial condition and results of operations.
During any protracted federal government shutdown, we may not be able to close certain loans and we may not be able to recognize non-interest income on the sale of loans. Some of the loans we originate are sold directly to government agencies, and some of these sales may be unable to be consummated during a shutdown. In addition, we believe that some borrowers may decide not to proceed with their home purchase and not close on their loans, which would result in a permanent loss of the related non-interest income. A federal government shutdown could also result in reduced income for government employees or
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employees of companies that engage in business with the federal government, which could result in greater loan delinquencies, increased in our non-performing, criticized, and classified assets, and a decline in demand for our products and services.

Item 1B.Unresolved Staff Comments
None.

Item 2.Properties
We operate from our main office in Cleveland, Ohio, our 3837 full-service branch offices located in Ohio and Florida and our eightfour loan production offices located in Ohio. Our branch offices are located in the Ohio counties of Cuyahoga, Lake, Lorain, Medina and Summit and in the Florida counties of Broward, Collier, Hillsborough, Lee, Palm Beach, Pasco, Pinellas and Sarasota. Our loan production offices are located in the Ohio counties of Franklin, Butler, Delaware and Hamilton. The Company owns the building in which its home office and executive offices are located, and six other office locations. The net book value of our land, premises, equipment and software was $60.9$34.7 million at September 30, 2017. Included2023, a $177 thousand increase from September 30, 2022 due to a $2.0 million increase in the net book value are two commercial buildings locatedDP equipment and a $479 thousand increase in Canton, Massachusetts, valued at $18.2 million, which are ownedbuilding improvements. These increases were primarily offset by our Hazelmere entity and leased to third parties in net lease transactions.depreciation.


Item 3.Legal Proceedings
The Company and its subsidiaries are subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s consolidated financial condition, results of operation, or statements of cash flows.

Item 4.Mine Safety Disclosures
Not applicable.


PART II

Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock is listed and traded on the NASDAQ Global Select Market under the symbol “TFSL”. As of November 20, 2017,14, 2023, we had 7,1806,044 shareholders of record, which number does not include persons or entities holding shares in “nominee” or “street” name through brokerage firms. Shares of our common stock began trading on April 23, 2007 following the completion of our initial public offering. Quarterly trading information for the periods indicated is provided by NASDAQ and included in the following table.
 Traded Market Prices  
 High     Low     Dividends
Quarter ended December 31, 2015$19.23
 $17.05
 $0.10
Quarter ended March 31, 201618.53
 15.60
 0.10
Quarter ended June 30, 201618.50
 16.43
 0.10
Quarter ended September 30, 201618.67
 16.92
 0.125
Quarter ended December 31, 201619.83
 18.61
 0.125
Quarter ended March 31, 201717.38
 16.40
 0.125
Quarter ended June 30, 201716.07
 15.30
 0.125
Quarter ended September 30, 201716.13
 14.84
 0.17
Payment of dividends is subject to declaration by our Board of Directors and is dependent on a number of factors, including:
our capital requirements and, to the extent that funds for any such dividend are provided by the Association, the regulatory capital requirements imposed on the Association by the OCC;
our financial position and results of operations;
tax considerations;
our alternative uses of funds;
statutory and regulatory limitations; and
general economic conditions.
Pursuant to IRS regulations, any payment of dividends by the Association to the Company that would be deemed to be drawn from the Association’s bad debt reserves would require a payment of taxes at the then-current tax rate by the Association on the amount of earnings deemed to be removed from the reserves for such distribution. The Association does not intend to make any distribution to the Company that would create such a federal tax liability.
Through September 30, 2010, Third Federal Savings, MHC, waived its right to receive dividends. The waivers complied with regulatory authorizations (in the form of non-objection) obtained by Third Federal Savings, MHC. Any requests for future regulatory authorizations to waive receipts of dividends will be submitted to the FRS. Please refer to the preceding discussion of dividend waivers presented in Part I, Item 1. Business, SUPERVISIONBusiness-SUPERVISION AND REGULATION, HoldingREGULATION-Holding Company Regulation, sections—Dividends and WaiversRegulation-Waivers of Dividends by Third Federal Savings, MHC. Regulatory non-objection is subject to periodic regulatory review and no assurances can be given regarding future regulatory non-objection. In addition, interim final rules issued by the FRS on August 12,in 2011 require that a majority of the mutual holding company's members

eligible to vote must approve a dividend waiver by a mutual holding company within 12 months prior to the declaration of the dividend being waived. There can be no assurance that a final rule will not require such a member vote.
On July 19, 2017, atAt a special meeting of members of Third Federal Savings, MHC, the members (depositors and certain loan customers of the Association) of Third Federal Savings, MHC voted to approve Third Federal Savings, MHC's proposed waiver of dividends aggregating up to $0.68$1.13 per share to be declared on the Company’s common stock duringof the four quarterly periods ending June 30, 2018.Company for the 12 months following the special meeting of members held on July 11, 2023. The members approved the waiver by casting 64%60% of the eligible votes, with 97% of the votes cast, or 58% of the total eligible votes, in favor of the waiver. Of the votes cast, 97% were in favor of the proposal. Third Federal Savings, MHC is the 81% majority shareholder of the Company.
Following the receipt of the members’ approval at the July 19, 201711, 2023 special meeting, Third Federal Savings, MHC filed a notice with, and subsequently received the non-objection of, the FRB-Cleveland for the proposed dividend waivers.
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In the table and graph that follow, we have provided summary information regarding the performance of the cumulative total return of our common stock from September 30, 20122018 through September 30, 2017,2023, relative to the cumulative total return on stocks included in the SNLS&P U.S. BMI Banks Index, KBW NASDAQ Bank and Thrift Index, SNL Thrift Index and NASDAQ Composite, in each case for the same period. The cumulative return data is presented in dollars, based on starting investments of $100 and assuming the reinvestment of dividends.
2629
 Measurement Date
Index (with base price at 9/30/2012)9/30/2012 9/30/2013 9/30/2014 9/30/2015 9/30/2016 9/30/2017
TFS Financial Corporation100.00
 131.97
 158.65
 194.98
 206.11
 193.01
SNL Bank and Thrift Index100.00
 130.10
 153.33
 156.54
 161.85
 227.64
SNL Thrift Index100.00
 120.39
 132.79
 158.59
 165.85
 192.83
NASDAQ Composite100.00
 122.77
 148.08
 153.99
 179.29
 221.75
 Measurement Date
Index (with base price at 9/30/2018)9/30/20189/30/20199/30/20209/30/20219/30/20229/30/2023
TFS Financial Corporation100.00 127.48 110.47 151.61 111.00 110.02 
S&P U.S. BMI Banks Index100.00 100.32 73.65 134.01 102.95 99.73 
KBW NASDAQ Bank Index

100.00 98.25 74.43 136.50 103.11 87.45 
NASDAQ Composite Index100.00 100.52 141.70 184.58 136.12 171.65 
Source: S&P Global Market Intelligence
 ______________________

We did not sell any equity securities during the fiscal year ended September 30, 2023.
We did not purchase any stock during the quarter ended September 30, 2017.
The following table summarizes our2023. On October 27, 2016, the Company announced that the Board of Directors approved the Company's eighth stock repurchase activity duringprogram, which authorizes the three monthsrepurchase of up to 10,000,000 shares of the Company's outstanding common stock. Purchases under the program will be on an ongoing basis and subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses of capital, and our financial performance. Repurchased shares will be held as treasury stock and be available for general corporate use. For the fiscal year ended September 30, 2017 and the2023, stock repurchase plans approved by our Boardrepurchases totaled 361,869 shares at an average price per share of Directors.$13.82. The program has 5,191,951 shares yet to be purchased as of September 30, 2023. The program has no expiration date.
46
   Average Total Number of Maximum Number
 Total Number Price Shares Purchased of Shares that May
 of Shares Paid per as Part of Publicly Yet be Purchased
PeriodPurchased Share Announced Plans (1) Under the Plans
July 1, 2017 through July 31, 2017398,900
 $15.79
 398,900
 7,938,890
August 1, 2017 through August 31, 2017108,000
 15.48
 108,000
 7,830,890
September 1, 2017 through September 30, 201780,000
 15.38
 80,000
 7,750,890
 586,900
 15.68
 586,900
  
        
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(1)Item 6.On October 27, 2016, the Company announced that the Board of Directors approved the Company's eighth stock repurchase program, which authorizes the repurchase of up to 10,000,000 shares of the Company's outstanding common stock, which commenced upon the completion of the Company's seventh stock repurchase program on January 7, 2017. Purchases under the program will be on an ongoing basis and subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses of capital, and our financial performance. Repurchased shares will be held as treasury stock and be available for general corporate use. The program has 7,750,890 shares yet to be purchased as of September 30, 2017.[Reserved]
Item 6.Selected Financial Data
 At September 30,
 2017 2016 2015 2014 2013
 (In thousands)
Selected Financial Condition Data:         
Total assets$13,692,563
 $12,906,062
 $12,368,886
 $11,803,195
 $11,269,346
Cash and cash equivalents268,218
 231,239
 155,369
 181,403
 285,996
Investment securities - available for sale537,479
 517,866
 585,053
 568,868
 477,376
Loans held for sale351
 4,686
 116
 4,962
 4,179
Loans, net12,419,306
 11,708,804
 11,187,583
 10,630,687
 10,084,066
Bank owned life insurance205,883
 200,144
 195,861
 190,152
 183,724
Prepaid expenses and other assets61,086
 63,994
 58,277
 64,880
 71,639
Deposits8,151,625
 8,331,368
 8,285,858
 8,653,878
 8,464,499
Borrowed funds3,671,377
 2,718,795
 2,168,627
 1,138,639
 745,117
Shareholders’ equity1,689,959
 1,660,458
 1,729,370
 1,839,457
 1,871,477



 For the Years Ended September 30,
 2017 2016 2015 2014 2013
 (In thousands, except per share amounts)
Selected Operating Data:         
Interest income$408,995
 $388,441
 $383,477
 $374,684
 $383,972
Interest expense130,099
 118,026
 113,350
 103,251
 115,419
Net interest income278,896
 270,415
 270,127
 271,433
 268,553
Provision (credit) for loan losses(17,000) (8,000) (3,000) 19,000
 37,000
Net interest income after provision for loan losses295,896
 278,415
 273,127
 252,433
 231,553
Non-interest income19,849
 24,952
 24,260
 21,900
 28,468
Non-interest expenses182,404
 181,004
 187,992
 175,476
 177,660
Earnings before income tax133,341
 122,363
 109,395
 98,857
 82,361
Income tax expense44,464
 41,810
 36,804
 32,966
 26,402
Net earnings after income tax expense$88,877
 $80,553
 $72,591
 $65,891
 $55,959
Earnings per share—basic and fully diluted$0.32
 $0.28
 $0.25
 $0.22
 $0.18
Cash dividends declared per share$0.545
 $0.425
 $0.31
 $0.07
 $—




 At or For The Years Ended September 30,
 2017 2016 2015 2014 2013
Selected Financial Ratios and Other Data:         
Performance Ratios:         
  Return on average assets0.67% 0.65% 0.57% 0.57% 0.50%
  Return on average equity5.28% 4.73% 4.04% 3.52% 3.05%
  Interest rate spread(1)2.02% 2.09% 2.03% 2.26% 2.25%
  Net interest margin(2)2.16% 2.23% 2.17% 2.42% 2.46%
  Efficiency ratio(3)61.06% 61.28% 63.86% 59.82% 59.81%
  Noninterest expense to average total assets1.37% 1.45% 1.47% 1.53% 1.58%
  Average interest-earning assets to average interest-bearing
  liabilities
113.29% 114.67% 115.43% 118.51% 119.58%
  Dividend payout ratio(4)170.31% 151.79% 124.00% 31.82% —%
Asset Quality Ratios:         
  Non-performing assets as a percent of total assets0.62% 0.75% 1.00% 1.33% 1.58%
  Non-accruing loans as a percent of total loans0.63% 0.76% 0.95% 1.27% 1.53%
  Allowance for loan losses as a percent of non-accruing loans61.89% 68.69% 67.00% 60.03% 59.38%
  Allowance for loan losses as a percent of total loans0.39% 0.52% 0.64% 0.76% 0.91%
Capital Ratios:         
Association         
Total risk-based capital to risk weighted assets(5)NA
 NA
 NA
 25.25% 26.16%
Total capital to risk-weighted assets(6)21.37% 22.24% 22.92% NA
 NA
Tier 1 core capital to adjusted tangible assets(5)NA
 NA
 NA
 13.47% 14.18%
Tier 1 (leverage) capital to net average assets(6)(7)11.16% 11.73% 12.78% NA
 NA
Tier 1 risk-based capital to risk weighted assets(5)NA
 NA
 NA
 24.02% 24.91%
       Tier 1 capital to risk-weighted assets(6)20.69% 21.36% 21.95% NA
 NA
       Common equity tier 1 capital to risk-weighted assets(6)20.69% 21.36% 21.95% NA
 NA
TFS Financial Corporation         
Total risk-based capital to risk weighted assets(5)NA
 NA
 NA
 29.00% 29.11%
Total capital to risk-weighted assets(6)23.63% 24.62% 24.54% NA
 NA
Tier 1 core capital to adjusted tangible assets(5)NA
 NA
 NA
 15.60% 16.59%
Tier 1 (leverage) capital to net average assets(6)(7)12.41% 13.07% 13.76% NA
 NA
Tier 1 risk-based capital to risk weighted assets(5)NA
 NA
 NA
 27.77% 30.36%
       Tier 1 capital to risk-weighted assets(6)22.96% 23.74% 23.57% NA
 NA
       Common equity tier 1 capital to risk-weighted assets(6)22.96% 23.74% 23.57% NA
 NA
Average equity to average total assets12.67% 13.64% 14.09% 16.28% 16.38%
Other Data:         
Association         
Number of full service offices38
 38
 38
 38
 38
Loan production offices8
 8
 8
 8
 8
______________________
(1)Represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities for the year.
(2)The net interest margin represents net interest income as a percent of average interest-earning assets for the year.
(3)The efficiency ratio represents non-interest expense divided by the sum of net interest income and non-interest income.
(4)Represents dividends paid per share divided by diluted earnings per share. Receipt of dividends on shares owned by Third Federal Savings, MHC has been waived and dividends paid on unallocated shares of the ESOP are used to pay down the loan to the ESOP.
(5)Calculated using the regulatory capital methodology applicable to the Association prior to January 1, 2015.

(6)Calculated using the regulatory capital methodology applicable to the Association beginning January 1, 2015. Please refer to Part I, Item 1, Business, Federal Banking Regulation, Capital Requirements for a detailed discussion of the new Basel III rules.
(7)Tier 1 (leverage) capital to net average assets ratio disclosures were based on net average assets beginning quarter end September 30, 2015.


Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
Our business strategy is to operate as a well-capitalized and profitable financial institution dedicated to providing exceptional personal service to our customers.
Since being organized in 1938, we grew to become, at the time of our initial public offering of stock in April 2007, the nation’s largest mutually-owned savings and loan association based on total assets. We credit our success to our continued emphasis on our primary values: “Love, Trust, Respect, and a Commitment to Excellence, along with Having Fun.” Our values are reflected in the design and pricing of our loan and deposit products, as described below. Our values are further reflected in a long-term revitalization program encompassing the three-mile corridor of the Broadway-Slavic Village neighborhood in Cleveland, Ohio where our main office was established and continues to be located and where the educational programs we have established and/or supported.support are located. We intend to continue to adhere to our primary values and to support our customers and the communities in which we operate.operate, as we pursue our mission to help people achieve the dream of home ownership and financial security while creating value for our customers, our communities, our associates and our shareholders.
The bank failures of three large domestic regional banks during the first half of 2023 negatively impacted consumer confidence and increased stress across the banking sector. The unprecedented implications of 2022 and 2023 fiscal policy coupled with geopolitics impacting energy markets and supply-chain constraints from global shutdowns culminated into high levels of inflation. The subsequent restrictive monetary policy approach has resulted in a heightened exposure of certain banking industry practices. Taking all of this into consideration, we remain confident that our business model and strategic approach remain appropriate. Specifically, (1) our capital ratios remain a primary source of financial strength; (2) our core deposits remain stable and the majority of our deposit accounts fall within FDIC insurance limits; (3) we maintain adequate access to contingent sources of liquidity; and (4) our risk management practices around an array of financial disciplines are robust and commensurate to an institution of our size and complexity.
The following tables present select financial data of the Company for the five most recent fiscal years.
 At September 30,
 20232022202120202019
 (In thousands)
Selected Financial Condition Data:
Total assets$16,917,979 $15,789,879 $14,057,450 $14,642,221 $14,542,356 
Cash and cash equivalents466,746 369,564 488,326 498,033 275,143 
Investment securities - available for sale508,324 457,908 421,783 453,438 547,864 
Loans held for sale3,260 9,661 8,848 36,871 3,666 
Loans, net15,165,747 14,257,067 12,509,035 13,103,062 13,195,745 
Bank owned life insurance312,072 304,040 297,332 222,919 217,481 
Prepaid expenses and other assets117,270 95,428 91,586 104,832 87,957 
Deposits9,449,820 8,921,017 8,993,605 9,225,554 8,766,384 
Borrowed funds5,273,637 4,793,221 3,091,815 3,521,745 3,902,981 
Shareholders’ equity1,927,361 1,844,339 1,732,280 1,671,853 1,696,754 
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 For the Years Ended September 30,
 20232022202120202019
 (In thousands, except per share amounts)
Selected Operating Data:
Interest income$611,919 $409,333 $389,351 $455,298 $482,087 
Interest expense328,352 141,937 157,721 213,030 216,666 
Net interest income283,567 267,396 231,630 242,268 265,421 
Provision (release) for credit losses on loans(1,500)1,000 (9,000)3,000 (10,000)
Net interest income after provision (release) for credit losses on loans285,067 266,396 240,630 239,268 275,421 
Non-interest income21,429 23,804 55,299 53,251 20,464 
Non-interest expenses213,129 198,146 195,835 192,274 193,673 
Earnings before income tax93,367 92,054 100,094 100,245 102,212 
Income tax expense18,117 17,489 19,087 16,928 21,975 
Net earnings after income tax expense$75,250 $74,565 $81,007 $83,317 $80,237 
Earnings per share
Basic$0.27 $0.26 $0.29 $0.30 $0.29 
Diluted$0.26 $0.26 $0.29 $0.29 $0.28 
Cash dividends declared per share$1.13 $1.13 $1.12 $1.11 $1.02 
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 At or For The Years Ended September 30,
 20232022202120202019
Selected Financial Ratios and Other Data:
Performance Ratios:
  Return on average assets0.46 %0.51 %0.56 %0.56 %0.56 %
  Return on average equity4.00 %4.14 %4.77 %4.88 %4.58 %
  Interest rate spread(1)1.57 %1.75 %1.52 %1.52 %1.73 %
  Net interest margin(2)1.80 %1.88 %1.66 %1.69 %1.92 %
  Efficiency ratio(3)69.88 %68.04 %68.25 %65.06 %67.75 %
  Non-interest expense to average total assets1.31 %1.34 %1.35 %1.29 %1.36 %
  Average interest-earning assets to average interest-bearing
  liabilities		111.36 %112.42 %111.92 %111.41 %112.28 %
Asset Quality Ratios:
  Non-performing assets as a percent of total assets0.20 %0.23 %0.32 %0.37 %0.50 %
  Non-accruing loans as a percent of total loans0.21 %0.25 %0.35 %0.41 %0.54 %
  Allowance for credit losses on loans as a percent of
  non-accruing loans		242.26 %204.73 %145.96 %87.95 %54.60 %
  Allowance for credit losses on loans as a percent of total loans0.51 %0.51 %0.51 %0.36 %0.29 %
Capital Ratios:
Association
Total capital to risk-weighted assets(4)17.87 %18.84 %21.00 %19.96 %19.56 %
Tier 1 (leverage) capital to net average assets(4)9.82 %10.33 %11.15 %10.39 %10.54 %
       Tier 1 capital to risk-weighted assets(4)17.15 %18.25 %20.43 %19.37 %19.07 %
       Common equity tier 1 capital to risk-weighted assets(4)17.15 %18.25 %20.43 %19.37 %19.07 %
TFS Financial Corporation
Total capital to risk-weighted assets(4)19.85 %21.18 %23.75 %22.71 %22.22 %
Tier 1 (leverage) capital to net average assets(4)10.96 %11.66 %12.65 %11.88 %12.05 %
       Tier 1 capital to risk-weighted assets(4)19.13 %20.59 %23.18 %22.13 %21.73 %
       Common equity tier 1 capital to risk-weighted assets(4)19.13 %20.59 %23.18 %22.13 %21.73 %
Average equity to average total assets11.58 %12.23 %11.72 %11.50 %12.30 %
Other Data:
Association:
Number of full service offices37 37 37 37 37 
Loan production offices4 5 7 7 8 
______________________
(1)Represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities for the year.
(2)The net interest margin represents net interest income as a percent of average interest-earning assets for the year.
(3)The efficiency ratio represents non-interest expense divided by the sum of net interest income and non-interest income.
(4)In April 2020, the Simplifications to the Capital Rule ("Rule") was adopted, which simplified certain aspects of the capital rule under Basel III. The impact of the Rule was not material to previously reported regulatory capital ratios.
Management believes that the following matters are those most critical to our success: (1) controlling our interest rate risk exposure; (2) monitoring and limiting our credit risk; (3) maintaining access to adequate liquidity and diverse funding sources;sources to support our growth; and (4) monitoring and controlling our operating expenses.
Controlling Our Interest Rate Risk Exposure. Although the significant housing and credit quality issues that arose in connection with the 2008 financial crisis had a distinctly negative effect on our operating results and, as described below, that experience made a lasting impression on our risk awareness, historically Historically, our greatest risk has been our exposure to changes in interest rates. When we hold long-term,longer-term, fixed-rate assets, funded by liabilities with shortershorter-term re-pricing characteristics, we are exposed to potentially adverse impacts from changing interest rates, and most notably rising interest rates. Generally, and particularly over extended periods of time that encompass full economic cycles, interest rates associated with longer-term
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assets, like fixed-rate mortgages, have been higher than interest rates associated with shorter-term funding sources, like deposits. This difference has been an important component of our net interest income and is fundamental to our operations. We manage
A challenge to our business model occurs when there is a rapid and substantial increase in short-term rates or there is an extended inverted yield curve, which have both occurred over recent periods. This economic environment has resulted in a decrease in our net interest margin.
To mitigate our interest rate risk in general and to address the riskcurrent rate environment specifically, we utilize a variety of holding longer-term, fixed-rate mortgage assets primarily by maintaining the levels ofstrategies that include:
•Maintaining regulatory capital in excess of levels required to be considered well capitalized, by promotingcapitalized;
•Promoting adjustable-rate loans and shorter-term fixed-rate loans, and by opportunisticallyloans;
•Marketing home equity lines of credit, which carry an adjustable rate of interest, indexed to the prime rate;
•Opportunistically extending the duration of our funding sources.sources;
•Utilizing interest rate swaps to convert short-term FHLB advances and brokered certificates of deposit into long-term, fixed-rate borrowings; and
•Selectively selling a portion of our long-term, fixed-rate mortgage loans in the secondary market.
Levels of Regulatory Capital
At September 30, 2017,2023, the Company’s Tier 1 (leverage) capital totaled $1.68$1.83 billion, or 12.41%10.96% of net average assets and 22.96%19.13% of risk-weighted assets, while the Association’s Tier 1 (leverage) capital totaled $1.51$1.64 billion, or 11.16%9.82% of net average assets and 20.69%17.15% of risk-weighted assets. Each of these measures was more than twiceis in excess of the requirements currently in effect for the Association for designation as “well capitalized” under regulatory prompt corrective action provisions, which set minimum levels of 5.00% of net average assets and 8.00% of risk-weighted assets. Beginning this fiscal year, the Company entered into the final three years of the five-year transitional period, as provided by a final rule, after CECL was adopted in fiscal year 2021. Refer to the Liquidity and Capital Resources section of this Item 7 for additional discussion regarding regulatory capital requirements.
Promotion of Adjustable-Rate Loans and Shorter-Term, Fixed-Rate Loans
In July 2010, we began marketing anWe offer our "Smart Rate" adjustable-rate mortgage loan, thatwhich provides us with improved interest rate risk characteristics when compared to a 30-year, fixed-rate mortgage loan. Our “Smart Rate” adjustable rate mortgage offers borrowers an interest rate lower than that of
We also offer a 30-year, fixed-rate loan. The interest rate in the Smart Rate mortgage is locked for three or five years then resets annually. The Smart Rate mortgage contains a feature to re-lock the rate an unlimited number of times at our then current interest rate and fee schedule, for another three or five years (which must be the same as the original lock period) without having to complete a full refinance transaction. Re-lock eligibility is subject to a satisfactory payment performance history by the borrower (current at the time of re-lock, and no foreclosures or bankruptcies since the Smart Rate application was taken). In addition to a satisfactory payment history, re-lock eligibility requires that the property continues to be the borrower’s primary residence. The loan term cannot be extended in connection with a re-lock nor can new funds be advanced. All interest rate caps and floors remain as originated.
Beginning in the latter portion of fiscal 2012, we began to feature a ten-year,10-year, fully amortizing fixed-rate, first mortgage loan in our product promotions.loan. The ten-year,10-year, fixed-rate loan has a less severemore desirable interest rate risk profile when compared to loans with fixed-rate terms of 15 to 30 years and helps uscan help to more effectively manage our interest rate risk exposure, yet provides our borrowers with the certainty of a fixed interest rate throughout the life of the obligation.

The following tables set forth our first mortgage loan production and balances segregated by loan structure at origination.
For the Years Ended September 30,
20232022
AmountPercentAmountPercent
First Mortgage Loan Originations and Purchases:(Dollars in thousands)
ARM (all Smart Rate) production$624,773 33.7 %$1,029,156 28.2 %
Fixed-rate production:
    Terms less than or equal to 10 years34,710 1.9 470,806 12.9 
    Terms greater than 10 years1,195,562 64.4 2,146,021 58.9 
        Total fixed-rate production1,230,272 66.3 2,616,827 71.8 
Total First Mortgage Loan Originations and Purchases:$1,855,045 100.0 %$3,645,983 100.0 %
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 For the Years Ended September 30,
 2017 2016
 Amount Percent Amount Percent
First Mortgage Loan Originations:(Dollars in thousands)
ARM (all Smart Rate) production$1,342,801
 49.7% $1,134,159
 43.8%
Fixed-rate production:       
    Terms less than or equal to 10 years417,182
 15.4
 608,786
 23.5
    Terms greater than 10 years941,634
 34.9
 848,538
 32.7
        Total fixed-rate production1,358,816
 50.3
 1,457,324
 56.2
Total First Mortgage Loan Originations:$2,701,617
 100.0% $2,591,483
 100.0%
September 30, 2023September 30, 2022
AmountPercentAmountPercent
Balances of First Mortgage Loans Held For Investment:(Dollars in thousands)
ARM (primarily Smart Rate) Loans$4,760,843 39.2 %$4,668,089 40.3 %
Fixed-rate Loans:
    Terms less than or equal to 10 years1,088,048 9.0 1,350,436 11.6 
    Terms greater than 10 years6,275,775 51.8 5,574,589 48.1 
        Total fixed-rate loans7,363,823 60.8 6,925,025 59.7 
Total First Mortgage Loans Held For Investment:$12,124,666 100.0 %$11,593,114 100.0 %
 September 30, 2017 September 30, 2016
 Amount Percent Amount Percent
Balances of Residential Mortgage Loans Held For Investment:(Dollars in thousands)
ARM (primarily Smart Rate) Loans$4,816,567
 44.4% $4,253,531
 41.7%
Fixed-rate Loans:       
    Terms less than or equal to 10 years2,051,529
 18.9
 2,078,561
 20.4
    Terms greater than 10 years3,987,072
 36.7
 3,859,498
 37.9
        Total fixed-rate loans6,038,601
 55.6
 5,938,059
 58.3
Total Residential Mortgage Loans Held For Investment:$10,855,168
 100.0% $10,191,590
 100.0%
The following table sets forth the balances as of September 30, 20172023 for all ARM loans segregated by the next scheduled interest rate reset date.
 Current Balance of ARM Loans Scheduled for Interest Rate Reset
During the Fiscal Years Ending September 30,(in thousands)
2018$405,426
2019569,254
2020807,754
20211,223,347
20221,621,812
2023188,974
     Total$4,816,567
Current Balance of ARM Loans Scheduled for Interest Rate Reset
During the Fiscal Years Ending September 30,(in thousands)
2024$381,797
2025699,104 
20261,464,792 
20271,650,442 
2028510,582 
202954,126 
     Total$4,760,843
At September 30, 20172023 and September 30, 2016,2022, mortgage loans held for sale, all of which were long-term, fixed-rate first mortgage loans and all of which were held for sale to Fannie Mae, totaled $0.4$3.3 million and $4.7$9.7 million, respectively.
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Loan Portfolio Yield
The following tables set forth the principal balance and interest yield as of September 30, 2023 for the portfolio of loans held for investment, by type of loan, structure and geographic location.
September 30, 2023
BalancePercentYield
(Dollars in thousands)
Total Loans:
Fixed-Rate
      Terms less than or equal to 10 years$1,088,048 7.2 %2.67 %
      Terms greater than 10 years6,275,775 41.3 3.85 %
Total Fixed-Rate loans7,363,823 48.5 3.68 %
ARMs4,760,843 31.3 3.11 %
Home Equity Loans and Lines of Credit3,030,526 19.9 7.39 %
Construction and Other loans52,817 0.3 5.11 %
Total Loans Receivable$15,208,009 100.0 %4.25 %

September 30, 2023
BalanceFixed-Rate BalancePercentYield
(Dollars in thousands)
Residential Mortgage Loans
Ohio$6,938,036 $5,322,695 45.6 %3.65 %
Florida2,137,804 1,032,002 14.1 3.29 %
Other3,048,826 1,009,126 20.0 3.15 %
     Total Residential Mortgage Loans12,124,666 7,363,823 79.7 3.46 %
Home Equity Loans and Lines of Credit
Ohio773,324 88,340 5.1 7.33 %
Florida666,517 68,801 4.4 7.31 %
California513,904 47,129 3.4 7.34 %
Other1,076,781 43,231 7.1 7.52 %
     Total Home Equity Loans and Lines of Credit3,030,526 247,501 20.0 7.39 %
Construction and Other loans52,817 52,817 0.3 5.11 %
Total Loans Receivable$15,208,009 $7,664,141 100.0 %4.25 %

Marketing of Home Equity Lines of Credit
We actively market home equity lines of credit, which carry an adjustable rate of interest indexed to the prime rate which provides interest rate sensitivity to that portion of our assets and is a meaningful strategy to manage our interest rate risk profile. Increasing our investments in loans with variable rates of interest help to better match the maturities and interest rates of our assets and liabilities, thereby reducing the exposure of our net interest income to changes in market interest rates. We strive to grow the home equity line of credit portfolio through offering competitive rates, marketing efforts, and by utilizing partners to attract more home equity line of credit customers. At September 30, 2023, the principal balance of home equity lines of credit totaled $2.63 billion. Our home equity lending is discussed in the preceding Lending Activities section of Item 1. Business in Part I. THIRD FEDERAL SAVINGS AND LOAN ASSOCIATION OF CLEVELAND.
Extending the Duration of Funding Sources
As a complement to our strategies to shorten the duration of our interest earninginterest-earning assets, as described above, we also seek to lengthen the duration of our interest bearinginterest-bearing funding sources. These efforts include monitoring the relative costs of alternative funding sources such as retail deposits,certificates of deposit, brokered certificates of deposit, longer-term (e.g. four to six
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years) fixed ratefixed-rate advances from the FHLB of Cincinnati, and shorter-term (e.g. three months) advances from the FHLB of Cincinnati,funding, the durations of which are extended by correlated interest rate exchange contracts. contracts ("swap"). All of our swaps are subject to collateral pledges and require specific structural features to qualify for hedge accounting treatment. Hedge accounting treatment directs that periodic mark-to-market adjustments be recorded in other comprehensive income (loss) in the equity section of the balance sheet, rather than being included in operating results of the income statement. The Association's intent is that any swap to which it may be a party will qualify for hedge accounting treatment.
The Association is a party to interest rate swap agreements. Each of the Association's swap agreements is registered on the Chicago Mercantile Exchange and involves the exchange of interest payment amounts based on a notional principal balance. No exchange of principal amounts occur and the notional principal amount does not appear on our balance sheet. The Association uses swaps to extend the duration of its funding sources. In each of the Association's agreements, interest paid is based on a fixed rate of interest throughout the term of each agreement while interest received is based on an interest rate that resets and compounds daily over a specified interval (generally three months) throughout the term of each agreement. On the initiation date of the swap, the agreed upon exchange interest rates reflect market conditions at that point in time. Swaps generally require counterparty collateral pledges that ensure the counterparties' ability to comply with the conditions of the agreement. Concurrent with the execution of each swap, the Association enters into a short-term borrowing in an amount equal to the notional amount of the swap and with interest rate resets aligned with the reset interval of the swap. Each individual swap agreement has been designated as a cash flow hedge of interest rate risk associated with either the Company's variable rate borrowings from the FHLB of Cincinnati or brokered CD's. In these challenging economic times with an extended inverted yield curve, the Association has found it financially beneficial to increase the use of swaps to lower our borrowing costs and extend the duration of our liabilities. For more details, refer to Notes 10. BORROWED FUNDS and 17. DERIVATIVE INSTRUMENTS to the unaudited consolidated financial statements.
Each funding alternative is monitored and evaluated based on its effective interest payment rate, options exercisable by the creditor (early withdrawal, right to call, etc.), and collateral requirements. Refer to Notes 10. DEPOSITS and 17. BORROWED FUNDS for additional details on balances. The interest payment rate is a function of market influences that are specific to the nuances and market competitiveness/breadth of each funding source. Generally, early withdrawal options, subject to a fee, are available to our retail CD customers but not to holders of brokered CDs; issuer call options are not provided on our advances from the FHLB of

Cincinnati; and we are not subject to early termination options with respect to our interest rate exchange contracts. Additionally, collateral pledges are not provided with respect to our retail CDs or our brokered CDs;CDs, but are required for our advances from the FHLB of Cincinnati as well as for our interest rate exchange contracts.
During We will continue to evaluate the year ended September 30, 2017, the compositionstructure of our duration-extending funding sources changed as follows: the balance of retail CDs decreased $211.7 million while the balance of brokered CDs (which is inclusive of acquisition costs and subsequent amortization) increased $81.3 million. Additionally during the year ended September 30, 2017, we increased the balance of our short-term advances from the FHLB of Cincinnati by $259.0 million; and we added $900.0 million of new, shorter-term advances from the FHLB of Cincinnati that were matched/correlated to interest rate exchange contracts that extended the effective durations of those shorter-term advances to approximately five years at inception. These funding source modifications facilitated asset growth of $786.5 million and funded stock repurchases of $52.5 million and stock dividends of $27.7 million.based on current needs.
Other Interest Rate Risk Management Tools
In addition to maintaining the levels of regulatory capital required to be well capitalized, since 2016, we have actively marketed home equity lines of credit, which carry an adjustable rate of interest indexed to the prime rate which provides interest rate sensitivity to that portion of our assets. Prior to 2010, home equity lending also represented a meaningful strategy to manage our interest rate risk profile. Between 2010 and 2015, the Association, in various steps, restricted and modified its home equity lending products and the markets they were offered in response to the 2008 financial crisis and the resulting regulatory environments that existed during that time. Through redesigned home equity products, we hope to have re-established home equity line of credit lending as a meaningful strategy to manage our interest rate risk profile. At September 30, 2017, the principal balance of home equity lines of credit totaled $1.24 billion. Our home equity lending is discussed in the preceding Lending Activities section of Item 1. Business in Part I.—THIRD FEDERAL SAVINGS AND LOAN ASSOCIATION OF CLEVELAND.
We also manage interest rate risk by selectively selling a small portion of our long-term, fixed-rate mortgage loans in the secondary market. PriorFirst mortgage loans (primarily fixed-rate, mortgage refinances with terms of 15 years or more and Home Ready) are originated under Fannie Mae procedures and are eligible for sale to fiscal 2010, this strategy was usedFannie Mae either as whole loans or within mortgage-backed securities. Currently, certain types of loans (i.e. our Smart Rate adjustable-rate loans, home purchase fixed-rate loans and 10-year fixed-rate loans) are originated under our legacy procedures, which are not eligible for sale to a greater extent toFannie Mae. We can also manage our interest rate risk. At September 30, 2017, we serviced $1.85 billion of loans for others, of which $1.04 billion were sold in the secondary market prior to fiscal 2010. While the sales of firstrisk by selling non-Fannie Mae compliant mortgage loans remain strategically important for us, since fiscal 2010, theyto private investors, although those transactions may be limited to loans that have played only a minor role in our management of interest rate risk.established payment histories, strong borrower credit profiles and are supported by adequate collateral. Additionally, sales to private investors are dependent upon favorable market conditions, including motivated buyers, and involve more complicated negotiations and longer settlement timelines. Loan sales are discussed later in this Part I1,Item 7. undermore detail within the heading Liquidity and Capital Resources section of this Item 7.
During the fiscal year ended September 30, 2023, $77.2 million of agency-compliant, long-term (15 to 30 years), fixed-rate mortgage loans were sold, or committed to be sold, to Fannie Mae on a servicing retained basis. Of these sold loans, $43.5 million were originated through Mortgage Passport, and $33.7 million were originated as other agency-compliant first mortgage loans. At September 30, 2023, loans that are classified as held for sale total $3.3 million. As of September 30, 2023, we serviced $1.93 billion of loans we originated and later sold to investors.
We continue to consider liquidity and balance sheet management, as well as secondary market pricing, in Part I1,evaluating the opportunity to sell loans. Additionally, we are expanding our ability to sell certain fixed-rate loans to Fannie through the use of more traditional mortgage banking activities, including a proprietary approach to risk-based pricing and loan-level pricing adjustments. This approach is concentrated in markets outside of Ohio and Florida. Some additional startup and marketing costs have been incurred, but are not expected to significantly impact our financial results in fiscal year 2023. Loan sales are discussed in more detail within the Liquidity and Capital Resources section of this Item 7A. Quantitative and Qualitative Disclosures About Market Risk.7.
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Monitoring and Limiting Our Credit Risk. While, historically, we had been successful in limiting our credit risk exposure by generally imposing high credit standards with respect to lending, the confluencememory of unfavorable regional and macro-economic events that culminated in the 2008 housing market collapse and financial crisis coupled with our pre-2010 expanded participation in the second lien mortgage lending markets, significantly refocused our attention with respectis a constant reminder to focus on credit risk. In response to the evolving economic landscape, we continuously revise and update our quarterly analysis and evaluation procedures, as needed, for each category of our lending with the objective of identifying and recognizing all appropriate credit impairments.losses. At September 30, 2017, 91%2023, 90% of our assets consisted of residential real estate loans (both “held for sale” and “held for investment”) and home equity loans and lines of credit, which were originated predominantly to borrowers in Ohio and Florida.credit. Our analytic procedures and evaluations include specific reviews of all home equity loans and lines of credit that become 90 or more days past due, as well as specific reviews of all first mortgage loans that become 180 or more days past due. We transfer performing home equity lines of credit subordinate to first mortgages delinquent greater than 90 days to non-accrual status. We also charge-off performing loans to collateral value and classify those loans as non-accrual within 60 days of notification of all borrowers filing Chapter 7 bankruptcy, that have not reaffirmed or been dismissed, regardless of how long the loans have been performing. Loans where at least one borrower has been discharged of their obligation in Chapter 7 bankruptcy, are classified as TDRs. At September 30, 2017, $33.0 million of loans in Chapter 7 bankruptcy status were included in total TDRs. At September 30, 2017, the recorded investment in non-accrual status loans included $34.1 million of performing loans in Chapter 7 bankruptcy status, of which $33.0 million were also reported as TDRs.
In response to the unfavorable regional and macro-economic environment that arose beginning in 2008, and in an effort to limitalign our credit risk exposure and improvewith the credit performancelow risk appetite approved by the Board of new customers, we tightened ourDirectors, the credit eligibility criteria is evaluated to ensure a successful homeowner has the primary source of repayment, followed by a collateral position that allows for a secondary source of repayment, if needed. Products that do not result in evaluating a borrower’san effective mix of repayment ability are not offered. We use stringent, conservative lending standards for underwriting to successfully fulfill hisreduce our credit risk. For first mortgage loans originated or her repayment obligationpurchased during the current fiscal year, the average credit score was 774, and we revised the design of many of our loan products to require higher borrower down-payments, limited the products available for condominiums, eliminated certain product features (such as interest-only adjustable-rate loans and loans above certainaverage LTV ratios), and we previously suspended home equity lending products with the exception of bridge loans between June 2010 and March 2012.was 71% at origination. The delinquency level related to loan originations prior to 2009, compared to originations or purchases in 2009 and after, reflect the higher credit standards to which we have subjected all new originations. As of September 30, 2017,2023, loans originated prior to 2009 had

a balance of $1.48 billion,$276.5 million, of which $37.0$5.5 million, or 2.5%2.0%, were delinquent, while loans originated or purchased in 2009 and after had a balance of $10.99$15.0 billion, of which $7.9$17.8 million, or 0.1%, were delinquent.
One aspect of our credit risk concern relates to high concentrations of our loans that are secured by residential real estate in specific states, particularly Ohio and Florida, in lightwhere a large portion of the difficulties that arose in connection with the 2008 housing crisis with respect to the real estate markets in those two states.our historical lending has occurred. At September 30, 2017,2023, approximately 56.7%57.2% and 16.1%17.7% of the combined total of our residential Core and construction loans held for investment and approximately 39.1%25.5% and 21.9%22.0% of our home equity loans and lines of credit were secured by properties in Ohio and Florida, respectively. In an effort to moderate the concentration of our credit risk exposure in individual states, particularly Ohio and Florida, we have utilized direct mail marketing, our internet site and our customer service call center to extend our lending activities to other attractive geographic locations. Currently, in addition to Ohio and Florida, we are actively lending in 1923 other states and the District of Columbia, and as a result of that activity, the concentration ratios of the combined total of our residential Core and construction loans held for investment in Ohio and Florida have trended downward from their September 30, 2010 levels when the concentrations were 79.1% in Ohio and 19.0% in Florida. Of the total mortgage loan originations and home equity originationspurchases for the yearsyear ended September 30, 2017 and 2016, 34.7% and 33.1%, respectively,2023, 25.8% are secured by properties in states other than Ohio or Florida.
Our residential Home Today loans are another area of credit risk concern. Although we no longer originate loans under this program and the principal balance in these loans constituted only 0.9% of our total “held for investment” loan portfolio balance, they comprised 28.3% and 27.7% of our 90 days or greater delinquencies and our total delinquencies, respectively, at that date. At September 30, 2017, approximately 95.3% and 4.5% of our residential Home Today loans were secured by properties in Ohio and Florida, respectively. At September 30, 2017, the percentages of those loans delinquent 30 days or more in Ohio and Florida were 11.6% and 10.1%, respectively. The disparity between the portfolio composition ratio and delinquency composition ratio reflects the nature of the Home Today loans. We do not offer, and have not offered, loan products frequently considered to be designed to target sub-prime borrowers containing features such as higher fees or higher rates, negative amortization, or low initial payment features with adjustable interest rates. Our Home Today loans, the majority of which were entered into with borrowers that had credit profiles that would not have otherwise qualified for our loan products due to deficient credit scores, generally contained the same features as loans offered to our Core borrowers. The overriding objective of our Home Today lending, just as it is with our Core lending, was the creation of successful homeowners. We have attempted to manage our Home Today credit risk by requiring that borrowers attend pre- and post-borrowing financial management education and counseling and that the borrowers be referred to us by a sponsoring organization with which we have partnered. Further, to manage the credit aspect of these loans, inasmuch as the majority of these buyers did not have sufficient funds for required down payments, many loans included private mortgage insurance. At September 30, 2017, 21.6% of Home Today loans included private mortgage insurance coverage. From a peak recorded investment of $306.6 million at December 31, 2007, the total recorded investment of the Home Today portfolio has declined to $107.7 million at September 30, 2017. This trend generally reflects the evolving conditions in the mortgage real estate market and the tightening of standards imposed by issuers of private mortgage insurance. As part of our effort to manage credit risk, effective March 27, 2009, the Home Today underwriting guidelines were revised to be substantially the same as our traditional mortgage product. At September 30, 2017, the recorded investment in Home Today loans originated subsequent to March 27, 2009 was $3.3 million. Since we are no longer originating loans under our Home Today program,the Home Today portfolio will continue to decline in balance due to contractual amortization. To supplant the Home Today product and to continue to meet the credit needs of our customers and the communities that we serve, during fiscal 2016 we began to offer Fannie Mae eligible, HomeReady loans. These loans are originated in accordance with Fannie Mae's underwriting standards. While we retain the servicing rights related to these loans, the loans, along with the credit risk associated therewith, are securitized/sold to Fannie Mae.
Maintaining Access to Adequate Liquidity and Diverse Funding Sources.Sources to Support our Growth. For most insured depositories, customer and community confidence are critical to their ability to maintain access to adequate liquidity and to conduct business in an orderly manner. We believe that a well capitalized institution is one of the most important factors in nurturing customer and community confidence. Accordingly, we have managedplan to manage the pace of our growth in a manner that reflects our emphasis on high capital levels. At September 30, 2017,2023, the Association’s ratio of Tier 1 (leverage) capital to net average assets (a basic industry measure that deems 5.00% or above to represent a “well capitalized” status) was 11.16%9.82%. The Association's current Tier 1 (leverage) capital ratio is lower than its ratio at September 30, 2016, which was 11.73%, due primarily to an $812023 included the negative impact of a $40 million cash dividend payment that the Association made to the Company, its sole shareholder, in December 2016 that reduced the Association's Tier 1 (leverage) capital ratio by an estimated 63 basis points.2022. Because of its intercompany nature, this dividend payment did not impact the Company's consolidated capital ratios which are reported in the Liquidity and Capital Resources section of this Item 7.ratios. We expect to continue to remain a well capitalized institution.
In managing its level of liquidity, the Company monitors available funding sources, which include attracting new deposits (including brokered CDs)deposits), borrowing from others, the conversion of assets to cash and the generation of funds through profitable operations. The Company has traditionally relied on retail deposits as its primary means in meeting its funding needs. To attract deposits, we typically offer rates that are competitive with the rates on similar products offered by other financial institutions. At September 30, 2017,2023, deposits totaled $8.15$9.45 billion (including $620.7 million$1.16 billion of brokered CDs), while borrowings totaled

$3.67 $5.27 billion and borrowers’ advances and servicing escrows totaled $0.14 billion,$154.2 million, combined. In evaluating funding sources, we consider many factors, including cost, collateral, duration and optionality, current availability, expected sustainability, impact on operations and capital levels.
To attract deposits, we offer our customers attractive rates of return on our deposit products. Our deposit products typically offer rates that are highly competitive with the rates on similar products offered by other financial institutions. We intend to continue this practice, subject to market conditions.
We preserve the availability of alternative funding sources through various mechanisms. First, by maintaining high capital levels, we retain the flexibility to increase our balance sheet size without jeopardizing our capital adequacy. Effectively, this permits us to increase the rates that we offer on our deposit products thereby attracting more potential customers. Second, we pledge available real estate mortgage loans and investment securities with the FHLB of Cincinnati and the FRB-Cleveland. At September 30, 2017, these collateral pledge support arrangements provide2023, the
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Association withhad the ability to immediately borrow an additional $41.0 milliona maximum of $6.63 billion from the FHLB of Cincinnati and $72.3$126.4 million from the FRB-Cleveland Discount Window. From the perspectiveAs of collateral value securingSeptember 30, 2023, our capacity for additional borrowing from FHLB of Cincinnati advances, our capacity limit for additional borrowings beyondwas $1.38 billion, Third, we have the outstanding balance at September 30, 2017 was $4.87 billion, subjectability to satisfaction of the FHLB of Cincinnati common stock ownership requirement. To satisfy the common stock ownership requirement for the maximum limit of borrowing we would needpurchase overnight Fed Funds up to increase our ownership of FHLB of Cincinnati common stock by an additional $97.4 million. Third,$585.0 million through various arrangements with other institutions. Fourth, we invest in high quality marketable securities that exhibit limited market price variability and, to the extent that they are not needed as collateral for borrowings, can be sold in the institutional market and converted to cash. At September 30, 2017,2023, our investment securities portfolio totaled $537.5$508.3 million. Finally, cash flows from operating activities have been a regular source of funds. During the fiscal years ended September 30, 20172023 and 2016,2022, cash flows from operations totaled $108.7$90.7 million and $84.9$38.9 million, respectively.
Historically, a portion of the residential first mortgage loans that we originated were considered to be highly liquid as they were eligible for delivery/sale to Fannie Mae. However, due to delivery requirement changes imposed by Fannie Mae as a result of the 2008 financial crisis, effective July 1, 2010, that was no longer an available source of liquidity for the Company. We have since implemented certain loan origination changes for a small portion of our loan production, which resulted in our November 15, 2013 reinstatement as an approved seller to Fannie Mae, which elevates the level of liquidity available for those loans. In addition, we have completed non-agency eligible, whole loan sales, all on a servicing retained basis, of both fixed-rate and Smart Rate loans, demonstrating that with adequate lead time, the majority of our residential first mortgage loan portfolio could be available for liquidity management purposes. At September 30, 2017, $0.4 million of agency eligible, long-term, fixed-rate first mortgage loans were classified as “held for sale”. During the fiscal year ended September 30, 2017, $13.7 million of agency-compliant HARP II loans and $197.3 million of long-term, fixed-rate, agency-compliant, non-HARP II first mortgage loans were sold to Fannie Mae. In addition to the loan sales to Fannie Mae, during the fiscal year ended September 30, 2017, $38.4 million of long-term, fixed-rate loans were sold to the FHLB of Cincinnati, under their Mortgage Purchase Program.
Overall, while customer and community confidence can never be assured, the Company believes that our liquidity is adequate and that we have adequate access to alternative funding sources.
Monitoring and Controlling Our Operating Expenses. We continue to focus on managing operating expenses. Our ratio of non-interest expense to average assets was 1.37%1.31% for the fiscal year ended September 30, 20172023 and 1.45%1.34% for the fiscal year ended September 30, 2016.2022. As of September 30, 2017,2023, our average assets per full-time employeeassociate and our average deposits per full-time employeeassociate were $13.5$17.1 million and $8.0$9.5 million, respectively. We believe that each of these measures compares favorably with industry averages. Our relatively high average deposits (exclusive of brokered CDs)accounts) held at our branch offices ($198.2224.0 million per branch office as of September 30, 2017)2023) contributes to our expense management efforts by limiting the overhead costs of serving our deposit customers. We will continue our efforts to control operating expenses as we grow our business.
Critical Accounting Policies and Estimates
Critical accounting policies and estimates are defined as those that involve significant judgments and uncertainties, and could potentially give rise to materially different results under different assumptions and conditions. We believe that the most critical accounting policies and estimates upon which our financial condition and results of operations depend, and which involve the most complex subjective decisions or assessments, are our policies with respectrelate to ourthe allowance for loancredit losses, income taxes and pension benefits.
Allowance for LoanCredit Losses. The allowance for loancredit losses is the amount estimated by management as necessary to absorb credit losses incurred inrelated to both the loan portfolio that are both probable and reasonably estimable at the balanceoff-balance sheet date.commitments based on a life of loan methodology. The

amount of the allowance is based on significant estimates and the ultimate losses may vary from such estimates as more information becomes available or conditions change. The methodology for determining the allowance for loancredit losses is considered a critical accounting policy by management due to the high degree of judgment involved, the subjectivity of the assumptions used and the potential for changes in the economic environment that could result in changes to the amount of the recorded allowance for loancredit losses. At September 30, 2017,2023, the allowance for loancredit losses was $48.9$102.6 million or 0.39%0.67% of total loans. An increase or decrease of 10% in the allowance at September 30, 20172023 would result in a $4.9$10.3 million charge or credit,release, respectively, to income before income taxes.
As a substantial percentage of our loan portfolio is collateralized by real estate, appraisals of the underlying value of property securing loans are critical in determining the charge-offs for specific loans. Assumptions are instrumental in determining the value of properties. Overly optimistic assumptions or negative changes to assumptions could significantly affect the valuation of a property securing a loan and the related allowance determined. Management carefully reviews the assumptions supporting such appraisals to determine that the resulting values reasonably reflect amounts realizable on the related loans.
Management performs a quarterly evaluation of the adequacy of the allowance for loancredit losses. We consider a variety of factors in establishing this estimate including, but not limited to, current economic conditions, delinquency statistics, geographic concentrations, economic forecasts and how they correlate to management's view of the future, the adequacy of the underlying collateral, the financial strength of the borrower, results of internal loan reviews and other relevant factors. This evaluation is inherently subjective as it requires material estimates by management that may be susceptible to significant change based on changes in economic and real estate market conditions.
Historically, the evaluation has been comprised of a specific component and a general component. The specific component relates Refer to loans that are delinquent or otherwise identified as a problem loan through the application of our loan review process and our loan grading system. All such loans are evaluated individually, with principal consideration given to the value Note 5. LOANS AND ALLOWANCES FOR CREDIT LOSSES of the collateral securing NOTES TO CONSOLIDATED FINANCIAL STATEMENTS and the loan. The general componentLending Activities section of the evaluation is determined by segregating the remaining loans by type of loan, risk weighting (if applicable) and payment history. We also analyze historical loss experience, delinquency trends, general economic conditions and geographic concentrations. Quantitative loss factors usedItem 1. Business in determining an appropriate allowance level are supplemented by more qualitative factors that impact potential losses. Qualitative factors include various market conditions, such as collateral values and unemployment rates. This analysis establishes factors that are applied to the loan groups to determine the amount of the general component of the allowancePart I. for loan losses.further discussion.
Actual loan losses may be significantly more than the allowances we have established, which would have a materialmaterially adverse effect on our financial results.
Income Taxes. We consider accounting Accounting for income taxes ainvolves critical accounting policypolicies and estimates due to the subjective nature of certain estimates that are involved in the calculation. We use the asset/liability method of accounting for income taxes in which deferred tax assets and liabilities are established for the temporary differences between the financial reporting basis
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and the tax basis of our assets and liabilities. We must assess the realization of the deferred tax asset and, to the extent that we believe that recovery is not likely, a valuation allowance is established. Adjustments to increase or decrease existing valuation allowances, if any, are charged or credited, respectively, to income tax expense. At September 30, 2017,2023, no valuation allowances were outstanding. Even though we have determined a valuation allowance is not required for deferred tax assets at September 30, 2017,2023, there is no guarantee that those assets will be recognizable in the future.
Pension Benefits. The determination of our obligations and expense for pension benefits is dependent upon certain assumptions used in calculating such amounts. Key assumptions used in the actuarial valuations include the discount rate and expected long-term rate of return on plan assets. Actual results could differ from the assumptions and market driven rates may fluctuate. Significant differences in actual experience or significant changes in the assumptions could materially affect future pension obligations and expense.
Comparison of Financial Condition at September 30, 20172023 and 2016September 30, 2022
Total assets increased $786.5 million,$1.13 billion, or 6%7.1%, to $13.69$16.92 billion at September 30, 20172023, from $12.91$15.79 billion at September 30, 2016.2022. This increase was primarilymainly due to new loan originations exceeding the resulttotal of increases in the balances of loans held for investmentloan sales and to a lesser extent, cash and cash equivalents and investment securities.principal repayments.
Cash and cash equivalents increased $37.0$97.1 million, or 16%26.3%, to $268.2$466.7 million at September 30, 20172023, from $231.2$369.6 million at September 30, 2016, as we hold cash2022. Cash is managed to maintain the level of liquidity described later in the Liquidity and Capital Resources section of the Overview.
Investment securities, all of which are classified as available for sale, increased $19.6$50.4 million, or 4%11.0%, to $537.5$508.3 million at September 30, 20172023, from $517.9$457.9 million at September 30, 2016.2022. Investment securities increased as $183.5$144.7 million in purchases exceeded the combinationcombined effect of $153.3

$83.6 million in principal paydowns, $5.5repayments, a $9.7 million increase in unrealized losses and $1.0 million of net acquisition premium amortization and $5.1 million in net unrealized losses that occurred in the mortgage-backed securities portfolio during the fiscal year ended September 30, 2017.2023. There were no sales of investment securities during the fiscal year ended September 30, 2017.2023.
Loans held for investment, net of deferred loan fees and allowance for credit losses, increased $710.5$908.7 million, or 6%6.4%, to $12.42$15.17 billion at September 30, 20172023, from $11.71$14.26 billion at September 30, 2016.2022, as new originations and additional draws on existing accounts exceeded loan sales and repayments. Residential mortgage loans increased $663.6$531.6 million, or 7%4.6%, to $10.86$12.12 billion at September 30, 2017 from $10.19 billion at September 30, 2016 as new originations exceeded the combination of principal repayments, loan sales and net charge-offs. The increase in residential mortgage loans reflected the negative impact of $5.3 million in gross charge-offs during the year ended September 30, 2017. During the year ended September 30, 2017, $1.34 billion of three- and five-year “SmartRate” loans were originated while $1.36 billion of 10-, 15-, and 30-year fixed-rate first mortgage loans were originated. During the year ended September 30, 2017 the total fixed-rate portion of our first mortgage loan portfolio increased $100.5 million and was comprised of a decrease of $27.1 million in the balance of fixed-rate loans with original terms of 10 years or less, and an increase of $127.6 million in the balance of fixed-rate loans with original terms greater than 10 years. During the fiscal year ended September 30, 2017, we completed $249.4 million in loan sales, which included $13.7 million of agency-compliant HARP II loans and $197.3 million of long-term, fixed-rate, agency-compliant, non-HARP II first mortgage loans to Fannie Mae, and $38.4 million of long-term fixed-rate loans to the FHLB of Cincinnati.
Augmenting the increase in residential mortgage loans2023. In addition, there was a $21.0$396.6 million or 1%, increase in the balance of home equity loans and lines of credit during the current year as newended September 30, 2023. During the fiscal year ended September 30, 2023, $624.8 million of three- and five-year “Smart Rate” loans were originated while $1.23 billion of 10-, 15-, and 30-year fixed-rate first mortgage loans were originated or purchased. Of the total $1.86 billion in first mortgage loans originated and purchased for the fiscal year ended September 30, 2023, 11% were refinance transactions and 89% were purchases, while 34% were adjustable-rate mortgages and 66% were fixed-rate mortgages. Fixed-rate loans with terms of 10 years or less accounted for 2% of total first mortgage loan originations and additional draws on existing accounts exceeded repaymentspurchases. During the fiscal year ended September 30, 2023, we completed $77.2 million in loan sales to Fannie Mae, which included $43.5 million of loans originated through our Mortgage Passport program and charge-offs. This increase reversed a downward trend over the past few years and signals a new focus on the origination$33.7 million of home equityagency-compliant first mortgage loans and lines of credit. originated through our traditional lending programs.
Commitments originated for home equity loans and lines of credit and equity and bridge loans were $1.00$1.70 billion for the twelve monthsyear ended September 30, 2017 and $438.3 million2023, compared to $2.16 billion for the twelve monthsyear ended September 30, 2016. Between 2010 and 2015, the Association, in various steps, suspended and then modified its home equity lending products and the markets where they were offered in response to the 2008 financial crisis.2022. At September 30, 2017, the recorded investment related to home equity lines of credit originated subsequent to March 2012, totaled $780.2 million. At September 30, 2017,2023, pending commitments to extendoriginate new home equity lines of credit totaled $97.9were $64.2 million and equity and bridge loans were $80.9 million. Refer to the Controlling Our Interest Rate RiskExposure section of the Overview for additional information.
The total allowance for loancredit losses decreased $12.9was $104.8 million, or 21%0.69% of total loans receivable, at September 30, 2023, and included a $27.5 million liability for unfunded commitments. At September 30, 2022, the allowance for credit losses was $99.9 million, or 0.70% of total loans receivable and included a $27.0 million liability for unfunded commitments. Refer to Note 5. LOANS AND ALLOWANCE FOR CREDIT LOSSES of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for additional discussion.
The amount of FHLB stock owned increased $34.8 million, or 16.4%, to $48.9$247.1 million at September 30, 20172023, from $61.8$212.3 million at September 30, 2016,2022. FHLB stock ownership requirements dictate the amount of stock owned at any given time.
Total bank owned life insurance contracts increased $8.0 million, to $312.0 million at September 30, 2023, from $304.0 million at September 30, 2022, primarily reflecting improved credit metrics, including reduced net charge-offs and lower loan delinquencies. Referdue to Note 4. Loans and Allowance for Loan Losses for additional discussion.changes in cash surrender value.
Deposits decreased $179.7increased $528.8 million, or 2%5.9%, to $8.15$9.45 billion at September 30, 20172023, from $8.33$8.92 billion at September 30, 2016.2022. The increase in deposits resulted primarily from a $786.7 million increase in CDs, partially offset by a $22.9 million
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decrease in deposits was the resultsavings accounts (consisting of a $130.4an $135.2 million decrease in our CDs,money market accounts in the state of Florida and a $39.2$95.8 million decreaseincrease in our high-yield savings accounts (a subcategory of ourhigh yield savings accounts) and a $9.7$226.6 million decrease in our high-yieldinterest-bearing checking accounts (a subcategory of our checking accounts) during the fiscal year ended September 30, 2017.accounts. The change in CDs is attributed to a $211.7 million net decrease in the balance of CDs generated through our retail operations, partially offset by an $81.3 million increase (net of premium and maturities) in brokered CDs acquired during the current fiscal year which had original terms of 33 to 48 months. The balance of CDs at September 30, 2017 included $620.72023 was $1.16 billion, which is an increase of $587.4 million in brokered CDs. We believe that our high-yield savings accounts as well as our high-yield checking accounts provide a stable sourcefrom the balance of funds. In addition, our high yield savings$575.2 million at September 30, 2022. Based on FDIC insurance limits by ownership structure, the total uninsured deposits were $322.5 million and high yield checking accounts are expected to reprice in a manner similar to our equity loan products,$366.7 million at September 30, 2023 and therefore, assist us in managing interest rate risk.September 30, 2022, respectively.
Borrowed funds all from the FHLB of Cincinnati, increased $952.6$480.4 million, or 35%10.0%, to $3.67$5.27 billion at September 30, 20172023, from $2.72$4.79 billion at September 30, 2016. This2022. The increase reflects an additional $900.0 million of new, short-term advances hedged by interest rate swaps with original terms of five years, combined with a $259.0 million increase in the balance of other short-term advances and partially offset by other principal repayments, as a combination ofwas primarily used to fund loan growth, share repurchases and dividend payments led to increased cash demands.growth. The total balance of borrowed funds at September 30, 2017 consisted2023, all from the FHLB, included $592.0 million of short-termovernight advances, $1.51 billion of $1.11 billion, long-termterm advances of $1.06 billion with a remaining weighted average maturity of approximately 1.62.2 years, and $3.15 billion of short-term advances of $1.50 billion aligned with interest rate swap contracts with a remaining weighted average effective maturity of approximately 4.1 years.contracts. Interest rate swaps werehave been used during the current fiscal year to extend the duration of short-term borrowings to approximately five yearsat inception by paying a fixed rate of interest and receiving thea variable rate. Refer to the Extending the Duration of Funding Sources section of the Overview and Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk for additional discussion regarding short-term borrowings and interest-rate exchange contracts.swaps.
Shareholders’Borrowers' advances for insurance and taxes increased by $7.2 million, or 6%, to $124.4 million at September 30, 2023,
from $117.2 million at September 30, 2022. This change is consistent with increases in our residential mortgage loan portfolio.
Accrued expenses and other liabilities increased by $28.8 million to $112.9 million at September 30, 2023 from $84.1 million at September 30, 2022. The increase is primarily due to a $13.2 million deferred tax increase, a $9.3 million increase on interest rate swap accruals, a $3.1 million increase in real estate tax payments remitted on behalf of borrowers, and a $4.0 million increase related to margin requirements on interest rate swaps.
Total shareholders’ equity increased $29.5$83.0 million, or 2%4.5%, to $1.69$1.93 billion at September 30, 20172023, from $1.66$1.84 billion at September 30, 2016. This net increase primarily reflected the effect of $88.92022. Activity reflects $75.3 million of net income in the positive impact related to awards under the stock-based compensation plan, the allocationcurrent year, reduced by dividends of shares held by the ESOP$58.3 million and the increase in other comprehensive income, partially offset by $52.5$5.0 million of repurchases of outstanding common stockstock. Other changes include a $62.1 million net positive change in accumulated other comprehensive income, primarily related to changes in market values due to fluctuations in market interest rates and $27.7maturities of swap contracts, and $9.0 million of positive change related to activity in the Company's stock compensation and employee stock ownership plans. During the fiscal year ended September 30, 2023, a total of 361,869 shares of our common stock were repurchased at an average cost of $13.82 per share. The Company's eighth stock repurchase program allows for a total of 10,000,000 shares to be repurchased, with 5,191,951 shares remaining to be repurchased at September 30, 2023. As a result of a mutual member vote, Third Federal Savings and Loan Association of Cleveland, MHC ("the MHC"), the mutual holding company that owns approximately 81% of the outstanding stock of the Company, was able to waive receipt of its share of each dividend payments.paid. Refer to Item 5. Market for Registrant’sRegistrant's Common Equity, Related Stockholder Matters and Issuer

Purchases of Equity Securities for additional details regarding the repurchase of shares of common stock and the payment of dividends. As a result
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Table of July 19, 2017 and July 26, 2016 mutual member votes, Third Federal Savings, MHC, the mutual holding company that owns 81% of the outstanding stock of the Company, waived the receipt of its share of the dividends paid.Contents

Analysis of Net Interest Income
Net interest income represents the difference between the income we earn on our interest-earning assets and the expense we pay on our interest-bearing liabilities. Net interest income depends on the volume of interest-earning assets and interest-bearing liabilities and the rates earned on such assets and the rates paid on such liabilities.

Average balances and yields. The following table sets forth average balances, average yields and costs, and certain other information at and for the fiscal years indicated. No tax-equivalent yield adjustments were made, as the effecteffects thereof waswere not material. Average balances are derived from daily average balances. Non-accrual loans wereare included in the computation of average balances, but have beenonly cash payments received on those loans during the period presented are reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees, deferred expenses, discounts and premiums that are amortized or accreted to interest income or interest expense.
 For the Fiscal Years Ended September 30,
 202320222021
 Average
Balance		Interest
Income/
Expense		Yield/
Cost		Average
Balance		Interest
Income/
Expense		Yield/
Cost		Average
Balance		Interest
Income/
Expense		Yield/
Cost
 (Dollars in thousands)
Interest-earning assets:
  Interest-earning cash equivalents$356,450 $16,826 4.72%$384,947 $3,178 0.83 %$567,035 $673 0.12 %
  Investment securities23,636 1,123 4.75%3,643 43 1.18 %— — — %
  Mortgage-backed securities464,919 13,247 2.85%439,269 5,458 1.24 %428,590 3,822 0.89 %
  Loans (1)14,657,265 565,610 3.86%13,258,517 395,691 2.98 %12,800,542 381,887 2.98 %
  Federal Home Loan Bank stock233,013 15,113 6.49%173,506 4,963 2.86 %155,322 2,969 1.91 %
Total interest-earning assets15,735,283 611,919 3.89%14,259,882 409,333 2.87 %13,951,489 389,351 2.79 %
Non-interest-earning assets515,123 482,501 532,786 
Total assets$16,250,406 $14,742,383 $14,484,275 
Interest-bearing liabilities:
  Checking accounts$1,093,036 6,081 0.56%$1,326,882 4,186 0.32 %$1,079,699 1,140 0.11 %
  Savings accounts1,798,663 24,686 1.37%1,859,990 4,553 0.24 %1,742,042 2,992 0.17 %
  Certificates of deposit6,123,979 143,434 2.34%5,826,286 68,204 1.17 %6,339,412 93,187 1.47 %
  Borrowed funds5,114,045 154,151 3.01%3,671,323 64,994 1.77 %3,303,925 60,402 1.83 %
Total interest-bearing liabilities14,129,723 328,352 2.32%12,684,481 141,937 1.12 %12,465,078 157,721 1.27 %
Non-interest-bearing liabilities239,387 255,388 321,958 
Total liabilities14,369,110 12,939,869 12,787,036 
Shareholders’ equity1,881,296 1,802,514 1,697,239 
Total liabilities and
     shareholders’ equity		$16,250,406 $14,742,383 $14,484,275 
Net interest income$283,567 $267,396 $231,630   
Interest rate spread (2)1.57 %1.75 %1.52 %
Net interest-earning assets (3)$1,605,560 $1,575,401 $1,486,411 
Net interest margin (4)1.80 %1.88 %1.66 %
Average interest-earning assets to
     average interest-bearing liabilities		111.36 %112.42 %111.92 %
(1) Loans include both mortgage loans held for sale and loans held for investment.
(2)Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(3)Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(4)Net interest margin represents net interest income divided by total interest-earning assets.
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 For the Fiscal Years Ended September 30,
 2017 2016 2015
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Cost
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Cost
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Cost
 (Dollars in thousands)
Interest-earning assets:                 
  Interest-earning cash equivalents$214,465
 $1,961
 0.91% $143,079
 $641
 0.45% $851,047
 $2,206
 0.26%
  Investment securities—
 —
 —% 162
 2
 1.23% 2,015
 25
 1.24%
  Mortgage-backed securities526,610
 9,041
 1.72% 555,996
 9,388
 1.69% 572,232
 9,546
 1.67%
  Loans12,104,277
 394,447
 3.26% 11,380,798
 375,624
 3.30% 10,951,984
 369,302
 3.37%
  Federal Home Loan Bank stock81,105
 3,546
 4.37% 69,658
 2,786
 4.00% 67,360
 2,398
 3.56%
Total interest-earning assets12,926,457
 408,995
 3.16% 12,149,693
 388,441
 3.20% 12,444,638
 383,477
 3.08%
Noninterest-earning assets358,213
     337,083
     319,063
    
Total assets$13,284,670
     $12,486,776
     $12,763,701
    
Interest-bearing liabilities:                 
  Checking accounts$992,042
 918
 0.09% $990,592
 1,289
 0.13% $995,736
 1,371
 0.14%
  Savings accounts1,514,275
 2,093
 0.14% 1,563,448
 2,811
 0.18% 1,636,093
 3,045
 0.19%
  Certificates of deposit5,672,212
 84,410
 1.49% 5,756,861
 85,900
 1.49% 5,836,053
 89,110
 1.53%
  Borrowed funds3,231,709
 42,678
 1.32% 2,284,881
 28,026
 1.23% 2,312,977
 19,824
 0.86%
Total interest-bearing liabilities11,410,238
 130,099
 1.14% 10,595,782
 118,026
 1.11% 10,780,859
 113,350
 1.05%
Noninterest-bearing liabilities190,873
     187,417
     184,587
    
Total liabilities11,601,111
     10,783,199
     10,965,446
    
Shareholders’ equity1,683,559
     1,703,577
     1,798,255
    
Total liabilities and
     shareholders’ equity
$13,284,670
     $12,486,776
     $12,763,701
    
Net interest income  $278,896
     $270,415
     $270,127
   
Interest rate spread(1)    2.02%     2.09%     2.03%
Net interest-earning assets(2)$1,516,219
     $1,553,911
     $1,663,779
    
Net interest margin(3)  2.16%     2.23%     2.17%  
Average interest-earning assets to
     average interest-bearing liabilities
113.29%     114.67%     115.43%    
______________________
(1)Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(2)Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(3)Net interest margin represents net interest income divided by total interest-earning assets.


Rate/Volume Analysis. The following table presents the effects of changing rates (yields) and volumes (average balances) on our net interest income for the fiscal years indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately, based on the changes due to rate and the changes due to volume.
 For the Fiscal Years Ended
September 30, 2023 vs. 2022		For the Fiscal Years Ended
September 30, 2022 vs. 2021
 Increase (Decrease)
Due to		Increase (Decrease)
Due to		 
 VolumeRateNetVolumeRateNet
 (In thousands)
Interest-earning assets:
  Interest-earning cash equivalents$(218)$13,866 $13,648 $(143)$2,648 $2,505 
  Investment securities696 384 1,080 43 — 43 
  Mortgage-backed securities337 7,452 7,789 97 1,539 1,636 
  Loans44,983 124,936 169,919 13,668 136 13,804 
  Federal Home Loan Bank stock2,162 7,988 10,150 381 1,613 1,994 
Total interest-earning assets47,960 154,626 202,586 14,046 5,936 19,982 
Interest-bearing liabilities:
  Checking accounts(569)2,464 1,895 315 2,731 3,046 
  Savings accounts(145)20,278 20,133 214 1,346 1,560 
  Certificates of deposit3,654 71,576 75,230 (7,106)(17,877)(24,983)
  Borrowed funds31,978 57,179 89,157 6,419 (1,827)4,592 
Total interest-bearing liabilities34,918 151,497 186,415 (158)(15,627)(15,785)
Net change in net interest income$13,042 $3,129 $16,171 $14,204 $21,563 $35,767 
 For the Fiscal Years Ended September 30, 2017 vs. 2016 For the Fiscal Years Ended September 30, 2016 vs. 2015
 
Increase (Decrease)
Due to
   Increase (Decrease)
Due to		  
 Volume Rate Net Volume Rate Net
 (In thousands)
Interest-earning assets:           
  Interest-earning cash equivalents$428
 $892
 $1,320
 $(2,548) $983
 $(1,565)
  Investment securities(1) (1) (2) (23) —
 (23)
  Mortgage-backed securities(503) 156
 (347) (273) 115
 (158)
  Loans23,627
 (4,804) 18,823
 14,261
 (7,939) 6,322
  Federal Home Loan Bank stock486
 274
 760
 84
 304
 388
Total interest-earning assets24,037
 (3,483) 20,554
 11,501
 (6,537) 4,964
Interest-bearing liabilities:           
  Checking accounts2
 (373) (371) (7) (75) (82)
  Passbook savings(86) (632) (718) (133) (101) (234)
  Certificates of deposit(1,260) (230) (1,490) (1,199) (2,011) (3,210)
  Borrowed funds12,365
 2,287
 14,652
 (243) 8,445
 8,202
Total interest-bearing liabilities11,021
 1,052
 12,073
 (1,582) 6,258
 4,676
Net change in net interest income$13,016
 $(4,535) $8,481
 $13,083
 $(12,795) $288
Comparison of Operating Results for the Fiscal Years Ended September 30, 20172023 and 20162022
General. Net income increased $8.3 million, or 10%, to $88.9of $75.3 million for the fiscal year ended September 30, 20172023 increased $0.7 million compared to $80.6$74.6 million for the fiscal year ended September 30, 2016. This change2022. The increase was attributedprimarily due to a $9.0 million decrease in the provision for loan losses and an increase of $8.5 million in net interest income, partially offset by an increasethe combined effect of $1.4 million inhigher non-interest expenseexpenses and a decrease of $5.2 million inlower earnings on non-interest income.income items.
Interest and Dividend Income. Total interest Interest and dividend income increased $20.6$202.6 million, or 5%49%, to $409.0$611.9 million forduring the fiscal year ended September 30, 20172023 compared to $388.4$409.3 million forduring the prior fiscal year. The increase in interest income resulted primarily from an increase in interest income from loans combined with increases in interest income from other interest-earning cash equivalents, and to a lesser extent, FHLB stock, partially offset by a decrease in interest income from investment securities available for sale.
Interest income on loans increased $18.8$169.9 million, or 5%43%, to $394.4 million compared to $375.6$565.6 million for the prior fiscal year.year ended September 30, 2023 compared to $395.7 million for the year ended September 30, 2022. This increase was primarily attributed to an 88 basis point increase in yield on loans and a $723.5 million$1.40 billion increase in the average balance of loans to $12.10$14.66 billion infor the current fiscal year compared to $11.38$13.26 billion during the prior fiscalyear.
Interest income on investment securities increased $8.8 million to $14.3 million during the year. The increase was largely due to mortgage-backed securities, which increased $7.7 million, or 140%, to $13.2 million during the current year as new loan production exceeded repayments and loan sales. The impact fromcompared to $5.5 million during the year ended September 30, 2022. This increase was attributed to a 161 basis point increase in the average yield on mortgage-backed securities, combined with a $25.6 million increase in the average balance of loans was partially offset by a four basis point decrease inmortgage-backed securities to $464.9 million for the average yield on loans to 3.26% from 3.30% as historically low interest rates have kept the level of refinance activity relatively high resulting in new originations at lower ratescurrent year compared to $439.3 million during the rest of our portfolio. Additionally, both our “Smart Rate” adjustable-rate first mortgage loan and our 10-year, fixed-rate first mortgage loan originations forprior year.
Interest Expense. Interest expense increased $186.5 million, or 131%, to $328.4 million during the fiscalcurrent year compared to $141.9 million during the year ended September 30, 2017, were originated at interest rates below rates offered on our traditional 15- and 30-year fixed-rate products and contributed to the lower average yield. During the fiscal year ended September 30, 2017, loan sales totaled $249.4 million while during the fiscal year ended September 30, 2016, loan sales totaled $200.3 million.
Interest income on interest-earning cash equivalents increased $1.4 million, or 233%, to $2.0 million compared to $0.6 million for the prior fiscal year. As a result of the additional required investment in FHLB stock and2022. The increase primarily resulted from an increase in the dividend yield, dividend income on FHLB stock increased $0.7 million, or 25%, to $3.5 million compared to $2.8 million during the prior fiscal year.

Interest Expense. Interest expense increased $12.1 million, or 10%, to $130.1 million for the fiscal year ended September 30, 2017 from $118.0 million for the 2016 fiscal year. The change resulted primarily from a $14.7 million increase in interest expense on deposits and borrowed funds partially offset by modest decreases in interest expense on checking accounts, savings accounts and CDs.funds.
Interest expense on CDs decreased $1.5increased $75.2 million, or 2%110%, to $84.4$143.4 million during the year ended September 30, 2023 compared to $85.9$68.2 million for fiscal 2016.during the year ended September 30, 2022. The changeincrease was attributed primarily to an $84.7a 117 basis point increase in the average rate paid on CDs to 2.34% during the current year from 1.17% during the prior year. Additionally, there was a $297.7 million, or 1%5%, decreaseincrease in the average balance of CDs to $5.67$6.12 billion from $5.76$5.83 billion asduring the prior year. Interest expense on savings and checking accounts increased $20.1 million and $1.9 million, respectively, to $24.7 million and $6.1 million during the year ended September 30, 2023, compared to the prior year due to an increase in the average raterates we
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Table of Contents
paid on CDs was 1.49% for both years. To optimally managethe deposits. Rates were adjusted on deposits in response to changes in market interest rates, as well as to changes in the rates paid by our funding costs during the current fiscal year, many maturing, higher rate CDs that were not renewed were replaced with with longer-term brokered CDs or lower rate borrowed funds.competition.
Interest expense on borrowed funds increased $14.7$89.2 million, or 53%137%, to $42.7$154.2 million compared to $28.0during the year ended September 30, 2023 from $65.0 million for fiscal 2016.during the year ended September 30, 2022. The increase was attributed to a ninecombination of a $1.44 billion, or 39%, increase in the average balance of borrowed funds to $5.11 billion during the current year from $3.67 billion during the prior year, and a 124 basis point increase in the average rate paid for these funds to 1.32% from 1.23% during fiscal 2016, combined with the impact of a $946.8 million, or 41%, increase in the average balance of borrowed funds to $3.23 billion3.01% during the current fiscal year ended September 30, 2023 from $2.28 billion during fiscal 2016. The increase in1.77% for the average balance of borrowed funds was used to fund our balance sheet growth and our capital management activities, including share repurchases and dividend payments. The increases in borrowed funds were in overnight and short-term advances and longer-term advances with initial effective durations of approximately five years as hedged by interest rate swaps.year ended September 30, 2022. Refer to the Extending the Duration of Funding Sources section of the Overview and Comparison of Financial Condition for further discussion.
Net Interest Income.Income. Net interest income increased $8.5$16.2 million, or 3%6%, to $278.9$283.6 million during the year ended September 30, 2023 from $267.4 million during the year ended September 30, 2022. The increase consisted of a $202.6 million increase in interest income, offset by a $186.5 million increase in interest expense. Average interest-earning assets increased during the current year by $1.48 billion, or 10%, when compared to the year ended September 30, 2022. Average interest-bearing liabilities increased by $1.45 billion. The average yield on interest earning assets increased 102 basis points to 3.89% from 2.87%, compared to a 120 basis point increased in the average rate paid on interest-bearing liabilities to 2.32% in the current year from 1.12% in the prior year. The interest rate spread was 1.57% for the fiscal year ended September 30, 20172023 compared to $270.4 million for the prior fiscal year. Average interest-earning assets increased during the current fiscal year by $776.8 million, or 6%, when compared to the prior fiscal year.1.75% at September 30, 2022. The increase in average assets was attributed primarily to the growth of our loan portfolio and to a lesser extent other interest-earning cash equivalents and FHLB stock, partially offset by a decrease in mortgage-backed securities. Partially offsetting the increase in average interest earning assets was a four basis point decrease in the yield on those assets to 3.16% from 3.20%. Our interest rate spread decreased seven basis points to 2.02% compared to 2.09% for the prior fiscal year. Our net interest margin was 2.16%1.80% for the current fiscal year ended September 30, 2023 and 2.23%1.88% for the prior fiscal year. Ouryear ended September 30, 2022. The decrease in our interest rate spread and net interest margin narrowed as our asset yields decreased while our overall funding costs increased as we extendedis primarily due to the effective durationimpact of our borrowed funds through the usea prolonged period of historically low interest rate swaps.environment followed by a rapid and meaningful rise in interest rates, that started in March 2022, along with an extended period of yield curve inversion. Refer to Controlling Our Interest Rate Risk Exposure of the Overview section for further discussion.
Provision (Release) for LoanCredit Losses. We establish provisions for loan losses, which are chargedrecorded a release to operations, in order to maintain the allowance for loan losses at a level we consider necessary to absorb credit losses incurred inof $1.5 million during the loan portfolio that are both probable and reasonably estimable at the balance sheet date. In determining the level of the allowance for loan losses, we consider past and current loss experience, evaluations of real estate collateral, current economic conditions, volume and type of lending, adverse situations that may affect a borrower’s ability to repay a loan and the levels of non-performing and other classified loans. The amount of the allowance is based on estimates and the ultimate losses may vary from such estimates as more information becomes available or conditions change. We assess the allowance for loan losses on a quarterly basis and make provisions for loan losses in order to maintain the adequacy of the allowance as described in the next paragraph. Recently, improving regional employment levels, stabilization in residential real estate values in many markets, recovering capital and credit markets, and upturns in consumer confidence have resulted in better credit metrics for us. Nevertheless, the depth of the decline in housing values that accompanied the 2008 financial crisis still presents significant challenges for many of our borrowers who may attempt to sell their homes or refinance their loans as a means to self-cure a delinquency. Refer to Critical Accounting Policies - Allowance for Loan Losses section of the Overview for further discussion.
Based on our evaluation, we recorded a credit for loan losses of $17.0 million for the fiscal year ended September 30, 2017 and2023 compared to a credit of $8.0$1.0 million provision for the fiscalallowance during the year ended September 30, 2016. The current credit for loan losses reflects reduced levels of loan delinquencies and net charge-offs, but we continue our awareness of the relative values of residential properties in comparison to their cyclical peaks as well as the uncertainty that persists in the current economic environment, which continues to challenge many of our loan customers.2022. As delinquencies in the portfolio have beenare resolved through pay-off, short sale or foreclosure, or management determines the collateral is not sufficient to satisfy the loan, uncollected balances have been charged against the allowance for loancredit losses previously provided. The levelRecoveries of net charge-offs decreased duringamounts charged against the allowance for credit losses occur when collateral values increase and homes are sold or when borrowers repay the amounts previously charged-off. For the fiscal year 2017 to $4.2 million ofended September 30, 2023, we recorded net recoveries of $6.4 million, as compared to $1.8net recoveries of $9.7 million for the year ended September 30, 2022. Credit loss provisions (releases) are recorded with the objective of aligning our allowance for credit loss balances with our current estimates of loss in the portfolio. Refer to the Lending Activities section of the Overview and Note 5. LOANS AND ALLOWANCE FOR CREDIT LOSSES of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for further discussion.
Non-Interest Income. Non-interest income decreased $2.4 million, or 10%, to $21.4 million during the year ended September 30, 2023 compared to $23.8 million during the year ended September 30, 2022. The decrease in non-interest income was partly due to a decrease in loan fees and net charge-offsgain on sale of loans of $2.1 million and $0.5 million, respectively during the year ended September 30, 2023, offset by a $1.2 million net positive change in the fair value of commitments to originate held for sale loans. Loans sold during the fiscal year ended September 30, 2016. Net recoveries combined with2023 were $77.2 million compared to loan sales of $128.1 million during the $17.0 million credit for loan losses recorded for the current fiscal year resulted in a decrease in the balance of the allowance for loan losses. Net charge-offs of $1.8 million and a credit for loan losses of $8.0 million were recorded for the fiscal year ended September 30, 2016.2022. The allowance fordecrease in loan lossessales during the year was $48.9primarily due to the significant increase in interest rates in a relatively short period of time.
Non-Interest Expense. Non-interest expense increased $15.0 million, or 0.39% of the total recorded investment in loans receivable, at September 30, 2017, compared8%, to $61.8 million, or 0.52% of the total recorded investment in loans receivable, at September 30, 2016. Balances of recorded investments are net of deferred fees/expenses and any applicable loans-in-process.

The total recorded investment in non-accrual loans decreased $10.9$213.1 million during the fiscal year ended September 30, 20172023 compared to a $16.8 million decrease during the fiscal year ended September 30, 2016.
The recorded investment in non-accrual loans in our residential Core portfolio decreased $7.5 million, or 15%, during the current fiscal year, to $43.8 million at September 30, 2017, compared to an $11.0 million decrease during the fiscal year ended September 30, 2016. At September 30, 2017, the recorded investment in our Core portfolio was $10.76 billion, compared to $10.08 billion at September 30, 2016. During the current fiscal year, Core portfolio net recoveries were $2.4 million, as compared to net charge-offs of $0.6$198.1 million during the fiscal year ended September 30, 2016. The $43.8 million balance in Core portfolio non-accrual loans at September 30, 2017 includes $27.4 million in TDRs which are current but included with non-accrual loans for a minimum period of six months from their restructuring date.
The recorded investment in non-accrual loans in our residential Home Today portfolio decreased $1.3 million, or 7% during the current fiscal year, to $18.1 million at September 30, 2017 compared to a $3.1 million decrease during the fiscal year ended September 30, 2016. At September 30, 2017, the recorded investment in our Home Today portfolio was $107.7 million, compared to $120.4 million at September 30, 2016. During the current fiscal year, Home Today net charge-offs were $1.0 million as compared to net charge-offs of $1.3 million during the fiscal year ended September 30, 2016. The $18.1 million balance in Home Today non-accrual loans includes $10.3 million in TDRs which are current but included with non-accrual loans for a minimum period of six months from their restructuring date.
The recorded investment in non-accrual home equity loans and lines of credit decreased $2.0 million, or 11%, during the current fiscal year, to $17.2 million at September 30, 2017 compared to a $2.3 million decrease during the fiscal year ended September 30, 2016. The recorded investment in our home equity loans and lines of credit portfolio at September 30, 2017 was $1.57 billion, compared to $1.54 billion at September 30, 2016. During the current fiscal year, home equity loans and lines of credit net recoveries were $2.7 million as compared to net recoveries of $0.1 million during the fiscal year ended September 30, 2016. We believe that non-performing home equity loans and lines of credit, on a relative basis, represent a higher level of credit risk than Core loans as these home equity loans and lines of credit generally hold subordinated lien positions. The seriously delinquent balances of home equity loans and lines of credit were $5.4 million, or less than 1%, of the home equity loans and lines of credit portfolio at September 30, 2017 compared to $4.9 million, or less than 1%, at September 30, 2016.
At September 30, 2017 and 2016, we believe we had recorded an allowance for loan losses that provides for all losses that are both probable and reasonable to estimate at September 30, 2017 and 2016, respectively.
Refer to Lending Activities in Item 1. Business for additional discussion and disclosure related to our provisions for loan losses.
Non-Interest Income. Non-interest income decreased $5.2 million, or 21%, to $19.8 million during the fiscal year ended September 30, 2017 compared to $25.0 million for the prior fiscal year mainly as a result of lower gains on the sale of loans and a decrease in death benefits from BOLI contracts during the current fiscal year. Gains on the sales of loans in the current fiscal year decreased $4.0 million from the prior fiscal year as market interest rate movements contributed to lower percentage gains on $249.4 million in sales during the current fiscal year as compared to the gains realized on $200.3 million in sales during the fiscal year ending September 30, 2016.
Non-Interest Expense. Non-interest expense increased $1.4 million, or 1%, to $182.4 million during the fiscal year ended September 30, 2017 compared to $181.0 million for fiscal 2016.2022. This increase resulted primarily from a combination of higherincreases in salary and employee benefits, marketing expenses and other expenses, partially offset by a combination of lower real estate owned expensesfederal insurance premium and compensation related expenses. The $2.6 million decrease in real estate owned expenses (which includes associated legal and maintenance expenses as well as gains (losses) on the disposal of properties) was driven in part by the decrease in real estate owned assets since September 30, 2016. The $2.8 million increase in marketing expenditures can be attributed to the timing of media campaigns supporting our lending activities.Other operating expenses increased $1.7 million, which consisted primarily of a $1.1 million increase in professional services expenses. Salaries and employee benefits decreased $0.6 million during the current fiscal year compared to the fiscal year ended September 30, 2016. This decrease was primarily due to a combination of a $2.2 million decrease in stock based compensation and a $1.9 million increase in the deferral of salary compensation related to direct loan origination costs, partially offset by a $3.6 million increase in associate compensation costs.assessments.
Income Tax Expense. The provision for income taxes was $44.5$18.1 million forduring the fiscal year ended September 30, 20172023 compared to $41.8$17.5 million forduring the fiscal year ended September 30, 2016.2022. The provision for fiscalthe current year 2017 included $43.4$17.3 million of federal income tax provision and $1.1$0.8 million of state income tax provision. The provision for fiscalthe year ended September 30, 20162022 included $40.9$17.1 million of federal income tax provision and $0.9$0.4 million of state income tax provision. The increase in state income tax between the current and prior fiscal years is reflective of the growth in our expansion states. Our federalcombined effective tax rate decreased to 32.8%was 19.4% during fiscal 2017 from 33.7%the year ended September 30, 2023 and 19.0% during fiscalthe year 2016, mainly asended September 30, 2022.
For a resultcomparison of

recognizing $1.1 million of excess tax benefits in the current year related to our adoption, effective October 1, 2016, of ASU 2016-09, Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting. Under this standard, excess tax benefits and tax deficiencies related to stock-based compensation are recognized in the provision for income taxes. Previously the amounts were recognized as part of paid-in capital in shareholders' equity. Our expected federal effective income tax rate is less than the federal statutory rate of 35.0%, primarily because of our ownership of bank owned life insurance contracts. Non-taxable income on bank owned insurance contracts was $6.4 million during fiscal 2017 and $7.4 million during fiscal 2016.
Comparison of Operating Results operating results for the Fiscal Years Endedfiscal years ended September 30, 20162022 and 2015
General. Net income increased $8.0 million, or 11%, to $80.6 million2021, see the Company's Form 10-K for the fiscal year ended September 30, 2016 compared to $72.6 million for the fiscal year ended September 30, 2015. This change was attributed to a $5.0 million decrease in the provision for loan losses and a $7.0 million decrease in non-interest expenses. Net interest income was relatively unchanged during fiscal 2016 compared to fiscal 2015.2022.
Interest and Dividend Income. Total interest income increased $4.9 million, or 1%, to $388.4 million for the fiscal year ended September 30, 2016 compared to $383.5 million for fiscal 2015. The increase in interest income resulted primarily from an increase in interest income from loans partially offset by a decrease in interest income from other interest-earning cash equivalents.
Interest income on loans for fiscal 2016 increased $6.3 million, or 2%, to $375.6 million compared to $369.3 million for fiscal 2015. This increase was attributed to a $428.8 million increase in the average balance of loans to $11.38 billion in fiscal 2016 compared to $10.95 billion during fiscal 2015 as new loan production exceeded repayments and loan sales. The impact from the increase in the average balance of loans was partially offset by a seven basis point decrease in the average yield on loans to 3.30% from 3.37% as historically low interest rates kept the level of refinance activity relatively high resulting in new originations at lower rates compared to the rest of our portfolio. Additionally, both our “Smart Rate” adjustable-rate first mortgage loan and our 10-year, fixed-rate first mortgage loan originations for the fiscal year ended September 30, 2016, were originated at interest rates below rates offered on our traditional 15- and 30-year fixed-rate products and contributed to the lower average yield. During the fiscal year ended September 30, 2016, loan sales totaled $200.3 million while during the fiscal year ended September 30, 2015, loan sales totaled $160.1 million.
Interest income on interest-earning cash equivalents for fiscal 2016 decreased $1.6 million, or 73%, to $0.6 million compared to $2.2 million for fiscal 2015. The decrease in interest income can be attributed to utilizing a strategy during fiscal 2015 to increase income. The strategy involved borrowing, on an overnight basis, approximately $1.00 billion of additional funds from the FHLB at the beginning of a particular quarter and repaying it prior to the end of that quarter. The proceeds of the borrowings, net of the required investment in FHLB stock, were deposited at the Federal Reserve. Because of increases in the interest rates charged by the FHLB, the strategy was not utilized during fiscal 2016. As a result of the additional required investment in FHLB stock, dividend income on FHLB stock for fiscal 2016 increased $0.4 million, or 17%, to $2.8 million compared to $2.4 million during fiscal 2015. Although the strategy's borrowings component was not utilized during fiscal 2016, the FHLB stock component remained in place and the receipt of increased FHLB stock dividends continued.
Interest Expense. Interest expense increased $4.6 million, or 4%, to $118.0 million for the fiscal year ended September 30, 2016 from $113.4 million for the 2015 fiscal year. The change resulted primarily from an $8.2 million increase in interest expense on borrowed funds partially offset by a decrease in interest expense on CDs.
Interest expense on CDs for fiscal 2016 decreased $3.2 million, or 4%, to $85.9 million compared to $89.1 million for fiscal 2015. The change was attributed to a four basis point decrease in the average rate we paid on CDs to 1.49% from 1.53% combined with a $79.2 million, or 1%, decrease in the average balance of CDs to $5.76 billion from $5.84 billion. Rates were adjusted on deposits in response to changes in general market rates as well as to changes in the rates paid by our competition on short-term CDs. Additionally, to optimally manage our funding costs during fiscal 2016, many maturing, higher rate CDs that were not renewed were replaced with with longer-term brokered CDs or lower rate borrowed funds.
Interest expense on borrowed funds for fiscal 2016 increased $8.2 million, or 41%, to $28.0 million compared to $19.8 million for fiscal 2015. The increase was attributed to a 37 basis point increase in the average rate paid for these funds during fiscal 2016, to 1.23% from 0.86% during fiscal 2015. Partially offsetting the impact of the increase in the average rate paid was a $28.1 million, or 1%, decrease in the average balance of borrowed funds to $2.28 billion during fiscal 2016 from $2.31 billion during fiscal 2015. The net decrease in the average balance was attributed to utilizing the strategy to increase income in fiscal 2015, as discussed earlier. The strategy was not utilized in fiscal 2016. Partially offsetting the decrease in the average balance resulting from discontinuing this strategy was an increase in FHLB of Cincinnati borrowings as part of our efforts to lengthen the duration of our interest bearing funding sources. Refer to the Extending the Duration of Funding Sources section

of the Overview for further discussion. To better manage funding costs, longer term borrowed funds from the FHLB of Cincinnati were also used to fund mortgage loan originations.
Net Interest Income. Net interest income increased $0.3 million, or less than 1%, to $270.4 million for the fiscal year ended September 30, 2016 compared to $270.1 million for fiscal 2015. Average interest-earning assets decreased during fiscal 2016 by $294.9 million, or 2%, when compared to fiscal 2015. The decrease in average assets was attributed primarily to the use of the strategy, discussed earlier, in fiscal 2015, which was not utilized in fiscal 2016, partially offset by the growth of our loan portfolio. Our interest rate spread increased six basis points to 2.09% for fiscal 2016 compared to 2.03% for fiscal 2015. Our net interest margin was 2.23% for fiscal 2016 and 2.17% for fiscal 2015. The change in these performance ratios was impacted by the net income strategy utilized in fiscal 2015. The strategy, which served to increase net income slightly also negatively impacted the interest rate spread and net interest margin due to the increase in the average balance of low-yield, interest-earning cash equivalents.
Provision for Loan Losses. Based on our evaluation, we recorded a negative provision for loan losses of $8.0 million for the fiscal year ended September 30, 2016 and a negative provision of $3.0 million for the fiscal year ended September 30, 2015. The fiscal 2016 negative provision for loan loss reflected reduced levels of loan delinquencies and net charge-offs, but we continued our awareness of the relative values of residential properties in comparison to their cyclical peaks as well as the uncertainty that persisted in the economic environment, which continued to challenge many of our loan customers. As delinquencies in the portfolio were resolved through pay-off, short sale or foreclosure, or management determined the collateral was not sufficient to satisfy the loan, uncollected balances were charged against the allowance for loan losses previously provided. The level of net charge-offs decreased during fiscal 2016 to $1.8 million as compared to $6.8 million during fiscal 2015. Net charge-offs combined with the $8.0 million negative provision for loan losses recorded for fiscal 2016 resulted in a decrease in the balance of the allowance for loan losses. Net charge-offs of $6.8 million and a negative provision for loan losses of $3.0 million were recorded for fiscal 2015. The allowance for loan losses was $61.8 million, or 0.52% of the total recorded investment in loans receivable, at September 30, 2016, compared to $71.6 million, or 0.64% of the total recorded investment in loans receivable, at September 30, 2015. Balances of recorded investments were net of deferred fees and any applicable loans-in-process.
The total recorded investment in non-accrual loans decreased $16.8 million during the fiscal year ended September 30, 2016 compared to a $28.7 million decrease during the fiscal year ended September 30, 2015.
The recorded investment in non-accrual loans in our residential Core portfolio decreased $11.0 million, or 18%, during fiscal 2016, to $51.3 million at September 30, 2016, compared to a $17.1 million decrease during fiscal 2015. At September 30, 2016, the recorded investment in our Core portfolio was $10.08 billion, compared to $9.47 billion at September 30, 2015. During fiscal 2016, Core portfolio net charge-offs were $0.6 million, as compared to net charge-offs of $1.5 million during fiscal 2015. The $51.3 million balance in non-accrual loans at September 30, 2016 included $31.1 million in TDRs which were current but included with non-accrual loans for a minimum period of six months from their restructuring date.
The recorded investment in non-accrual loans in our residential Home Today portfolio decreased $3.1 million, or 14% during fiscal 2016, to $19.5 million at September 30, 2016 compared to a $7.4 million decrease during fiscal 2015. At September 30, 2016, the recorded investment in our Home Today portfolio was $120.4 million, compared to $134.0 million at September 30, 2015. During fiscal 2016, Home Today net charge-offs were $1.3 million as compared to net charge-offs of $1.9 million during fiscal 2015. The $19.5 million balance in Home Today non-accrual loans included $10.7 million in TDRs which were current but included with non-accrual loans for a minimum period of six months from their restructuring date.
The recorded investment in non-accrual home equity loans and lines of credit decreased $2.3 million, or 11%, during fiscal 2016, to $19.2 million at September 30, 2016 compared to a $4.7 million decrease during fiscal 2015. The recorded investment in our home equity loans and lines of credit portfolio at September 30, 2016, was $1.54 billion, compared to $1.63 billion at September 30, 2015. During fiscal 2016, home equity loans and lines of credit net recoveries were $0.1 million as compared to net charge-offs of $3.6 million during fiscal 2015. We believe that non-performing home equity loans and lines of credit, on a relative basis, represented a higher level of credit risk than Core loans as these home equity loans and lines of credit generally hold subordinated lien positions. The seriously delinquent balances of home equity loans and lines of credit were $4.9 million, or less than 1%, of the home equity loans and lines of credit portfolio at September 30, 2016 compared to $5.6 million, or less than 1%, at September 30, 2015.
At September 30, 2016 and 2015, we believe we had recorded an allowance for loan losses that provides for all losses that are both probable and reasonable to estimate at September 30, 2016 and 2015, respectively.
Refer to Lending Activities in Item 1. Business for additional discussion and disclosure related to our provisions for loan losses.

Non-Interest Income. Non-interest income increased $0.7 million, or 3%, to $25.0 million during fiscal 2016 compared to $24.3 million for fiscal 2015 mainly as a result of increased net gains on the sale of loans partially offset by a decrease in loan fees and service charges and other. The increase in the net gain on sales of loans primarily reflected a higher volume of loan sales in fiscal 2016, $200.3 million, as compared to $160.1 million during fiscal 2015. This increase was partially offset by a decrease in net loan servicing fees received in connection with the smaller portfolio of loans serviced for others included in loan fees and service charges and a decrease in income received in connection with reduced real estate owned activity included in other.
Non-Interest Expense. Non-interest expense decreased $7.0 million, or 4%, to $181.0 million during fiscal 2016 compared to $188.0 million for fiscal 2015. This decrease resulted primarily from lower real estate owned expense, marketing expenses, and other operating expenses partially offset by higher data processing expenses. The $3.9 million decrease in real estate owned expenses (which includes associated legal and maintenance expenses as well as gains (losses) on the disposal of properties) was driven in part by the decrease in real estate owned assets since September 30, 2015. The $2.9 million decrease in marketing expenditures can be attributed to the timing of media campaigns supporting our lending activities.Other operating expenses decreased $1.4 million, which consisted primarily of a $1.0 million decrease in professional services expenses, and a $0.6 million decrease in postage/courier fees partially offset by a $0.7 increase in expenses associated with originating loans. Salaries and employee benefits increased $0.6 million during fiscal 2016 compared to fiscal 2015. This increase was primarily due to a $1.2 million increase in pension costs partially offset by a $0.6 million decrease in stock based compensation.
Income Tax Expense. The provision for income taxes was $41.8 million for fiscal 2016 compared to $36.8 million for fiscal 2015. The provision for fiscal 2016 included $40.9 million of federal income tax provision and $932 thousand of state income tax provision. The provision for fiscal 2015 included $36.7 million of federal income tax provision and $143 thousand of state income tax provision. The increase in state income tax between fiscal 2016 and 2015 was reflective of the growth in our expansion states. Our federal effective tax rate increased to 33.7% during fiscal 2016 from 33.6% during fiscal year 2015. Our expected federal effective income tax rate was less than the federal statutory rate of 35.0%, primarily because of our ownership of bank owned life insurance contracts. Non-taxable income on bank owned insurance contracts was $7.4 million during fiscal 2016 and $7.3 million during fiscal 2015.
Liquidity and Capital Resources
Liquidity is the ability to meet current and future financial obligations of a short-term nature. Our primary sources of funds consist of deposit inflows, loan repayments, advances from the FHLB of Cincinnati, borrowings from the FRB-Cleveland
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Discount Window, overnight Fed Funds through various arrangements with other institutions, proceeds from brokered CDs transactions, principal repayments and maturities of securities, and sales of loans.
In addition to the primary sources of funds described above, we have the ability to obtain funds through the use of collateralized borrowings in the wholesale markets, and from sales of securities. Also, debt issuance by the Company and access to the equity capital markets via a supplemental minority stock offering or a full conversion (second step)(second-step) transaction remain as other potential sources of liquidity, although these channels generally require sixup to nine months of lead time.
While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition. The Association’s Asset/Liability ManagementInvestment Committee is responsible for establishing and monitoring our liquidity targets and strategies in order to ensure that sufficient liquidity exists for meeting the borrowing needs and deposit withdrawals of our customers as well as unanticipated contingencies. We generally seek to maintain a minimum liquidity ratio of 5% (which we compute as the sum of cash and cash equivalents plus unencumbered investment securities for which ready markets exist, divided by total average assets). For the year ended September 30, 2017, our2023, the liquidity ratio averaged 5.65%.5.53% for the Association. We believe that we had sufficient sources of liquidity to satisfy our short- and long-term liquidity needs as of September 30, 2017.2023.
We regularly adjust our investments in liquid assets based upon our assessment of expected loan demand, expected deposit flows, yields available on interest-earning deposits and securities, scheduled liability maturities and the objectives of our asset/liability management program. Excess liquid assets are generally invested in interest-earning deposits and short- and intermediate-term securities.
Our most liquid assets are cash and cash equivalents. The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period. At September 30, 2017,2023, cash and cash equivalents totaled $268.2$466.7 million, which represented an increase of 16%26% from September 30, 2016.2022.
Investment securities classified as available-for-sale,available for sale, which provide additional sources of liquidity, totaled $537.5$508.3 million at September 30, 2017.

2023.
During the year ended September 30, 2017,2023, loan sales, including commitments to sell, totaled $77.2 million, which included sales to Fannie Mae totaled $211.0consisting of $66.5 million which included $13.7of long-term, fixed-rate, agency-compliant, non-Home Ready first mortgage loans and $10.7 million of loans that qualified under Fannie Mae's HARP II initiative and $15.3 million of loans that qualified under Fannie Mae's HomeReadyHome Ready initiative. Loans originated under the HARP II an HomeReady initiatives are classified as “held for sale” at origination. Loans originated under Fannie Mae compliant procedures other than HARP II and HomeReady are classified as “held for investment” until they are specifically identified for sale.
In addition to the loan sales to Fannie Mae, during the year ended September 30, 2017, loan sales to the FHLB of Cincinnati, under their Mortgage Purchase Program, totaled $38.4 million. Loans that qualify under the FHLB Mortgage Purchase Program are classified as “held for investment” until they are specifically identified for sale.
At September 30, 2017, $0.42023, $3.3 million of long-term, fixed-rate residential first mortgage loans were classified as “held"held for sale,” all of which qualified under Fannie Mae's HARP II or HomeReady initiatives. There were no loan sale commitments outstanding at September 30, 2017.sale".
Our cash flows are derived from operating activities, investing activities and financing activities as reported in our Consolidated Statements of Cash FlowsCONSOLIDATED STATEMENTS OF CASH FLOWS included in the Consolidated Financial Statements.CONSOLIDATED FINANCIAL STATEMENTS.
At September 30, 2017,2023, we had $548.9$349.4 million in loanoutstanding commitments outstanding.to originate or purchase loans. In addition to commitments to originate loans, we had $1.43$4.70 billion in undisbursedunfunded home equity lines of credit to borrowers. CDs due within one year of September 30, 20172023 totaled $2.13$3.42 billion, or 26.1%36.2% of total deposits. If these deposits do not remain with us, we will be required to seek other sources of funds, including loan sales, sales of investment securities, other deposit products, including new CDs, brokered CDs, FHLB advances, borrowings from the FRB-Cleveland Discount Window or other collateralized borrowings. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the CDs due on or before September 30, 2018.2024. We believe, however, based on past experience, that a significant portion of such deposits will remain with us. Generally, we have the ability to attract and retain deposits by adjusting the interest rates offered.
Our primary investing activities are originating residential mortgage loans, home equity loans and lines of credit and purchasing investments. During the year ended September 30, 2017,2023, we originated $2.70or purchased $1.86 billion of residential mortgage loans, and $1.70 billion of commitments for home equity loans and lines of credit, while during the year ended September 30, 2016,2022, we originated $2.59$3.65 billion of residential mortgage loans.loans and $2.16 billion of commitments for home equity loans and lines of credit. We purchased $183.5$144.7 million of securities during the year ended September 30, 2017,2023, and $95.2$250.0 million during the year ended September 30, 2016.2022. Also, during the year ended September 30, 2023, we purchased $279.2 million of long-term, fixed-rate first mortgage loans.
Financing activities consist primarily of changes in deposit accounts, changes in the balances of principal and interest owed on loans serviced for others, FHLB advances, including any collateral requirements related to interest rate swap agreements and borrowings from the FRB-Cleveland Discount Window. We experienced a net decreaseincrease in total deposits of $179.7$528.8 million during the year ended September 30, 2017, which reflected the active management of the overall cost of funding between maturing CDs and wholesale borrowings,2023 compared to a net increasedecrease of $45.5$72.5 million during the year ended September 30, 2016.2022. Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by us and our local competitors, and by other factors. The net decrease in total deposits duringDuring the year ended September 30, 2017,2023, there was partially offset by the $80.9a $587.4 million
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increase in the balance of brokered CDs to $620.7 million, from $539.8 million(exclusive of acquisition costs and subsequent amortization), which had a balance of $1.16 billion at September 30, 2016. During the year ended2023. At September 30, 20162022, the balance of brokered CDs increased by $19.7was $575.2 million. Principal and interest owedreceived on loans serviced for others and owed to investors experienced a net decrease of $13.6$0.1 million to $35.8$29.8 million during the year ended September 30, 20172023, compared to a net decrease of $0.1$11.6 million to $49.4$29.9 million during the year ended September 30, 2016.2022. During the year ended September 30, 2017,2023, we increased our advances from the FHLB of Cincinnatiborrowed funds by $952.6$480.4 million as we fundedto manage future interest costs, to fund new loan originations, and to actively managedmanage our liquidity ratio. During
In March 2021, we received a second consecutive “Needs to Improve” rating on our CRA examination covering the period ended December 31, 2019. The FHFA practice is to place member institutions in this situation on restriction. If this restriction is established, we will not have access to FHLB long-term advances (maturities greater than one year) until our rating improves. However, we have not received notice of this restriction as of November 21, 2023. Existing advances and future advances with less than a one year ended September 30, 2016,term, including 90 day advances used to facilitate longer term interest rate swap agreements, will not be affected. We expect no impact to our advances from the FHLB of Cincinnati increased by $550.2 million.ability to access funding.
Liquidity management is both a daily and long-term function of business management. If we require funds beyond our ability to generate them internally, borrowing agreements exist with the FHLB of Cincinnati, and the FRB-Cleveland Discount Window, and arrangements with other institutions to purchase overnight Fed Funds, each of which provides an additional source of funds. Additionally,On September 28, 2023, the FHLB of Cincinnati approved a revision to their Credit Policy Manual to decrease the allowable borrowing limit from 50% to 40% of total assets, therefore decreasing the maximum borrowing capacity for the Company. In order to ensure adequate borrowing capacity with the FHLB, the Company has started replacing 90-day FHLB advances with like-term brokered deposits. In March 2023, the Federal Reserve created the BTFP as an additional source of liquidity. The program offers loans up to one year in evaluating funding alternatives, we may participate in the brokered CDs market. length against pledges of high-quality securities, such as U.S. Treasuries, agency debt and mortgage-backed securities, owned as of March 21, 2023. The BTFP is scheduled to end on March 11, 2024.
At September 30, 2017,2023, we had $3.67$5.25 billion of FHLB of Cincinnati advances, and no outstanding borrowings from the FRB-Cleveland Discount Window.Window and no outstanding borrowings in the form of Fed Funds. Additionally, at September 30, 2017,2023, we had $620.7 million$1.16 billion of brokered CDs. During the year ended September 30, 2017,2023, we had average outstanding advances from the FHLBborrowed funds of Cincinnati of $3.23$5.11 billion, as compared to average outstanding advances of $2.28$3.67 billion during the year ended September 30, 2016. The increase in net average balance in the current year reflects an increase in FHLB of Cincinnati borrowings as part of our efforts to lengthen the duration of our interest bearing funding sources as well as increases in the balance of our short-term borrowings used to fund: balance sheet growth; our net savings outflow; our capital initiatives; and to manage our on-balance sheet liquidity.2022. Refer to the Extending the Duration of Funding Sources section of the Overview and the General section of Item 7A. Quantitative and Qualitative Disclosures About Market Risk for further discussion. At September 30, 2017, we had the ability to immediately borrow an additional $41.0 million from the FHLB of Cincinnati and $72.3 million from the FRB-Cleveland Discount Window. From the perspective of collateral value securing FHLB of Cincinnati advances, our capacity limit for additional borrowings beyond the immediately available limits at September 30, 2017 was $4.87 billion, subject to

satisfaction of the FHLB of Cincinnati common stock ownership requirement. To satisfy the common stock ownership requirement, we would have to increase our ownership of FHLB of Cincinnati common stock by an additional $97.4 million.
The Association and the Company are subject to various regulatory capital requirements, including a risk-based capital measure. The Basel III capital framework for U.S. banking organizations ("Basel III Rules") includes both a revised definition of capital and guidelines for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories. Effective January 1, 2015,In 2020, the OCC andAssociation adopted the otherSimplifications to the Capital Rule ("Rule") which simplified certain aspects of the capital rule under Basel III. The impact of the Rule was not material to the Association's regulatory ratios.
In 2019, a final rule adopted by the federal bankbanking agencies provided banking organizations with the option to phase in, over a three-year period, the adverse day-one regulatory capital effects of the adoption of the CECL accounting standard. In 2020, as part of its response to the impact of COVID-19, U.S. federal banking regulatory agencies revised their leverageissued a final rule which provides banking organizations that implement CECL during the 2020 calendar year the option to delay for two years an estimate of CECL’s effect on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period, which the Association and risk-basedCompany have adopted. During the two-year delay, the Association and Company added back to CET1, 100% of the initial adoption impact of CECL plus 25% of the cumulative quarterly changes in the allowance for credit losses. After two years the quarterly transitional amounts along with the initial adoption impact of CECL is fixed and will be phased out of CET1 capital requirements andover the method for calculating risk-weighted assetsthree-year period.
The Association is subject to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision"capital conservation buffer" requirement level of 2.5%. The requirement limits capital distributions and certain provisions ofdiscretionary bonus payments to management if the DFA and revisedinstitution does not hold a "capital conservation buffer" in addition to the definition of assets used in the Tier 1 (leverage) capital ratio from adjusted tangible assets (a measurement computed based on quarter-end asset balances) to net average assets (a measurement computed based on the average of daily asset balances during the quarter). Among other things, the rule established a new common equity Tier 1 minimum capital requirement (4.5% of risk-weighted assets) and increased the minimum Tier 1 capital to risk-based assets requirement (from 4% to 6% of risk-weighted assets). The rule also requires unrealized gains and losses on certain "available-for-sale" security holdings and change in defined benefit plan obligations to be included for purposes of calculating regulatory capital requirements unless a one-time opt-in or opt-out is exercised.The Association exercised its one time opt-out election with the filing of its March 31, 2015 regulatory call report. Effective January 1, 2015,requirements. At September 30, 2023, the Association implementedexceeded the new capital requirementsregulatory requirement for the standardized approach to the Basel III Rules, subject to transitional provisions extending through the end of 2018. The final rule also implemented consolidated capital requirements for savings and loan holding companies effective January 1, 2015."capital conservation buffer".
As of September 30, 2017,2023, the Association exceeded all regulatory capital requirements to be considered "Well Capitalized".
In addition to the operational liquidity considerations described above, which are primarily those of the Association, the Company, as a separate legal entity, also monitors and manages its own, parent company-only liquidity, which provides the source of funds necessary to support all of the parent company's stand-alone operations, including its capital distribution strategies which encompass its share repurchase and dividend payment programs. The Company's primary source of liquidity is dividends received from the Association. The amount of dividends that the Association may declare and pay to the Company in any calendar year, without the receipt of prior approval from the OCC but with prior notice to the FRB-Cleveland, cannot
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exceed net income for the current calendar year-to-date period plus retained net income (as defined) for the preceding two calendar years, reduced by prior dividend payments made during those periods. In December 2016,2022, the Company received an $81.0a $40.0 million cash dividend from the Association. Because of its intercompany nature, this dividend payment had no impact on the Company's capital ratios or its consolidated statement of condition but reduced the Association's reported capital ratios.
The Company's seventh stock repurchase program, covering 10,000,000 shares, which began on August 4, 2015, was completed on January 6, 2017. On October 27, 2016, At September 30, 2023, the Company announced thathad, in the Boardform of Directors approvedcash and a demand loan from the Association, $173.7 million of funds readily available to support its stand-alone operations.
The Company’s eighth stock repurchase program, which authorized the repurchase of up to 10,000,000 shares of the Company’s outstanding common stock. Repurchases understock was approved by the eighth stock repurchase authorizationBoard of Directors on October 27, 2016, and repurchases began on January 6, 2017. There were 2,249,1104,808,049 shares repurchased under that program between its start date and September 30, 2017.2023. During the year ended September 30, 2017,2023, the Company repurchased $54.0$5.0 million of its common stock.
On July 26, 2016, Third Federal Savings, MHC received the approval of its members (depositors and certain loan customers of the Association) with respect to the waiverThe payment of dividends, support of asset growth and subsequently received the non-objection of the FRB-Cleveland, to waive receipt of dividends on the Company’s common stock the MHC owns up to a total of $0.50 per share during the four quarterly periods ended June 30, 2017. Third Federal Savings, MHC waived its right to receive a $0.125 per share dividend payment on September 19, 2016, December 12, 2016, March 20, 2017 and June 23, 2017.
On July 19, 2017, Third Federal Savings, MHC received the approval of its members with respect to the waiver of dividends, and subsequently received the non-objection of the FRB-Cleveland, to waive receipt of dividends on the Company’s common stock the MHC owns up to a total of $0.68 per share, to be declared on the Company’s common stock during the twelve months subsequent to the members’ approval (i.e., through July 19, 2018). The members approved the waiver by casting 64% of the eligible votes in favor of the waiver. Of the votes cast, 97% were in favor of the proposal. Third Federal Savings, MHC waived its right to receive a $0.17 per share dividend payment on September 25, 2017.
Whilestrategic stock repurchases are planned to continue in the future as the payment of dividends and support of asset growth will likely represent a larger focus for future capital deployment activities.
At September 30, 2017, Third Federal Savings, MHC has the approval of its members to waive dividends aggregating up to $1.13 per share on the common stock of the Company had, infor the form12 months following the special meeting of cashmembers held on July 11, 2023, and a demand loansubsequently received the non-objection from the Association, $94.4 million of funds readily available to support its stand-alone operations.FRB.

Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
Commitments. As a financial services provider, we routinely are a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit. While these contractual obligations represent our future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process accorded to loans we make. In addition, we routinely enter into commitments to securitize and sell mortgage loans. For additional information, see Note 15 of the Notes to Consolidated Financial Statements.
Contractual Obligations. In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities and agreements with respect to investments.
The following table summarizes our significant fixed and determinable contractual obligations and other funding needs by payment date at September 30, 2017. The payment amounts represent those amounts due to the recipient and do not include any unamortized premiums or discounts or other similar carrying amount adjustments.
  Payments due by period
Contractual Obligations 
Less than
One year
  
One to
Three years
 
Three to
Five years
 
More than
Five years
 Total
  (In thousands)
FHLB advances(1)(2) $2,888,245
   $744,294
 $1,290
 $37,548
 $3,671,377
Operating leases 6,697
   11,125
 6,732
 6,264
 30,818
Certificates of deposit(1) 2,133,538
   2,626,673
 728,409
 202,589
 5,691,209
Limited partner investments 11,541
   —
 —
 —
 11,541
Total $5,040,021
   $3,382,092
 $736,431
 $246,401
 $9,404,945
Commitments to extend credit $2,084,599
(3) $—
 $—
 $—
 $2,084,599
______________________
(1)
Includes accrued interest payable, computed on an actual days outstanding basis, at September 30, 2017.
(2)
Reflect the net impact of deferred penalties discussed in Note 10. Borrowed Funds.
(3)
Includes the unused portion (including commitments for accounts suspended as a result of material default or a decline in equity) of home equity lines of credit of $1.50 billion.
Impact of Inflation and Changing Prices
Our consolidated financial statements and related notes have been prepared in accordance with GAAP. GAAP generally requires the measurement of financial position and operating results in terms of historical dollars without consideration for changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of our operations. Unlike industrial companies, our assets and liabilities are primarily monetary in nature. As a result, changes in market interest rates have a greater impact on performance than the effects of inflation.
Recent Accounting Pronouncements
Refer to Note 21. Recent Accounting Pronouncements 20. RECENT ACCOUNTING PRONOUNCEMENTS of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for pending and adopted accounting guidance.

Item 7A.Quantitative and Qualitative Disclosures About Market Risk
General. The majority of our assets and liabilities are monetary in nature. Consequently, our most significant form of market risk has historically been interest rate risk. In general, our assets, consisting primarily of mortgage loans, have longer maturities than our liabilities, consisting primarily of deposits and advances from the FHLB of Cincinnati. As a result, a fundamental component of our business strategy is to manage interest rate risk and limit the exposure of our net interest income to changes in market interest rates. Accordingly, our Board of Directors has established risk parameter limits deemed appropriate given our business strategy, operating environment, capital, liquidity and performance objectives.Additionally, our Board of Directors has authorized the formation of an Asset/Liability Management Committee comprised of key operating personnel, which is responsible for managing this risk in a mattermanner that is consistent with the guidelines and risk limits approved by the Board of Directors.Further, the Board has established the Directors Risk Committee, which, among other responsibilities, conducts regular oversight and review of the guidelines, policies and deliberations of the Asset/Liability Management Committee. We have sought to manage our interest rate risk in order to control the exposure of our earnings and

capital to changes in interest rates. As partRefer to the Overview section of our ongoing asset-liability management,Item 7 for additional discussion on how we use the following strategies to manage our interest rate risk:
(i)marketing adjustable-rate and shorter-maturity (10-year, fixed-rate mortgage) loan products;
(ii)lengthening the weighted average remaining term of major funding sources, primarily by offering attractive interest rates on deposit products, particularly longer-term certificates of deposit, and through the use of longer-term advances from the FHLB of Cincinnati (or shorter-term advances converted to longer-term durations via the use of interest rate exchange contracts that qualify as cash flow hedges) and longer-term brokered certificates of deposit;
(iii)investing in shorter- to medium-term investments and mortgage-backed securities;
(iv)maintaining the levels of capital required for "well capitalized" designation; and
(v)securitizing and/or selling long-term, fixed-rate residential real estate mortgage loans.
During the fiscal year ended September 30, 2017, $211.0 million of agency-compliant, long-term, fixed-rate mortgage loans were sold to Fannie Mae, and $38.4 million of long-term, fixed-rate mortgage loans, which were also agency-compliant, were sold to the FHLB of Cincinnati. All loans were sold on a servicing retained basis. At September 30, 2017, $0.4 million of agency-compliant, long-term, fixed-rate residential first mortgage loans that qualified under Fannie Mae's HARP II or HomeReady programs, were classified as "held for sale". Of the Fannie Mae loan sales completed during fiscal 2017, $13.7 million was comprised of long-term, (15 to 30 years), fixed-rate first mortgage loans which were sold under Fannie Mae's HARP II, $15.3 million was comprised of long-term, (15 to 30 years), fixed-rate first mortgage loans which were sold under Fannie Mae's HomeReady program, and $182.0 million was comprised of long-term (15 to 30 years), fixed-rate first mortgage loans which had been originated under our revised procedures and were sold to Fannie Mae under our re-instated seller contract, as described in the next paragraph. The loans that were sold to the FHLB of Cincinnati were sold under the FHLB's Mortgage Purchase Program. Loans that qualify under the FHLB Mortgage Purchase Program are classified as “held for investment” until they are specifically identified for sale. At September 30, 2017, we had no outstanding loan sales commitments.risk.
Fannie Mae, historically the Association’s primary loan investor, implemented, effective July 1, 2010, certain loan origination requirement changes affecting loan eligibility that we chose not to adopt until May 2013. Subsequent to the May 2013 implementation date of our revised procedures, and, upon review and validation by Fannie Mae which was received on November 15, 2013, fixed-rate, first mortgage loans (primarily fixed-rate, mortgage refinances with terms of 15 years or more and HARP II, and more recently HomeReady, loans) that are originated under the revised procedures are eligible for sale to Fannie Mae either as whole loans or as mortgage-backed securities. We expect that certain loan types (i.e. our Smart Rate adjustable-rate loans, purchase fixed-rate loans and 10-year fixed-rate loans) will continue to not be originated under the revised (Fannie Mae) procedures and accordingly, the Association’s ability to reduce interest rate risk via loan sales for such loans is limited to those loans that have established payment histories, strong borrower credit profiles and are supported by adequate collateral values that meet the requirements of the FHLB's Mortgage Purchase Program or of private third-party investors.
In response to impact that the 2008 financial crisis had on housing and more particularly on the operation of the secondary mortgage market, we have actively marketed an adjustable-rate mortgage loan product since 2010 and a 10-year fixed-rate mortgage loan product since 2012. Each of these products provides us with improved interest rate risk characteristics when compared to longer-term, fixed-rate mortgage loans. Shortening the average maturity of our interest-earning assets by increasing our investments in shorter-term loans and investments, as well as loans and investments with variable rates of interest, helps to better match the maturities and interest rates of our assets and liabilities, thereby reducing the exposure of our net interest income to changes in market interest rates. By following these strategies, we believe that we are better positioned to react to increases in market interest rates.
The Association evaluates funding source alternatives as it seeks to extend its liability duration. Extended duration funding sources that are currently considered include: retail certificates of deposit (which, subject to a fee, generally provide depositors with an early withdrawal option, but do not require pledged collateral); brokered certificates of deposit (which generally do not provide an early withdrawal option and do not require collateral pledges); collateralized borrowings which are not subject to creditor call options (generally advances from the FHLB of Cincinnati); and interest rate exchange contracts ("swaps") which are subject to collateral pledges and which require specific structural features to qualify for hedge accounting treatment (hedge accounting treatment directs that periodic mark-to-market adjustments be recorded in other comprehensive income (loss) in the equity section of the balance sheet rather than being included in operating results of the income statement). The Association's intent is that any swap to which it may be a party will qualify for hedge accounting treatment. The Association is generally opportunistic in the timing of its funding duration deliberations and when evaluating alternative funding sources, compares effective interest rates, early withdrawal/call options and collateral requirements.

In December 2015, the Association entered into its first interest rate swap agreements in over ten years. Each of the Association's swap agreements is registered on the Chicago Mercantile Exchange and involves the exchange of interest payment amounts based on a notional principal balance. No exchange of principal amounts occurs and the notional principal amount does not appear on our balance sheet. The Association uses swaps to extend the duration of its funding sources. In each of the Association's agreements, interest paid is based on a fixed rate of interest throughout the term of each agreement while interest received is based on an interest rate that resets at a specified interval (generally three months) throughout the term of each agreement. On the initiation date of the swap, the agreed upon exchange interest rates reflect market conditions at that point in time. Swaps generally require counterparty collateral pledges that ensure the counterparties' ability to comply with the conditions of the agreement. The notional amount of the Association's swap portfolio at September 30, 2017 was $1.50 billion. The swap portfolio's weighted average fixed pay rate was 1.62% and the weighted average remaining term was 4.1 years. Concurrent with the execution of each swap, the Association entered into a short-term borrowing from the FHLB of Cincinnati in an amount equal to the notional amount of the swap and with interest rate resets aligned with the reset interval of the swap. For $1.35 billion of our outstanding swaps, the borrowing proceeds represented new monies which were generally used to fund loans and investment securities. During the fiscal year ended September 30, 2016, swaps totaling $150.0 million were contracted to restructure existing longer-term FHLB borrowings. These restructuring transactions lowered our effective cost of funding but did not involve the receipt of new monies. Each individual swap agreement has been designated as a cash flow hedge of interest rate risk associated with the Company's variable rate borrowings from the FHLB of Cincinnati.
Economic Value of Equity. Using customized modeling software, the Company and Association preparesprepare periodic estimates of the amounts by which the net present value of its cash flows from assets, liabilities and off-balance sheet items (the institution’s economic value of equity or EVE) would change in the event of a range of assumed changes in market interest rates. The simulation model uses a discounted cash flow analysis and an option-based pricing approach in measuring the interest rate sensitivity of EVE. The model estimates the economic value of each type of asset, liability and off-balance sheet contract under the assumption that instantaneous changes (measured in basis points) occur at all maturities along the United States Treasury yield curve and other relevant market interest rates. A basis point equals one, one-hundredth of one percent, and 100 basis points equals one percent. An increase in interest rates from 2% to 3% would mean, for example, a 100 basis point increase in the “Change in Interest Rates” column below. The model is tailored specifically to our organization, which, we believe, improves its predictive accuracy. The following table presents the estimated changes in the Association’s EVE at September 30, 2017 that would result from the indicated instantaneous changes in the United States Treasury yield curve and other relevant market interest rates. Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions, including relative levels of market interest rates, loan prepayments and deposit decay, and should not be relied upon as indicative of actual results.
The following table presents the estimated changes in the Company's EVE at September 30, 2023 that would result from the indicated instantaneous changes in the United States Treasury yield curve and other relevant market interest rates.
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TFS Financial CorporationTFS Financial Corporation
Change in
Interest Rates
(basis points) (1)
 
Estimated 
EVE (2)
 
Estimated Increase
(Decrease) in EVE
 
EVE as a Percentage
of Present Value of
Assets (3)
Change in
Interest Rates
(basis points) (1)		Estimated 
EVE (2)		Estimated Increase
(Decrease) in EVE		EVE as a Percentage
of Present Value of
Assets (3)
EVE
Ratio (4)
 
Increase
(Decrease)
(basis points)
EVE
Ratio (4)		Increase
(Decrease)
(basis points)
Amount Percent AmountPercent
 (Dollars in thousands)       (Dollars in thousands)   
+300 $1,461,909
 $(647,110) (30.68)% 11.57% (348)+300$740,527 $(513,451)(40.95)%5.28 %(293)
+200 1,722,441
 (386,578) (18.33)% 13.13% (192)+200928,976 (325,002)(25.92)%6.44 %(177)
+100 1,951,186
 (157,833) (7.48)% 14.36% (69)+1001,111,172 (142,806)(11.39)%7.49 %(72)
0 2,109,019
 —
 — % 15.05% —
01,253,978 — — %8.21 %— 
-100 2,103,755
 (5,264) (0.25)% 14.69% (36)-1001,365,669 111,691 8.91 %8.70 %49 
-200-2001,422,575 168,597 13.44 %8.83 %62 
-300-3001,411,363 157,385 12.55 %8.56 %35 
The following table presents the estimated changes in the Association's EVE at September 30, 2023 that would result from the indicated instantaneous changes in the United States Treasury yield curve and other relevant market interest rates.
Third Federal Savings and Loan Association
Change in
Interest Rates
(basis points) (1)		Estimated 
EVE (2)		Estimated Increase
(Decrease) in EVE		EVE as a Percentage
of Present Value of
Assets (3)
EVE
Ratio (4)		Increase
(Decrease)
(basis points)
AmountPercent
 (Dollars in thousands)   
+300$519,419 $(512,967)(49.69)%3.71 %(306)
+200707,707 (324,679)(31.45)%4.91 %(186)
+100889,739 (142,647)(13.82)%6.00 %(77)
01,032,386 — — %6.77 %— 
-1001,143,898 111,512 10.80 %7.30 %53 
-2001,200,628 168,242 16.30 %7.46 %69 
-3001,189,237 156,851 15.19 %7.22 %45 
_________________
(1)Assumes an instantaneous uniform change in interest rates at all maturities.
(2)EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.
(3)Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.
(4)EVE Ratio represents EVE divided by the present value of assets.
(1)Assumes an instantaneous uniform change in interest rates at all maturities.
(2)EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.
(3)Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.
(4)EVE Ratio represents EVE divided by the present value of assets.
The preceding table indicatestables above indicate that at September 30, 2017,2023, in the event of an increase of 200 basis points in all interest rates, the Company and Association would experience a 18.33%25.92% and 31.45% decrease in EVE.EVE, respectively. In the event of a 100 basis point decrease in interest rates, the Company and Association would experience a 0.25% decrease8.91% and 10.80% increase in EVE.EVE, respectively.

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The following table istables are based on the calculations contained in the previous table,tables, and setsset forth the change in the EVE at a +200 basis point rate of shock at September 30, 2017,2023, with comparative information as of September 30, 2016.2022. By regulation, the Association must measure and manage its interest rate risk for interest rate shocks relative to established risk tolerances in EVE.
TFS Financial Corporation
At September 30,
Risk Measure (+200 bp Rate Shock)20232022
     Pre-Shock EVE Ratio8.21 %11.00 %
     Post-Shock EVE Ratio6.44 %9.25 %
     Sensitivity Measure in basis points(177)(175)
     Percentage Change in EVE Ratio(25.92)%(20.25)%
Third Federal Savings and Loan AssociationThird Federal Savings and Loan Association
At September 30,At September 30,
Risk Measure (+200 bp Rate Shock)2017 2016Risk Measure (+200 bp Rate Shock)20232022
Pre-Shock EVE Ratio15.05 % 14.98 % Pre-Shock EVE Ratio6.77 %9.08 %
Post-Shock EVE Ratio13.13 % 13.72 % Post-Shock EVE Ratio4.91 %6.71 %
Sensitivity Measure in basis points(192) (126) Sensitivity Measure in basis points(186)(237)
Percentage Change in EVE Ratio(18.33)% (13.55)% Percentage Change in EVE Ratio(31.45)%(29.92)%
Certain shortcomings areThe manner in which actual yields, costs and consumer behavior respond to changes in market interest rates may vary from the inherent in the methodologies used in measuringto measure interest rate risk through changes in EVE. Modeling changes in EVE requires making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the EVE tables presented above assume:
•no new growth or business volumes;
•that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured, except for reductions to reflect mortgage loan principal repayments along with modeled prepayments and defaults;defaults, and deposit decays; and
•that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities.
Accordingly, although the EVE tables provide an indication of our interest rate risk exposure as of the indicated dates, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our EVE and will differ from actual results. WhileIn addition to our core business activities, which primarily soughtseek to originate Smart Rate (adjustable) loans, home equity lines of credit (adjustable) and 10-year fixed-rate loans funded by borrowings from the FHLB and intermediate term CDs (including brokered CDs), and which are intended to have a favorable impact on our IRR profile, the net impact of threeseveral other items and events resulted in the 4.78%279 and 231 basis point deterioration in the Percentage Change inPre-Shock EVE measureRatio (base valuation) measures at September 30, 2017,2023, when compared to the measuremeasures at September 30, 2016. The most significant factor2022 for the Company and Association, respectively. Factors contributing to the overall deterioration was the changethese deteriorations included increases in market interest rates, which included an increase of 72 basis points for the two-year term, an increase of 79 basis points for the five-year term and an increase of 74 basis points for the ten-year term, and which resulted in a decrease of 9.14% in the Percentage Change in EVE. Combined with this deterioration was the impact of an $81.0 million cash dividend thatcapital actions by the Association, paidand changes due to the Company. Because of its intercompany nature, this payment had no impact on the Company's capital position, or the Company's overall IRR profile but reduced the Association's regulatory capital and regulatory capital ratios and negatively impacted the Association's Percentage Change in EVE by approximately 0.86%. Partially offsetting the unfavorable impact of the two preceding factors, numerous modifications and enhancements to our modeling assumptions and methodologies, which are continually challenged and evaluated, on a net basis, positively impacted the Association's Percentage Change in EVE by 2.83%. These changes primarily involved factors used in the modeling of prepayment rates for our fixed-rate, first mortgage loans and attempt to more closely align the model’s projections with our historical experience for those products.Finally,business activity. While our core business activities, as described at the beginning of this paragraph, resulted in 2.39%are generally intended to have a positive impact on our IRR profile, the actual impact is determined by a number of improvementfactors, including the pace of mortgage asset additions to our Percentage Changebalance sheet (including consideration of outstanding commitments to originate those assets), in EVE. The IRR simulation results presented above were in line with management's expectations and were withincomparison to the risk limits established by our Boardpace of Directors.the addition of duration extending funding sources.
Our simulation model possesses random patterning capabilities and accommodates extensive regression analytics applicable to the prepayment and decay profiles of our borrower and depositor portfolios. The model facilitates the generation of alternative modeling scenarios and provides us with timely decision making data that is integral to our IRR management processes. Modeling our IRR profile and measuring our IRR exposure are processes that are subject to continuous revision, refinement, modification, enhancement, back testing and validation. We continually evaluate, challenge and update the methodology and assumptions used in our IRR model, including behavioral equations that have been derived based on third-party studies of our customercustomers' historical performance patterns. Changes to the methodology and/or assumptions used in the model will result in reported IRR profiles and reported IRR exposures that will be different, and perhaps significantly, from the results reported above.
Earnings at Risk. In addition to EVE calculations, we use our simulation model to analyze the sensitivity of our net interest income to changes in interest rates (the institution’s EaR). Net interest income is the difference between the interest income that we earn on our interest-earning assets, such as loans and securities, and the interest that we pay on our interest-bearinginterest-
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bearing liabilities, such as deposits and borrowings. In our model, we estimate what our net interest income would be for

prospective 12 and 24 month periods using customized (based on our portfolio characteristics) assumptions with respect to loan prepayment rates, default rates and deposit decay rates, and the implied forward yield curve as of the market date for assumptions asrelated to projected interest rates. We then calculate what the estimated net interest income would be for the same period under numerous interest rate scenarios.The simulation process is subject to continual enhancement, modification, refinement and adaptation in order that it might most accurately reflect our current circumstances, factors and expectations.adaptation. As of September 30, 2017, we2023, the estimated that our EaR for the 12 months ending September 30, 20182024 would decrease by 1.63%1.75% for the Company and 2.71% for the Association in the event that market interest rates used in the simulation were adjusted in equal monthlyincremental amounts (termed a "ramped" format) during the 12 month measurement period to an aggregate increase in 200 basis points. This assumption differs from the assumption used to report our EaR estimates in reporting periods prior to March 31, 2017, when our EaR disclosures were determined under assumed instantaneous changes in market interest rates. During the March 31, 2017 quarter, based on a survey of the predominate practices disclosed by other similarly profiled financial institutions, theThe Company and Association adopteduse the "ramped" assumption in preparing the EaR simulation estimates for use in its public disclosures. In addition to conforming to predominate industry practice, theThe Company and Association also believes that the ramped assumption provides a more probable/plausible scenario for net interest income simulations than instantaneous shocks which provide a theoretical analysis but a much less credible economic scenario. The Association continuescontinue to calculate instantaneous scenarios, and as of September 30, 2017, we2023, the estimated that our EaR for the 12 month periodmonths ending September 30, 2018,2024, would decrease by 5.14%5.16% and 6.91%, respectively, in the event of an instantaneous 200 basis point increase in market interest rates. At September 30, 2017, the IRR simulations results were in line with management's expectations and were within the risk limits established by our Board of Directors.
Certain shortcomings are also inherent in the methodologies used in determining interest rate risk through changes in EaR. Modeling changes in EaR require making certain assumptions that may or may not reflect theThe manner in which actual yields, costs and costsconsumer behavior respond to changes in market interest rates.rates may vary from the inherent methodologies used to measure interest rate risk through EaR. In this regard, the interest rate risk information presented above assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although interest rate risk calculations provide an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our net interest income and will differ from actual results. In addition to the preparation of computations as described above, we also formulate simulations based on a variety of non-linear changes in interest rates and a variety of non-constant balance sheet composition scenarios.
Other Considerations. The EVE and EaR analyses are similar in that they both start with the same month end balance sheet amounts, weighted average coupon and maturity. The underlying prepayment, decay and default assumptions are also the same and they both start with the same month end "markets" (Treasury and LiborFHLB yield curves, etc.). From that similar starting point, the models follow divergent paths. EVE is a stochastic model using 100150 different interest rate paths to compute market value at the cohorted transactionaccount level for each of the categories on the balance sheet whereas EaR uses the implied forward curve to compute interest income/expense at the cohorted transactionaccount level for each of the categories on the balance sheet.
EVE is considered as a point in time calculation with a "liquidation" view of the Company and Association where all the cash flows (including interest, principal and prepayments) are modeled and discounted using discount factors derived from the current market yield curves. It provides a long term view and helps to define changes in equity and duration as a result of changes in interest rates. On the other hand, EaR is based on balance sheet projections going one year and two yearyears forward and assumes new business volume and pricing to calculate net interest income under different interest rate environments. EaR is calculated to determine the sensitivity of net interest income under different interest rate scenarios. With each of these models, specific policy limits have been established for the Association that are compared with the actual month end results. These limits have been approved by the Association's Board of Directors and are used as benchmarks to evaluate and moderate interest rate risk. In the event that there is a breach of policy limits that extends beyond two consecutive quarter end measurement periods, management is responsible for taking such action, similar to those described under the preceding heading of General, as may be necessary in order to return the Association's interest rate risk profile to a position that is in compliance with the policy. At September 30, 2017 the IRR profile as disclosed above was within our internal limits.

Item 8.Financial Statements and Supplementary Data
The Financial Statements are included in Part IV, Item 15 of this Form 10-K.

Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.


Item 9A.Controls and Procedures
Disclosure Controls and Procedures
Under the supervision of and with the participation of the Company’s management, including our principal executive officer and principal financial officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based upon that
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evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.
Changes in Internal Control Over Financial Reporting
No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the most recentrecently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Management’s Report Regarding Internal Control Over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as such terms are defined in Rule 13a-15(f) of the Exchange Act of 1934. Our system of internal controls is designed to provide reasonable assurance that the financial statements that we provide to the public are fairly presented.
Our internal control over financial reporting includes policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets, (ii) provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and (iii) 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 our financial statements.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Accordingly, absolute assurance cannot be provided that the effectiveness of the internal control systems may not become inadequate in future periods because of changes in conditions, or because the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2017.2023. In making this assessment, the criteria set forth by the Committee of Sponsoring Organizations of the Treadway CommissionCOSO in Internal Control-Integrated Framework (2013) was utilized. Based on this assessment, management believesManagement concluded that as of September 30, 2017, the Company’sCompany's internal control over financial reporting iswas effective at the reasonable assurance level.as of September 30, 2023, based on those criteria.
The Company’seffectiveness of the Company's internal control over financial reporting as of September 30, 2023 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, has issued an attestationas stated in their report on the Company’s internal control over financial reporting.which appears herein.
The Sarbanes-Oxley Act Section 302 Certifications have been filed as Exhibit 31.1 and Exhibit 31.2 to this Annual Report on Form 10-K.



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the shareholders and the Board of Directors and Shareholders of
TFS Financial Corporation
Cleveland, OH

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of TFS Financial Corporation and subsidiaries (the "Company"“Company”) as of September 30, 2017,2023, based on criteria established in Internal Control -— Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2023, 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, 2023, of the Company and our report dated November 21, 2023, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company'sCompany’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’sManagement's Report Regarding Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company'sCompany’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 Public Company Accounting Oversight Board (United States).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'scompany’s internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company'scompany’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'scompany’s assets that could have a material effect on the financial statements.


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

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

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended September 30, 2016 of the Company and our report dated November 22, 2017 expressed an unqualified opinion on those financial statements.




/s/ Deloitte & Touche LLP

Cleveland, OHOhio
November 22, 201721, 2023


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Item 9B.Other Information
Securities Trading Plans of Directors and Executive Officers
Transactions in our securities by our executive officers are required to be made in accordance with our Insider Trading Policy and Guidelines with Respect to Certain Transactions in Company Securities, which, among other things, requires that the transaction be in accordance with applicable U.S. federal securities laws that prohibit trading while in the possession of material nonpublic information. Rule 10b5-1 under the Securities Exchange Act of 1934 provides an affirmative defense that enables prearranged transactions in securities in a manner that avoids concerns about initiating transactions at a future date while possibly in possession of material nonpublic information.
During this quarter, Marc A. Stefanski, Chairman, CEO, and President of the Company, completed the transactions that were contemplated in the Trading Plan adopted on June 14, 2023 that was intended to satisfy the affirmative defense conditions of the Exchange Act Rule 10b5-1(c) and authorized a designated option for 286,500 shares of common stock be exercised, after a 90-day cooling off period, in the event that the Company's stock equals or exceeds a predetermined share amount.
On September 18, 2023, Daniel F. Weir, Director of the Company, adopted a Trading Plan that is intended to satisfy the affirmative defense conditions of the Exchange Act Rule 10b5-1(c) and authorizes a sale of a total of 100,000 shares of common stock on designated days, each for designated amount of shares, to be exercised, after a 90-day cooling off period, without regard to a predetermined share trading value. The Trading Plan expires upon the earlier of (1) February 08, 2024, (2) the execution of all of the orders relating to such trades as specified in the plan, (3) the date Broker receives notice of liquidation, dissolution, bankruptcy, or insolvency of the client, (4) the date the Broker receives notice of the Client's death, or (5) the termination of the Trading Plan in accordance with Section 9(b) or Section 16.
Item 9B.9C.Other InformationDisclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.


PART III

Item 10.Directors, Executive Officers and Corporate Governance
Incorporated by reference from the Notice of Annual Meeting and Proxy Statement for the 20182024 Annual Meeting of Shareholders (the “Proxy Statement”) sections entitled “Proposal One: Election of Directors,” “Executive Compensation,” “Section“Delinquent Section 16(a) Beneficial Ownership Reporting Compliance”Reports” and “Corporate Governance.” Such information will be filed with the SEC no later than 120 days after the end of the fiscal year covered by this report.
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The table below sets forth information, as of September 30, 2017,2023, regarding our executive officers other than Mr.Marc A. Stefanski and Ms.Meredith S. Weil.
NameTitleAge
Judith Z. AdamKathleen (Kitty) M. DanckersChief Risk Officer6261
David S. HuffmanRussell C. HolmesChief Retail Officer, the Association60
Susanne N. MillerChief Accounting Officer58
Timothy W. MulhernChief Financial Officer and Secretary(1)6557
PaulAndrew J. HumlRubinoChief Accounting Officer Chief Operating Officer, the Company58
Anna Maria P. MottaChief Information Officer, the Association5848
Cathy W. ZbanekBradley T. StefanskiChief Strategy Officer, the Association35
Gavin B. StefanskiChief Marketing and Human ResourcesExperience Officer, the Association4435
Cathy W. ZbanekChief Synergy Officer, the Association50
(1) On October 26, 2023, the Board of Directors appointed Mr. Mulhern to the role of Chief Innovation Officer of the Association and appointed Ms. Weil as Chief Financial Officer effective January 1, 2024.
The executive officers of the Company and the Association are elected annually and hold office until their respective successors are elected or until death, resignation, retirement or removal by the Board of Directors.
The Business Background of Our Executive Officers
The business experience for the past five years of each of our executive officers other than Mr. Stefanski and Ms. Weil is set forth below. Unless otherwise indicated, executive officers have held their positions for the past five years.
Judith Z. Adam joinedKathleen (Kitty) M. Danckers has been with the Association in 2000since 1997, and was named Chief Risk Officer in 2015.June 2020. During her time with the Association, Ms. AdamDanckers has managed the Accounting, Internetserved in various management roles including as a Regional Manager of Retail Operations, Manager of Information Services and Loan Production teams.Operations Support, and continues to serve as the Chief Information Security Officer. Ms. Adam’s more than 30Danckers holds a BA in Computer Science, Mathematics and German from St. Catherine University.Ms. Danckers is a Fulbright Scholar.
Russell C. Holmeshas been with the Association since 2013 in retail delivery management and was named Chief Retail Officer in 2020. He most recently served as Ohio regional manager, managing all branch and loan production offices in the state. With 35 years in the banking industry have included servingbusiness, Mr. Holmes joined Third Federal from Key Bank where he served as SVP District Retail Leader for Eastern Ohio. He holds a BS in various accounting roles at TransOhio Savings BankBusiness Administration from the University of Akron, and Metropolitan Bank & Trust.received a Distinguished Business Alumni Award in 2009, and a Distinguished Alumni Award from the University’s multicultural department in 2013.
David S. HuffmanSusanne N. Miller joined the Association in 1993, and has served as its Chief Financial Officer since 2000. He has also served as Chief Financial Officer of the Company since 2004 and as Secretary since 2011. Mr. Huffman has more than 30 years of experience in the financial institutions industry, including serving as Chief Financial Officer of First American Savings Bank of Canton, Ohio, from 1989 to 1993.
Paul J. Huml joined the Association as a Vice President in 1998 and was appointed Chief Operating Officer of the Company in 2002 and Chief Accounting Officer in June 2009. Prior to joining the Association, Mr. Huml spent 10 years in the hotel industry, focusing on the areas of finance, real estate development and risk management. Mr. Huml is a certified public accountant in the state of Ohio.
Anna Maria P. Motta joined the Association in 1989 and was named Chief Information Officer in 2014.2020. During her time with the Association, Ms. MottaMiller has held various retail and accounting roles, and served on company-wide strategic project teams. Since 2007, she has worked as a manager in the Accounting Department, overseeing procedure implementation, corporate tax reporting and financial statement preparation. Ms. Miller holds a BS in Accounting from the University of Akron.
Timothy W. Mulhern was named the Chief Financial Officer in January 2022. Mr. Mulhern joined the Association in 2003 as a project manager where he led key strategic business initiatives including a state loan expansion project, and IT projects to replace the company’s front-end servicing application, and implementation of an updated loan origination system. Mr. Mulhern moved to IT management, then to operations where he managed a number of different operational areasvarious departments including Northeast Ohio Retail Operations, Customer Service, Internet Services, Loan Servicing, Default Servicing and Deposit Operations,Operations. He was named the Chief Credit Officer in August 2018, and Information Services. Ms. Motta’sDirector of Internal Audit in June 2019, where he earned his CIA credentials. Mr. Mulhern joined the Finance Department in February 2021. He holds a Bachelor’s Degree in Accounting from John Carroll University and an MBA from the Weatherhead School of Management at Case Western Reserve University. Prior to joining Third Federal, Mr. Mulhern was in public accounting with Coopers & Lybrand where he earned his CPA credentials, and more than 30a decade as a small business owner.
Andrew J. Rubinohas been with the Association since 2000, joining the company as a business analyst. He was named Chief Information Officer in 2021. Mr. Rubino has held a variety of leadership positions throughout the company, serving as Information Security Officer and managing several strategic areas of the company, including: Loan Production, Customer Care, Internet Services, Operations Support and Marketing, most recently serving as Chief Marketing Officer. He holds both a BS in Management Information Systems and an MBA from the University of Akron.
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Bradley T. Stefanski has been with the Association since 2014, and was named Chief Strategy Officer in March 2022. He began his career at Third Federal in the Risk Management Department, working on the development of the company’s Market Risk Management Program, including modeling and testing; before moving to Loan Production and the branch system, where he spent four years in roles in Underwriting, retail management, and Operations Support project development. Mr. Stefanski then joined the banking industry also included serving as TreasurerFinance Department in 2021 to help drive strategic initiatives. He holds a BA in Sociology and Economics from Colgate University. Bradley T. Stefanski is the son of ParkViewour Chairman of the Board, Chief Executive Officer and President, Marc A. Stefanski, and brother of our Vice Chairman of the Board, Ashley H. Williams.
Gavin B. Stefanski joined the Association in 2018 in the Management Training Program, supporting the company’s branch system in Southern and Northeast Ohio. Mr. Stefanski was named Underwriting Manager in 2019, Loan Production Manager in 2021, and became Chief Lending Officer in March 2022. He was named Chief Experience Officer in May 2023. Prior to Third Federal, Savingshe managed multi-billion dollar and Loan,strategic clients for ODW Logistics, a national supply chain solutions company in Cleveland,Hamilton, Ohio, where he was responsible for developing and maintaining customized total freight management solutions driving high revenue growth for ODW. Mr. Stefanski holds a BS in Business from 1987 to 1989.the Farmer School of Business at Miami University. Gavin B. Stefanski is the nephew of our Chairman of the Board, Chief Executive Officer and President, Marc A. Stefanski, and cousin of our Vice Chairman of the Board, Ashley H. Williams.


Cathy W. Zbanek joined the Association in 2001, and was named Chief Synergy Officer in 2020. In her role, Ms. Zbanek is responsible for fostering the internal synergy of the organization as well as customer engagement. She most recently served as Chief Marketing Officer in January 2013 and also serves as the Human Resources Officer for the Association.since 2013. Prior to her current role, sheroles on the executive team, Ms. Zbanek directed several of the company’s key strategic business projects as well as systems design and development. She also managed several Third Federal departments, including Customer Service.Service and Marketing. Before joining the Association, Ms. Zbanek served as a senior consultant with Waterstone Consulting, working in their Management Consulting Group. Her experience also includes working with the consulting group, Price Waterhouse Coopers. She holds a BA in Economics and Psychology from the University of Pennsylvania.
The Company has adopted a policy statement entitled CODE OF ETHICS FOR SENIOR FINANCIAL OFFICERS that applies to our chief executive officer and our senior financial officers. A copy of the CODE OF ETHICS FOR SENIOR FINANCIAL OFFICERS is available on our website, www.thirdfederal.com.


Item 11.Executive Compensation
Incorporated by reference from the sections of the Proxy Statement entitled “Executive Compensation,” “Report of the Compensation Committee,” and “Director Compensation.” Such information will be filed with the SEC no later than 120 days after the end of the fiscal year covered by this report.


Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Incorporated by reference from the section of the Proxy Statement entitled “Security Ownership of Certain Beneficial Owners and Management.” Such information will be filed with the SEC no later than 120 days after the end of the fiscal year covered by this report.
The Company’s only equity compensation program that was not approved by shareholders is its employee stock ownership plan, which was established in conjunction with our initial stock offering completed in April 2007.
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The following table provides information as of September 30, 20172023 regarding our Amended and Restated 2008 Equity Incentive Plan that was approved by shareholders on February 22, 2018. The original plan was approved by shareholders on May 29, 2008:2008.
Plan Category 
Number of Shares to be
Issued Upon Exercise of
Outstanding Options,
Rights and Warrants
 
Weighted-Average
Exercise Price of
Outstanding Options,
Rights and Warrants
 
Number of Shares
Remaining Available
for Future Issuance
Under the Plan
Plan CategoryNumber of Shares to be
Issued Upon Exercise of
Outstanding Options,
Rights and Warrants		Weighted-Average
Exercise Price of
Outstanding Options,
Rights and Warrants		Number of Shares
Remaining Available
for Future Issuance
Under the Plan
Equity Compensation Plans       Equity Compensation Plans
Approved by Stockholders 5,685,500
 $10.53
(1) 11,011,124
 Approved by Stockholders3,549,879 $8.81 (1)7,138,688 
Equity Compensation Plans       Equity Compensation Plans
Not Approved by Stockholders N/A
 N/A
 N/A
 Not Approved by StockholdersN/AN/AN/A
Total 5,685,500
 $10.53
(1) 11,011,124
 Total3,549,879 $8.81 (1)7,138,688 
 ______________________
(1)Weighted-Average Exercise Price of Outstanding Options, Rights and Warrants is calculated using 1,339,833 shares of restricted stock awards at $0.00, 218,071 shares of performance share units at $0.00, and 1,991,975 shares of stock option awards at $15.69.

(1)
Weighted-Average Exercise Price of Outstanding Options, Rights and Warrants is calculated using 1,169,068 shares of restricted stock awards at $0.00 and 4,516,432 shares of stock option awards at $13.26.

Item 13.Certain Relationships and Related Transactions, and Director Independence
Incorporated by reference from the sections of the Proxy Statement entitled “Certain Relationships and Related Transactions” and “Corporate Governance.” Such information will be filed with the SEC no later than 120 days after the end of the fiscal year covered by this report.


Item 14.Principal Accounting Fees and Services
Incorporated by reference from the section of the Proxy Statement entitled “Fees Paid to Deloitte & Touche LLP.LLP (PCAOB ID No. 34).” Such information will be filed with the SEC no later than 120 days after the end of the fiscal year covered by this report.





PART IV

Item 15.Exhibits and Financial Statement Schedules
(a)(1) Financial Statements
The following documents are filed as part of this Annual Report on Form 10-K:
a.The consolidated financial statements of TFS Financial Corporation and subsidiaries contained in Part II, Item 8 of this Annual Report on Form 10-K:
a.The consolidated financial statements of TFS Financial Corporation and subsidiaries contained in Part II, Item 8 of this Annual Report on Form 10-K:
•Consolidated Statements of Condition as of September 30, 20172023 and 2016;2022;
•Consolidated Statements of Income for the years ended September 30, 2017, 20162023, 2022 and 2015;2021;
•Consolidated Statements of Comprehensive Income for the years ended September 30, 2017, 20162023, 2022 and 2015;2021;
•Consolidated Statements of Shareholders' Equity for the years ended September 30, 2017, 20162023, 2022 and 2015;2021;
•Consolidated Statements of Cash Flows for the years ended September 30, 2017, 20162023, 2022 and 2015;2021; and
•Notes to the Consolidated Financial Statements
b.    The exhibits listed in the Exhibits Index beginning on Page 131121 of this Annual Report on Form 10-K.



Item 16.Form 10-K Summary

Not applicable.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the shareholders and the Board of Directors and Shareholders of
TFS Financial Corporation
Cleveland, OH

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of condition of TFS Financial Corporation and subsidiaries (the "Company") as of September 30, 20172023 and 2016, and2022, the related consolidated statements of income, comprehensive income (loss), shareholders' equity, and cash flows, for each of the three years in the period ended September 30, 2017. 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2023, 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, 2023, 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 21, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

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

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


InCritical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion suchon 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

The allowance for credit losses (“ACL”) is management’s estimate of expected credit losses in the loan portfolio, including off-balance sheet commitments. As discussed in Notes 1 and 5 of the consolidated financial statements, present fairly, in all material respects, the financial positionACL is an amount which represents management’s best estimate of TFS Financial Corporationexpected credit losses over the contractual life of the Company’s loan portfolio as of the balance sheet date. We have identified the general valuation allowance ("GVA"), which is a component of ACL, for both the loan portfolio and subsidiariesoff-balance sheet commitments, as a critical audit matter. GVA for the loan portfolio is comprised of quantitative general valuation allowances for credit losses based on historical loan loss, and qualitative adjustments to the quantitative general valuation allowances to cover uncertainties that affect the estimate of expected credit losses. GVA for off-balance sheet commitments is comprised of expected lifetime losses on unfunded loan commitments to extend credit where the obligations are not unconditionally cancellable.

As of September 30, 2017 and 2016,2023, the Company's loan portfolio totaled $15.2 billion, and the resultsrelated ACL was $77.3 million, including $67.8 million GVA. The Company's off-balance sheet commitments totaled $5.1 billion, and the related GVA was $27.5 million. The GVA is established using relevant available information, relating to past events, current conditions, and reasonable and supportable forecasts. The Company utilizes loan level regression models with forecasted economic data to derive the probability of their operationsdefault and their cash flowsloss given default factors. These factors are used to calculate the loan level credit loss over a 24-month reasonable and supportable period with an immediate reversion to historical mean loss rates for eachthe remaining life of the three yearsloans. Qualitative adjustments are then made to account for factors that management does not believe are captured in the period ended September 30, 2017,Current Expected Credit Losses ("CECL") quantitative models. The determination of the appropriate level of the allowance for
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the loan portfolio inherently involves a high degree of subjectivity and requires significant estimates of current credit risks using both quantitative and qualitative analyses.

Auditing certain aspects of the GVA, including the (1) model methodology, (2) model accuracy, (3) model assumptions, (4) selection of relevant risk characteristics, (5) interpretation of the results, and (6) use of qualitative adjustments, involves especially subjective and complex judgment. Given the significant judgment in conformity with accounting principles generally accepteddetermining the GVA estimate, performing audit procedures to evaluate the reasonableness of management’s estimate of the GVA requires a high degree of auditor judgment and an increased extent of effort, including the need to involve our credit specialists.

How the Critical Audit Matter Was Addressed in the United StatesAudit

Our audit procedures related to the GVA included the following, among others:

• We tested the effectiveness of America.
We have also audited, in accordance withcontrols over the standardsCompany’s (1) model methodology, (2) model accuracy, (3) model assumptions, (4) selection of relevant risk characteristics, (5) interpretation of the Public Company Accounting Oversight Board (United States),results, and (6) use of qualitative adjustments.

• With the assistance of our credit specialists, we evaluated the reasonableness of the (1) model methodology, (2) model accuracy, (3) model assumptions, (4) selection of relevant risk characteristics, and (5) interpretation of the results.

• We evaluated trends in the total GVA for consistency with trends in loan portfolio growth and credit performance.

• We tested the accuracy and completeness of key risk characteristics input into the model by agreeing to source information.

• We assessed the Company's internal control over financial reporting asmethod for determining the qualitative factor adjustments and the effect of September 30, 2017, basedthose factors on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway CommissionGVA compared with relevant credit risk factors and our report dated November 22, 2017 expressed an unqualified opinion on the Company's internal control over financial reporting.credit trends.






/s/ Deloitte & Touche LLP

Cleveland, OHOhio
November 22, 201721, 2023



We have served as the Company's auditor since 2000.






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TFS FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CONDITION
As of September 30, 20172023 and 20162022
(In thousands, except share data)
 
2017 201620232022
ASSETS   ASSETS
Cash and due from banks$35,243
 $27,914
Cash and due from banks$29,134 $18,961 
Other interest-earning cash equivalents232,975
 203,325
Other interest-earning cash equivalents437,612 350,603 
Cash and cash equivalents268,218
 231,239
Cash and cash equivalents466,746 369,564 
Investment securities available for sale (amortized cost $541,964 and $517,228, respectively)537,479
 517,866
Mortgage loans held for sale, at lower of cost or market (none measured at fair value)351
 4,686
Investment securities available for sale (amortized cost $561,715 and $501,597, respectively)Investment securities available for sale (amortized cost $561,715 and $501,597, respectively)508,324 457,908 
Mortgage loans held for saleMortgage loans held for sale3,260 9,661 
Loans held for investment, net:   Loans held for investment, net:
Mortgage loans12,434,339
 11,748,099
Mortgage loans15,177,844 14,276,478 
Other loans3,050
 3,116
Other loans4,411 3,263 
Deferred loan expenses, net30,865
 19,384
Deferred loan expenses, net60,807 50,221 
Allowance for loan losses(48,948) (61,795)
Allowance for credit losses on loansAllowance for credit losses on loans(77,315)(72,895)
Loans, net12,419,306
 11,708,804
Loans, net15,165,747 14,257,067 
Mortgage loan servicing assets, net8,375
 8,852
Mortgage loan servicing assets, net7,400 7,943 
Federal Home Loan Bank stock, at cost89,990
 69,853
Federal Home Loan Bank stock, at cost247,098 212,290 
Real estate owned, net5,521
 6,803
Real estate owned, net1,444 1,191 
Premises, equipment, and software, net60,875
 61,003
Premises, equipment, and software, net34,708 34,531 
Accrued interest receivable35,479
 32,818
Accrued interest receivable53,910 40,256 
Bank owned life insurance contracts205,883
 200,144
Bank owned life insurance contracts312,072 304,040 
Other assets61,086
 63,994
Other assets117,270 95,428 
TOTAL ASSETS$13,692,563
 $12,906,062
TOTAL ASSETS$16,917,979 $15,789,879 
LIABILITIES AND SHAREHOLDERS’ EQUITY   LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits$8,151,625
 $8,331,368
Deposits$9,449,820 $8,921,017 
Borrowed funds3,671,377
 2,718,795
Borrowed funds5,273,637 4,793,221 
Borrowers’ advances for insurance and taxes100,446
 92,313
Borrowers’ advances for insurance and taxes124,417 117,250 
Principal, interest, and related escrow owed on loans serviced35,766
 49,401
Principal, interest, and related escrow owed on loans serviced29,811 29,913 
Accrued expenses and other liabilities43,390
 53,727
Accrued expenses and other liabilities112,933 84,139 
Total liabilities12,002,604
 11,245,604
Total liabilities14,990,618 13,945,540 
Commitments and contingent liabilities
 
Commitments and contingent liabilities
Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued and outstanding—
 —
Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued and outstanding— — 
Common stock, $0.01 par value, 700,000,000 shares authorized; 332,318,750 shares issued; 281,291,750 and 284,219,019 outstanding at September 30, 2017 and September 30, 2016, respectively3,323
 3,323
Common stock, $0.01 par value, 700,000,000 shares authorized; 332,318,750 shares issued; 280,359,173 and 280,582,741 outstanding at September 30, 2023 and September 30, 2022, respectivelyCommon stock, $0.01 par value, 700,000,000 shares authorized; 332,318,750 shares issued; 280,359,173 and 280,582,741 outstanding at September 30, 2023 and September 30, 2022, respectively3,323 3,323 
Paid-in capital1,722,672
 1,716,818
Paid-in capital1,755,027 1,751,223 
Treasury stock, at cost; 51,027,000 and 48,099,731 shares at September 30, 2017 and September 30, 2016, respectively(735,530) (681,569)
Treasury stock, at cost; 51,959,577 and 51,736,009 shares at September 30, 2023 and September 30, 2022, respectivelyTreasury stock, at cost; 51,959,577 and 51,736,009 shares at September 30, 2023 and September 30, 2022, respectively(776,101)(771,986)
Unallocated ESOP shares(53,084) (57,418)Unallocated ESOP shares(27,084)(31,417)
Retained earnings—substantially restricted760,070
 698,930
Retained earnings—substantially restricted886,984 870,047 
Accumulated other comprehensive loss(7,492) (19,626)
Accumulated other comprehensive incomeAccumulated other comprehensive income85,212 23,149 
Total shareholders’ equity1,689,959
 1,660,458
Total shareholders’ equity1,927,361 1,844,339 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$13,692,563
 $12,906,062
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$16,917,979 $15,789,879 
See accompanying notes to consolidated financial statements.

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TFS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For each of the three years in the period ended September 30, 20172023
(In thousands, except share and per share data)
 
2017 2016 2015202320222021
INTEREST AND DIVIDEND INCOME:     INTEREST AND DIVIDEND INCOME:
Loans, including fees$394,447
 $375,624
 $369,302
Loans, including fees$565,610 $395,691 $381,887 
Investment securities available for sale9,041
 9,390
 9,571
Investment securities available for sale14,370 5,501 3,822 
Other interest and dividend earning assets5,507
 3,427
 4,604
Other interest and dividend earning assets31,939 8,141 3,642 
Total interest and dividend income408,995
 388,441
 383,477
Total interest and dividend income611,919 409,333 389,351 
INTEREST EXPENSE:     INTEREST EXPENSE:
Deposits87,421
 90,000
 93,526
Deposits174,201 76,943 97,319 
Borrowed funds42,678
 28,026
 19,824
Borrowed funds154,151 64,994 60,402 
Total interest expense130,099
 118,026
 113,350
Total interest expense328,352 141,937 157,721 
NET INTEREST INCOME278,896
 270,415
 270,127
NET INTEREST INCOME283,567 267,396 231,630 
PROVISION (CREDIT) FOR LOAN LOSSES(17,000) (8,000) (3,000)
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES295,896
 278,415
 273,127
PROVISION (RELEASE) FOR CREDIT LOSSESPROVISION (RELEASE) FOR CREDIT LOSSES(1,500)1,000 (9,000)
NET INTEREST INCOME AFTER PROVISION (RELEASE) FOR CREDIT LOSSESNET INTEREST INCOME AFTER PROVISION (RELEASE) FOR CREDIT LOSSES285,067 266,396 240,630 
NON-INTEREST INCOME:     NON-INTEREST INCOME:
Fees and service charges, net of amortization6,896
 7,423
 7,972
Fees and service charges, net of amortization7,840 9,934 9,602 
Net gain on the sale of loans2,183
 6,161
 4,519
Net gain on the sale of loans498 1,136 33,082 
Increase in and death benefits from bank owned life insurance contracts6,449
 7,409
 7,324
Increase in and death benefits from bank owned life insurance contracts9,355 9,984 9,961 
Other4,321
 3,959
 4,445
Other3,736 2,750 2,654 
Total non-interest income19,849
 24,952
 24,260
Total non-interest income21,429 23,804 55,299 
NON-INTEREST EXPENSE:     NON-INTEREST EXPENSE:
Salaries and employee benefits95,682
 96,281
 95,638
Salaries and employee benefits112,785 109,339 108,867 
Marketing services19,713
 16,956
 19,904
Marketing services25,288 21,263 19,174 
Office property, equipment, and software24,531
 23,862
 22,048
Office property, equipment, and software27,734 26,783 25,710 
Federal insurance premium and assessments10,055
 10,377
 11,135
Federal insurance premium and assessments13,452 9,361 9,085 
State franchise tax5,235
 5,459
 5,914
State franchise tax4,891 4,859 4,663 
Real estate owned expense, net3,185
 5,772
 9,705
Other expenses24,003
 22,297
 23,648
Other expenses28,979 26,541 28,336 
Total non-interest expense182,404
 181,004
 187,992
Total non-interest expense213,129 198,146 195,835 
INCOME BEFORE INCOME TAXES133,341
 122,363
 109,395
INCOME BEFORE INCOME TAXES93,367 92,054 100,094 
INCOME TAX EXPENSE44,464
 41,810
 36,804
INCOME TAX EXPENSE18,117 17,489 19,087 
NET INCOME$88,877
 $80,553
 $72,591
NET INCOME$75,250 $74,565 $81,007 
Earnings per share—basic and diluted$0.32
 $0.28
 $0.25
Earnings per shareEarnings per share
BasicBasic$0.27 $0.26 $0.29 
DilutedDiluted$0.26 $0.26 $0.29 
Weighted average shares outstanding     Weighted average shares outstanding
Basic277,213,258
 281,566,648
 289,935,861
Basic277,436,382 277,370,762 276,694,594 
Diluted279,268,768
 283,785,713
 292,210,417
Diluted278,583,454 278,686,365 278,576,254 
See accompanying notes to consolidated financial statements.



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TFS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For each of the three years in the period ended September 30, 20172023
(In thousands)

202320222021
Net income$75,250 $74,565 $81,007 
Other comprehensive income (loss), net of tax:
Net change in unrealized (losses) gains on securities available for sale(7,274)(34,860)(3,733)
Net change in cash flow hedges66,649 127,093 56,096 
Net change in defined benefit plan obligation2,688 (1,283)11,801 
Total other comprehensive income (loss)62,063 90,950 64,164 
Total comprehensive income$137,313 $165,515 $145,171 


  2017 2016 2015
Net income $88,877
 $80,553
 $72,591
Other comprehensive income (loss), net of tax:      
Net change in unrealized gain (loss) on securities available for sale (3,331) (1,510) 3,018
Net change in cash flow hedges 11,620
 (1,371) —
Change in pension obligation 3,845
 (3,680) (5,291)
Total other comprehensive income (loss) 12,134
 (6,561) (2,273)
Total comprehensive income $101,011
 $73,992
 $70,318

See accompanying notes to consolidated financial statements.



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TFS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
For each of the three years in the period ended September 30, 20172023
(In thousands, except share and per share data)
 Common
stock		Paid-in
capital		Treasury
stock		Unallocated
common stock
held by ESOP		Retained
earnings		Accumulated other
comprehensive income (loss)		Total
shareholders'equity
Balance at September 30, 2020$3,323 $1,742,714 $(767,649)$(40,084)$865,514 $(131,965)$1,671,853 
Comprehensive income
Cumulative effect from changes in accounting principle, net of tax1
— — — — (35,763)— (35,763)
Net income— — — — 81,007 — 81,007 
Other comprehensive income net of tax— — — — — 64,164 64,164 
ESOP shares allocated or committed to be released— 3,936 — 4,333 — — 8,269 
Compensation costs for equity incentive plans— 5,442 — — — — 5,442 
Treasury stock allocated to (from) equity incentive plan— (5,205)(386)— — — (5,591)
Dividends declared to common shareholders ($1.1225 per common share)— — — — (57,101)— (57,101)
Balance at September 30, 20213,323 1,746,887 (768,035)(35,751)853,657 (67,801)1,732,280 
Comprehensive income
Net income— — — — 74,565 — 74,565 
Other comprehensive income, net of tax— — — — — 90,950 90,950 
ESOP shares allocated or committed to be released— 2,729 — 4,334 — — 7,063 
Compensation costs for equity incentive plans— 3,946 — — — — 3,946 
Purchase of treasury stock (337,259 shares)— — (5,049)— — — (5,049)
Treasury stock allocated to (from) equity incentive plan— (2,339)1,098 — — — (1,241)
Dividends declared to common shareholders ($1.13 per common share)— — — — (58,175)— (58,175)
Balance at September 30, 20223,323 1,751,223 (771,986)(31,417)870,047 23,149 1,844,339 
Comprehensive income
Net income— — — — 75,250 — 75,250 
Other comprehensive income, net of tax— — — — — 62,063 62,063 
ESOP shares allocated or committed to be released— 1,427 — 4,333 — — 5,760 
Compensation costs for equity incentive plans— 4,240 — — — — 4,240 
Purchase of treasury stock (361,869 shares)— — (5,000)— — — (5,000)
Treasury stock allocated to (from) equity incentive plan— (1,863)885 — — — (978)
Dividends declared to common shareholders ($1.13 per common share)— — — — (58,313)— (58,313)
Balance at September 30, 2023$3,323 $1,755,027 $(776,101)$(27,084)$886,984 $85,212 $1,927,361 
 
Common
stock
 
Paid-in
capital
 
Treasury
stock
 
Unallocated
common stock
held by ESOP
 
Retained
earnings
 Accumulated other
comprehensive 
income (loss)		 
Total
shareholders’
equity
Balance at September 30, 2014$3,323
 1,702,441
 (379,109) (66,084) 589,678
 (10,792) $1,839,457
Comprehensive income             
Net income—
 —
 —
 —
 72,591
 —
 72,591
Other comprehensive loss, net of tax—
 —
 —
 —
 —
 (2,273) (2,273)
ESOP shares allocated or committed to be released—
 2,284
 —
 4,333
 —
 —
 6,617
Compensation costs for stock-based plans—
 7,363
 —
 —
 —
 —
 7,363
Excess tax benefit from stock-based compensation—
 1,582
 —
 —
 —
 —
 1,582
Purchase of treasury stock (11,275,950 shares)—
 —
 (172,366) —
 —
 —
 (172,366)
Treasury stock allocated to restricted stock plan—
 (6,041) 2,918
 —
 (988) —
 (4,111)
Dividends paid to common shareholders ($0.31 per common share)—
 —
 —
 —
 (19,490) —
 (19,490)
Balance at September 30, 2015$3,323
 1,707,629
 (548,557) (61,751) 641,791
 (13,065) $1,729,370
Comprehensive income             
Net income—
 —
 —
 —
 80,553
 —
 80,553
Other comprehensive loss, net of tax—
 —
 —
 —
 —
 (6,561) (6,561)
ESOP shares allocated or committed to be released—
 3,380
 —
 4,333
 —
 —
 7,713
Compensation costs for stock-based plans—
 5,723
 —
 —
 —
 —
 5,723
Excess tax benefit from stock-based compensation—
 3,198
 —
 —
 —
 —
 3,198
Purchase of treasury stock (7,210,500 shares)—
 —
 (128,427) —
 —
 —
 (128,427)
Treasury stock allocated to restricted stock plan—
 (3,112) (4,585) —
 —
 —
 (7,697)
Dividends paid to common shareholders ($0.425 per common share)—
 —
 —
 —
 (23,414) —
 (23,414)
Balance at September 30, 2016$3,323
 1,716,818
 (681,569) (57,418) 698,930
 (19,626) $1,660,458
Comprehensive income             
Net income—
 —
 —
 —
 88,877
 —
 88,877
Other comprehensive loss, net of tax—
 —
 —
 —
 —
 12,134
 12,134
ESOP shares allocated or committed to be released—
 3,009
 —
 4,334
 —
 —
 7,343
Compensation costs for stock-based plans—
 3,937
 —
 —
 (28) —
 3,909
Purchase of treasury stock (3,148,610 shares)—
 —
 (52,549) —
 —
 —
 (52,549)
Treasury stock allocated to restricted stock plan—
 (1,092) (1,412) —
 —
 —
 (2,504)
Dividends paid to common shareholders ($0.545 per common share)—
 —
 —
 —
 (27,709) —
 (27,709)
Balance at September 30, 2017$3,323
 1,722,672
 (735,530) (53,084) 760,070
 (7,492) $1,689,959
1 Related to ASU 2016-13 adopted October 1, 2020.
See accompanying notes to consolidated financial statements.

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TFS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For each of the three years in the period ended September 30, 20172023
(In thousands)
2017 2016 2015202320222021
CASH FLOWS FROM OPERATING ACTIVITIES:     CASH FLOWS FROM OPERATING ACTIVITIES:(In thousands)
Net income$88,877
 $80,553
 $72,591
Net income$75,250 $74,565 $81,007 
Adjustments to reconcile net income to net cash provided by operating activities:     Adjustments to reconcile net income to net cash provided by operating activities:
ESOP and stock-based compensation expense11,252
 13,436
 13,980
ESOP and stock-based compensation expense10,000 11,009 13,711 
Depreciation and amortization20,885
 19,369
 17,453
Depreciation and amortization18,115 27,035 32,568 
Deferred income taxes3,548
 11,099
 9,185
Deferred income taxes3,732 (26,876)(14,249)
Provision (credit) for loan losses(17,000) (8,000) (3,000)
Provision (release) for credit lossesProvision (release) for credit losses(1,500)1,000 (9,000)
Net gain on the sale of loans(2,183) (6,161) (4,519)Net gain on the sale of loans(498)(1,136)(33,082)
Other net increase562
 613
 2,962
Principal repayments on and proceeds from sales of loans held for sale29,172
 16,285
 27,815
Loans originated for sale(24,947) (20,466) (27,011)
Increase in and death benefits for bank owned life insurance contracts(6,320) (4,854) (6,491)
Cash Collateral received from derivative counterparties7,525
 —
 —
Net increase in interest receivable and other assets(1,383) (13,087) (2,173)
Net (decrease) increase in accrued expenses and other liabilities(1,295) (4,128) 1,014
Other—
 255
 296
Net gain on sale of commercial propertyNet gain on sale of commercial property— (181)— 
Other net (gains) lossesOther net (gains) losses(199)810 689 
Proceeds from sales of loans held for saleProceeds from sales of loans held for sale43,124 41,495 63,913 
Loans originated and principal repayments on loans held for saleLoans originated and principal repayments on loans held for sale(45,082)(66,162)(67,024)
Increase in bank owned life insurance contractsIncrease in bank owned life insurance contracts(9,355)(8,432)(7,979)
Net (increase) decrease in interest receivable and other assetsNet (increase) decrease in interest receivable and other assets(39,360)(13,043)7,697 
Net increase (decrease) in accrued expenses and other liabilitiesNet increase (decrease) in accrued expenses and other liabilities36,495 (1,155)14,904 
Net cash provided by operating activities108,693
 84,914
 102,102
Net cash provided by operating activities90,722 38,929 83,155 
CASH FLOWS FROM INVESTING ACTIVITIES:     CASH FLOWS FROM INVESTING ACTIVITIES:
Loans originated(3,422,896) (3,024,260) (2,760,277)
Loans originated or purchasedLoans originated or purchased(3,549,306)(5,273,730)(4,874,761)
Principal repayments on loans2,494,866
 2,310,358
 2,052,276
Principal repayments on loans2,605,262 3,447,529 4,756,761 
Proceeds from sales, principal repayments and maturities of:     Proceeds from sales, principal repayments and maturities of:
Securities available for sale153,315
 154,520
 153,945
Securities available for sale83,567 163,568 317,066 
Proceeds from sale of:     Proceeds from sale of:
Loans218,158
 186,705
 133,456
Loans33,635 87,671 739,699 
Real estate owned8,761
 22,400
 25,134
Real estate owned484 429 206 
Premises, equipment and other assetsPremises, equipment and other assets— 389 — 
Purchases of:     Purchases of:
FHLB Stock(20,137) (383) (29,059)
Bank-owned life insuranceBank-owned life insurance— — (70,000)
FHLB stockFHLB stock(34,808)(49,507)(25,990)
Securities available for sale(183,518) (95,176) (171,125)Securities available for sale(144,663)(250,022)(297,466)
Premises and equipment(4,150) (9,125) (5,522)
Premises, equipment, and software, netPremises, equipment, and software, net(5,101)(2,700)(1,337)
Other792
 584
 784
Other2,299 1,278 3,178 
Net cash used in investing activities(754,809) (454,377) (600,388)
Net cash (used in) provided by investing activitiesNet cash (used in) provided by investing activities(1,008,631)(1,875,095)547,356 
CASH FLOWS FROM FINANCING ACTIVITIES:     CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in deposits(179,743) 45,510
 (368,020)
Net increase in borrowers' advances for insurance and taxes8,133
 6,021
 10,026
Net increase (decrease) in depositsNet increase (decrease) in deposits520,029 (72,511)(231,949)
Net increase (decrease) in borrowers' advances for insurance and taxesNet increase (decrease) in borrowers' advances for insurance and taxes7,167 7,617 (1,903)
Net decrease in principal and interest owed on loans serviced(13,635) (92) (5,177)Net decrease in principal and interest owed on loans serviced(101)(11,563)(4,419)
Net increase in short-term borrowed funds1,160,682
 696,227
 444,830
Net increase (decrease) in short-term borrowed fundsNet increase (decrease) in short-term borrowed funds417,000 875,000 (525,000)
Proceeds/(Repayments) from Fed Funds purchasedProceeds/(Repayments) from Fed Funds purchased(225,000)225,000 — 
Proceeds from long-term borrowed funds—
 40,290
 600,294
Proceeds from long-term borrowed funds350,000 600,000 100,000 
Repayment of long-term borrowed funds(208,100) (186,349) (15,136)Repayment of long-term borrowed funds(77,876)(3,646)(4,689)
Purchase of treasury shares(54,029) (128,361) (172,546)
Excess tax benefit related to stock-based compensation—
 3,198
 1,582
Acquisition of treasury shares through net settlement

(2,504) (7,697) (4,111)
Cash collateral/settlements received from (provided to) derivative counterpartiesCash collateral/settlements received from (provided to) derivative counterparties88,144 162,094 89,970 
Acquisition of treasury sharesAcquisition of treasury shares(5,978)(6,290)(5,591)
Dividends paid to common shareholders(27,709) (23,414) (19,490)Dividends paid to common shareholders(58,294)(58,297)(56,637)
Net cash provided by financing activities683,095
 445,333
 472,252
NET INCREASE (DECREASE) CASH AND CASH EQUIVALENTS36,979
 75,870
 (26,034)
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities1,015,091 1,717,404 (640,218)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTSNET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS97,182 (118,762)(9,707)
CASH AND CASH EQUIVALENTS—Beginning of year231,239
 155,369
 181,403
CASH AND CASH EQUIVALENTS—Beginning of year369,564 488,326 498,033 
CASH AND CASH EQUIVALENTS—End of year$268,218
 $231,239
 $155,369
CASH AND CASH EQUIVALENTS—End of year$466,746 $369,564 $488,326 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:     SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest on deposits$87,373
 $89,947
 $93,093
Cash paid for interest on deposits$169,153 $76,558 $98,535 
Cash paid for interest on borrowed funds36,216
 26,421
 18,994
Cash paid for interest on borrowed funds194,601 37,120 16,043 
Cash (received)/ paid for interest on interest rate swapsCash (received)/ paid for interest on interest rate swaps(50,416)29,138 45,031 
Cash paid for income taxes38,208
 31,815
 22,533
Cash paid for income taxes21,776 39,602 25,772 
SUPPLEMENTAL SCHEDULES OF NONCASH INVESTING AND FINANCING ACTIVITIES:     SUPPLEMENTAL SCHEDULES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Transfer of loans to real estate owned7,989
 12,134
 23,761
Transfer of loans to real estate owned869 1,283 330 
Transfer of loans from held for investment to held for sale218,720
 183,178
 127,066
Transfer of loans from held for investment to held for sale33,543 86,077 698,917 
Transfer of loans from held for sale to held for investmentTransfer of loans from held for sale to held for investment8,433 22,741 — 
Treasury stock issued for stock benefit plans

1,135
 3,112
 7,041
Treasury stock issued for stock benefit plans1,863 2,412 5,310 
See accompanying notes to consolidated financial statements.

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TFS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of and for the years ended September 30, 2017, 2016,2023, 2022, and 20152021
(Dollars in thousands unless otherwise indicated)


1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business—TFS Financial Corporation, a federally chartered stock holding company, conducts its principal activities through its wholly owned subsidiaries. The principal line of business of the Company is retail consumer banking, including mortgage lending, deposit gathering, and other insignificant financial services. Third Federal Savings and Loan Association of Cleveland, MHC, its federally chartered mutual holding company parent, owned 80.74%81.01% of the outstanding shares of common stock of the Company at September 30, 2017.2023.
The Company’s primary operating subsidiaries include the Association and Third Capital, Inc. The Association is a federal savings association, which provides retail loan and savings products to its customers in Ohio and Florida, through its 3837 full-service branches, eightfour loan production offices, customer service call center and internet site. The Association also provides savings products, purchase mortgages, first mortgage refinance loans, home equity lines of credit, and home equity loans in states outside of its branch footprint. The Association also acquires first mortgage loans through a correspondent lending partnership. Third Capital, Inc. was formed to hold non-thrift investments and subsidiaries, which include a limited liability company that acquires and manages commercial real estate.subsidiaries.
The accounting and reporting policies of TFS Financial Corporation and its subsidiaries conform to accounting principles generally accepted in the United States of America and to general practices within the thriftbanking industry.
No material subsequent events have occurred requiring recognition in the consolidated financial statements or disclosure in the notes to the consolidated financial statements.
The following is a description of the significant accounting and reporting policies, which the Company follows in preparing and presenting its consolidated financial statements.
PrinciplesBasis of Consolidation and Reporting—The consolidated financial statements of the Company include the accounts of TFS Financial Corporation and its wholly owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation.
Estimates—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Cash and Cash Equivalents—Cash and cash equivalents consist of working cash on hand, and demand and interest bearing deposits at other financial institutions with maturities of three months or less. For purposes of reporting cash flows, cash and cash equivalents also includes federal funds sold.sold, when applicable. The Company has acknowledged informal agreements with banks where it maintains deposits. Under these agreements, service fees charged to the Company are waived provided certain average compensating balances are maintained throughout each month.
Investment Securities—SecuritiesOur fixed-maturity securities are all classified as availableaccounted for sale.on an available-for-sale basis. Securities held as available for saleavailable-for-sale are reported at fair value, with the corresponding unrealized gains and losses,(losses), net of tax,deferred income taxes, reported as a component ofin AOCI. Management determines the appropriate classification of investment securities based on theits intent and ability to hold at the time of purchase.
Gains and losses Purchases of securities are accounted for on a trade-date or settlement-date basis, depending on the sale of investmentsettlement terms.
Realized gains and mortgage-backed(losses) on securities available for sale are computed on a specific identification basis. PurchasesRealized gains and sales(losses) also include changes in fair value on derivatives not designated as hedging instruments. Sales of securities are accounted for on a trade-date or settlement-date basis, depending on the settlement terms.
A decline in the fair value of any available for sale security, below cost, that is deemed to be other than temporary, results in a reduction in the carrying amount to fair value. The impairmentevaluated for credit loss. Credit loss is bifurcated between that related to credit loss which is recognized in non-interest incomeearnings if management intends, or will more likely than not be required, to sell the security before the recovery of its amortized cost basis. If the present value of cash flows expected to be collected is less than the amortized cost basis of the security, then a credit loss exists and thatan allowance would be recognized as a credit loss expense, limited to the difference between fair value and amortized cost. Non-credit related to all other factors whichloss is recognized in other comprehensive income. OCI, net of applicable deferred income taxes.
To determine whether an impairment is other than temporary,a credit loss exists, the Company considers, among other things, adverse conditions related to the durationsecurity, industry, geographic area, the payment schedule of the debt security and extentlikelihood that the issuer will be able to whichmake
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payments that increase in the fair value of an investment is less than its cost, changes in value subsequent to year end, forecast performancefuture, failure of the issuer to make scheduled payments and whetherall available information relevant to the Company hassecurities collectability, changes in ratings assigned by a rating agency, and other credit enhancements that affect the intent to holdsecurities expected performance.
Investment income consist of interest and accretion (net of amortization). Interest is recognized on an accrual basis using the investment until market price recovery, or, for debt securities, whether the Company has the intent to sell the security or more likely than not will be required to sell the debt security before its anticipated recovery.
level-yield method. Premiums and discounts are amortized using the level-yield method.
Derivative Instruments—Derivative instruments are carried at fair value in the Company's financial statements. For derivative instruments that are designated and qualify as cash flow hedges, changes in the fair value of the derivative instrument are reported as a component of OCI, net of tax, and reclassified into earnings in the same period during which the hedged transaction affects earnings. The earnings effect of the hedging instrument will be presented in the same income statement line item as the earnings effect of the hedged item. AOCI will be adjusted to a balance that reflects the cumulative change in the fair value of the hedging instrument. 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, an evaluation of hedge transaction effectiveness and the benchmark interest rate or contractually specified interest rate being hedged.
Hedge accounting is discontinued prospectively when (1) a derivative is no longer highly effective in offsetting changes in the fair value or cash flow of a hedged item, (2) a derivative expires or is sold, (3) a derivative is de-designated as a hedge, because it is unlikely that a forecasted transaction will occur, or (4) it is determined that designation of a derivative as a hedge is no longer appropriate. When hedge accounting is discontinued, the Company would continue to carry the derivative on the statement of condition at its fair value; however, changes in its fair value would be recorded in earnings instead of through OCI.
For derivative instruments not designated as hedging instruments, the Company recognizes gains and (losses) on the derivative instrument in current earnings during the period of change.
Mortgage Banking Activity—Mortgage loans originated or purchased and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate. Mortgage loans included in pending agency contracts to sell and securitize loans are carried at fair value. Fair value is based on quoted secondary market pricing for loan portfolios with similar

characteristics and includes consideration of deferred fees (costs). Net unrealized lossesgains or net unrealized gainslosses on loans carried at fair value, are recognized in a valuation allowance by charges to income.
The Company retains servicing on loans that are sold and initially recognizes an asset for mortgage loan servicing rights based on the fair value of the servicing rights. Residential mortgage loans represent the single class of servicing rights and are measured at the lower of cost or fair value on a recurring basis. Mortgage loan servicing rights are reported net of accumulated amortization, which is recorded in proportion to, and over the period of, estimated net servicing revenues. The Company monitors prepayments and changes amortization of mortgage servicing rights accordingly. Fair values are estimated using discounted cash flows based on current interest rates and prepayment assumptions, and impairment is monitored each quarterly reporting period. The impairment analysis is based on predominant risk characteristics of the loans serviced, such as type, fixedfixed- and adjustable rateadjustable-rate loans, original terms and interest rates. The amount of impairment recognized is the amount by which the mortgage loan servicing assets exceed their fair value.
Servicing fee income net of amortization and other loan fees collected on loans serviced for others are included in Fees and service charges, net of amortization on the consolidated financial statements.CONSOLIDATED STATEMENTS OF INCOME.
Derivative Instruments—Derivative instruments are carried at fair value in the Company's financial statements. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income, net of tax, and reclassified into earnings in the same period during which the hedged transaction affects earnings. Ineffectiveness is measured as the amount by which the cumulative change in the fair value of the hedging instrument exceeds or is substantially less than the present value of the cumulative change in the hedged item's expected cash flows attributable to the risk being hedged and, when present, is recognized in current earnings during the period. 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 hedge transaction effectiveness.
Hedge accounting is discontinued prospectively when (1) a derivative is no longer highly effective in offsetting changes in the fair value or cash flow of a hedged item, (2) a derivative expires or is sold, (3) a derivative is de-designated as a hedge, because it is unlikely that a forecasted transaction will occur, or (4) it is determined that designation of a derivative as a hedge is no longer appropriate. When hedge accounting is discontinued, the Company would continue to carry the derivative on the statement of condition at its fair value; however, changes in its fair value would be recorded in earnings instead of through OCI.
For derivative instruments not designated as hedging instruments, the Company recognizes gains and losses on the derivative instrument in current earnings during the period of change.
Loans and Related Deferred Loan Expenses, net—Loans originated or purchased with the intent to hold into the foreseeable future are carried at unpaid principal balances adjusted for partial charge-offs, the allowance for loancredit losses and net deferred loan expenses. Interest on loans is accrued and credited to income as earned. Interest on loans is not recognized in income when collectability is uncertain.
Loan fees and certain direct loan origination costs are deferred and recognized as an adjustment to interest income using the level-yield method over the contractual lives of related loans, if the loans are held for investment. If the loans are held for sale, net deferred fees (costs) are generally not amortized, but rather are recognized when the related loans are sold.
Loans are classified as TDRs when the original contractual terms are restructured to provide a concession to a borrower experiencing financial difficulty under terms that would not otherwise be available and the restructuring is the result of an agreement between the Company and the borrower or is imposed by a court or law. Concessions granted in TDRs may include a reduction of the stated interest rate, a reduction or forbearance of principal, an extension of the maturity date, a significant delay in payments, the removal of one or more borrowers from the obligation, or any combination of these.
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Allowance for LoanCredit Losses—The allowance for credit losses represents the estimate of lifetime losses in our loan portfolio and off-balance sheet commitments. The allowance for credit losses is assessed on a quarterly basis and provisions (releases) for (or recaptures of) loancredit losses are made in orderaccordingly. The allowance is established using relevant available information, relating to maintain the allowance at a level sufficient to absorbpast events, current conditions and supportable economic forecasts. Historical credit losses in the portfolio. Impairment evaluations are performed on loans segregated into homogeneous pools based on similarities in credit profile, product and property types. Through the evaluation, general allowances for loan losses are assessed based on historical loan loss experience provides the basis for each homogeneous pool. General allowancesthe estimation of expected credit losses. Qualitative adjustments to historical loss information are adjusted to address other factors that affect estimated probable losses including the sizemade for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency status or likely recovery of the portion of the portfolio that is not subjected to individual review; current delinquency statistics; the status of loans in foreclosure, real estate in judgment and real estate owned; national, regional and local economic factors and trends; asset disposition loss statistics (both current and historical); and the relative level of individually allocated valuation allowances to the balances of loans individually reviewed.previous loan charge-offs. The allowance for loancredit losses is increased by charges to incomerecoveries and decreased by charge-offs (netcharge-offs. Also, qualitative adjustments were made to reflect expected recovery of recoveries). Management believesloan amounts previously charged-off, beyond what the allowancemodel is adequate.able to project.

For further discussion on the allowance for loancredit losses, non-accrual, impairment, and TDRs, see Note 5. Loans and Allowance for Loan LossesLOANS AND ALLOWANCE FOR CREDIT LOSSES.
Real Estate Owned, net—Real estate owned, net represents real estate acquired through foreclosure or deed in lieu of foreclosure and is initially recorded at fair value, less estimated costs to sell. Subsequent to acquisition, real estate owned is carried at the lower of cost or fair value, less estimated selling costs. Management performs periodic valuations and a valuation allowance is established by a charge to income for any excess of the carrying value over the fair value, less estimated costs to sell the property. Recoveries in fair value during the holding period are recognized until the valuation allowance is reduced to zero. Costs related to holding and maintaining the property are charged to expense.
Premises, Equipment, and Software, net—Depreciation and amortization of premises, equipment and software is computed on a straight-line basis over the estimated useful lives of the related assets. Estimated lives are 31.5 years for office facilities and three to 10 years for equipment and software. Amortization of leasehold or building improvements is computed on a straight-line basis over the lesser of the economic useful life of the improvement or term of the lease, typically 10 years.
Leases—At inception, all contracts are evaluated to determine if the arrangement contains a lease based on the terms and conditions. As a lessee, the Company recognizes leases with terms greater than one year on the CONSOLIDATED STATEMENTS OF CONDITION as lease assets (a right-of-use asset) and lease liabilities (a liability to make lease payments), measured on a discounted basis. For further discussion on leases, see Note 8. LEASES.
Bank Owned Life Insurance Contracts—Life insurance is provided under both whole and split dollar life insurance agreements. Policy premiums were prepaid and the Company will recover the premiums paid from the proceeds of the policies. The Company recognizes death benefits and growth in the cash surrender value of the policies in other non-interest income.
Goodwill—The excess of purchase price over the fair value of net assets of acquired companies is classified as goodwill and reported in Other Assets. Goodwill was $9,732 at September 30, 20172023 and 2016.2022. Goodwill is reviewed for impairment on an annual basis as of September 30. No impairment was identified as of September 30, 20172023 or 2016.2022.
Taxes on Income—Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. 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. Additional information about policies related to income taxes is included in Note 12. Income TaxesINCOME TAXES.
Deposits—Interest on deposits is accrued and charged to expense monthly and is paid or credited in accordance with the terms of the accounts.
Treasury Stock—Acquisitions of treasury stock through stock repurchases are recorded at cost using the cost method of accounting. Repurchases may be made through open market purchases, block trades and in negotiated private transactions, subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company’s financial performance. Repurchased shares will be available for general corporate purposes.
Accumulated Other Comprehensive LossIncome (Loss)—Accumulated other comprehensive lossAOCI consists of changes in pension obligations, and changes in unrealized gains (losses) on securities available for sale and cash flow hedges, each of which is net of the related income tax effects. The Company's policy is to release income tax effects from AOCI only when the entire portfolio to which the underlying transactions relate to is liquidated, sold or extinguished.
Revenue from Contracts with Customers—The core principle of the guidance requires an entity to 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 to receive in exchange for those goods or services. Three of the Company's revenue streams within scope of Topic
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606 are the sales of REO, interchange income, and deposit account and other transaction-based service fee income. Those streams are immaterial and therefore quantitative information regarding these streams is not disclosed.
Pension Benefits.Benefits—The determination of our obligations and expense for pension benefits is dependent upon certain assumptions used in calculating such amounts. Key assumptions used in the actuarial valuations include the discount rate and expected long-term rate of return on plan assets. Actual results could differ from the assumptions and market driven rates may fluctuate. Significant differences in actual experience or significant changes in the assumptions could materially affect future pension obligations and expense.
Share-Based Compensation—Compensation expense for awards of equity instruments is recognized on a straight-line basis over the requisite service period based on the grant date fair value estimated in accordance with the provisions of FASB ASC 718 “Compensation—Stock Compensation”. All vested equity instruments are settled in stock. Forfeitures are recognized as they occur. Share-based compensation expense is included in Salaries and employee benefits in the consolidated statements of income.CONSOLIDATED STATEMENTS OF INCOME. Tax benefits or deficiencies recognized for the difference between realized deductions and cumulative book compensation cost on share-based compensation awards are included in operating cash flows on the CONSOLIDATED STATEMENTS OF CASH FLOW.
The grant date fair value of stock options is estimated using the Black-Scholes option-pricing model using assumptions for the expected option term, expected stock price volatility, risk-free interest rate, and expected dividend yield. Due to limited historical data on exercise of share options, the simplified method is used to estimate expected option term.
Marketing Costs—Marketing costs are expensed as incurred.
Earnings per Share—Basic earnings per shareEPS is computed by dividing net income by the weighted-average number of shares of common stock outstanding. Outstanding shares include shares sold to subscribers, shares held by the Third Federal

Foundation, shares of the Employee Stock Ownership Plan which have been allocated or committed to be released for allocation to participants, and shares held by Third Federal Savings, MHC. Unvested shares awarded in the Company's restricted stock plansshare-based compensation plan are treated as participating securities asfor purposes of the two-class method when they contain nonforfeitable rights to dividends, andbut are not included in the number of shares in the computation of basic EPS. The two-class method is an earnings allocation that determines EPS for each class of common stock and participating security.
Diluted earnings per shareEPS is computed using the same method as basic earnings per share,EPS, but the weighted-average number of shares reflects the potential dilution, if any, of unexercised stock options, unvested shares of performance share units and unvested shares of restricted stock units that could occur if stock options were exercised and performance share units and restricted stock units were issued and converted into common stock. These potentially dilutive shares would then be included in the number of weighted-average number of shares outstanding for the period using the treasury stock method. At September 30, 2017, 20162023, 2022 and 2015,2021, potentially dilutive shares include stock options, and restricted stock units and performance share units issued through stock-basedshare-based compensation plans.
Use of Estimates—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
2. STOCK TRANSACTIONS
TFS Financial Corporation completed its initial public stock offering on April 20, 2007 and sold 100,199,618 shares, or 30.16% of its post-offering outstanding common stock, to subscribers in the offering. Third Federal Savings, MHC, the Company’s mutual holding company parent, holds 227,119,132 shares of TFS Financial Corporation’s outstanding common stock. TFS Financial Corporation issued 5,000,000 shares of common stock, or 1.50% of its post-offering outstanding common stock, to Third Federal Foundation.
In January 2017,Pursuant to the seventh repurchase program allowing the repurchase of up to 10,000,000 shares of TFS Financial Corporation's outstanding common stock, which was originally authorized by the Board of Directors in July 2015, was completed. The Board of Directors authorized an eighth repurchase program for the repurchase of 10,000,000 shares authorized by the Board of Directors in October, 2016, and repurchases under this program began in January, 2017. A total of 3,148,610 shares were repurchased during the year ended September 30, 2017 and 7,210,500361,869 shares were repurchased during the year ended September 30, 2016. At 2023, 337,259 shares were repurchased during the year ended September 30, 2017,2022, and no shares were repurchased during the year ended September 30, 2021. At September 30, 2023, there were 7,750,8905,191,951 shares remaining to be purchased under the eighth repurchase program. The Company previously repurchased 51,300,000 shares of the Company’s common stock as part of the previous seven Board of Directors-approved share repurchase programs. In total, the Company has repurchased 53,549,11056,108,049 shares of the Company's common stock as of September 30, 2017.2023.
3. REGULATORY MATTERS
The Association is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements of the Association. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Association must meet specific capital
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guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy require the Association to maintain minimum amounts and ratios (set forth in table below) of common equity Tier 1, Tier 1, and Total capital (as defined in the regulations) to risk-weighted assets (as defined) and Tier 1 capital (as defined) to net average assets (as defined). The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet assets to broad risk categories.
In 2019, a final rule adopted by the federal banking agencies provided banking organizations with the option to phase in, over a three-year period, the adverse day-one regulatory capital effects of the adoption of the CECL accounting standard. In 2020, as part of its response to the impact of COVID-19, U.S. federal banking regulatory agencies issued a final rule which provides banking organizations that implement CECL during the 2020 calendar year the option to delay for two years an estimate of CECL’s effect on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period, which the Association and Company have adopted. During the two-year delay, the Association and Company added back to CET1 100% of the initial adoption impact of CECL plus 25% of the cumulative quarterly changes in the allowance for credit losses. Beginning this fiscal year, the cumulative transitional amounts became fixed and will be phased out of CET1 capital over the subsequent three-year period.At September 30, 2017,2023, the Association exceeded all regulatory capital requirements and is considered “well capitalized”capitalized” under regulatory guidelines.
The Association operates under the capital requirements for the standardized approach of the Basel III capital framework for U.S. banking organizations (“Basel III Rules”), subject to transitional provisions extending through the end of calendar 2018. The requirement would limitwhich limits capital distributions and certain discretionary bonus payments to management if the institution does not hold a "capital conservation buffer" consisting of 2.5% in addition to the minimum capital requirements. At September 30, 2017,2023, the Association exceeded the fully phased-in regulatory requirement for the "capital conservation buffer".

The following table summarizes the actual capital amounts and ratios of the Association as of September 30, 20172023 and 2016,2022, compared to the minimum capital adequacy requirements and the requirements for classification as a well capitalized institution.
   Minimum Requirements
 ActualFor Capital
Adequacy Purposes		To be “Well Capitalized”
Under Prompt Corrective
Action Provision
 AmountRatioAmountRatioAmountRatio
September 30, 2023
Total Capital to Risk-Weighted Assets$1,709,596 17.87 %$765,410 8.00 %$956,762 10.00 %
Tier 1 (Leverage) Capital to Net Average Assets1,640,657 9.82 %667,958 4.00 %834,948 5.00 %
Tier 1 Capital to Risk-Weighted Assets1,640,657 17.15 %574,057 6.00 %765,410 8.00 %
Common Equity Tier 1 Capital to Risk-Weighted Assets
1,640,657 17.15 %430,543 4.50 %621,896 6.50 %
September 30, 2022
Total Capital to Risk-Weighted Assets$1,666,677 18.84 %$707,788 8.00 %$884,734 10.00 %
Tier 1 (Leverage) Capital to Net Average Assets1,614,615 10.33 %625,020 4.00 %781,275 5.00 %
Tier 1 Capital to Risk-Weighted Assets1,614,615 18.25 %530,841 6.00 %707,788 8.00 %
Common Equity Tier 1 Capital to Risk-Weighted Assets
1,614,615 18.25 %398,130 4.50 %575,077 6.50 %
     Minimum Requirements
 Actual 
For Capital
Adequacy Purposes
 
To be “Well Capitalized”
Under Prompt Corrective
Action Provision
 Amount Ratio Amount   Ratio   Amount     Ratio    
September 30, 2017           
Total Capital to Risk-Weighted Assets$1,555,903
 21.37% $582,553
 8.00% $728,192
 10.00%
Tier 1 (Leverage) Capital to Net Average Assets1,506,952
 11.16% 540,193
 4.00% 675,242
 5.00%
Tier 1 Capital to Risk-Weighted Assets1,506,952
 20.69% 436,915
 6.00% 582,553
 8.00%
Common Equity Tier 1 Capital to Risk-Weighted Assets

1,506,938
 20.69% 327,686
 4.50% 473,325
 6.50%
September 30, 2016           
Total Capital to Risk-Weighted Assets$1,551,502
 22.24% $558,006
 8.00% $697,508
 10.00%
Tier 1 (Leverage) Capital to Net Average Assets1,489,704
 11.73% 507,977
 4.00% 634,972
 5.00%
Tier 1 Capital to Risk-Weighted Assets1,489,704
 21.36% 418,505
 6.00% 558,006
 8.00%
Common Equity Tier 1 Capital to Risk-Weighted Assets

1,489,690
 21.36% 313,879
 4.50% 453,380
 6.50%
The Association paid dividends of $81,000$40,000 and $60,000$56,000 to the Company during the years ended September 30, 2017 and September 30, 2016, respectively. Additionally, the Association paid a special dividend of $150,000 to the Company in the fiscal yearyears ended September 30, 2016. The special dividend amount was equal to the voluntary contribution of capital that the Company made to the Association in October 2010.2023 and 2022, respectively.


On July 19, 2017, as dictatedAs permitted under interim final rules issued by the FRS on August 12, 2011, a majority of Third Federal Savings, MHC's members eligible to vote approved Third Federal Savings, MHC waiving its rightdividends aggregating up to receive dividends$1.13 per share on the Company'scommon stock that Third Federal Savings, MHC owns, up to $0.68 per share duringof the four quarters ending June 30, 2018.Company for the 12 month following the special meeting of members held on July 11 2023. Unless the FRS amends its interim rule, a member vote will be required for Third Federal Savings, MHC to waive its right to receive dividends beyond June 30, 2018.July 11, 2024.
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4. INVESTMENT SECURITIES
Investments available for saleAvailable-for-sale securities are summarized in the tables below.
 September 30, 2023
 Amortized
Cost		Gross
Unrealized		Fair
Value
 GainsLosses
REMICs$495,874 $— $(52,867)$443,007 
Fannie Mae certificates834 1 (21)814 
Freddie Mac certificates1,141 — (97)1,044 
U.S. Government and agency obligations63,866 — (407)63,459 
Total$561,715 $1 $(53,392)$508,324 

 September 30, 2022
 Amortized
Cost		Gross
Unrealized		Fair
Value
 GainsLosses
REMICs$496,529 $1 $(43,262)$453,268 
Fannie Mae certificates1,011 14 (4)1,021 
U.S. Government and agency obligations4,057 — (438)3,619 
Total$501,597 $15 $(43,704)$457,908 
At September 30, 2023, and September 30, 2022, investment securities included $59,813 and $0, respectively, of U.S. government obligations pledged as follows:collateral on our open swap positions to meet requirements established by the clearing organization. Accrued interest on investment securities is $1,907 and $1,122 at September 30, 2023, and September 30, 2022, respectively, and is reported in accrued interest receivable on the CONSOLIDATED STATEMENTS OF CONDITION.
The following is a summary of our securities portfolio by remaining period to contractual maturity and yield at September 30, 2023. Maturities are based on the final contractual payment dates, and do not reflect the impact of prepayments or early redemptions that may occur. Weighted average yields are not presented on a tax-equivalent basis and are calculated by multiplying each carry value by its yield and dividing the sum of these results by the total carry values. We did not hold any tax-free securities.
September 30, 2023September 30, 2022
Amortized CostFair ValueWeighted Average YieldAmortized CostFair ValueWeighted Average Yield
Due in one year or less$59,948 $59,936 5.13 %$— $— — %
Due after one to five years10,529 9,929 2.00 %15,476 14,775 2.06 %
Due after five to 10 years31,372 29,381 2.42 %38,927 37,204 2.30 %
10 years or greater459,866 409,078 2.82 %447,194 405,929 2.25 %
Total$561,715 $508,324 3.03 %$501,597 $457,908 2.25 %
 September 30, 2017
 
Amortized
Cost
 
Gross
Unrealized
 
Fair
Value
 Gains Losses 
REMICs$533,427
 $52
 $(4,943) $528,536
Fannie Mae certificates8,537
 419
 (13) 8,943
Total$541,964
 $471
 $(4,956) $537,479
85
 September 30, 2016
 
Amortized
Cost
 
Gross
Unrealized
 
Fair
Value
 Gains Losses 
REMICs$508,044
 $1,447
 $(1,494) $507,997
Fannie Mae certificates9,184
 685
 —
 9,869
Total$517,228
 $2,132
 $(1,494) $517,866
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Gross unrealized losses on available foravailable- for- sale securities and the estimated fair value of the related securities, aggregated by the length of time the securities have been in a continuous unrealized loss position, at September 30, 20172023 and 2016,2022, were as follows:
 September 30, 2023
 Less Than 12 Months12 Months or MoreTotal
Estimated
Fair Value		Unrealized
Loss		Estimated
Fair Value		Unrealized
Loss		Estimated
Fair Value		Unrealized
Loss
Available for sale—
REMICs$80,452 $1,749 $362,555 $51,118 $443,007 $52,867 
Fannie Mae certificates578 21 — — 578 21 
Freddie Mac certificates1,045 97 — — 1,045 97 
U.S. Government and agency obligations59,813 11 3,646 396 63,459 407 
Total$141,888 $1,878 $366,201 $51,514 $508,089 $53,392 
 September 30, 2017
 Less Than 12 Months 12 Months or More Total
 
Estimated
Fair Value
 
Unrealized
Loss
 
Estimated
Fair Value
 
Unrealized
Loss
 
Estimated
Fair Value
 
Unrealized
Loss
Available for sale—           
REMICs$246,113
 $1,508
 $260,837
 $3,435
 $506,950
 $4,943
Fannie Mae certificates4,601
 13
 —
 —
 4,601
 13
Total$250,714
 $1,521
 $260,837
 $3,435
 $511,551
 $4,956
            
 September 30, 2016
 Less Than 12 Months 12 Months or More Total
 
Estimated
Fair Value
 
Unrealized
Loss
 
Estimated
Fair Value
 
Unrealized
Loss
 
Estimated
Fair Value
 
Unrealized
Loss
            
Available for sale—REMICs$210,735
 $797
 $73,361
 $697
 $284,096
 $1,494
            

 September 30, 2022
 Less Than 12 Months12 Months or MoreTotal
 Estimated
Fair Value		Unrealized
Loss		Estimated
Fair Value		Unrealized
Loss		Estimated
Fair Value		Unrealized
Loss
Available for sale—
REMICs$261,795 $17,260 $190,739 $26,002 $452,534 $43,262 
Fannie Mae certificates217 4 — — 217 4 
U.S. Government and agency obligations3,619 438 — — 3,619 438 
Total$265,631 $17,702 $190,739 $26,002 $456,370 $43,704 
The unrealized losses on investment securities were primarily attributable to an increase in market interest rate increases.rates. The contractual cash flowsinvestment portfolio is comprised entirely of mortgage-backed securities are guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae. REMICs are issued by or backed by securities issued by U.S. government entities and agencies, which support the expectation of zero, other than temporary, loss estimates since principal and interest payments due on these governmental agencies. It is expected thatsecurities carry the securities would not be settled at a price substantially less than the amortized costfull faith and credit guaranty of the investment. TheU.S. government. In addition, the U.S. Treasury Department established financing agreements in 2008 to ensure Fannie Mae and Freddie Mac meet their obligations to holders of mortgage-backed securities that they have issued or guaranteed.
Since the decline in value is primarily attributable to changesan increase in market interest rates and not credit quality and because the AssociationCompany has neither the intent to sell the securities nor is it more likely than not the AssociationCompany will be required to sell the securities for the time periods necessaryprior to recoverrecovery of the amortized cost, these investments arethe Company did not considered other-than-temporarily impaired.record an allowance for credit losses as of September 30, 2023.
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5. LOANS AND ALLOWANCE FOR CREDIT LOSSES
LOAN LOSSESPORTFOLIOS
Loans held for investment consist of the following:
 September 30,September 30,
 20232022
Real estate loans:
Residential Core$12,078,158 $11,539,859 
Residential Home Today46,508 53,255 
Home equity loans and lines of credit3,030,526 2,633,878 
Construction48,406 121,759 
Real estate loans15,203,598 14,348,751 
Other loans4,411 3,263 
Add (deduct):
Deferred loan expenses, net60,807 50,221 
Loans-in-process(25,754)(72,273)
Allowance for credit losses on loans(77,315)(72,895)
Loans held for investment, net$15,165,747 $14,257,067 
 September 30,
 2017 2016
Real estate loans:   
Residential Core$10,746,204
 $10,069,652
Residential Home Today108,964
 121,938
Home equity loans and lines of credit1,552,315
 1,531,282
Construction60,956
 61,382
Real estate loans12,468,439
 11,784,254
Other consumer loans3,050
 3,116
Add (deduct):   
Deferred loan expenses, net30,865
 19,384
Loans-in-process (“LIP”)(34,100) (36,155)
Allowance for loan losses(48,948) (61,795)
Loans held for investment, net$12,419,306
 $11,708,804

AtLoans are carried at amortized cost, which includes outstanding principal balance adjusted for any unamortized premiums or discounts, net of deferred fees and expenses. Accrued interest is $51,989 and $39,124 as of September 30, 20172023 and 2016,September 30, 2022, respectively, $351 and $4,686 of long-term, fixed-rate loans were classified as mortgage loans held for sale.is reported in accrued interest receivable on the CONSOLIDATED STATEMENTS OF CONDITION.
A large concentration of the Company’s lending is in Ohio and Florida. As of September 30, 20172023, and 2016,September 30, 2022, the percentage of totalaggregate Residential Core, Home Today and Construction loans heldsecured by properties in Ohio werewas 57% and 60%56%, respectively, and

the percentages heldpercentage of loans secured by properties in Florida was 16%18% as of both dates. As of September 30, 20172023 and 2016,September 30, 2022, home equity loans and lines of credit were concentrated in the states of Ohio (39% as of both dates)(26% and 27%, respectively), Florida (22%(22% and 24%)20%, respectively), and California (13%(17% and 14%)16%, respectively).
Residential Core mortgage loans represent the largest portion of the residential real estate portfolio. The Company believes overall credit risk is low based on the nature, composition, collateral, products, lien position and performance of the portfolio. The portfolio does not include loan types or structures that have experienced severe performance problems at other financial institutions (sub-prime, no documentation or pay-option adjustable-rate mortgages). The portfolio contains "Smart Rate" adjustable-rate mortgage loans whereby the interest rate is locked initially for three or five years then resets annually, subject to periodic rate adjustments caps and various re-lock options available to the borrower. Although the borrower is qualified for its loan at a higher rate than the initial rate offered, the adjustable-rate feature may impact a borrower's ability to afford the higher payments upon rate reset during periods of rising interest rates while this repayment risk may be reduced in a declining or low rate environment. With limited historical loss experience compared to other types of loans in the portfolio, judgment is required by management in assessing the allowance required on adjustable-rate mortgage loans. The principal amount of adjustable-rate mortgage loans included in the Residential Core portfolio was $4,760,843 and $4,668,089 at September 30, 2023 and September 30, 2022, respectively.
Home Today was an affordable housing program targeted to benefit low- and moderate-income home buyers and mostbuyers. Most loans under the program were originated prior to 2009. No new loans were originated under the Home Today program after September 30, 2016. Through this program the Association provided the majority of loans to borrowers who would not otherwise qualify for the Association’s loan products, generally because of low credit scores. Although the credit profiles of borrowers in the Home Today program might be described as sub-prime, Home Today loans generally contained the same features as loans offered to our Residential Core borrowers. Borrowers with a Home Today loan completed financial management education and counseling and were referred to the Association by a sponsoring organization with which the Association partnered as part of the program. Because the Association applied less stringent underwriting and credit standards to the majority of Home Today loans, loans originated under the program have greater credit risk than its traditional residential real estate mortgage loans.
Home equity loans in the Residential Core portfolio. Asand lines of September 30, 2017 and 2016, the principal balancecredit, which are comprised primarily of Home Today loans originated prior to March 27, 2009 was $105,485 and $118,255 respectively. Since loans are no longer originated under the Home Today program, the Home Today portfolio will continue to decline in balance due to contractual amortization. To supplant the Home Today product and to continue to meet the credit needs of customers and the communities served, during 2016 the Association began to offer Fannie Mae eligible, HomeReady loans. These loans are originated in accordance with Fannie Mae's underwriting standards. While the Association retains the servicing to these loans, the loans, along with the credit risk associated therewith, are securitized/sold to Fannie Mae. The Association does not offer, and has not offered, loan products frequently considered to be designed to target sub-prime borrowers containing features such as higher fees or higher rates, negative amortization, a LTV ratio greater than 100%, or pay-option, adjustable-rate mortgages.
The Association currently offers home equity lines of credit, thatrepresent a significant portion of the residential real estate portfolio and include monthly principal and interest payments throughout the entire term. Home equityOnce the draw period on lines of credit prior to June 28, 2010 require interest only payments for 10 years, with an option to extendhas expired, the interest only and draw period another 10 years, at which time theyaccounts are included in the home equity loan balance. The recorded investment in interest only loans is comprised solely offull credit exposure on home equity lines of credit with balancesis secured by the value of $483,127 and $892,973the collateral real estate at the time of origination.
The Company originates construction loans to individuals for the construction of their personal single-family residence by a qualified builder (construction/permanent loans). The Company’s construction/permanent loans generally provide for disbursements to the builder or sub-contractors during the construction phase as work progresses. During the construction phase, the borrower only pays interest on the drawn balance. Upon completion of construction, the loan converts to a permanent
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amortizing loan without the expense of a second closing. The Company offers construction/permanent loans with fixed or adjustable-rates, and a current maximum loan-to-completed-appraised value ratio of 85%.
Other loans are comprised of loans secured by certificate of deposit accounts, which are fully recoverable in the event of non-payment, and forgivable down payment assistance loans, which are unsecured loans used as down payment assistance to borrowers qualified through partner housing agencies. The Company records a liability for the down payment assistance loans which are forgiven in equal increments over a pre-determined term, subject to residency requirements.
Loans held for sale include loans originated with the intent to sell which are generally priced in alignment with secondary market pricing and may be subject to loan level pricing adjustments. Additionally, loans originated or purchased for the held for investment portfolio may later be identified for sale and transferred to the held for sale portfolio, which may include loans originated or purchased within the parameters of programs established by Fannie Mae. During the years endingended September 30, 20172023 and 2016,September 30, 2022, reclassifications to the held for sale portfolio included loans that were sold during the period, including those in contracts pending settlement at the end of the period, and loans originated for the held for investment portfolio that were later identified for sale. At September 30, 2023 and September 30, 2022, mortgage loans held for sale totaled $3,260 and $9,661, respectively. During the years ended September 30, 2023 and September 30, 2022, the principal balance of loans sold was $77,205 and $128,118, respectively. During the years ended September 30, 2023 and September 30, 2022, the amortized cost of loans classified as held for sale that were subsequently transferred to the held for investment portfolio was $8,433 and $22,741, respectively. These transfers were due to changes in market pricing, affected by the rise in long-term interest rates, and managements' intent to hold the loans in portfolio until maturity for the foreseeable future. During the year ended September 30, 2021, there were no transfers to the held for investment portfolio.
DELINQUENCY and NON-ACCRUAL
An ageaging analysis of the recorded investmentamortized cost in loan receivables that are past due at September 30, 20172023 and 2016September 30, 2022 is summarized in the following tables. When a loan is more than one month past due on its scheduled payments, the loan is considered 30 days or more past due.due, regardless of the number of days in each month. Balances are adjusted for deferred loan fees and expenses and any applicable loans-in-process. 
30-59 Days
Past Due		60-89 Days
Past Due		90 Days
or More
Past Due		Total Past
Due		CurrentTotal
September 30, 2023
Real estate loans:
Residential Core$3,680 $1,763 $8,268 $13,711 $12,089,228 $12,102,939 
Residential Home Today666 323 855 1,844 44,186 46,030 
Home equity loans and lines of credit3,271 690 3,876 7,837 3,059,444 3,067,281 
Construction— — — — 22,401 22,401 
Total real estate loans7,617 2,776 12,999 23,392 15,215,259 15,238,651 
Other loans— — — — 4,411 4,411 
Total$7,617 $2,776 $12,999 $23,392 $15,219,670 $15,243,062 
 
30-59 Days
Past Due
 
60-89 Days
Past Due
 
90 Days
or More
Past Due
 
Total Past
Due
 Current Total
September 30, 2017           
Real estate loans:           
Residential Core$6,077
 $2,593
 $11,975
 $20,645
 $10,740,398
 $10,761,043
Residential Home Today4,067
 1,496
 6,851
 12,414
 95,269
 107,683
Home equity loans and lines of credit4,418
 1,952
 5,408
 11,778
 1,558,273
 1,570,051
Construction—
 —
 —
 —
 26,427
 26,427
Total real estate loans14,562
 6,041
 24,234
 44,837
 12,420,367
 12,465,204
Other consumer loans—
 —
 —
 —
 3,050
 3,050
Total$14,562
 $6,041
 $24,234
 $44,837
 $12,423,417
 $12,468,254


30-59
Days
Past Due		60-89
Days
Past Due		90 Days
or More
Past Due		Total Past
Due		CurrentTotal
September 30, 2022
Real estate loans:
Residential Core$2,725 $1,491 $9,281 $13,497 $11,545,784 $11,559,281 
Residential Home Today1,341 770 861 2,972 49,836 52,808 
Home equity loans and lines of credit1,599 796 2,321 4,716 2,661,416 2,666,132 
Construction— — — — 48,478 48,478 
Total real estate loans5,665 3,057 12,463 21,185 14,305,514 14,326,699 
Other loans— — — — 3,263 3,263 
Total$5,665 $3,057 $12,463 $21,185 $14,308,777 $14,329,962 
88
 
30-59
Days
Past Due
 
60-89
Days
Past Due
 
90 Days
or More
Past Due
 
Total Past
Due
 Current Total
September 30, 2016           
Real estate loans:           
Residential Core$6,653
 $3,157
 $15,593
 $25,403
 $10,054,211
 $10,079,614
Residential Home Today5,271
 2,583
 7,356
 15,210
 105,225
 120,435
Home equity loans and lines of credit4,605
 1,811
 4,932
 11,348
 1,531,242
 1,542,590
Construction—
 —
 —
 —
 24,844
 24,844
Total real estate loans16,529
 7,551
 27,881
 51,961
 11,715,522
 11,767,483
Other consumer loans—
 —
 —
 —
 3,116
 3,116
Total$16,529
 $7,551
 $27,881
 $51,961
 $11,718,638
 $11,770,599
At September 30, 2017 and 2016, real estate loans include $14,736 and $20,047, respectively,Table of loans that were in the process of foreclosure.Contents
Loans are placed in non-accrual status when they are contractually 90 days or more past due. The number of days past due is determined by the number of scheduled payments that remain unpaid, assuming a period of 30 days between each scheduled payment. Loans with a partial charge-off are placed in non-accrual and will remain in non-accrual status until, at a minimum, the loss is recovered. Loans restructured in TDRs that were in non-accrual status prior to the restructurings remainand loans with forbearance plans that were subsequently modified are reported in non-accrual status for a minimum of six months after restructuring. Loans where the borrowers' sustained ability to repay is not fully supportedrestructured in TDRs with a high debt-to-income ratio at the time of modification are placed in non-accrual status for a minimum of twelve12 months. Additionally, home equity loans and lines of credit where the customer has a severely delinquent first mortgage loan and loans in Chapter 7 bankruptcy status where all borrowers have filed, and not reaffirmed or been dismissed, are placed in non-accrual status.
The recorded investmentamortized cost of loan receivables in non-accrual status is summarized in the following table. Non-accrual with no ACL describes non-accrual loans which have no quantitative or individual valuation allowance, primarily because they have already been collaterally reviewed and any required charge-offs have been taken, but may be included in consideration of qualitative allowance factors. Balances are adjusted for deferred loan fees and expenses.
 September 30,
 2017 2016
Real estate loans:   
Residential Core$43,797
 $51,304
Residential Home Today18,109
 19,451
Home equity loans and lines of credit17,185
 19,206
Total non-accrual loans$79,091
 $89,961

At There are no loans 90 or more days past due and still accruing at September 30, 2017 and 2023 or September 30, 2016, respectively,2022.
September 30, 2023September 30, 2022
Non-accrual with No ACLTotal
Non-accrual		Non-accrual with No ACLTotal
Non-accrual
Real estate loans:
Residential Core$15,691 $19,414 $20,995 $22,644 
Residential Home Today4,511 4,623 5,753 6,037 
Home equity loans and lines of credit7,035 7,877 6,668 6,925 
Total non-accrual loans$27,237 $31,914 $33,416 $35,606 
At September 30, 2023 and September 30, 2022, the recorded investmentamortized cost in non-accrual loans includes $54,858$18,915 and $62,081$23,159, respectively, which are performing according to the terms of their agreement, of which $34,142$11,508 and $40,546$13,526, respectively, are loans in Chapter 7 bankruptcy status, primarily where all borrowers have filed, and have not reaffirmed or been dismissed. At September 30, 2023 and September 30, 2022, real estate loans include $9,144 and $9,833, respectively, of loans that are in the process of foreclosure.
Interest on loans in accrual status including certain loans individually reviewed for impairment, is recognized in interest income as it accrues, on a daily basis. Accrued interest on loans in non-accrual status is reversed by a charge to interest income and income is subsequently recognized only to the extent cash payments are received. The Company has elected not to measure an allowance for credit losses on accrued interest receivable amounts since amounts are written off timely. Cash payments on loans in non-accrual status are applied to the oldest scheduled, unpaid payment first. The amount of interest income recognized on non-accrual loans was $663 and $740 for the years ended September 30, 2023 and September 30, 2022, respectively. Cash payments on loans with a partial charge-off are applied fully to principal, then to recovery of the charged off amount prior to interest income being recognized.recognized, except cash payments may be applied to interest capitalized in a restructuring when collection of remaining amounts due is considered probable. A non-accrual loan is generally returned to accrual status when contractual payments are less than 90 days past due. However, a loan may remain in non-accrual status when collectability is uncertain, such as a TDR that has not met minimum payment requirements, a loan with a partial charge-off, ana home equity loan or line of credit with a delinquent first mortgage greater than 90 days past due, or a loan in Chapter 7 bankruptcy status where all borrowers have filed, and have not reaffirmed or been dismissed. The number of days past due is determined by the number of scheduled payments that remain unpaid, assuming a period of 30 days between each scheduled payment.

The recorded investment in loan receivables at September 30, 2017 and 2016 is summarized in the following table. The table provides details of the recorded balances according to the method of evaluation used for determining the allowance for loan losses, distinguishing between determinations made by evaluating individual loans and determinations made by evaluating groups of loans not individually evaluated. Balances of recorded investments are adjusted for deferred loan fees, expenses and any applicable loans-in-process.
 September 30,
 2017 2016
 Individually Collectively Total Individually Collectively Total
Real estate loans:           
Residential Core$94,747
 $10,666,296
 $10,761,043
 $107,541
 $9,972,073
 $10,079,614
Residential Home Today46,641
 61,042
 107,683
 51,415
 69,020
 120,435
Home equity loans and lines of credit39,172
 1,530,879
 1,570,051
 35,894
 1,506,696
 1,542,590
Construction—
 26,427
 26,427
 —
 24,844
 24,844
Total real estate loans180,560
 12,284,644
 12,465,204
 194,850
 11,572,633
 11,767,483
Other consumer loans—
 3,050
 3,050
 —
 3,116
 3,116
Total$180,560
 $12,287,694
 $12,468,254
 $194,850
 $11,575,749
 $11,770,599
An analysis of the allowance for loan losses at September 30, 2017 and 2016 is summarized in the following table. The analysis provides details of the allowance for loan losses according to the method of evaluation, distinguishing between allowances for loan losses determined by evaluating individual loans and allowances for loan losses determined by evaluating groups of loans collectively.
 September 30,
 2017 2016
 Individually Collectively Total Individually Collectively Total
Real estate loans:           
Residential Core$7,336
 $6,850
 $14,186
 $8,927
 $6,141
 $15,068
Residential Home Today2,250
 2,258
 4,508
 2,979
 4,437
 7,416
Home equity loans and lines of credit1,475
 28,774
 30,249
 722
 38,582
 39,304
Construction—
 5
 5
 —
 7
 7
Total real estate loans$11,061
 $37,887
 $48,948
 $12,628
 $49,167
 $61,795
At September 30, 2017 and 2016, individually evaluated loans that required an allowance were comprised only of loans evaluated for impairment based on the present value of cash flows, such as performing TDRs, and loans with a further deterioration in the fair value of collateral not yet identified as uncollectible. All other individually evaluated loans received a charge-off if applicable.
Because many variables are considered in determining the appropriate level of general valuation allowances, directional changes in individual considerations do not always align with the directional change in the balance of a particular component of the general valuation allowance. At September 30, 2017 and 2016, respectively, allowances on individually reviewed loans evaluated for impairment based on the present value of cash flows, such as performing TDRs were $11,061 and $12,432; and allowances on loans with further deteriorations in the fair value of collateral not yet identified as uncollectible were $0 and $196.
Residential Core mortgage loans represent the largest portion of the residential real estate portfolio. The Company believes overall credit risk is low based on the nature, composition, collateral, products, lien position and performance of the portfolio. The portfolio does not include loan types or structures that have recently experienced severe performance problems at other financial institutions (sub-prime, no documentation or pay-option adjustable-rate mortgages).
As described earlier in this note, Home Today loans have greater credit risk than traditional residential real estate mortgage loans. At September 30, 2017 and 2016, respectively, approximately 22% and 27% of Home Today loans include private mortgage insurance coverage. The majority of the coverage on these loans was provided by PMI Mortgage Insurance Co., which the Arizona Department of Insurance seized in 2011 and indicated that all claims payments would be reduced by

50%. Between March 2013 and June 2016, PMIC gradually increased the cash percentage of the partial claim payment from 55% to 71.5% of the claim with the remainder deferred. Appropriate adjustments have been made to the Association’s affected valuation allowances and charge-offs, and estimated loss severity factors were adjusted accordingly for loans evaluated collectively. The amount of loans in the Association's total owned residential portfolio covered by mortgage insurance provided by PMIC as of September 30, 2017 and 2016, respectively, was $61,470 and $91,784 of which $56,511 and $84,007 was current. The amount of loans in our owned portfolio covered by mortgage insurance provided by Mortgage Guaranty Insurance Corporation as of September 30, 2017 and 2016, respectively, was $28,946 and $40,578 of which $28,870 and $40,190 was current. As of September 30, 2017, MGIC's long-term debt rating, as published by the major credit rating agencies, did not meet the requirements to qualify as "high credit quality"; however, MGIC continues to make claims payments in accordance with its contractual obligations and the Association has not increased its estimated loss severity factors related to MGIC's claim paying ability. No other loans were covered by mortgage insurers that were deferring claim payments or which we assessed as being non-investment grade.
Home equity loans and lines of credit, which are comprised primarily of home equity lines of credit, represent a significant portion of the residential real estate portfolio. Post-origination deterioration in economic and housing market conditions may impact a borrower's ability to afford the higher payments required during the end of draw repayment period that follows the period of interest only payments on home equity lines of credit originated prior to 2012 or the ability to secure alternative financing. Beginning in February 2013, the terms on new home equity lines of credit included monthly principal and interest payments throughout the entire term to minimize the potential payment differential between the during draw and after draw periods.
The Association originates construction loans to individuals for the construction of their personal single-family residence by a qualified builder (construction/permanent loans). The Association’s construction/permanent loans generally provide for disbursements to the builder or sub-contractors during the construction phase as work progresses. During the construction phase, the borrower only pays interest on the drawn balance. Upon completion of construction, the loan converts to a permanent amortizing loan without the expense of a second closing. The Association offers construction/permanent loans with fixed or adjustable rates, and a current maximum loan-to-completed-appraised value ratio of 85%.
Other consumer loans are comprised of loans secured by certificate of deposit accounts, which are fully recoverable in the event of non-payment.ALLOWANCE FOR CREDIT LOSSES
For all classes of loans, a loan is considered impairedcollateral-dependent when, based on current information and events, itthe borrower is probable thatexperiencing financial difficulty and repayment is expected to be provided substantially through the Association will be unable to collect the scheduled payments of principal and interest according to the contractual termssale of the loan agreement.collateral or foreclosure is probable. Factors considered in determining that a loan is impairedcollateral-dependent may include the deteriorating financial condition of the borrower indicated by missed or delinquent payments, a pending legal action, such as bankruptcy or foreclosure, or the absence of adequate security for the loan.

The recorded investment and the unpaid principal balance of impaired loans, including those reported as TDRs, as of September 30, 2017 and 2016 are summarized as follows. Balances of recorded investments are adjusted for deferred loan fees and expenses.
 September 30,
 2017 2016
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
With no related IVA recorded:           
Residential Core$47,507
 $65,132
 $—
 $53,560
 $72,693
 $—
Residential Home Today18,780
 41,064
 —
 20,108
 44,914
 —
Home equity loans and lines of credit18,793
 25,991
 —
 20,549
 30,216
 —
Total$85,080
 $132,187
 $—
 $94,217
 $147,823
 $—
With an IVA recorded:           
Residential Core$47,240
 $47,747
 $7,336
 $53,981
 $54,717
 $8,927
Residential Home Today27,861
 28,210
 2,250
 31,307
 31,725
 2,979
Home equity loans and lines of credit20,379
 20,389
 1,475
 15,345
 15,357
 722
Total$95,480
 $96,346
 $11,061
 $100,633
 $101,799
 $12,628
Total impaired loans:           
Residential Core$94,747
 $112,879
 $7,336
 $107,541
 $127,410
 $8,927
Residential Home Today46,641
 69,274
 2,250
 51,415
 76,639
 2,979
Home equity loans and lines of credit39,172
 46,380
 1,475
 35,894
 45,573
 722
Total$180,560
 $228,533
 $11,061
 $194,850
 $249,622
 $12,628
At September 30, 2017 and 2016, respectively, the recorded investment in impaired loans includes $162,020 and $170,602 of loans restructured in TDRs of which $11,884 and $12,368 are 90 days or more past due.
The average recorded investment in impaired loans and the amount of interest income recognized during period that the loans were impaired are summarized below.
 For the Years Ended September 30,
 2017 2016 2015
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
With no related IVA recorded:           
Residential Core$50,534
 $1,411
 $57,869
 $1,288
 $67,509
 $1,464
Residential Home Today19,444
 337
 21,573
 352
 25,542
 271
Home equity loans and lines of credit19,671
 293
 21,798
 282
 24,832
 299
Total$89,649
 $2,041
 $101,240
 $1,922
 $117,883
 $2,034
With an IVA recorded:           
Residential Core$50,611
 $1,891
 $55,696
 $2,228
 $58,145
 $2,570
Residential Home Today29,584
 1,445
 33,158
 1,756
 37,070
 1,877
Home equity loans and lines of credit17,862
 849
 13,206
 255
 9,469
 271
Construction—
 —
 213
 —
 213
 10
Total$98,057
 $4,185
 $102,273
 $4,239
 $104,897
 $4,728
Total impaired loans:           
Residential Core$101,145
 $3,302
 $113,565
 $3,516
 $125,654
 $4,034
Residential Home Today49,028
 1,782
 54,731
 2,108
 62,612
 2,148
Home equity loans and lines of credit37,533
 1,142
 35,004
 537
 34,301
 570
Construction—
 —
 213
 —
 213
 10
Total$187,706
 $6,226
 $203,513
 $6,161
 $222,780
 $6,762

Interest on loans in non-accrual status is recognized on a cash-basis. The amount of interest income on impaired loans recognized using a cash-basis method is $1,443, $1,400 and $1,347 for the years ended September 30, 2017, 2016 and 2015, respectively. Cash payments on loans with a partial charge-off are applied fully to principal, then to recovery of the charged off amount prior to interest income being recognized. Interest income on the remaining impaired loans is recognized on an accrual basis.

Charge-offs on residential mortgage loans, home equity loans and lines of credit, and construction loans are recognized when triggering events, such as foreclosure actions, short sales, or deeds accepted in lieu of repayment, result in less than full repayment of the recorded investmentamortized cost in the loans.

Partial or full charge-offs are also recognized for the amount of impairmentcredit losses on loans considered collateral dependent that meetcollateral-dependent when the borrower is experiencing financial difficulty as described by meeting the conditions described below.
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•For residential mortgage loans, payments are greater than 180 days delinquent;
•For home equity loans and lines of credit, equity loans, and residential loans restructured in a TDR, payments are greater than 90 days delinquent;
•For all classes of loans restructured in a TDR with a high debt-to-income ratio at time of modification;
•For all classes of loans, a sheriff sale is scheduled within 60 days to sell the collateral securing the loan;
•For all classes of loans, all borrowers have been discharged of their obligation through a Chapter 7 bankruptcy;
•For all classes of loans, within 60 days of notification, all borrowers obligated on the loan have filed Chapter 7 bankruptcy and have not reaffirmed or been dismissed;
•For all classes of loans, a borrower obligated on a loan has filed bankruptcy and the loan is greater than 30 days delinquent; and
•For all classes of loans, it becomes evident that a loss is probable.

Collateral dependentCollateral-dependent residential mortgage loans and construction loans are charged offcharged-off to the extent the recorded investmentamortized cost in athe loan, net of anticipated mortgage insurance claims, exceeds the fair value, less estimated costs to dispose of the underlying property. Management can determine if the loan is uncollectible for reasons such as foreclosures exceeding a reasonable time frame and recommend a full charge-off. Home equity loans or lines of credit are charged offcharged-off to the extent the recorded investmentamortized cost in the loan plus the balance of any senior liens exceeds the fair value, less estimated costs to dispose of the underlying property, or management determines the collateral is not sufficient to satisfy the loan. A loan in any portfolio that is identified as collateral dependentcollateral-dependent will continue to be reported as impairedsuch until it is no longer considered collateral dependent,collateral-dependent, is less than 30 days past due and does not have a prior charge-off. A loan in any portfolio that has a partial charge-off consequent to impairment evaluation will continue to be individually evaluated for impairmentcredit loss until, at a minimum, the impairmentloss has been recovered.

The following summarizes the effective datesResidential mortgage loans, home equity loans and lines of charge-off policies that changed or were first implemented during the currentcredit and previous four fiscal years and the portfolios to which those policies apply.
Effective Date
PolicyPortfolio(s) Affected
6/30/2014A loan is considered collateral dependent and any collateral shortfall is charged off when, within 60 days of notification, all borrowers obligated on a loan filed Chapter 7 bankruptcy and have not reaffirmed or been dismissed (1)All

(1)Prior to 6/30/2014, collateral shortfalls onconstruction loans in Chapter 7 bankruptcy were charged off when all borrowers were discharged of the obligation or when the loan was 30 days or more past due. Adoption of this policy did not result in a material change to total charge-offs or the provision for loan losses in the fiscal year ending September 30, 2014.
Loans restructured in TDRs that are not evaluated based on collateral are separately evaluated for impairmentcredit losses on a loan by loan basis at the time of restructuring and at each subsequent reporting date for as long as they are reported as TDRs. The impairmentcredit loss evaluation is based on the present value of expected future cash flows discounted at the effective interest rate of the original loan. Expected future cash flows include a discount factor representing a potential for default. Valuation allowances are recorded for the excess of the recorded investmentsamortized costs over the result of the cash flow analysis. Loans discharged in Chapter 7 bankruptcy are reported as TDRs and also evaluated based on the present value of expected future cash flows unless evaluated based on collateral. We evaluate theseThese loans are evaluated using the expected future cash flows because we expect the borrower, not liquidation of the collateral, is expected to be the source of repayment for the loan. Other consumer loans are not considered for restructuring. A loan restructured in a TDR is classified as an impaired loan
At September 30, 2023 and September 30, 2022, allowances on individually reviewed TDRs (IVAs), evaluated for a minimum of one year. After one year, that loan may be reclassified out of the balance of impaired loans if the loan was restructured to yield a market rate for loans of

similar credit risk at the time of restructuring and the loan is not impairedlosses based on the termspresent value of cash flows were $9,546 and $10,284, respectively. All other individually evaluated loans received a charge-off, if applicable.
The allowance for credit losses represents the estimate of lifetime losses in the loan portfolio and unfunded loan commitments. The allowance is estimated at each reporting date using relevant available information relating to past events, current conditions and supportable forecasts. The Company utilizes loan level regression models with forecasted economic data to derive the probability of default and loss given default factors. These factors are used to calculate the loan level credit loss over a 24-month period with an immediate reversion to historical mean loss rates for the remaining life of the restructuring agreement.loans.
Historical credit loss experience provides the basis for the estimation of expected credit losses. Qualitative adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency status or likely recovery of previous loan charge-offs. Qualitative adjustments for expected changes in environmental conditions, such as changes in unemployment rates, property values or other relevant factors, are recognized when forecasted economic data used in the model differs from management's view or contains significant unobservable changes within a short period, particularly when those changes are directionally positive. Identifiable model limitations may also lead to qualitative adjustments, such as those made to reflect the expected recovery of loan amounts previously charged-off, beyond what the model is able to project. The qualitative adjustments resulted in a negative ending balance on the allowance for credit losses for the Home Today portfolio, where recoveries are expected to exceed charge-offs over the remaining life of that portfolio.The net qualitative adjustment at September 30, 2023 was a net reduction of $13,425, compared to a net reduction of $7,085 at September 30, 2022. Adjustments are evaluated quarterly based on current facts and circumstances.
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Activity in the allowance for credit losses by portfolio segment is summarized as follows. See Note 15. COMMITMENTS AND CONTINGENT LIABILITIES for further details on the allowance for unfunded commitments.
 For the Year Ended September 30, 2023
 Beginning
Balance		Provisions (Releases)Charge-offsRecoveriesEnding
Balance
Real estate loans:
Residential Core$53,506 $1,000 $(257)$1,126 $55,375 
Residential Home Today(997)(2,370)(320)2,451 (1,236)
Home equity loans and lines of credit20,032 (399)(665)4,079 23,047 
Construction354 (225)— — 129 
Total real estate loans
$72,895 $(1,994)$(1,242)$7,656 $77,315 
Total Unfunded Loan Commitments (1)
$27,021 $494 $— $— $27,515 
Total Allowance for Credit Losses$99,916 $(1,500)$(1,242)$7,656 $104,830 
 For the Year Ended September 30, 2022
 Beginning
Balance		Provisions (Releases)Charge-offsRecoveriesEnding
Balance
Real estate loans:
Residential Core$44,523 $6,298  $(247) $2,932  $53,506 
Residential Home Today15  (3,411) (249) 2,648  (997)
Home equity loans and lines of credit19,454  (3,820) (954) 5,352  20,032 
Construction297  (118) —  175  354 
Total real estate loans
$64,289  $(1,051) $(1,450) $11,107  $72,895 
Total Unfunded Loan Commitments (1)
$24,970 $2,051 $— $— $27,021 
Total Allowance for Credit Losses$89,259 $1,000 $(1,450)$11,107 $99,916 
(1) Total allowance for unfunded loan commitments is recorded in other liabilities on the CONSOLIDATED STATEMENTS OF CONDITION and primarily relates to undrawn home equity lines of credit.



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CLASSIFIED LOANS
The following tables provide information about the credit quality of residential loan receivables by an internally assigned grade as of the dates presented. Revolving loans reported at amortized cost include home equity lines of credit currently in their draw period. Revolving loans converted to term are home equity lines of credit that are in repayment. Home equity loans and bridge loans are segregated by origination year. Loans, or the portions of loans, classified as loss are fully charged-off in the period in which they are determined to be uncollectible; therefore they are not included in the following table. No Home Today loans whose terms were restructured in TDRs were reclassifiedare classified Special Mention and all construction loans are classified Pass for both periods presented. Balances are adjusted for deferred loan fees and expenses and any applicable loans-in-process.
Revolving LoansRevolving Loans
By fiscal year of originationAmortizedConverted
20232022202120202019PriorCost BasisTo TermTotal
September 30, 2023
Real estate loans:
Residential Core
Pass$1,667,029 $3,169,609 $2,054,744 $1,342,854 $563,955 $3,275,978 $— $— $12,074,169 
Special Mention— — 612 — 106 1,025 — — 1,743 
Substandard185 823 1,285 1,806 721 22,207 — — 27,027 
Total Residential Core1,667,214 3,170,432 2,056,641 1,344,660 564,782 3,299,210 — — 12,102,939 
Residential Home Today (1)
Pass— — — — — 40,335 — — 40,335 
Substandard— — — — — 5,695 — — 5,695 
Total Residential Home Today— — — — — 46,030 — — 46,030 
Home equity loans and lines of credit
Pass210,131 72,229 23,989 6,965 6,192 13,704 2,657,028 63,399 3,053,637 
Special Mention— 129 — 52 32 102 2,830 370 3,515 
Substandard— — 140 96 — 120 4,849 4,924 10,129 
Total Home equity loans and lines of credit210,131 72,358 24,129 7,113 6,224 13,926 2,664,707 68,693 3,067,281 
Total Construction11,646 10,755 — — — — — — 22,401 
Total real estate loans
Pass1,888,806 3,252,593 2,078,733 1,349,819 570,147 3,330,017 2,657,028 63,399 15,190,542 
Special Mention— 129 612 52 138 1,127 2,830 370 5,258 
Substandard185 823 1,425 1,902 721 28,022 4,849 4,924 42,851 
Total real estate loans$1,888,991 $3,253,545 $2,080,770 $1,351,773 $571,006 $3,359,166 $2,664,707 $68,693 $15,238,651 
(1) No new originations of Home Today loans since fiscal 2016.
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Revolving LoansRevolving Loans
By fiscal year of originationAmortizedConverted
20222021202020192018PriorCost BasisTo TermTotal
September 30, 2022
Real estate loans:
Residential Core
Pass$3,349,200 $2,251,075 $1,488,763 $629,090 $665,116 $3,141,907 $— $— $11,525,151 
Special Mention— 292 — 108 464 816 — — 1,680 
Substandard— 1,195 3,188 1,142 1,883 25,042 — — 32,450 
Total Residential Core3,349,200 2,252,562 1,491,951 630,340 667,463 3,167,765 — — 11,559,281 
Residential Home Today (1)
Pass— — — — — 45,408 — — 45,408 
Substandard— — — — — 7,400 — — 7,400 
Total Residential Home Today— — — — — 52,808 — — 52,808 
Home equity loans and lines of credit
Pass98,904 30,614 9,204 8,036 6,965 11,247 2,400,095 89,448 2,654,513 
Special Mention— 191 — — — — 898 640 1,729 
Substandard— — 54 20 19 127 2,996 6,674 9,890 
Total Home equity loans and lines of credit98,904 30,805 9,258 8,056 6,984 11,374 2,403,989 96,762 2,666,132 
Total Construction37,810 10,668 — — — — — — 48,478 
Total real estate loans
Pass3,485,914 2,292,357 1,497,967 637,126 672,081 3,198,562 2,400,095 89,448 14,273,550 
Special Mention— 483 — 108 464 816 898 640 3,409 
Substandard— 1,195 3,242 1,162 1,902 32,569 2,996 6,674 49,740 
Total real estate loans$3,485,914 $2,294,035 $1,501,209 $638,396 $674,447 $3,231,947 $2,403,989 $96,762 $14,326,699 
(1) No new originations of Home Today loans since fiscal 2016.
The home equity lines of credit converted from impairedrevolving to term loans during the years ended September 30, 2017, 2016 and 2015.

The recorded investment in TDRs by type of concession as of September 30, 20172023 and September 30, 20162022, totaled $2,492 and $436, respectively. The amount of conversions to term loans is shown inexpected to remain low for several years since the tables below.
September 30, 2017 Reduction
in Interest 
Rates		 Payment
Extensions		 Forbearance
 or Other Actions		 
Multiple
Concessions
 
Multiple
Restructurings
 Bankruptcy Total
Residential Core $12,485
 $521
 $8,176
 $21,278
 $20,459
 $23,670
 $86,589
Residential Home Today 5,441
 —
 4,811
 10,538
 18,877
 4,337
 44,004
Home equity loans and lines of credit 106
 6,033
 373
 14,661
 1,471
 8,783
 31,427
Total $18,032
 $6,554
 $13,360
 $46,477
 $40,807
 $36,790
 $162,020
September 30, 2016 Reduction
in Interest 
Rates		 Payment
Extensions		 Forbearance
 or Other Actions		 
Multiple
Concessions
 Multiple
Restructurings		 Bankruptcy Total
Residential Core $13,456
 $748
 $8,595
 $22,641
 $21,517
 $28,263
 $95,220
Residential Home Today 6,338
 —
 5,198
 11,330
 20,497
 5,241
 48,604
Home equity loans and lines of credit 120
 4,135
 401
 9,354
 1,166
 11,602
 26,778
Total $19,914
 $4,883
 $14,194
 $43,325
 $43,180
 $45,106
 $170,602

TDRs may be restructured more than once. Among other requirements, a subsequent restructuring may be available for a borrower upon the expiration of temporary restructured terms if the borrower cannot return to regular loan payments. If the borrower is experiencing an income curtailment that temporarily has reduced his/her capacity to repay, such as loss of employment, reduction of hours, non-paid leave or short term disability, a temporary restructuring is considered. If the borrower lacks the capacity to repay the loan at the current terms due to a permanent condition, a permanent restructuring is considered. In evaluating the need for a subsequent restructuring, the borrower’s ability to repay is generally assessed utilizing a debt to income and cash flow analysis. As the economy has improved, the need for multiple restructurings has begun to abate. Loans discharged in Chapter 7 bankruptcy are classified as multiple restructurings if the loan's original terms had also been restructured by the Association.

For all loans restructured during the years ended September 30, 2017, 2016 and 2015 (set forth in the tables below), the pre-restructured outstanding recorded investment was not materially different from the post-restructured outstanding recorded investment.
The following tables set forth the recorded investment in TDRs restructured during the years presented, according to the types of concessions granted.
 For the Year Ended September 30, 2017
 Reduction
in Interest 
Rates		 
Payment
Extensions
 Forbearance
 or Other Actions		 
Multiple
Concessions
 Multiple
Restructurings		 Bankruptcy Total
 (Dollars in thousands)
Residential Core$818
 $—
 $1,340
 $1,654
 $2,176
 $2,621
 $8,609
Residential Home Today147
 —
 456
 458
 2,734
 469
 4,264
Home equity loans and lines of credit—
 2,282
 32
 6,834
 694
 1,042
 10,884
Total$965
 $2,282
 $1,828
 $8,946
 $5,604
 $4,132
 $23,757


 For the Year Ended September 30, 2016
 Reduction
in Interest 
Rates		 
Payment
Extensions
 Forbearance
 or Other Actions		 
Multiple
Concessions
 Multiple
Restructurings		 Bankruptcy Total
 (Dollars in thousands)
Residential Core$1,342
 $—
 $1,154
 $4,444
 $2,902
 $4,929
 $14,771
Residential Home Today169
 —
 489
 542
 3,487
 469
 5,156
Home equity loans and lines of credit58
 1,371
 33
 5,842
 459
 1,360
 9,123
Total$1,569
 $1,371
 $1,676
 $10,828
 $6,848
 $6,758
 $29,050

 For the Year Ended September 30, 2015
 
Reduction
in Interest 
Rates
 
Payment
Extensions
 
Forbearance
 or Other Actions
 
Multiple
Concessions
 Multiple
Restructurings		 Bankruptcy Total
 (Dollars in thousands)
Residential Core$2,490
 $—
 $745
 $4,464
 $4,437
 $6,720
 $18,856
Residential Home Today80
 —
 758
 301
 5,306
 2,096
 8,541
Home equity loans and lines of credit—
 1,800
 88
 3,079
 290
 1,634
 6,891
Total$2,570
 $1,800
 $1,591
 $7,844
 $10,033
 $10,450
 $34,288
Below summarizes the information on TDRs restructured within the previous 12 monthslength of the draw period presented for which there was a subsequent payment default, at least 30 days past due on one scheduled payment, during the period presented. 
 For the Year Ended September 30, 2017 For the Year Ended September 30, 2016 For the Year Ended September 30, 2015
TDRs That Subsequently Defaulted
Number of
Contracts
 
Recorded
Investment
 
Number of
Contracts
 
Recorded
Investment
 Number of
Contracts		 Recorded
Investment
 (Dollars in thousands) (Dollars in thousands) (Dollars in thousands)
Residential Core17
 $1,462
 32
 $2,282
 34
 $3,296
Residential Home Today25
 1,126
 26
 1,088
 26
 1,179
Home equity loans and lines of credit16
 667
 28
 886
 44
 689
Total58
 $3,255
 86
 $4,256
 104
 $5,164
new originations changed from five to 10 years in 2016.
Residential loans are internally assigned a grade that complies with the guidelines outlined in the OCC’s Handbook for Rating Credit Risk. Pass loans are assets well protected by the current paying capacity of the borrower. Special Mention loans have a potential weakness, as evaluated based on delinquency status or nature of the product, that the Association feelsCompany deems to deserve management’s attention and may result in further deterioration in their repayment prospects and/or the Association’sCompany’s credit position. Substandard loans are inadequately protected by the current payment capacity of the borrower or the collateral pledged with a defined weakness that jeopardizes the liquidation of the debt. Also included in Substandard are performing home equity loans and lines of credit where the customer has a severely delinquent first mortgage to which the performing home equity loan or line of credit is subordinate and all loans in Chapter 7 bankruptcy status where all borrowers have filed, and have not reaffirmed or been dismissed. Loss loans are considered uncollectible and are charged offcharged-off when identified. Loss loans are of such little value that their continuance as bankable assets is not warranted even though partial recovery may be effected in the future.


The following tables provide information about the credit quality of residential loan receivables by an internally assigned grade. Balances are adjusted for deferred loan fees, expenses and any applicable LIP.
 Pass 
Special
Mention
 Substandard Loss Total
September 30, 2017         
Real Estate Loans:         
Residential Core$10,709,739
 $—
 $51,304
 $—
 $10,761,043
Residential Home Today88,247
 —
 19,436
 —
 107,683
Home equity loans and lines of credit1,545,658
 3,837
 20,556
 —
 1,570,051
Construction26,427
 —
 —
 —
 26,427
Total real estate loans$12,370,071
 $3,837
 $91,296
 $—
 $12,465,204
 Pass 
Special
Mention
 Substandard Loss Total
September 30, 2016         
Real Estate Loans:         
Residential Core$10,022,555
 $—
 $57,059
 $—
 $10,079,614
Residential Home Today99,442
 —
 20,993
 —
 120,435
Home equity loans and lines of credit1,516,551
 4,122
 21,917
 —
 1,542,590
Construction24,844
 —
 —
 —
 24,844
Total real estate loans$11,663,392
 $4,122
 $99,969
 $—
 $11,767,483
At September 30, 20172023 and 2016,September 30, 2022, respectively, the recorded investment$73,172 and $75,904 of impaired loans includes $94,104 and $101,227 of TDRs that are individually evaluated for impairment, butcredit loss have adequately performed under the terms of the restructuring and are classified as Pass loans. At September 30, 2017 and 2016, respectively, there were $4,840 and $6,346 of loans classified substandard and $3,837 and $4,122 of loans designated special mention that are not included in the recorded investment of impaired loans; rather, they are included in loans collectively evaluated for impairment.
Other consumer loans are internally assigned a grade of nonperformingnon-performing when they are consideredbecome 90 days or more past due. At September 30, 20172023 and September 30, 2016,2022, no consumerother loans were graded as nonperforming.non-performing.
During
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TROUBLED DEBT RESTRUCTURINGS
Initial concessions granted for loans restructured as TDRs may include reduction of interest rate, extension of amortization period, capitalization of delinquent amounts, forbearance or other actions. Some TDRs have experienced a combination of concessions. TDRs also may occur as a result of bankruptcy proceedings. Loans discharged in Chapter 7 bankruptcy are classified as multiple restructurings if the loan's original terms had also been restructured by the Company. The amortized cost in TDRs by category as of September 30, 2023 and September 30, 2022 is shown in the tables below.
September 30, 2023Initial RestructuringMultiple
Restructurings		BankruptcyTotal
Residential Core$28,546 $15,730 $9,577 $53,853 
Residential Home Today9,390 10,114 1,691 21,195 
Home equity loans and lines of credit21,063 2,460 879 24,402 
Total$58,999 $28,304 $12,147 $99,450 

September 30, 2022Initial RestructuringMultiple
Restructurings		BankruptcyTotal
Residential Core$30,071 $17,583 $10,896 $58,550 
Residential Home Today10,359 11,485 1,995 23,839 
Home equity loans and lines of credit22,636 2,743 1,268 26,647 
Total$63,066 $31,811 $14,159 $109,036 
TDRs may be restructured more than once. Among other requirements, a subsequent restructuring may be available for a borrower upon the expiration of temporary restructuring terms if the borrower is unable to resume contractually scheduled loan payments. If the borrower is experiencing an income curtailment that temporarily has reduced their capacity to repay, such as loss of employment, reduction of work hours, non-paid leave or short-term disability, a temporary restructuring is considered. If the borrower lacks the capacity to repay the loan at the current terms due to a permanent condition, a permanent restructuring is considered. In evaluating the need for a subsequent restructuring, the borrower’s ability to repay is generally assessed utilizing a debt to income and cash flow analysis.
For all TDRs restructured during the years ended September 30, 20172023 and 2016, respectively, $0 and $244September 30, 2022 (set forth in recoveries were recorded representing payments received as a resultthe tables below), the pre-restructured outstanding amortized cost was not materially different from the post-restructured outstanding amortized cost.
The following tables set forth the amortized cost in TDRs restructured during the periods presented.
 For the Year Ended September 30, 2023
 Initial RestructuringMultiple
Restructurings		BankruptcyTotal
Residential Core$2,866 $1,784 $1,037 $5,687 
Residential Home Today356 342 31 729 
Home equity loans and lines of credit1,289 233 1 1,523 
Total$4,511 $2,359 $1,069 $7,939 
 For the Year Ended September 30, 2022
 Initial RestructuringMultiple
Restructurings		BankruptcyTotal
Residential Core$3,823 $1,533 $1,142 $6,498 
Residential Home Today202 1,071 45 1,318 
Home equity loans and lines of credit510 175 163 848 
Total$4,535 $2,779 $1,350 $8,664 
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Table of PMIC increasing the cash percentageContents
 For the Year Ended September 30, 2021
 Initial RestructuringMultiple
Restructurings		BankruptcyTotal
Residential Core$9,364 $1,981 $1,614 $12,959 
Residential Home Today362 1,432 103 1,897 
Home equity loans and lines of credit1,466 1,223 417 3,106 
Total$11,192 $4,636 $2,134 $17,962 
The table below summarizes information about TDRs restructured within 12 months of the partial claimperiod presented for which there was a subsequent payment plan as discussed earlier in this note.default (at least 30 days past due on one scheduled payment) during the periods presented.
Activity in the allowance for loan losses is summarized as follows:
 For the Year Ended September 30, 2023For the Year Ended September 30, 2022For the Year Ended September 30, 2021
TDRs That Subsequently DefaultedNumber of
Contracts		Recorded
Investment		Number of
Contracts		Recorded
Investment		Number of
Contracts		Recorded
Investment
Residential Core6 $575 5 $780 6 $948 
Residential Home Today5 207 5 90 7 194 
Home equity loans and lines of credit1 46 2 108 1 42 
Total12 $828 12 $978 14 $1,184 

 For the Year Ended September 30, 2017
 
Beginning
Balance
 Provisions Charge-offs Recoveries 
Ending
Balance
Real estate loans:         
Residential Core$15,068
 $(3,311) $(3,029) $5,458
 $14,186
Residential Home Today7,416
 (1,943) (2,276) 1,311
 4,508
Home equity loans and lines of credit39,304
 (11,744) (6,173) 8,862
 30,249
Construction7
 (2) —
 —
 5
Total real estate loans

$61,795
 $(17,000) $(11,478) $15,631
 $48,948


 For the Year Ended September 30, 2016
 
Beginning
Balance
 Provisions Charge-offs Recoveries 
Ending
Balance
Real estate loans:         
Residential Core$22,596
 $(6,942) $(4,294) $3,708
 $15,068
Residential Home Today9,997
 (1,253) (2,761) 1,433
 7,416
Home equity loans and lines of credit38,926
 255
 (7,846) 7,969
 39,304
Construction35
 (60) —
 32
 7
Total real estate loans
$71,554
 $(8,000) $(14,901) $13,142
 $61,795
 For the Year Ended September 30, 2015
 
Beginning
Balance
 Provisions Charge-offs Recoveries 
Ending
Balance
Real estate loans:         
Residential Core$31,080
 $(6,987) $(6,866) $5,369
 $22,596
Residential Home Today16,424
 (4,508) (3,452) 1,533
 9,997
Home equity loans and lines of credit33,831
 8,661
 (11,034) 7,468
 38,926
Construction27
 (166) —
 174
 35
Total real estate loans
$81,362
 $(3,000) $(21,352) $14,544
 $71,554
6. MORTGAGE LOAN SERVICING RIGHTS
The Company sells certain types of loans through whole loan sales and through securitizations. In each case, the Company retains a servicing interest in the loans or securitized loans. Certain assumptions and estimates are used to determine the fair value allocated to these retained interests at the date of transfer and at subsequent measurement dates. These assumptions and estimates include loan repayment rates and discount rates.
Changes in interest rates can affect the average life of loans and mortgage-backed securities and the related servicing rights. A reduction in interest rates normally results in increased prepayments, as borrowers refinance their debt in order to reduce their borrowing costs. This creates reinvestment risk, which is the risk that the Company may not be able to reinvest the proceeds of loan and securities prepayments at rates that are comparable to the rates earned on the loans or securities prior to receipt of the repayment.
During 2017, 20162023, 2022 and 2015, $249,426, $200,2982021, $77,206, $128,118 and $160,052,$796,512, respectively, of mortgage loans were securitized and/or sold including accrued interest thereon. In these transactions, the Company retained residual interests in the form of mortgage loan servicing rights. Primary economic assumptions used to measure the value of the Company’s retained interests at the date of sale resulting from the completed transactions were as follows (per annum):
20232022
Primary prepayment speed assumptions (weighted average annual rate)17.6 %11.9 %
Weighted average life (years)25.324.1
Amortized cost to service loans (weighted average)0.12 %0.12 %
Weighted average discount rate12 %12 %
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Table of Contents
 2017 2016
Primary prepayment speed assumptions (weighted average annual rate)9.9% 11.3%
Weighted average life (years)22.2
 23.0
Amortized cost to service loans (weighted average)0.12% 0.12%
Weighted average discount rate12% 12%
Key economic assumptions and the sensitivity of the current fair value of mortgage loan servicing rights to immediate 10% and 20% adverse changes in those assumptions are as presented in the following table. The three key economic assumptions that impact the valuation of the mortgage loan servicing rights are: (1) the prepayment speed, or how long the mortgage servicing right will be outstanding; (2) the estimate of servicing costs that will be incurred in fulfilling the mortgage servicing right responsibilities; and (3) the discount factor applied to future net cash flows to convert them to present value. The Company established these factors based on independent analysis of our portfolio and reviews these assumptions periodically to ensure that they reasonably reflect current market conditions and our loan portfolio experience. Additionally, to confirm the appropriateness of the Company's mortgage loan servicing rights valuation, an independent third party is engaged at least annually, and more frequently if warranted by market volatility, to value our mortgage loan servicing rights portfolio. The results of the third party valuation are compared and reconciled to the Company's valuation, thereby validating the Company's approach and assumptions.

September 30, 2023
Fair value of mortgage loan servicing rights$15,916 
Prepayment speed assumptions (weighted average annual rate)9.4 %
Impact on fair value of 10% adverse change$(629)
Impact on fair value of 20% adverse change$(1,180)
Estimated prospective annual cost to service loans (weighted average)0.12 %
Impact on fair value of 10% adverse change$(1,446)
Impact on fair value of 20% adverse change$(2,869)
Discount rate12.0 %
Impact on fair value of 10% adverse change$(590)
Impact on fair value of 20% adverse change$(1,114)
 September 30, 2017
Fair value of mortgage loan servicing rights$16,102
Prepayment speed assumptions (weighted average annual rate)18.0%
Impact on fair value of 10% adverse change$(568)
Impact on fair value of 20% adverse change$(1,085)
Estimated prospective annual cost to service loans (weighted average)0.12%
Impact on fair value of 10% adverse change$(1,493)
Impact on fair value of 20% adverse change$(2,987)
Discount rate12.0%
Impact on fair value of 10% adverse change$(570)
Impact on fair value of 20% adverse change$(1,096)
These sensitivities are hypothetical and should be used with caution. As indicated in the table above, changes in fair value based on a 10% variation in assumptions generally cannot be extrapolated because the relationship in the change in assumption to the change in fair value may not be linear. Also, the effect of a variation in a particular assumption on the fair value of the retained interest is calculated without changing any other assumption. In reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which could magnify or counteract the sensitivities.
Servicing rights are evaluated periodically for impairment based on the fair value of those rights. Twenty-one risk tranches are used in evaluating servicing rights for impairment, segregated primarily by interest rate stratum within original term to maturity categories with additional strata for less uniform account types.
Activity in mortgage servicing rights is summarized as follows:
 Year Ended September 30,
 202320222021
Balance—beginning of year$7,943 $8,941 $7,860 
   Additions from loan securitizations/sales322 657 3,836 
   Amortization (1)
(865)(1,655)(2,764)
   Net change in valuation allowance— — 9 
Balance—end of year$7,400 $7,943 $8,941 
Fair value of capitalized amounts$15,916 $15,288 $17,454 
 Year Ended September 30,
 2017 2016 2015
Balance—beginning of year$8,852
 $9,988
 $11,669
   Additions from loan securitizations/sales1,347
 1,044
 907
   Amortization(1,824) (2,180) (2,588)
   Net change in valuation allowance—
 —
 —
Balance—end of year$8,375
 $8,852
 $9,988
Fair value of capitalized amounts$16,102
 $16,428
 $21,084
(1) Year ended September 30, 2021, amounts include $199 related to the repurchase of loans previously sold and serviced by the Company.
The Company receives annual servicing fees ranging from 0.02% to 0.98%0.84% of the outstanding loan balances. Servicing income, net of amortization of capitalized servicing rights, included in Non-interestnon-interest income, amounted to $4,257$4,516 in 2017, $4,6962023, $4,251 in 20162022 and $5,444$3,260 in 2015.2021. The unpaid principal balance of mortgage loans serviced for others was approximately $1,849,653, $1,959,467$1,933,249, $2,051,110 and $2,181,436$2,262,875 at September 30, 2017, 20162023, 2022 and 2015,2021, respectively. The ratio of capitalized servicing rights to the unpaid principal balance of mortgage loans serviced for others was 0.45%0.38%, 0.45%0.39%, and 0.46%0.40% at September 30, 2017, 20162023, 2022 and 2015,2021, respectively.

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7. PREMISES, EQUIPMENT AND SOFTWARE, NET
Premises, equipment and software at cost are summarized as follows:
 September 30,
 20232022
Land$8,610 $8,610 
Office buildings62,090 61,312 
Furniture, fixtures and equipment40,634 39,899 
Software21,591 20,048 
Leasehold improvements11,018 11,071 
143,943 140,940 
Less: accumulated depreciation and amortization(109,235)(106,409)
Total$34,708 $34,531 
 September 30,
 2017 2016
Land$12,183
 $12,183
Office buildings76,003
 73,235
Furniture, fixtures and equipment33,313
 32,513
Software17,432
 17,061
Leasehold improvements15,224
 13,820
 154,155
 148,812
Less: accumulated depreciation and amortization(93,280) (87,809)
Total$60,875
 $61,003
During the years ended September 30, 2017, 20162023, 2022 and 2015,2021, depreciation and amortization expense on premises, equipment, and software was $5,633, $5,507$4,921, $5,393 and $4,798,$5,422, respectively.
8. LEASES
As a lessee, the Company enters into operating leases of buildings and land. The Company leasesoccupies certain of itsbanking branches, under renewable operating lease agreements. Future minimum payments under non-cancelableloan production and customer service offices and a disaster recovery site through non-cancellable operating leases with initial or remaining terms of from less than one year or more consistedto 13 years. Most of the followingleases have fixed payment terms with annual fixed-escalation clauses. Certain leases have annual rent escalations based on subsequent year-to-year changes in the consumer price index. These year-to-year changes in the consumer price index are excluded from the calculation of right-of-use assets and lease liabilities and recognized as expense in the period in which they are incurred. Additionally, all variable lease costs that are not based on an index or rate, such as "common area maintenance" costs, are expensed as incurred. Most of the Company's leases include options to extend for periods that range from three to five years. The leases do not have early-termination options. The Company has not included term extensions in the calculation of the lease term, as the Company does not consider it reasonably certain that the options will be exercised. As the interest rate implicit in all of the Company's lease contracts is not readily determinable, the Company utilized its incremental borrowing rate, which is the rate that would be incurred to borrow on a collateralized basis over a similar term on an amount equal to the total contractual lease payments in a similar economic environment. The incremental borrowing rate utilized for all the Company's leases is the FHLB Advance rate based on the lease term at commencement in determining the present value of lease payments.
Operating lease expense for the years ended September 30, 2017:
Years Ending September 30, 
2018$6,697
20196,138
20204,987
20213,989
20222,743
Thereafter6,264

2023 and 2022, totaled $5,573 and $5,576, respectively. Variable lease expense for the years ended September 30, 2023 and 2022, totaled $1,514 and $1,479, respectively. During the years ended September 30, 2017, 20162023 and 2015, rental expense was $6,929, $6,7112022, the Company paid $5,556 and $6,421,$5,572, respectively, and appears in office property, equipment, and softwarecash for amounts included in the accompanying statements.

The Company, as lessor, leases certain commercial office buildings. The Company anticipates receiving future minimum paymentsmeasurement of the following aslease liabilities. As of September 30, 2017:2023 and 2022, the Company has not entered into any material leases that have not yet commenced.
The following table summarizes information relating to the Company's operating leases:
Years Ending September 30, 
2018$2,154
20191,991
20201,124
20211,072
2022998
Thereafter824
September 30,
20232022
Right-of-use assets (a)$37,517$30,189
Lease liabilities (b)$18,209$15,775
Weighted Average Remaining Lease Term5.10 years5.06 years
Weighted Average Discount Rate2.44%1.49%
During each of the years ended September 30, 2017, 2016 and 2015, rental income was $1,857, $1,556 and $1,414 respectively, and appears(a) Included in other non-interest incomeOther assets in the accompanying statements.CONSOLIDATED STATEMENTS OF CONDITION

8. ACCRUED INTEREST RECEIVABLE
(b) Included in Accrued interest receivable is summarized as follows:expenses and other liabilities in the CONSOLIDATED STATEMENTS OF CONDITION
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 September 30,
 2017 2016
Investment securities$1,270
 $1,179
Loans34,209
 31,639
     Total$35,479
 $32,818
The following table summarizes the maturities of lease liabilities at the periods presented:
September 30,
20232022
Maturing in:
12 months or less$5,478 $4,953 
13 to 24 months4,763 3,903 
25 to 36 months3,288 3,044 
37 to 48 months2,067 1,810 
49 to 60 months1,347 591 
over 60 months2,577 2,230 
Total minimum lease payments19,520 16,531 
Less imputed interest1,311 756 
Total lease liabilities$18,209 $15,775 
9. DEPOSITS
Deposit account balances are summarized by interest rate as follows:
 Stated
Interest
Rate		September 30,
 20232022
AmountPercentAmountPercent
Checking accounts0.00–1.00%$983,396 10.4 %$1,210,035 13.6 %
Savings accounts, excluding money market accounts0.00–4.221,460,601 15.5 1,364,821 15.3 
Money market accounts0.00–3.93346,479 3.7 481,650 5.4 
Subtotal2,790,476 29.6 3,056,506 34.3 
Certificates of deposit0.00–0.99981,728 10.4 3,157,495 35.4 
1.00–1.99685,170 7.2 1,002,227 11.2 
2.00–2.99941,842 10.0 1,320,579 14.8 
3.00–3.991,173,211 12.4 378,587 4.2 
4.00–4.991,346,720 14.3 3,386 0.1 
 5.00 and above1,520,311 16.1 — — 
6,648,982 70.4 5,862,274 65.7 
Subtotal9,439,458 100.0 8,918,780 100.0 
Accrued interest10,362 — 2,237 — 
Total deposits$9,449,820 100.0 %$8,921,017 100.0 %
 
Stated
Interest
Rate
 September 30,
  2017 2016
  Amount Percent Amount Percent
Checking accounts 0.00–0.10% $987,001
 12.1% $995,372
 12.0%
Savings accounts 0.00–0.15 1,473,415
 18.1
 1,514,428
 18.2
Subtotal   2,460,416
 30.2
 2,509,800
 30.2
Certificates of deposit 0.00–0.99 877,684
 10.8
 1,164,802
 14.0
  1.00–1.99 4,348,918
 53.3
 4,214,976
 50.6
  2.00–2.99 449,358
 5.5
 411,229
 4.9
  3.00–3.99 8,648
 0.1
 9,487
 0.1
 4.00 and above 4,628
 0.1
 19,148
 0.2
    5,689,236
 69.8
 5,819,642
 69.8
Subtotal   8,149,652
 100.0
 8,329,442
 100.0
Accrued interest   1,973
 —
 1,926
 —
Total deposits   $8,151,625
 100.0% $8,331,368
 100.0%

At September 30, 20172023 and 2016,2022, the weighted average interest rate was 0.14%0.05% and 0.81% on checking accounts; 1.49% and 0.79% on savings accounts; 0.09%2.62% and 0.95% on checkingmoney market accounts; 1.52%3.47% and 1.48%1.37% on certificates of deposit, respectively; and 1.10%2.77% and 1.07%1.18% on total deposits, respectively.
The aggregate amount of certificates of depositCD's in denominations of $100$250 or more totaled approximately $2,685,662was $845,375 and $2,668,391$733,301 at September 30, 20172023 and 2016,2022, respectively. In accordance with the DFA, the maximum amount of deposit insurance is $250$250 per depositor.
Brokered certificatesCD's (exclusive of deposit,acquisition costs and subsequent amortization), which are used as a cost effectivean additional funding alternative, totaled $620,705$1,162,601 and $539,775$575,236 at September 30, 20172023 and 2016,2022, respectively. The FDIC places restrictions on banks with regard to issuing brokered deposits based on the bank's capital classification. AAs a well-capitalized institution at September 30, 2023 and September 30, 2022, the Association may accept brokered deposits without FDIC restrictions. An adequately capitalized institution must obtain a waiver from the FDIC in order to accept brokered deposits, while an undercapitalized institution is prohibited by the FDIC from accepting brokered deposits.
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The scheduled maturity of certificates of deposit is as follows:
September 30, 2017 September 30, 2023
Amount Percent AmountPercentWeighted
Average
Rate
12 months or less$2,131,565
 37.4%12 months or less$3,419,349 51.4 %3.46 %
13 to 24 months1,490,041
 26.2%13 to 24 months764,512 11.5 %2.01 %
25 to 36 months1,136,632
 20.0%25 to 36 months1,506,491 22.7 %4.07 %
37 to 48 months491,055
 8.6%37 to 48 months501,945 7.5 %2.92 %
49 to 60 months237,354
 4.2%49 to 60 months440,012 6.6 %4.22 %
Over 60 months202,589
 3.6%Over 60 months16,673 0.3 %1.72 %
Total$5,689,236
 100.0% Total$6,648,982 100.0 %3.44 %

Interest expense on deposits is summarized as follows:
 Year Ended September 30,
 202320222021
Certificates of deposit$143,434 $68,204 $93,187 
Checking accounts6,081 4,186 1,140 
Savings and money market accounts24,686 4,553 2,992 
     Total$174,201 $76,943 $97,319 
99
 Year Ended September 30,
 2017 2016
Certificates of deposit$84,410
 $85,900
Checking accounts918
 1,289
Savings accounts2,093
 2,811
     Total$87,421
 $90,000
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10. BORROWED FUNDS
Federal Home Loan BankAt September 30, 2023, the Association had a maximum borrowing capacity of $7,344,253, of which $5,273,637 was outstanding. Borrowings from the FHLB of Cincinnati are secured by the Association’s investment in the common stock of the FHLB of Cincinnati, as well as by a blanket pledge of its mortgage portfolio not otherwise pledged. The Association also has the ability to purchase Fed Funds through arrangements with other institutions. Finally, the ability to borrow from the FRB-Cleveland Discount Window is available to the Association and is secured by a pledge of specific loans in the Association’s mortgage portfolio.
Total borrowings at September 30, 20172023 are summarized in the table below.below:
Borrowing CapacityBorrowings AvailableBorrowings Outstanding
FHLB$6,632,811 $1,381,951 $5,250,860 
FRB Cleveland126,442 126,442 — 
Fed Funds purchased585,000 585,000 — 
Subtotal$7,344,253 $2,093,393 5,250,860 
Accrued interest22,777 
Total borrowings$5,273,637 
Maturities of borrowings at September 30, 2023 are summarized in the table below:
AmountWeighted Average Rate
Maturing in:
12 months or less$1,417,000 3.19 %
13 to 24 months700,000 2.26 %
25 to 36 months775,548 2.74 %
37 to 48 months725,000 2.90 %
49 to 60 months577,273 3.80 %
over 60 months1,056,039 3.36 %
Total advances$5,250,860 3.06 %
Accrued interest22,777 
     Total$5,273,637 
All borrowings have fixed rates during their term ranging up to 240 months. Interest is payable monthly for long-term advances and at maturity for FHLB three-month advances and overnight advances. The amounttable above reflects the effective maturities and weighted averagefixed interest rates of certainthe $3,150,000 of short-term FHLB Advances maturing in years 2018 through 2021 reflect the net impact of deferred penalties discussed below:
 Amount 
Weighted
Average
Rate
Maturing in:   
2018$2,884,479
 1.25%
2019414,478
 1.79%
2020329,816
 1.82%
20211,290
 1.54%
thereafter37,548
 1.56%
Total FHLB Advances3,667,611
 1.36%
Accrued interest3,766
  
     Total$3,671,377
  

Through the use ofadvances that are tied to interest rate swaps discussed in Note 17. Derivative Instruments, $1,500,000 of FHLB advances included inDERIVATIVE INSTRUMENTS.
For the table above as maturing in 2018, have effective maturities, assuming no early terminations of the swap contracts, as shown below:
Effective Maturity:Amount 
Swap Adjusted Weighted
Average
Rate
    
2020$50,000
 1.23%
2021525,000
 1.19%
2022900,000
 1.90%
202325,000
 1.67%
     Total FHLB Advances under swap contracts$1,500,000
 1.62%
During fiscal year 2016, $150,000 fixed-rate FHLB advances with remaining terms of approximately four years were prepaidended September 30, 2023, 2022 and replaced with new four- and five-year2021, net interest rate swap arrangements. The deferred repayment penalties of $2,408expense related to the $150,000 of restructuring are being recognized in interest expense over the remaining term of the swap contracts.

The following table sets forth certain information relating to Federal Home Loan Bank short-term borrowings at or for the periods indicated.was $115,329, $49,828 and $50,975, respectively.
100
 At or For the Fiscal Years Ended September 30,
 2017 2016 2015
 (dollars in thousands)
Balance at end of year$2,610,000
 $1,451,000
 $755,000
Maximum outstanding at any month-end$2,610,000
 $1,451,000
 $1,535,000
Average balance during year$1,976,281
 $934,689
 $1,242,380
Average interest rate during the fiscal year0.89% 0.42% 0.15%
Weighted average interest rate at end of year1.22% 0.47% 0.18%
Interest expense$17,826
 $3,984
 $1,811
The Association implemented a strategy in fiscal year 2015 to increase net income, which involved borrowing, on an overnight basis, approximately $1,000,000
Table of additional funds from the FHLB at the beginning of a particular quarter and repaying it prior to the end of that quarter. The proceeds of the borrowings, net of the required investment in FHLB stock, were deposited at the Federal Reserve. The strategy was not utilized at September 30, 2017, 2016 or 2015, however, dependent upon market rates, remains an option in the future.Contents
The Association’s maximum borrowing capacity at the FHLB, under the most restrictive measure, was an additional $40,979 at September 30, 2017. Pursuant to collateral agreements with FHLB of Cincinnati, advances are secured by a blanket lien on qualifying first mortgage loans. In addition to the existing available capacity, the Association’s capacity limit for additional borrowings from the FHLB of Cincinnati was $4,867,936 at September 30, 2017, subject to satisfaction of the FHLB of Cincinnati common stock ownership requirement. To satisfy the common stock ownership requirement, the Association would have to increase its ownership of FHLB of Cincinnati common stock by an additional $97,359. The terms of the advances include various restrictive covenants including limitations on the acquisition of additional debt in excess of specified levels. As of September 30, 2017, the Association was in compliance with all such covenants. The Association’s borrowing capacity at the FRB-Cleveland Discount Window was $72,295 at September 30, 2017.

11. OTHER COMPREHENSIVE INCOME (LOSS)
The change in accumulated other comprehensive income (loss)AOCI by component is as follows:
Unrealized Gains (Losses) on Securities Available for SaleCash Flow HedgesDefined Benefit PlanTotal
Fiscal year 2021 activity
Balance at September 30, 2020$4,694 $(114,306)$(22,353)$(131,965)
Other comprehensive income (loss) before reclassifications, net of tax expense (benefit) of $8,656(3,733)20,914 9,937 27,118 
Amounts reclassified, net of tax expense (benefit) of $9,907— 35,182 1,864 37,046 
Other comprehensive income (loss)(3,733)56,096 11,801 64,164 
Balance at September 30, 2021$961 $(58,210)$(10,552)$(67,801)
Fiscal year 2022 activity
Other comprehensive income (loss) before reclassifications, net of tax expense (benefit) of $21,242(34,860)109,452 (1,665)72,927 
Amounts reclassified, net of tax expense (benefit) of $5,212— 17,641 382 18,023 
Other comprehensive income (loss)(34,860)127,093 (1,283)90,950 
Balance at September 30, 2022$(33,899)$68,883 $(11,835)$23,149 
Fiscal year 2023 activity
Other comprehensive income (loss) before reclassifications, net of tax expense (benefit) of $31,998(7,274)112,851 1,904 107,481 
Amounts reclassified, net of tax expense (benefit) of $(13,383)— (46,202)784 (45,418)
Other comprehensive income (loss)(7,274)66,649 2,688 62,063 
Balance at September 30, 2023$(41,173)$135,532 $(9,147)$85,212 
 Unrealized Gains (Losses) on Securities Available for Sale Cash Flow Hedges Defined Benefit Plan Total
Fiscal year 2015 activity       
Balance at September 30, 2014$(1,092) $—
 $(9,700) $(10,792)
Other comprehensive income (loss) before reclassifications, net of tax benefit of $1,4903,018
 —
 (5,785) (2,767)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax expense of $265—
 —
 494
 494
Other comprehensive income (loss)3,018
 —
 (5,291) (2,273)
Balance at September 30, 2015$1,926
 $—
 $(14,991) $(13,065)
Fiscal year 2016 activity       
Other comprehensive loss before reclassifications, net of tax benefit of $4,621(1,510) (2,389) (4,682) (8,581)
Amounts reclassified from accumulated other comprehensive loss, net of tax expense of $1,089—
 1,018
 1,002
 2,020
Other comprehensive loss(1,510) (1,371) (3,680) (6,561)
Balance at September 30, 2016$416
 $(1,371) $(18,671) $(19,626)
Fiscal year 2017 activity       
Other comprehensive income (loss) before reclassifications, net of tax expense of $4,479(3,331) 9,186
 2,463
 8,318
Amounts reclassified from accumulated other comprehensive income (loss), net of tax expense of $2,055—
 2,434
 1,382
 3,816
Other comprehensive (loss) income(3,331) 11,620
 3,845
 12,134
Balance at September 30, 2017$(2,915) $10,249
 $(14,826) $(7,492)
        
The following table presents the reclassification adjustment out of accumulated other comprehensive income (loss)AOCI included in net income and the corresponding line item on the consolidated statements of incomeCONSOLIDATED STATEMENTS OF INCOME for the periods indicated:
Details about AOCI ComponentsFor the Years Ended September 30,Line Item in the Statement of Income
202320222021
Cash flow hedges:
Interest (income) expense$(59,821)$22,740 $44,534  Interest expense
Net income tax effect13,619 (5,099)(9,352) Income tax expense
Net of income tax expense (benefit)$(46,202)$17,641 $35,182 
Amortization of defined benefit plan:
Actuarial loss$1,020 $495 $2,419 (a)
Net income tax effect(236)(113)(555) Income tax expense
Net of income tax expense784 382 1,864 
Total reclassifications for the period$(45,418)$18,023 $37,046 
Details about Accumulated Other Comprehensive Income Components For the Years Ended September 30, Line Item in the Statement of Income
 2017 2016 2015 
Cash flow hedges:        
Interest expense, effective portion $3,745
 $1,567
 $—
  Interest expense
Income tax (1,311) (549) —
  Income tax expense
Net of income tax $2,434
 $1,018
 $—
  
         
Amortization of pension plan:        
Actuarial loss $2,126
 $1,542
 $759
  (a)
Income tax (744) (540) (265)  Income tax expense
Net of income tax 1,382
 1,002
 494
  
Total reclassifications for the period $3,816
 $2,020
 $494
  
(a) These items are included in the computation of net period pension cost. See Note 13. Employee Benefit PlansEMPLOYEE BENEFIT PLANS for additional disclosure.

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12. INCOME TAXES
The components of the income tax provision are as follows:
 Year Ended September 30,
 202320222021
Current tax expense (benefit):
Federal$13,602 $41,812 $31,043 
State781 2,553 2,230 
Deferred tax expense (benefit):
Federal3,681 (24,691)(13,548)
State53 (2,185)(638)
Income tax provision$18,117 $17,489 $19,087 
 Year Ended September 30,
 2017 2016 2015
Current tax expense:     
Federal$39,794
 $29,833
 $27,056
State1,121
 878
 564
Deferred tax expense (benefit):     
Federal3,634
 11,045
 9,605
State(85) 54
 (421)
Income tax provision$44,464
 $41,810
 $36,804
Reconciliation from tax at the federal statutory rate to the income tax provision is as follows:
 Year Ended September 30,
 202320222021
Tax at statutory rate21.0 %21.0 %21.0 %
State tax, net0.7 0.3 1.3 
Non-taxable income from bank owned life insurance contracts(2.1)(2.3)(2.1)
Non-deductible compensation1.0 1.4 0.9 
Equity based compensation0.2 (0.1)(1.3)
Employee (Associate) Stock Ownership Plan(1.5)(1.2)(0.8)
Other, net0.1 (0.1)0.1 
     Income tax provision19.4 %19.0 %19.1 %
 Year Ended September 30,
 2017 2016 2015
Tax at statutory rate35.0 % 35.0 % 35.0 %
State tax, net0.5
 0.5
 0.1
Non-taxable income from bank owned life insurance contracts(1.7) (2.1) (2.4)
Other, net(0.5) 0.8
 0.9
     Income tax provision33.3 % 34.2 % 33.6 %

Temporary differences between the financial statement carrying amounts and tax basis of assets and liabilities that gave rise to significant portions of net deferred taxes relate to the following:
 September 30,
 20232022
Deferred tax assets:
Loan loss reserve$29,390 $27,659 
Deferred compensation4,215 4,198 
Lease liability4,251 3,599 
Property, equipment and software basis difference975 1,413 
Other2,099 2,220 
Total deferred tax assets40,930 39,089 
Deferred tax liabilities:
FHLB stock basis difference5,135 5,017 
Mortgage servicing rights1,514 1,551 
Pension2,843 2,119 
Goodwill2,158 2,132 
Lease ROU asset4,160 3,514 
Fair value adjustment20,969 — 
Deferred loan costs, net of fees15,005 13,371 
Other2,328 2,219 
Total deferred tax liabilities54,112 29,923 
Net deferred tax asset (liability)$(13,182)$9,166 
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 September 30,
 2017 2016
Deferred tax assets:   
Loan loss reserve$26,690
 $30,240
Deferred compensation12,280
 11,796
Pension2,696
 5,790
Property, equipment and software basis difference2,180
 1,759
Other2,482
 3,234
Total deferred tax assets46,328
 52,819
Deferred tax liabilities:   
FHLB stock basis difference7,999
 7,826
Mortgage servicing rights1,583
 1,322
Goodwill3,473
 3,434
Deferred loan costs, net of fees15,288
 11,131
Other1,994
 3,033
Total deferred tax liabilities30,337
 26,746
Net deferred tax asset$15,991
 $26,073
In the accompanying Consolidated Statements of ConditionCONSOLIDATED STATEMENTS OF CONDITION the net deferred tax asset or liability is included in Accrued expenses and other liabilities, and Other assets.assets for September 30, 2023 and 2022, respectively.
A valuation allowance is established to reduce deferred tax assets if it is more likely than not that the related tax benefits will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. There was no valuation allowance required at September 30, 20172023 or 2016.2022.

Retained earnings at September 30, 20172023 and 20162022 included approximately $104,861$104,861, for which no provision for federal or state income tax has been made. This amount represents allocations of income during years prior to 1988 to bad debt deductions for tax purposes only. These qualifying and nonqualifyingnon-qualifying base year reserves and supplemental reserves will be recaptured into income in the event of certain distributions and redemptions. Such recapture would create income for tax purposes only, which would be subject to the then current corporate income tax rate. However, recapture would not occur upon the reorganization, merger, or acquisition of the Association, nor if the Association is merged or liquidated tax-free into a bank or undergoes a charter change. If the Association fails to qualify as a bank or merges into a nonbanknon-bank entity, these reserves will be recaptured into income.
The provisions of Accounting for Uncertainty in Income Taxes, codified within FASB ASC 740 “Income Taxes,” prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement for a tax position taken or expected to be taken in a tax return. FASB ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Tax positions must meet a more-likely-than-not recognition threshold in order for the related tax benefit to be recognized or continue to be recognized. As of September 30, 2017, 20162023 and 2015,2022, the Company had no unrecognized tax benefits. The Company does not anticipate the total amount of unrecognized tax benefits to significantly change within the next 12twelve months.

The Company recognizes interest and penalties on income tax assessments or income tax refunds, where applicable, in the financial statements as a component of its provision for income taxes. The Company recognized no$0, $0, and $9 of interest expense or penalties on income tax assessments, and $0, $34, and $116 of interest on income tax refunds related to net operating loss carrybacks during the years ended September 30, 2017, 20162023, 2022 and 2015. Total2021, respectively. There was no interest related to income tax assessments accrued was $0at September 30, 2017 and 2016.2023 or 2022.

The Company’s effective income tax rate was 33.3%19.4%, 34.2%19.0% and 33.6%19.1% for the years ending September 30, 2017, 2016 and 2015, respectively. The decrease in the effective rate for the year ended September 30, 2017 compared to the same periods during fiscal 20162023, 2022 and 2015 is primarily due to how excess tax benefits on share-based payment awards are recognized pursuant to the adoption of ASU 2016-09. This change is described more fully in Note 21, Recent Accounting Pronouncements.2021, respectively.
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and city jurisdictions. With few exceptions, the Company is no longer subject to income tax examinations in its major jurisdictions for tax years prior to 2014.2020.
The Company makes certain investments in limited partnerships which invest in affordable housing projects that qualify for the Low Income Housing Tax Credit.LIHTC. The Company acts as a limited partner in these investments and does not exert control
over the operating or financial policies of the partnership. The Company accounts for its interests in LIHTCs using the
proportional amortization method. The impact of the Company's investments in tax credit entities on the provision for income
taxes was not material atfor the years ended September 30, 2017, 20162023, 2022 and 2015.2021.
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13. EMPLOYEE BENEFIT PLANS
Defined Benefit Plan—The Third Federal Savings Retirement Plan (the “Plan”) is a defined benefit pension plan. Effective December 31, 2002, the Plan was amended to limit participation to employees who met the Plan’s eligibility requirements on that date. Effective December 31, 2011, the Plan was amended to freeze future benefit accruals for participants in the Plan. After December 31, 2002, employees not participating in the Plan, upon meeting the applicable eligibility requirements, and those eligible participants who no longer receive service credits under the Plan, participate in a separate tier of the Company’s defined contribution 401(k) Savings Plan. Benefits under the Plan are based on years of service and the employee’s average annual compensation (as defined in the Plan) through December 31, 2011. The funding policy of the Plan is consistent with the funding requirements of U.S. federal and other governmental laws and regulations. During fiscal year 2022, a settlement adjustment was recognized as a result of lump sum payments exceeding the interest costs for the year. There were no settlement adjustments made during fiscal year 2023.
The following table sets forth the change in projected benefit obligation for the defined benefit plan:
 September 30,
 20232022
Projected benefit obligation at beginning of year$65,015 $88,276 
Interest cost3,324 2,628 
Actuarial (gain) loss and other(3,764)(19,783)
Settlement— (4,292)
Benefits paid(4,140)(1,814)
Projected benefit obligation at end of year$60,435 $65,015 
 September 30,
 2017 2016
Projected benefit obligation at beginning of year$84,218
 $76,735
Interest cost3,068
 3,288
Actuarial loss and other(955) 7,464
Benefits paid(4,113) (3,269)
Projected benefit obligation at end of year$82,218
 $84,218

The following table reconciles the beginning and ending balances of the fair value of Plan assets and presents the funded status of the Plan recognized in the Consolidated Statements of ConditionCONSOLIDATED STATEMENTS OF CONDITION at the September 30 measurement dates: dates. There were no employer contributions in the years ending September 30, 2023 and 2022.
 September 30,
 20232022
Fair value of plan assets at beginning of year$74,042 $97,971 
Actual return on plan assets2,481 (17,823)
Benefits paid(4,140)(1,814)
Settlement— (4,292)
Fair value of plan assets at end of year$72,383 $74,042 
Funded status of the plan—asset (liability)$11,948 $9,027 
 September 30,
 2017 2016
Fair value of plan assets at beginning of the year$65,951
 $60,849
Actual return on plan assets6,968
 4,371
Employer contributions4,000
 4,000
Benefits paid(4,113) (3,269)
Fair value of plan assets at end of year$72,806
 $65,951
Funded status of the plan—asset (liability)$(9,412) $(18,267)
The components of net periodic cost recognized in other non-interest expense in the Consolidated Statements of IncomeCONSOLIDATED STATEMENTS OF INCOME are as follows:
 Year Ended September 30,
 202320222021
Interest Cost$3,324 $2,628 $2,536 
Expected return on plan assets(3,872)(4,987)(4,997)
Amortization of net loss and other1,020 576 1,466 
Recognized net loss due to settlement— 882 792 
     Net periodic benefit (income) cost$472 $(901)$(203)
 Year Ended September 30,
 2017 2016 2015
Interest Cost3,068
 3,288
 3,130
Expected return on plan assets(4,134) (4,111) (4,414)
Amortization of net loss and other2,126
 1,542
 759
     Net periodic benefit (income) cost$1,060
 $719
 $(525)
There were no contributions, required minimum employer contributionsor voluntary, made during the fiscal year ended September 30, 2017. The Company made a voluntary contribution2023.
As of $4,000 duringSeptember 30, 2023, the current fiscal year.
Plan assets consist of investmentshad $0 invested in pooled separate accounts that investdue to the Plan moving to an LDI strategy. The LDI strategy derisks the Plan by allocating more to long-duration, fixed income assets. The Plan's target asset allocation is now 80% in mutual funds, equity securities, debt securities, or real estate investments. Pooled separate accounts are valued at net asset value per share at the reporting date. The fair values of the underlying investments used to determine net asset value of theLDI fixed income and 20% in equity. At September 30, 2022, $43.8 million were invested in pooled separate accounts are primarily publicly quoted prices or quoted prices for similarwith a redemption notice of 7 days.
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The following table summarizes Plan assets in active or non-active markets. In accordance with Subtopic 820-10, certain investments measured at fair value using the net asset value per share practical expedient are not classified in theon a recurring basis as of September 30, 2023 and 2022. See FN 16. FAIR VALUE for more information on how our fair value hierarchy described in Note16. Fair Value.is evaluated:

  Recurring Fair Value Measurements at Reporting Date Using
September 30, 2023Total Fair ValueQuoted Prices in
Active Markets for
Identical Assets
(Level 1)		Significant Other
Observable Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Cash equivalents$1,001 $1,001 $— $— 
Fixed income:
U.S. government obligations2,550 2,550 — — 
Corporate debt securities42,573 — 42,573 — 
Government strips8,617 — 8,617 — 
Total fixed income53,740 2,550 51,190 — 
Mutual equity funds15,791 15,791 — — 
Total (1)
$70,532 $19,342 $51,190 $— 
The following table presents the(1) Plan assets measured at fair value on a recurring basis excludes approximately $1,851 of Plan assets.unsettled security transactions.

 September 30,
 2017 2016
 
Fair Value
(in thousands)
 Unfunded Commitments 
Redemption Frequency
(if currently eligible)
 Redemption Notice Period Fair Value
(in thousands)		 Unfunded Commitments Redemption Frequency
(if currently eligible)		 Redemption Notice Period
Pooled Separate Accounts$72,806
 N/A Daily 7 Days $65,951
 N/A Daily 7 Days
  Recurring Fair Value Measurements at Reporting Date Using
September 30, 2022Total Fair ValueQuoted Prices in
Active Markets for
Identical Assets
(Level 1)		Significant Other
Observable Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Mutual equity funds$30,271 $30,271 $— $— 
Total$30,271 $30,271 $— $— 
There are no redemption restrictions on Plan assets at September 30, 2017.2023. Redemptions may be deferred for a longer period if conditions do not permit an orderly transfer or for certain investments of an illiquid nature.
The following additional information is provided with respect to the Plan:
September 30, September 30,
2017 2016 2015 202320222021
Assumptions and dates used to determine benefit obligations:     Assumptions and dates used to determine benefit obligations:
Discount rate3.90% 3.75% 4.40%Discount rate5.75 %5.35 %2.85 %
Rate of compensation increasen/a
 n/a
 n/a
Rate of compensation increasen/an/an/a
     
Assumptions used to determine net periodic benefit cost:     Assumptions used to determine net periodic benefit cost:
Discount rate3.75% 4.40% 4.40%Discount rate5.35 %4.60 %2.80 %
Long-term rate of return on plan assets7.00% 7.50% 7.50%Long-term rate of return on plan assets5.50 %5.50 %5.50 %
Rate of compensation increase (graded scale)n/a
 n/a
 n/a
Rate of compensation increase (graded scale)n/an/an/a
The expected long-term return on plan assets assumption has been derivedwas developed as a weighted average rate based upon the average rates of earnings expected on the funds invested to providetarget asset allocation of the Plan and the Long-Term Capital Market Assumptions for Plan benefits.the corresponding fiscal year end. Management evaluates the historical performance of the various asset categories, as well as current expectations in determining the adequacy of the assumed rates of return in meeting Plan obligations. If warranted, the assumption is modified.
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The following table provides estimates of expected future benefit payments during each of the next five fiscal years, as well as in the aggregate for years six through ten.10. Additionally, the table includes the minimum employer contributions expected during the next fiscal year.year:
Expected Benefit Payments During the Fiscal Years Ending September 30: 
2024$5,870 
20253,890 
20264,060 
20274,260 
20284,210 
Aggregate expected benefit payments during the five fiscal year period beginning October 1, 2028, and ending September 30, 203323,330 
Minimum employer contributions expected to be paid during the fiscal year ending September 30, 2024— 
Expected Benefit Payments During the Fiscal Years Ending September 30: 
2018$5,700
20194,020
20204,370
20214,910
20223,990
Aggregate expected benefit payments during the five fiscal year period beginning October 1, 2023, and ending September 30, 202722,970
Minimum employer contributions expected to be paid during the fiscal year ending September 30, 2018—
Effective September 30, 2006, the Company adopted the provisions of FASB ASC 715 “Compensation – Retirement Benefits” which requires an employer to recognize the funded status of its Plan in the statement of financial condition by a charge to AOCI. For the fiscal years ended September 30, 2017, 2016,2023, 2022, and 2015,2021, AOCI includes pretax net actuarial losses of $22,809, $28,725,$11,862, $15,255, and $23,063,$13,686, respectively, which have not been recognized as components of net periodic benefit costs as of the measurement date (there was no transition obligation at any date).
date. The Company expects that $1,679$628 of net actuarial losses will be recognized as AOCI components of net periodic benefit cost during the fiscal year ended September 30, 2018.2024.
401(k) Savings Plan—The Company maintains a 401(k) savings plan that is comprised of three tiers. The first tier allows eligible employees to contribute up to 75% of their compensation to the plan, subject to limitations established by the Internal Revenue Service, with the Company matching 100% of up to 4% on funds contributed. The second tier permits the Company to

make a profit-sharing contribution at its discretion. The first and second tiers cover substantially all employees who have reached age 2118 and have worked 1,000 hours30 days of service in one year of service. The third tier permits the Company to make discretionary contributions allocable to eligible employees including those eligible employees who are participants, but no longer receiving service credits, under the Company’s defined benefit pension plan. Voluntary contributions made by employees are vested at all times whereas Company contributions and Company matching contributions are subject to various vesting periods which range from immediately vested to fully vesting upon five years of service.
The total of the Company’s matching and discretionary contributions related to the 401(k) savings plan for the years ended September 30, 2017, 20162023, 2022 and 20152021 was $3,456, $3,412$4,297, $4,295 and $3,204,$4,187, respectively.
Employee (Associate) Stock Ownership Plan—The Company established an ESOP for its employees effective January 1, 2006. The ESOP is a tax-qualified plan designed to invest primarily in the Company’s common stock and provides employees with an opportunity to receive a funded retirement benefit, based primarily on the value of the Company’s common stock. The ESOP covers all eligible employees of the Company and its wholly-owned subsidiaries. Employees are eligible to participate in the ESOP after attainment of age 18, completion of 1,000 hours of service, and employment on the last day of the plan’s calendar year. Company contributions to the plan are at the discretion of the Board of Directors. The ESOP is accounted for in accordance with the provisions for stock compensation in FASB ASC 718. Compensation expense for the ESOP is based on the market price of the Company’s stock and is recognized as shares are committed to be released to participants. The total compensation expense related to this plan in the 2017, 20162023, 2022 and 20152021 fiscal years was $7,342, $7,714$5,761, $7,063 and $6,617,$8,270, respectively.
The ESOP was authorized to purchase, and did purchase, 11,605,824 shares of the Company’s common stock at a price of $10 per share with a 2006 plan year cash contribution and the proceeds of a loan from the Company to the ESOP. The outstanding loan principal balance as of September 30, 20172023 and 20162022 was $61,759$37,254 and $65,462,$41,927, respectively. Shares of the Company’s common stock pledged as collateral for the loan are released from the pledge for allocation to participants as loan payments are made. At September 30, 2017, 5,972,4082023, 8,897,453 shares have been allocated to participants and 325,005 shares were committed to be released. Shares that are committed to be released will be allocated to participants at the end of the plan year (December 31). ESOP shares that are unallocated or not yet committed to be released totaled 5,308,4112,708,371 at September 30, 2017,2023, and had a fair market value of $85,625.$32,013. Participants have the option to receive dividends on allocated shares in cash or leave the dividend in the ESOP. Dividends are reinvested in Company stock for those participants who choose to leave their dividends in the ESOP or who do not make an election. The purchase of Company stock for reinvestment of dividends is made in the open market on or about the date of the cash disbursement to the participants who opt to take dividends in cash. Dividends on unallocated shares held in the Employer Stock fund were paid to the trustee to be used to make payments on the outstanding loan obligation.
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14. EQUITY INCENTIVE PLAN
At a special meeting of shareholders held on May 29, 2008, shareholders of the Company approved theThe TFS Financial Corporation Amended and Restated 2008 Equity Incentive Plan, (theapproved by shareholders in February 2018 and the 2008 Equity Incentive Plan, approved by shareholders in May 2008, are collectively referred to as the "Equity Plan”). The amended and restated plan is substantially similar to the previous plan, except that the number of future shares eligible to be granted has been reduced to 8,450,000 shares, of which 7,138,688 shares remain available for future award, and the term to grant shares has been extended to February 21, 2028.
The Company adopted the provisionsrecorded excess tax benefits (expense) of $(224), $109, and $1,331 related to share-based compensation in FASB ASC 718awards for the years ended September 2023, 2022 and FASB ASC 505, upon approval of the Equity Plan, and began to expense the fair value of all2021, respectively.
The following table presents share-based compensation granted overexpense and the requisite service periods.
During the year ended September 30, 2017, the Compensation Committee of the Company’s Board of Directors approved the issuance of an additional 300,400 stock options and 72,900 restricted stock units to certain directors, officers and employees of the Company. The awards were made pursuant to the Equity Plan.
Amendments to FASB ASC 718 requires the Company to report the benefits of realized tax deductions in excess of the deferred tax benefits previously recognized for compensation expense as an operating cash flow. Prior to the year ended September 30, 2017, excess tax benefits were reported as a financing cash flow. The Company recorded an excessrelated tax benefit of $1,058, $3,198, and $1,582 for 2017, 2016 and 2015, respectively.recognized during the periods presented:
The stock options have a contractual term of 10 years and vest over a one to seven year service period. The Company recognizes compensation expense for the fair values of these awards, which have installment vesting, on a straight-line basis over the requisite service period of the awards.
Year Ended September 30,
202320222021
Restricted stock units expense$3,366 $3,206 $4,160 
Performance share units expense874 739 1,214 
Stock option expense— — 68 
Total stock-based compensation expense$4,240 $3,945 $5,442 
Tax benefit related to share-based compensation expense$778 $677 $999 
Restricted stock units vest over a one to ten10 year service period. The product of the number of units granted and the grant date market price of the Company’s common stock determines the fair value of restricted stock units under the Equity Plan. The Company recognizes compensation expense for the fair value of restricted stock units on a straight-line basis over the requisite service period.

During the years ended September 30, 2017, 2016 and 2015, the Company recorded $3,893, $5,723 and $7,363, respectively, of share-based compensation expense, comprised of stock option expense of $1,502, $2,473 and $3,391, respectively and restricted stock units expense of $2,391, $3,250 and $3,972, respectively. The tax benefit recognized in net income related to share-based compensation expense was $1,195, $1,776 and $2,505, respectively.
The following is a summary of the status of the Company’s restricted stock units as of September 30, 20172023, and changes therein during the year then ended:
Number of
Shares
Awarded		Weighted
Average
Grant Date
Fair Value
Outstanding at September 30, 20221,257,898 $14.17 
     Granted174,550 $13.69 
     Released(91,765)$17.86 
     Forfeited(850)$17.77 
Outstanding at September 30, 2023 (1)1,339,833 $13.85 
 
Number of
Shares
Awarded
 
Weighted
Average
Grant Date
Fair Value
Outstanding at September 30, 20161,184,357
 $13.00
     Granted72,900
 $19.26
     Exercised(82,489) $15.66
     Forfeited(5,700) $17.01
Outstanding at September 30, 20171,169,068
 $13.18
Vested and exercisable, at September 30, 2017611,883
 $12.23
Vested and expected to vest, at September 30, 20171,169,068
 $13.18
(1)Includes 765,748 shares with a weighted average grant date fair value of $11.87 that have vested but will not be issued until the recipients are no longer employed by the Company.
The weighted average grant date fair value of restricted stock units granted during the years ended September 30, 2017, 20162023, 2022 and 20152021 was $19.26, $19.06$13.69, $17.80 and $14.98$17.77 per share, respectively. The total fair value of restricted stock units vested during the years ended September 30, 2017, 20162023, 2022 and 20152021 was $2,655, $2,519,$1,639, $2,058, and $5,042,$6,981, respectively. Expected future compensation expense relating to the non-vested restricted stock units at September 30, 20172023, is $1,364$2,606 over a weighted average period of 1.772.43 years.
Performance share units vest in the form of Company common stock issued at the end of a three-year period, based on the pro-rata achievement of performance based metrics over a two-year period. The range of payout is 0% to 150% of the number of share units granted. For performance stock units, fair value is estimated as the product of the number of performance units granted, adjusted for the probability of achievement, and the grant date market price of the Company’s common stock. The Company recognizes compensation expense for the fair value of performance share units on a straight-line basis over the requisite service period, based on the performance condition that is probable of achievement. Probability of achievement is reassessed at each reporting period and the cumulative effect of a change in estimate, if any, is recognized in the period of change. Cash dividend equivalents are accrued and paid only if and when the underlying units become vested and payable.
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The following is a summary of the status of the Company’s performance share units as of September 30, 2023, and changes therein during the year then ended. No awards were forfeited during the year ended September 30, 2023.
Number of
Shares
Awarded		Weighted
Average
Grant Date
Fair Value
Outstanding at September 30, 2022169,954 18.46
     Granted102,000 13.69
     Released(58,277)19.76
     Performance adjustment4,394 17.77
Outstanding at September 30, 2023218,071 15.87
The weighted average grant date fair value of performance share units granted during the year ended September 30, 2023, 2022 and 2021 was $13.69, $17.80, and $17.77, respectively. The total fair value of performance share units vested during the years ended September 30, 2023, 2022 and 2021, totaled $1,152, $1,112, and $14, respectively. Expected future compensation expense relating to the non-vested performance share units at September 30, 2023, is $1,196 over a weighted average period of 1.81 years.
Stock options have a contractual term of 10 years and vest over a one to seven year service period. The Company recognizes compensation expense for the fair values of these awards, which have installment vesting, on a straight-line basis over the requisite service period of the awards.
The following is a summary of the Company’s stock option activity and related information for the Equity Plan for the year ended September 30, 2017:2023. There were no stock options granted during 2023, 2022 and 2021.
Number of
Stock Options		Weighted
Average
Exercise
Price		Weighted
Average
Remaining
Contractual
Life (years)		Aggregate
Intrinsic
Value
Outstanding at September 30, 20222,361,175 $15.14 3.32$429 
     Exercised(315,200)$11.64 $820 
     Forfeited or expired(54,000)$14.94 $— 
Outstanding at September 30, 20231,991,975 $15.69 2.66$— 
Vested and exercisable, at September 30, 20231,991,975 $15.69 2.66$— 
Vested or expected to vest, at September 30, 20231,991,975 $15.69 2.66$— 
 
Number of
Stock Options
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life (years)
 
Aggregate
Intrinsic
Value
Outstanding at September 30, 20164,961,757
 $12.62
 5.76 $26,216
     Granted300,400
 $19.28
    
     Exercised(738,925) $11.41
   $5,027
     Forfeited(6,800) $15.45
   $13
Outstanding at September 30, 20174,516,432
 $13.26
 5.54 $15,057
Vested and exercisable, at September 30, 20173,113,511
 $11.74
 4.48 $14,064
Vested or expected to vest, at September 30, 20174,516,432
 $13.26
 5.54 $15,057

The fair value of the option grants was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions.
 2017 2016
Expected dividend yield2.59% 2.10%
Expected volatility21.97% 22.03%
Risk-free interest rate1.86% 1.86%
Expected option term (in years)6.00
 6.00
The expected dividend yield for 2017 was estimated on the then current annualized dividend payout of $0.50 per share which was not expected to change. The expected dividend yield for 2016 was estimated based on the then current annualized dividend payout of $0.40 per share which was not expected to change. Volatility of the company’s stock was used in the estimation of fair value. Management estimated the expected life of the options using the simplified method allowed under SEC Staff Accounting Bulletin 110, which expresses the views of the SEC regarding the use of a “simplified” method, as discussed in Staff Accounting Bulletin No. 107. The five and seven year Treasury yield in effect at the time of the grant provides the risk-free rate of return for periods within the expected term of the options.

The weighted average grant date fairtotal intrinsic value of options grantedexercised during the years ended September 30, 2017, 20162023, 2022 and 20152021 was $3.22, $3.48,$820, $551 and $3.08 per share,$8,605, respectively. Expected future compensation expense relating to theThere were no non-vested options outstanding as of September 30, 2017 is $1,587 over a weighted average period of 2.09 years.2023. Upon exercise of vested options, management expects to draw on treasury stock as the source of the shares. At September 30, 2017, the number of common shares authorized for award under the Equity Plan was 23,000,000, of which 11,011,124 shares remain available for future award.
15. COMMITMENTS AND CONTINGENT LIABILITIES
In the normal course of business, the Company enters into commitments with off-balance-sheet risk to meet the financing needs of its customers. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments to originate or purchase loans generally have fixed expiration dates of 60 to 360 days or other termination clauses and may require payment of a fee. Unfunded commitments related to home equity lines of credit generally expire from 5five to 10 years following the date that the line of credit was established, subject to various conditions including compliance with payment obligation, adequacy of collateral securing the line and maintenance of a satisfactory credit profile by the borrower. Since some of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.
Off-balance sheet commitments to extend credit involve elements of credit risk and interest rate risk in excess of the amount recognized in the consolidated statements of condition.CONSOLIDATED STATEMENTS OF CONDITION. The Company’s exposure to credit loss in the event of nonperformance by the other party to the commitment is represented by the contractual amount of the commitment. The Company generally uses the same credit policies in making commitments as it does for on-balance-sheet instruments. The allowance for credit losses related to off-balance sheet commitments is recorded in other liabilities in the CONSOLIDATED STATEMENTS OF CONDITION. Refer to Note 5. LOANS AND ALLOWANCES FOR CREDIT LOSSES for discussion on
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credit loss methodology. Interest rate risk on commitments to extend credit results from the possibility that interest rates may have moved unfavorably from the position of the Company since the time the commitment was made.
At September 30, 2017,2023, the Company had commitments to originate or purchase loans and related allowances as follows:
CommitmentAllowance
Fixed-rate mortgage loans$130,448 $673 
Adjustable-rate mortgage loans44,034 232 
Home equity loans and lines of credit174,942 2,547 
Total$349,424 $3,452 
Fixed-rate mortgage loans$211,351
Adjustable-rate mortgage loans214,065
Equity loans and lines of credit including bridge loans123,492
Total$548,908


At September 30, 2017,2023, the Company had unfunded commitments outstanding and related allowances as follows:
CommitmentAllowance
Home equity lines of credit$4,696,512 $23,811 
Construction loans25,754 252 
Total$4,722,266 $24,063 
Equity lines of credit$1,425,440
Construction loans34,100
Limited partner investments11,541
Total$1,471,081
At September 30, 2017,2023, the unfunded commitment on home equity lines of credit, including commitments for accounts suspended as a result of material default or a decline in equity, is $1,501,591.$4,728,215.
At September 30, 2023 and September 30, 2022, the Company had $2,094 and $0, respectively, in commitments to sell mortgage loans. At September 30, 2023 and September 30, 2022, the Company had $51,275 and $0, respectively, in commitments to purchase mortgage loans, which are included in mortgage loan commitments above.
The above commitments are expected to be funded through normal operations.
The Company is undergoing an escheat audit covering Ohio, Kentucky and Florida. Any potential loss that may result from this matter is not reasonably estimable at September 30, 2023.
The Company and its subsidiaries are subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s consolidated financial condition, results of operation, or statements of cash flows.

16. FAIR VALUE
Under U.S. GAAP, fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date under current market conditions and aconditions. A fair value framework is established whereby assets and liabilities measured at fair value are grouped into three levels of a fair value hierarchy, based on the transparency of inputs and the reliability of assumptions used to estimate fair value. The Company’s policy is to recognize transfers between levels of the hierarchy as of the end of the reporting period in which the transfer occurs. The three levels of inputs are defined as follows:
Level 1 –
quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 –
quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets with few transactions, or model-based valuation techniques using assumptions that are observable in the market.
Level 3 –
a company’s own assumptions about how market participants would price an asset or liability.

As permitted under the fair value guidance in U.S. GAAP, the Company elects to measure at fair value, mortgage loans classified as held for sale that are subject to pending agency contracts to securitize and sell loans. This election is expected to reduce volatility in earnings related to market fluctuations between the contract trade and settlement dates. At September 30, 20172023 and 2016, respectively,September 30, 2022, there were no loans held for sale, subject to pending agency contracts held for which the fair value option was elected.sale. For the years ended September 30, 2017, 20162023, 2022, and 2015,2021, net gain (loss) on the sale of loans includes $0, $0 and $(111),$134, respectively, related to changesunrealized gains or losses during the period due to changes in the fair value of loans held for sale subject to pending agency contracts.
Presented below is a discussion of the methods and significant assumptions used by the Company to estimate fair value.
Investment Securities Available for Sale—Investment securities available for sale are recorded at fair value on a recurring basis. At September 30, 20172023 and 2016, respectively,2022, this includes $537,479$508,324 and $517,866$457,908, respectively, of investments in U.S. government and agency obligations including U.S. Treasury notes and investments in highly liquid collateralized mortgage obligations, that can include items issued by Fannie Mae, Freddie Mac, and Ginnie Mae. Values at both dates areMae, measured using the market approach. The fair values of collateralized mortgage obligationsinvestment securities represent unadjusted price estimates obtained from third party independent nationally recognized pricing services using pricing models or quoted prices of securities with similar characteristics and are included in Level 2 of the hierarchy. Third party pricing is reviewed on a monthly basis for reasonableness based on the market knowledge and experience of company personnel that interact daily with the markets for these types of securities.
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Mortgage Loans Held for Sale—The fair value of mortgage loans held for sale is estimated on an aggregate basis using a market approach based on quoted secondary market pricing for loan portfolios with similar characteristics. Loans held for sale are carried at the lower of cost or fair value except, as described above, the Company elects the fair value measurement option for mortgage loans held for sale subject to pending agency contracts to securitize and sell loans. Loans held for sale are included in Level 2 of the hierarchy. At September 30, 20172023 and 2016, respectively,2022, there were $351$3,260 and $4,686$9,661, respectively, of loans held for sale measured at fair value. At September 30, 2023 and 2022 there were no loans held for sale carried at cost. Interest income on mortgage loans held for sale is recorded in interest income on loans.
ImpairedCollateral-Dependent Loans—ImpairedCollateral-dependent loans represent certain loans held for investment that are subject to a fair value measurement under U.S. GAAP because they are individually evaluated for impairment and that impairment is measured using a fair value measurement, such as the fair value of the underlying collateral. ImpairmentCredit loss is measured using a market approach based on the fair value of the collateral, less estimated costs to dispose, for loans the Company considers to be collateral-dependent due to a delinquency status or other adverse condition severe enough to indicate that the borrower can no longer be relied upon as the continued source of repayment. These conditions are described more fully in Note 5. Loans and Allowance for Loan LossesLOANS AND ALLOWANCES FOR CREDIT LOSSES. To calculate impairmentthe credit loss of collateral-dependent loans, the fair market values of the collateral, estimated using exteriorthird-party appraisals in the majority of instances, are reduced by calculated estimated costs to dispose, derived from historical experience and recent market conditions. Any indicated impairmentcredit loss is recognized by a charge to the allowance for loancredit losses. Subsequent increases in collateral values or principal pay downs on loans with recognized impairmentcredit loss could result in an impaireda collateral-dependent loan being carried below its fair value. When no impairmentcredit loss is indicated, the carrying amount is considered to approximate the fair value of that loan to the Company because contractually that is the maximum recoveryrepayment the Company can expect. The recorded investmentamortized cost of loans individually evaluated for impairmentcredit loss based on the fair value of the collateral are included in Level 3 of the hierarchy with assets measured at fair value on a non-recurring basis. The range and weighted average impact of estimated costs to dispose on fair values is determined at the time of impairmentcredit loss or when additional impairmentcredit loss is recognized and is included in quantitative information about significant unobservable inputs later in this note.
Loans held for investment that have been restructured in TDRs, and are performing according to the restructured terms of the loan agreement and are not evaluated based on collateral, are individually evaluated for impairmentcredit loss using the present value of future cash flows based on the loan’s

effective interest rate, which is not a fair value measurement. At September 30, 20172023 and 2016, respectively,2022, this included $95,480$74,691 and $102,079$76,692, respectively, in recorded investmentamortized costs of TDRs with related allowances for loss of $11,061$9,546 and $12,432.$10,284.
Real Estate Owned—Real estate owned includes real estate acquired as a result of foreclosure, or by deed in lieu of foreclosure, and is carried at the lower of the cost basis or fair value, less estimated costs to dispose. The carrying amounts of real estate owned at September 30, 2023 and September 30, 2022 were $1,444 and $1,191, respectively. Fair value is estimated under the market approach using independent third party appraisals. As these properties are actively marketed, estimated fair values may be adjusted by management to reflect current economic and market conditions. At September 30, 20172023 and 2016,2022, these adjustments were not significant to reported fair values. At September 30, 20172023 and 2016,2022, respectively, $3,479$1,413 and $4,192$1,192 of real estate owned is included in Level 3 of the hierarchy with assets measured at fair value on a non-recurring basis where the cost basis equals or exceeds the estimate ofestimated fair values, less costs to dispose of these properties. Real estate owned, as reported in the Consolidated Statements of Condition, includes estimated costs to dispose, of $401$163 and $521 related to properties measured at fair value$156, respectively. Real estate owned includes $194 and $2,443 and $3,132$155 of properties carried at their original or adjusted cost basis at September 30, 20172023 and 2016,2022, respectively.
Derivatives—Derivative instruments include interest rate locks on commitments to originate loans for the held for sale portfolio, forward commitments on contracts to deliver mortgage loans, and interest rate swaps designated as cash flow hedges. Derivatives not designated as cash flow hedges are reported at fair value in otherOther assets or otherOther liabilities on the Consolidated Statement of ConditionCONSOLIDATED STATEMENT OF CONDITION with changes in value recorded in current earnings. Derivatives qualifying as cash flow hedges when highly effective, are reported atsettled daily, bringing their fair value in other assets or other liabilities on the Consolidated Statement of Condition with changes in value recorded in OCI. Should the hedge no longer be considered effective, the ineffective portion of the change in fair value is recorded directly in earnings in the period in which the change occurs. See to $0. Refer to Note 17. Derivative Instruments DERIVATIVE INSTRUMENTSfor additional details. Fair value of forward commitments is estimated using a market approach basedinformation on quoted secondary market pricing for loan portfolios with characteristics similar to loans underlying thecash flow hedges and other derivative contracts.instruments. The fair value of interest rate swaps is estimated using a discounted cash flow method that incorporates current market interest rates and other market parameters. The fair value of of interest rate lock commitments is adjusted by a closure rate based on the estimated percentage of commitments that will result in closed loans. The range and weighted average impact of the closure rate is included in quantitative information about significant unobservable inputs later in this note. A significant change in the closure rate may result in a significant change in the ending fair value measurement of these derivatives relative to their total fair value. Because the closure rate is a significantly unobservable assumption, interest rate lock commitments are included in Level 3 of the hierarchy. Forward commitments on contracts to deliver mortgage loans and interest rate swaps are included in Level 2 of the hierarchy.

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Assets and liabilities carried at fair value on a recurring basis in the Consolidated Statements of ConditionCONSOLIDATED STATEMENTS OF CONDITION at September 30, 20172023 and 20162022 are summarized below.
  Recurring Fair Value Measurements at Reporting Date Using  Recurring Fair Value Measurements at Reporting Date Using
September 30,
2017		 
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 September 30,
2023		Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		Significant Other
Observable Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Assets       Assets
Investment securities available for sale:       Investment securities available for sale:
REMIC’s$528,536
 $—
 $528,536
 $—
REMIC’s$443,007 $— $443,007 $— 
Fannie Mae certificates8,943
 —
 8,943
 —
Fannie Mae certificates814 — 814 — 
Freddie Mac certificatesFreddie Mac certificates1,044 — 1,044 — 
U.S. government and agency obligations U.S. government and agency obligations63,459 — 63,459 — 
Derivatives:       Derivatives:
Interest rate lock commitments58
 —
 —
 58
Interest rate swaps17,001
 —
 17,001
 —
Forward commitments for the sale of mortgage loansForward commitments for the sale of mortgage loans11 — 11 — 
Total$554,538
 $—
 $554,480
 $58
Total$508,335 $— $508,335 $— 
Liabilities       Liabilities
Derivatives:       Derivatives:
Interest rate swaps1,233
 —
 1,233
 —
Interest rate lock commitments Interest rate lock commitments1 — — 1 
Total$1,233
 $—
 $1,233
 $—
Total$1 $— $— $1 
 

  Recurring Fair Value Measurements at Reporting Date Using
 September 30,
2022		Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		Significant Other
Observable Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Assets
Investment securities available for sale:
REMIC’s$453,268 $— $453,268 $— 
Fannie Mae certificates1,021 — 1,021 — 
U.S. government and agency obligations3,619 — 3,619 — 
Total$457,908 $— $457,908 $— 
Liabilities
Derivatives:
Interest rate lock commitments333 — — 333 
Total$333 $— $— $333 
   Recurring Fair Value Measurements at Reporting Date Using
 September 30,
2016		 
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Assets       
Investment securities available for sale:       
REMIC’s507,997
 —
 507,997
 —
Fannie Mae certificates9,869
 —
 9,869
 —
Derivatives:       
Interest rate lock commitments99
 —
 —
 99
       Interest rate swaps772
 —
 772
 —
Total$518,737
 $—
 $518,638
 $99
Liabilities       
Derivatives:       
Interest rate swaps2,880
 —
 2,880
 —
Total$2,880
 $—
 $2,880
 $—
The table below presents a reconciliation of the beginning and ending balances and the location within the Consolidated Statements of IncomeCONSOLIDATED STATEMENTS OF INCOME where gains (losses) due to changes in fair value are recognized on interest rate lock commitments which are measured at fair value on a recurring basis using significant unobservable inputs (Level 3).
Interest Rate Lock Commitments
Year Ended September 30,
202320222021
Beginning balance$(333)$525 $1,194 
(Loss)/Gain during the period due to changes in fair value:
Included in other non-interest income332 (858)(669)
Ending balance$(1)$(333)$525 
Change in unrealized gains for the period included in earnings for
  assets held at end of the reporting date		$(1)$(333)$525 
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 Interest Rate Lock Commitments
 Year Ended September 30,
 2017 2016 2015
Beginning balance$99
 $79
 $59
Gain (loss) during the period due to changes in fair value:     
Included in other non-interest income(41) 20
 20
Ending balance$58
 $99
 $79
Change in unrealized gains for the period included in earnings for
  assets held at end of the reporting date
$58
 $99
 $79
Summarized in the tables below are those assets measured at fair value on a nonrecurring basis.
 Nonrecurring Fair Value Measurements at Reporting Date Using
  Nonrecurring Fair Value Measurements at Reporting Date Using September 30,
2023		Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		Significant Other
Observable Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
September 30,
2017		 
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Impaired loans, net of allowance$85,080
 $—
 $—
 $85,080
Collateral-dependent loans, net of allowanceCollateral-dependent loans, net of allowance$38,289 $— $— $38,289 
Mortgage loans held for saleMortgage loans held for sale3,260 — 3,260 — 
Real estate owned(1)
3,479
 —
 —
 3,479
Real estate owned(1)
1,413 — — 1,413 
Total$88,559
 $—
 $—
 $88,559
Total$42,962 $— $3,260 $39,702 
______________________
(1) Amounts represent fair value measurements of properties before deducting estimated costs to dispose.

 Nonrecurring Fair Value Measurements at Reporting Date Using
  Nonrecurring Fair Value Measurements at Reporting Date Using September 30,
2022		Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		Significant Other
Observable Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Collateral-dependent loans, net of allowanceCollateral-dependent loans, net of allowance$47,121 $— $— $47,121 
Mortgage loans held for saleMortgage loans held for sale9,661 — 9,661 — 
Real estate owned(1)
Real estate owned(1)
1,192 — — 1,192 
September 30,
2016		 
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Impaired loans, net of allowance$92,576
 $—
 $—
 $92,576
Real estate owned(1)
4,192
 —
 —
 4,192
Total$96,768
 $—
 $—
 $96,768
Total$57,974 $— $9,661 $48,313 
 ______________________

(1) Amounts represent fair value measurements of properties before deducting estimated costs to dispose. 
The following provides quantitative information about significant unobservable inputs categorized within Level 3 of the Fair Value Hierarchy. The interest rate lock commitments include mortgage origination applications.
Fair Value
September 30, 2023Valuation Technique(s)Unobservable InputRangeWeighted Average
Collateral-dependent loans, net of allowance$38,289Market comparables of collateral discounted to estimated net proceedsDiscount appraised value to estimated net proceeds based on historical experience:
  • Residential Properties0-30%4.8%
Interest rate lock commitments$(1)Quoted Secondary Market pricingClosure rate0-100%99.5%
Fair Value
September 30, 2022Valuation Technique(s)Unobservable InputRangeWeighted Average
Collateral-dependent loans, net of allowance$47,121Market comparables of collateral discounted to estimated net proceedsDiscount appraised value to estimated net proceeds based on historical experience:
• Residential Properties0-28%4.7%
Interest rate lock commitments($333)Quoted Secondary Market pricingClosure rate0-100%93.7%

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  Fair Value         Weighted
  9/30/2017 Valuation Technique(s) Unobservable Input Range Average
Impaired loans, net of allowance $85,080 Market comparables of collateral discounted to estimated net proceeds Discount appraised value to estimated net proceeds based on historical experience:      
    • Residential Properties 0-28% 7.6%
          
Interest rate lock commitments $58 Quoted Secondary Market pricing Closure rate 0-100% 93.0%

  Fair Value         Weighted
  9/30/2016 Valuation Technique(s) Unobservable Input Range Average
Impaired loans, net of allowance $92,576 Market comparables of collateral discounted to estimated net proceeds Discount appraised value to estimated net proceeds based on historical experience:      
  • Residential Properties 0-26% 8.2%
          
Interest rate lock commitments $99 Quoted Secondary Market pricing Closure rate 0-100% 93.0%

The following table presentstables present the carrying amount and estimated fair value of the Company’sCompany's financial instruments.instruments and their carrying amounts as reported in the CONSOLIDATED STATEMENTS OF CONDITION.
September 30, 2023
CarryingEstimated Fair Value
AmountTotalLevel 1Level 2Level 3
Assets:
  Cash and due from banks$29,134 $29,134 $29,134 $— $— 
  Interest earning cash equivalents437,612 437,612 437,612 — — 
  Investment securities available for sale508,324 508,324 — 508,324 — 
  Mortgage loans held for sale3,260 3,260 — 3,260 — 
  Loans, net:
Mortgage loans held for investment15,161,336 13,262,711 — — 13,262,711 
Other loans4,411 4,411 — — 4,411 
  Federal Home Loan Bank stock247,098 247,098 N/A— — 
  Accrued interest receivable53,910 53,910 — 53,910 — 
Cash collateral received from or held by counterparty24,887 24,887 24,887 — — 
Derivatives1111— 11— 
Liabilities:
  Checking and passbook accounts$2,790,476 $2,790,476 $— $2,790,476 $— 
  Certificates of deposit6,659,344 6,571,674 — 6,571,674 — 
  Borrowed funds5,273,637 5,256,278 — 5,256,278 — 
  Borrowers’ advances for taxes and insurance124,417 124,417 — 124,417 — 
Principal, interest and escrow owed on loans serviced29,811 29,811 — 29,811 — 
  Derivatives1 1 — — 1 
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September 30, 2017September 30, 2022
Carrying Estimated Fair ValueCarryingEstimated Fair Value
Amount Total Level 1 Level 2 Level 3AmountTotalLevel 1Level 2Level 3
Assets:         Assets:
Cash and due from banks$35,243
 $35,243
 $35,243
 $—
 $—
 Cash and due from banks$18,961 $18,961 $18,961 $— $— 
Interest earning cash equivalents232,975
 232,975
 232,975
 —
 —
 Interest earning cash equivalents350,603 350,603 350,603 — — 
Investment securities available for sale537,479
 537,479
 —
 537,479
 —
 Investment securities available for sale457,908 457,908 — 457,908 — 
Mortgage loans held for sale351
 355
 —
 355
 —
 Mortgage loans held for sale9,661 9,661 — 9,661 — 
Loans-net:         
Loans, net: Loans, net:
Mortgage loans held for investment12,416,256
 12,758,951
 —
 —
 12,758,951
Mortgage loans held for investment14,253,804 13,106,346 — — 13,106,346 
Other loans3,050
 3,143
 —
 —
 3,143
Other loans3,263 3,263 — — 3,263 
Federal Home Loan Bank stock89,990
 89,990
 N/A
 —
 —
 Federal Home Loan Bank stock212,290 212,290 N/A— — 
Accrued interest receivable35,479
 35,479
 —
 35,479
 —
 Accrued interest receivable40,256 40,256 — 40,256 — 
Cash collateral held by counterparty2,955
 2,955
 2,955
 —
 —
Derivatives17,059
 17,059
 —
 17,001
 58
Cash collateral received from or held by counterpartyCash collateral received from or held by counterparty26,045 26,045 26,045 — — 
Liabilities:         Liabilities:
Checking and passbook accounts$2,460,416
 $2,460,416
 $—
 $2,460,416
 $—
 Checking and passbook accounts$3,056,506 $3,056,506 $— $3,056,506 $— 
Certificates of deposit5,691,209
 5,550,162
 —
 5,550,162
 —
 Certificates of deposit5,864,511 5,733,418 — 5,733,418 — 
Borrowed funds3,671,377
 3,677,256
 —
 3,677,256
 —
 Borrowed funds4,793,221 4,734,377 — 4,734,377 — 
Borrowers’ advances for taxes and insurance100,446
 100,446
 —
 100,446
 —
 Borrowers’ advances for taxes and insurance117,250 117,250 — 117,250 — 
Principal, interest and escrow owed on loans serviced35,766
 35,766
 —
 35,766
 —
Principal, interest and escrow owed on loans serviced29,913 29,913 — 29,913 — 
Derivatives1,233
 1,233
 —
 1,233
 —
 Derivatives333 333 — — 333 

 September 30, 2016
 Carrying Estimated Fair Value
 Amount Total Level 1 Level 2 Level 3
Assets:         
  Cash and due from banks$27,914
 $27,914
 $27,914
 $—
 $—
  Interest earning cash equivalents203,325
 203,325
 203,325
 —
 —
  Investment securities available for sale

517,866
 517,866
 —
 517,866
 —
  Mortgage loans held for sale4,686
 4,839
 —
 4,839
 —
  Loans-net:         
Mortgage loans held for investment11,705,688
 12,177,536
 —
 —
 12,177,536
Other loans3,116
 3,277
 —
 —
 3,277
  Federal Home Loan Bank stock69,853
 69,853
 N/A
 —
 —
  Accrued interest receivable32,818
 32,818
 —
 32,818
 —
  Cash collateral held by counterparty10,480
 10,480
 10,480
 —
 —
  Derivatives871
 871
 —
 772
 99
Liabilities:         
  Checking and passbook accounts$2,509,800
 $2,509,800
 $—
 $2,509,800
 $—
  Certificates of deposit5,821,568
 5,832,958
 —
 5,832,958
 —
  Borrowed funds2,718,795
 2,740,565
 —
 2,740,565
 —
  Borrowers’ advances for taxes and insurance92,313
 92,313
 —
 92,313
 —
Principal, interest and escrow owed on loans serviced49,401
 49,401
 —
 49,401
 —
  Derivatives2,880
 2,880
 —
 2,880
 —
Presented below is a discussion of the valuation techniques and inputs used by the Company to estimate fair value.
Cash and Due from Banks, Interest Earning Cash Equivalents, Cash Collateral Received from or Held by Counterparty—The carrying amount is a reasonable estimate of fair value.
Investment and Mortgage-Backed Securities—Estimated fair value for investment and mortgage-backed securities is based on quoted market prices, when available. If quoted prices are not available, management will use as part of their estimation process fair values which are obtained from third party independent nationally recognized pricing services using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows.
Mortgage Loans Held for Sale—Fair value of mortgage loans held for sale is based on quoted secondary market pricing for loan portfolios with similar characteristics.
Loans—For mortgage loans held for investment and other loans, fair value is estimated by discounting contractual cash flows adjusted for prepayment estimates using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining term. The use of current rates to discount cash flows reflects current market expectations with respect to credit exposure. Impaired loans are measured at the lower of cost or fair value as described earlier in this footnote.
Federal Home Loan Bank Stock—It is not practical to estimate the fair value of FHLB stock due to restrictions on its transferability. The fair value is estimated to be the carrying value, which is par. All transactions in capital stock of the FHLB Cincinnati are executed at par.
Deposits—The fair value of demand deposit accounts is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using discounted cash flows and rates currently offered for deposits of similar remaining maturities.
Borrowed Funds—Estimated fair value for borrowed funds is estimated using discounted cash flows and rates currently charged for borrowings of similar remaining maturities.

Accrued Interest Receivable, Borrowers’ Advances for Insurance and Taxes, and Principal, Interest and Related Escrow Owed on Loans Serviced—The carrying amount is a reasonable estimate of fair value.
Derivatives—Fair value is estimated based on the valuation techniques and inputs described earlier in this footnote.
17. DERIVATIVE INSTRUMENTS
The Company enters into interest rate swaps to add stability to interest expense and manage exposure to interest rate movements as part of an overall risk management strategy. For hedges of the Company's borrowing and deposit program, interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed payments. These derivatives are used to hedge the forecasted cash outflows associated with the Company's FHLB borrowings.borrowings and brokered certificates of deposit.
Cash flow hedges are initially assessed for effectiveness using regression analysis. The effective portion of changesChanges in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in OCI and is subsequently reclassified into earnings induring the period thatin which the hedged forecasted transaction affects earnings. IneffectivenessQuarterly, a quantitative analysis is generally measured aspreformed to monitor the amount by which the cumulative change in the fair valueongoing effectiveness of the hedging instrument exceeds or is substantially less than the present value of the cumulative change in the hedged item's expected cash flows attributableinstrument. All derivative positions were initially, and continue to the risk being hedged. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings for the period in which it occurs.be, highly effective at September 30, 2023.
The following table presents additional information about the interest rate swaps used in the Company's asset liability management strategy.
  Cash Flow Hedges
  September 30, 2017 September 30, 2016
     
Notional value $1,500,000
 $600,000
Fair value 15,768
 (2,108)
Weighted-average rate receive 1.32% 0.79%
Weighted-average rate pay 1.62% 1.21%
Average maturity (in years) 4.1
 4.5
Amounts reported in AOCI related to derivatives are reclassified to interest expense during the same period in which the hedged transaction affects earnings. During the next twelve months, the Company estimates that $665 of the amounts reported in AOCI will be reclassified to interest expense.
The Company enters into forward commitments for the sale of mortgage loans principallyprimarily to protect against the risk of lost revenue from adverse interest rate movements on net income. The Company recognizes the fair value of such contracts when the characteristics of those contracts meet the definition of a derivative. These derivatives are not designated in a hedging relationship; therefore, gains and losses are recognized immediately in the statement of income. There were no forward commitments for the sale of mortgage loans at September 30, 2017 or September 30, 2016.CONSOLIDATED STATEMENTS OF INCOME.
In addition, the Company is party to derivative instruments when it enters into interest rate lock commitments to originate a portion of its loans, which when funded, are classified as held for sale. Such commitments are not designated in a hedging relationship; therefore, gains and losses are recognized immediately in the statementCONSOLIDATED STATEMENTS OF INCOME.
In accordance with the reference rate reform, for every LIBOR referenced interest rate swap with a reset date after the LIBOR cessation date, counterparties received a LIBOR referenced instrument maturing on the first reset date after the LIBOR cessation date, and a forward starting SOFR instrument. At September 30, 2023, all previous LIBOR referenced swaps have transitioned to a SOFR-based rate. Additionally, under previously adopted ASU 2020-04, Reference Rate Reform (Topic 848), the Company has elected and applied certain optional expedients for eligible hedging relationships impacted by the LIBOR cessation.
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Table of income.Contents

The following tables provide the locations within the Consolidated Statements of ConditionCONSOLIDATED STATEMENTS OF CONDITION, notional values and the fair values, at the reporting dates, for all derivative instruments.
 Asset Derivatives
 At September 30, 2017 At September 30, 2016
 Location Fair Value Location Fair Value
Derivatives designated as hedging instruments       
Cash flow hedges:       
Interest rate swapsOther Assets $17,001
 Other Assets $772
        
Derivatives not designated as hedging instruments       
Interest rate lock commitmentsOther Assets $58
 Other Assets $99
September 30, 2023
Weighted Average
Notional ValueFair ValueTerm (years)Fixed-Rate Payments
Derivatives designated as hedging instruments
Cash flow hedges: Interest rate swaps
Other Assets
SOFR swaps$3,815,000 — 3.72.91 %
Total cash flow hedges: Interest rate swaps$3,815,000 $— 3.72.91 %

 Liability Derivatives
 At September 30, 2017 At September 30, 2016
 Location Fair Value Location Fair Value
Derivatives designated as hedging instruments       
Cash flow hedges:       
Interest rate swapsOther Liabilities $1,233
 Other Liabilities $2,880

September 30, 2022
Weighted Average
Notional ValueFair ValueTerm (years)Fixed-Rate Payments
Cash flow hedges: Interest rate swaps
Other Assets
LIBOR swaps$1,550,000 $— 2.71.88 %
Total cash flow hedges: Interest rate swaps$1,550,000 $— 2.71.88 %


September 30, 2023September 30, 2022
Notional ValueFair ValueNotional ValueFair Value
Derivatives not designated as hedging instruments
Interest rate lock commitments
Other Liabilities$1,830 $(1)$9,170 $(333)
Forward Commitments for the sale of mortgage loans
Other Assets2,094 11 — — 
Total derivatives not designated as hedging instruments$3,924 $10 $9,170 $(333)

The following tables present the net gains and losses recorded within the Consolidated Statements of IncomeCONSOLIDATED STATEMENTS OF INCOME and the Consolidated Statements of Comprehensive IncomeCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME relating to derivative instruments.
 Location of Gain or (Loss) 
Recognized in Income		Year Ended September 30,
 202320222021
Cash flow hedges
Amount of gain/(loss) recognizedOther comprehensive income$146,807 $141,163 $27,848 
Amount of gain/(loss) reclassified from AOCIInterest expense: Borrowed funds and Deposits59,821 (22,740)(44,534)
Derivatives not designated as hedging instruments
Interest rate lock commitmentsOther non-interest income$332 $(858)$(669)
Forward commitments for the sale of mortgage loansNet gain/(loss) on the sale of loans11 — 134 
The Company estimates that $90,257 of the amounts reported in AOCI will be reclassified as a reduction to interest expense during the fiscal year ending September 30, 2024.
115
 
Location of Gain or (Loss) 
Recognized in Income
 
Amount of Gain or (Loss) Recognized
in Income on Derivative
 Year Ended September 30,
 2017 2016 2015
Cash flow hedges       
Amount of loss recognized, effective portionOther comprehensive income $14,131
 $(3,676) $—
Amount of loss reclassified from AOCIInterest expense (3,745) (1,567) —
Amount of ineffectiveness recognizedOther non-interest income —
 —
 —
        
Derivatives not designated as hedging instruments       
Interest rate lock commitmentsOther non-interest income $(41) $20
 $20
Forward commitments for the sale of mortgage loansNet gain on the sale of loans —
 —
 14
Total  $(41) $20
 $34
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Derivatives contain an element of credit risk which arises from the possibility that the Company will incur a loss because a counterparty fails to meet its contractual obligations. The Company's exposure is limited to the replacement value of the contracts rather than the notional or principal amounts. Credit risk is minimized through counterparty collateral,margin payments, transaction limits and monitoring procedures. SwapAll of the Company's swap transactions that are handled bycleared through a registered clearing broker are cleared through the broker to a registeredcentral clearing organization. The clearing organization establishes daily cash and upfront cash or securities margin requirements to cover potential exposure in the event of default. This process shifts the risk away from the counterparty, since the clearing organization acts as the middlemanan intermediary on each cleared transaction. At September 30, 2023 and 2022, there was $24,887 and $26,045, respectively, of cash collateral included in other assets, and $59,813 and $0, respectively, included in investment securities related to initial margin requirements that are held by the central clearing organization. For derivative transactions cleared through certain clearing parties, variation margin payments are recognized as settlements on a daily basis. The fair valuesvalue of derivative instruments are presented on a gross basis, even when the derivative instruments are subject to master netting arrangements. Cash collateral payables or receivables associated with the derivative instruments are not added to or netted against the fair value amounts. The Company’s interest rate swaps are cleared through a registered clearing broker. At September 30, 2017 and September 30, 2016, respectively, the Company posted collateral of $2,955 and $10,480 related to the initial and daily margin requirements of interest rate swaps.


18. PARENT COMPANY ONLY FINANCIAL STATEMENTS
The following condensed financial statements for TFS Financial Corporation (parent company only) reflect the investments in, and transactions with, its wholly-owned subsidiaries. Intercompany activity is eliminated in the consolidated financial statements.
 September 30,
 20232022
Statements of Condition
Assets:
Cash and due from banks$1,424 $1,341 
Investment securities - available for sale3,646 3,619 
Other loans:
Demand loan due from Third Federal Savings and Loan172,307 184,772 
ESOP loan receivable37,254 41,927 
Investments in:
Third Federal Savings and Loan1,704,315 1,605,306 
Non-thrift subsidiaries8,268 8,104 
Prepaid federal and state taxes738 — 
Deferred income taxes200 296 
Accrued receivables and other assets9,786 9,158 
Total assets$1,937,938 $1,854,523 
Liabilities and shareholders’ equity:
Line of credit due non-thrift subsidiary$8,132 $7,485 
Accrued expenses and other liabilities2,445 2,532 
Accrued federal and state income taxes— 167 
Total liabilities10,577 10,184 
Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued and outstanding— — 
Common stock, 0.01 par value, 700,000,000 shares authorized; 332,318,750 shares issued; 280,359,173 and 280,582,741 outstanding at September 30, 2023 and September 30, 2022, respectively3,323 3,323 
Paid-in capital1,755,027 1,751,223 
Treasury stock, at cost; 51,959,577 and 51,736,009 shares at September 30, 2023 and September 30, 2022, respectively(776,101)(771,986)
Unallocated ESOP shares(27,084)(31,417)
Retained earnings—substantially restricted886,984 870,047 
Accumulated other comprehensive income85,212 23,149 
Total shareholders’ equity1,927,361 1,844,339 
Total liabilities and shareholders’ equity$1,937,938 $1,854,523 
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 September 30,
 2017 2016
Statements of Condition   
Assets:   
Cash and due from banks$5,123
 $5,102
Other loans:   
Demand loan due from Third Federal Savings and Loan89,299
 88,443
ESOP loan receivable61,759
 65,462
Investments in:   
Third Federal Savings and Loan1,503,831
 1,475,175
Non-thrift subsidiaries80,420
 79,386
Prepaid federal and state taxes154
 374
Deferred income taxes2,630
 2,704
Accrued receivables and other assets9,247
 6,727
Total assets$1,752,463
 $1,723,373
Liabilities and shareholders’ equity:   
Line of credit due non-thrift subsidiary$59,815
 $58,890
Accrued expenses and other liabilities2,689
 4,025
Total liabilities62,504
 62,915
Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued and outstanding—
 —
Common stock, $0.01 par value, 700,000,000 shares authorized; 332,318,750 shares issued; 281,291,750 and 284,219,019 outstanding at September 30, 2017 and September 30, 2016, respectively3,323
 3,323
Paid-in capital1,722,672
 1,716,818
Treasury stock, at cost; 51,027,000 and 48,099,731 shares at September 30, 2017 and September 30, 2016, respectively(735,530) (681,569)
Unallocated ESOP shares(53,084) (57,418)
Retained earnings—substantially restricted760,070
 698,930
Accumulated other comprehensive loss(7,492) (19,626)
Total shareholders’ equity1,689,959
 1,660,458
Total liabilities and shareholders’ equity$1,752,463
 $1,723,373

 Years Ended September 30,
 202320222021
Statements of Comprehensive Income (Loss)
Interest income:
Demand loan due from Third Federal Savings and Loan$9,047 $1,600 $164 
ESOP loan2,433 1,400 1,732 
Other interest income54 6 1 
Investment securities available for sale45 43 — 
Total interest income11,579 3,049 1,897 
Interest expense:
Borrowed funds from non-thrift subsidiaries351 97 7 
Total interest expense351 97 7 
Net interest income11,228 2,952 1,890 
Non-interest income:
Intercompany service charges30 30 85 
Dividend from Third Federal Savings and Loan40,000 56,000 55,000 
Total other income40,030 56,030 55,085 
Non-interest expenses:
Salaries and employee benefits4,825 4,534 4,917 
Professional services1,253 1,456 1,566 
Office property and equipment13 13 3 
Other operating expenses217 223 176 
Total non-interest expenses6,308 6,226 6,662 
Income before income tax benefit44,950 52,756 50,313 
Income tax benefit(1,294)(2,826)(3,848)
Income before undistributed earnings of subsidiaries46,244 55,582 54,161 
Equity in undistributed earnings of subsidiaries (dividend in excess of earnings):
Third Federal Savings and Loan28,843 17,260 24,738 
Non-thrift subsidiaries163 1,723 2,108 
Net income75,250 74,565 81,007 
Change in net unrealized gain (loss) on securities available for sale(7,273)(34,860)(3,733)
Change in cash flow hedges66,649 127,093 56,096 
Change in pension obligation2,688 (1,283)11,801 
Total other comprehensive income (loss)62,064 90,950 64,164 
Total comprehensive income$137,314 $165,515 $145,171 
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 Years Ended September 30,
 2017 2016 2015
Statements of Comprehensive Income     
Interest income:     
Demand loan due from Third Federal Savings and Loan$914
 $433
 $139
ESOP loan2,308
 2,281
 2,276
Other interest income21
 4
 —
Total interest income3,243
 2,718
 2,415
Interest expense:     
Borrowed funds from non-thrift subsidiaries612
 377
 253
Total interest expense612
 377
 253
Net interest income2,631
 2,341
 2,162
Non-interest income:     
Intercompany service charges68
 90
 218
Dividend from Third Federal Savings and Loan81,000
 60,000
 66,000
Total other income81,068
 60,090
 66,218
Non-interest expenses:     
Salaries and employee benefits5,134
 5,543
 6,216
Professional services982
 922
 997
Office property and equipment3
 13
 13
Other operating expenses193
 253
 255
Total non-interest expenses6,312
 6,731
 7,481
Income before income taxes77,387
 55,700
 60,899
Income tax benefit(3,747) (2,915) (2,583)
Income before undistributed earnings of subsidiaries81,134
 58,615
 63,482
Equity in undistributed earnings of subsidiaries (dividend in excess of earnings):     
Third Federal Savings and Loan6,709
 21,231
 8,777
Non-thrift subsidiaries1,034
 707
 332
Net income88,877
 80,553
 72,591
Change in net unrealized (loss) gain on securities available for sale(3,331) (1,510) 3,018
Change in cash flow hedges11,620
 (1,371) —
Change in pension obligation3,845
 (3,680) (5,291)
Total other comprehensive loss12,134
 (6,561) (2,273)
Total comprehensive income$101,011
 $73,992
 $70,318
 Years Ended September 30,
 202320222021
Statements of Cash Flows
Cash flows from operating activities:
Net income$75,250 $74,565 $81,007 
Adjustments to reconcile net income to net cash provided by operating activities:
(Equity in undistributed earnings of subsidiaries) dividend in excess of earnings:
Third Federal Savings and Loan(28,843)(17,260)(24,738)
Non-thrift subsidiaries(163)(1,723)(2,108)
Deferred income taxes87 81 204 
ESOP and stock-based compensation expense1,863 1,543 1,843 
Net decrease (increase) in interest receivable and other assets(1,351)908 12,593 
Net increase (decrease) in accrued expenses and other liabilities(273)48 (200)
Net cash provided by operating activities46,570 58,162 68,601 
Cash flows from investing activities:
Purchase of securities available for sale— (4,071)— 
(Increase) decrease in balances lent to Third Federal Savings and Loan12,465 304 (12,222)
Net cash provided by (used in) investing activities12,465 (3,767)(12,222)
Cash flows from financing activities:
Principal reduction of ESOP loan4,673 4,527 4,063 
Purchase of treasury shares(5,000)(5,049)— 
Dividends paid to common shareholders(58,294)(58,297)(56,637)
Acquisition of treasury shares through net settlement(978)(1,241)(5,591)
Net increase (decrease) in borrowings from non-thrift subsidiaries647 1,649 1,787 
Net cash used in financing activities(58,952)(58,411)(56,378)
Net increase (decrease) in cash and cash equivalents83 (4,016)1 
Cash and cash equivalents—beginning of year1,341 5,357 5,356 
Cash and cash equivalents—end of year$1,424 $1,341 $5,357 

 Years Ended September 30,
 2017 2016 2015
Statements of Cash Flows     
Cash flows from operating activities:     
Net income$88,877
 $80,553
 $72,591
Adjustments to reconcile net income to net cash provided by operating activities:     
(Equity in undistributed earnings of subsidiaries) dividend in excess of earnings:     
Third Federal Savings and Loan(6,709) (21,231) (8,777)
Non-thrift subsidiaries(1,034) (707) (332)
Deferred income taxes74
 542
 (261)
ESOP and Stock-based compensation expense1,439
 2,435
 3,205
Net (increase) decrease in interest receivable and other assets(2,300) (346) 2,166
Net increase (decrease) in accrued expenses and other liabilities144
 359
 107
Net cash provided by operating activities80,491
 61,605
 68,699
Cash flows from investing activities:     
(Increase) decrease in balances lent to Third Federal Savings and Loan(856) (54,792) 122,257
Repayment of capital contribution from Third Federal Savings and Loan—
 150,000
 —
Net cash (used in) provided by investing activities(856) 95,208
 122,257
Cash flows from financing activities:     
Principal reduction of ESOP loan3,703
 3,648
 3,534
Purchase of treasury shares(54,029) (128,361) (172,546)
Dividends paid to common shareholders(27,709) (23,414) (19,490)
Excess tax benefit related to stock-based compensation—
 1,485
 484
Acquisition of treasury shares through net settlement for taxes

(2,504) (7,697) (4,111)
Net increase in borrowings from non-thrift subsidiaries925
 529
 1,173
Net cash used in financing activities(79,614) (153,810) (190,956)
Net increase in cash and cash equivalents21
 3,003
 —
Cash and cash equivalents—beginning of year5,102
 2,099
 2,099
Cash and cash equivalents—end of year$5,123
 $5,102
 $2,099
19. EARNINGS PER SHARE
Basic earnings per share is the amount of earnings available to each share of common stock outstanding during the reporting period. Diluted earnings per share is the amount of earnings available to each share of common stock outstanding during the reporting period adjusted to include the effect of potentially dilutive common shares. For purposes of computing earnings per share amounts, outstanding shares include shares held by the public, shares held by the ESOP that have been allocated to participants or committed to be released for allocation to participants and the 227,119,132 shares held by Third Federal Savings, MHC, and, forMHC. For purposes of computing dilutive earnings per share, stock options and restricted stockand performance share units with a dilutive impact.impact are added to the outstanding shares used in the basic earnings per share calculation. Unvested shares awarded pursuant to the Company's restricted stock 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. Performance share units, determined to be contingently issuable and not participating securities, are excluded from the calculation of basic EPS. At September 30, 20172023 and 2016, respectively,2022, the ESOP held 5,308,4112,708,371 and 5,741,7513,141,711 shares, respectively, that were neither allocated to participants nor committed to be released to participants.



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The following is a summary of the Company’s earnings per shareEPS calculations.
For the Year Ended September 30, 2017 For the Year Ended September 30, 2023
Income Shares 
Per share
 amount
 IncomeSharesPer share
 amount
(Dollars in thousands, except per share data) (Dollars in thousands, except per share data)
Net income$88,877
    Net income$75,250 
Less: income allocated to restricted stock units901
    Less: income allocated to restricted stock units1,569 
Basic earnings per share:     Basic earnings per share:
Income available to common shareholders87,976
 277,213,258
 $0.32
Income available to common shareholders73,681 277,436,382 $0.27 
Diluted earnings per share:     Diluted earnings per share:
Effect of dilutive potential common shares  2,055,510
  Effect of dilutive potential common shares1,147,072 
Income available to common shareholders$87,976
 279,268,768
 $0.32
Income available to common shareholders$73,681 278,583,454 $0.26 
 
For the Year Ended September 30, 2016 For the Year Ended September 30, 2022
Income Shares 
Per share
 amount
 IncomeSharesPer share
 amount
(Dollars in thousands, except per share data) (Dollars in thousands, except per share data)
Net income$80,553
    Net income$74,565 
Less: income allocated to restricted stock units761
    Less: income allocated to restricted stock units1,510 
Basic earnings per share:     Basic earnings per share:
Income available to common shareholders79,792
 281,566,648
 $0.28
Income available to common shareholders73,055 277,370,762 $0.26 
Diluted earnings per share:     Diluted earnings per share:
Effect of dilutive potential common shares  2,219,065
  Effect of dilutive potential common shares1,315,603 
Income available to common shareholders$79,792
 283,785,713
 $0.28
Income available to common shareholders$73,055 278,686,365 $0.26 
 
 For the Year Ended September 30, 2021
 IncomeSharesPer share
 amount
 (Dollars in thousands, except per share data)
Net income$81,007 
Less: income allocated to restricted stock units1,555 
Basic earnings per share:
Income available to common shareholders79,452 276,694,594 $0.29 
Diluted earnings per share:
Effect of dilutive potential common shares1,881,660 
Income available to common shareholders$79,452 278,576,254 $0.29 
 For the Year Ended September 30, 2015
 Income Shares 
Per share
 amount
 (Dollars in thousands, except per share data)
Net income$72,591
    
Less: income allocated to restricted stock units626
    
Basic earnings per share:     
Income available to common shareholders71,965
 289,935,861
 $0.25
Diluted earnings per share:     
Effect of dilutive potential common shares  2,274,556
  
Income available to common shareholders$71,965
 292,210,417
 $0.25

The following is a summary of outstanding stock options and restricted and performance share units that are excluded from the computation of diluted earnings per shareEPS because their inclusion would be anti-dilutive. No restricted stock units were anti-dilutive for the years
 For the Year Ended September 30,
 202320222021
Options to purchase shares1,991,975 407,100 133,800 
Restricted and performance share units57,669 50,000 — 




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20. RECENT ACCOUNTING PRONOUNCEMENTS
Adopted in fiscal year ended September 30, 2017, 2016, and 2015.2023
 For the Year Ended September 30,
 2017 2016 2015
Options to purchase shares779,740
 393,500
 1,382,900
20. RELATED PARTY TRANSACTIONS
The Company has made loans and extensionsIn December of credit, in2022, the ordinary course of business, to certain Directors. These loans were under normal credit terms, including interest rate and collateralization, and do not represent more than the normal risk of collection. The aggregate amount of loans to such related parties at September 30, 2017 and 2016 was $173 and $181, respectively. None of these loans were past due, considered impaired or on nonaccrual at September 30, 2017.

21. RECENT ACCOUNTING PRONOUNCEMENTS
Pending as of September 30, 2017

In August 2017, The FASB issued ASU 2017-12 Derivatives and Hedging2022-06, Reference Rate Reform (Topic 815)848): Targeted ImprovementsDeferral of the Sunset Date of Topic 848. This ASU deferred the period of time entities can utilize the reference rate reform relief guidance from ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effect of Reference Rate Reform on Financial Reporting, to Accounting for Hedging Activities. This Update is intended to more closely align financial reportingDecember 31, 2024 instead of hedging relationships with risk management activities.the original December 31, 2022. This amendment expands hedge accounting for both nonfinancial and financial risk components, modifiesis a result of the presentationexpectation that the LIBOR would cease to be published as of certain hedging relationships in the financial statements and eases hedge effectiveness testing requirements.June 30, 2023. The amendments areFASB Board decided that this amendment would be effective for fiscal years beginning after December 15, 2018. Early adoption is permissible in any interim period after theall entities upon issuance of thisASU 2022-06. This update and is being considered by the Company. The update isdid not expected to have a significantmaterial impact on the Company's consolidated financial condition or results of operations.operation.
In May 2017,March 2023, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation2023-02, Investments - Equity Method and Joint Ventures (Topic 718), Scope of Modification Accounting. This Update clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value (or calculated intrinsic value, if those amounts are being used to measure the award under ASC 718), the vesting conditions, or the classification of the award (as equity or liability) change as a result of the change in terms or conditions. The guidance is effective prospectively for annual periods beginning on or after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted. The Company intends to adopt the guidance on the effective date and does not expect the adoption to have a material impact on its consolidated financial condition or results of operations.
In March 2017, the FASB issued ASU 2017-07 Compensation - Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This Update was issued to improve the presentation of net periodic pension or benefit costs for employers that offer their employees defined benefit pension plans, postretirement benefit plans, or other types of benefits accounted for under Topic 715. The amendments prescribe where the amount of net benefit cost should be presented in an employer’s income statement and require entities to disclose by line item the amount of net benefit cost that is included in the income statement or capitalized in assets. The ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted. Retrospective application is required for the change in income statement presentation, while the change in capitalized benefit cost is to be applied prospectively. The Company plans to early adopt this guidance for the annual and interim reporting periods beginning October 1, 2017. The only impact is a change to how certain items will be presented in the Company’s Consolidated Statements of Condition and Statements of Income and the accompanying Notes.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.323). The amendments in this Update address eight specific cash flow issues withupdate expand the objectiveproportional amortization method, by election, to account for all investments made primarily for the purpose of reducing the existing diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and Other Topics. Current guidance is either unclearreceiving income tax credits or does not include specific guidance on these issues. Additionally, in November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) Restricted Cash, which requires restricted cash or restricted cash equivalents be included in beginning-of-period and end-of-period cash totals and changes in this classification be explained separately. The amendments in both these Updates are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years and should be applied using a retrospective transition method. Early adoption is permitted, provided that all of the amendments are adopted in the same period. The Company is reviewing the requirements with an implementation team and currently does not expect to early adopt. Adoption ofother tax benefits. Previously, this accounting guidance may affect the presentation in the Company's Consolidated Statements of Cash Flows.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The amendments in this Update replace the existing incurred loss impairment methodology with a methodology that reflects expectedmethod was only allowed for low-income housing tax credit losses for the remaining life of the asset.investments. This will require consideration of a broader range of information, including reasonably supportable forecasts, in the measurement of expected credit losses.The amendments expand disclosures of credit quality indicators, requiring disaggregation by year of origination (vintage). Additionally, credit losses on available for sale debt securities will be recognized as an allowance rather than a write-down, with reversals permitted as credit loss estimates decline. An entity will apply the amendments in this Update through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidanceupdate is effective (that is, a modified-retrospective approach). For public business entities that are SEC filers, the amendments are effective for fiscal years beginning after December 15, 2019, including2023, with early adoption permitted in any interim periods within those fiscal years. Early adoption is permitted. Management has formed a working group comprised of teams from acrossperiod. The Company adopted this update effective April 1, 2023 and will consider the association including accounting, risk management, and finance.provisions on future tax credit investments, should they occur. This group has begun assessing the required changes toupdate did not have an immediate impact on our credit loss estimation methodologies and systems, as well as additional data and resources that may be required to comply with this standard. The

Company is currently evaluating the impact that this accounting guidance may have on its consolidated financial condition or results of operations. The actual effect on our allowance for loan losses at the adoption date will be dependent upon the nature
Issued but not yet adopted as of the characteristics of the portfolio as well as the macroeconomic conditions and forecasts at that date.September 30, 2023
In February 2016,March 2022, the FASB issued ASU 2016-02, Leases (Topic 842). This guidance changes the accounting treatment of leases by requiring lessees to recognize operating leases on the balance sheet as lease assets (a right-to-use asset) and lease liabilities (a liability to make lease payments), measured on a discounted basis and will require both quantitative and qualitative disclosure regarding key information about the leasing arrangements. An accounting policy election to not recognize operating leases with terms of 12 months or less as assets and liabilities is permitted. This guidance will be effective for the fiscal year beginning after December 15, 2018, with early adoption permitted. A modified retrospective approach is required that includes a number of optional practical expedients to address leases that commenced before the effective date. An implementation team has been created to identify all leases involved, which, if any, practical expedients to utilize, and all data gathering required to comply. All leases have been identified. The Company expects to recognize a right-to-use asset and a lease liability for its operating lease commitments on the Consolidated Statements of Condition and is assessing the impact this new standard will have on its consolidated financial condition and results of operations.
In January 2016, the FASB issued ASU 2016-01, 2022-02, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities. This ASU changesCredit Losses (Topic 326). The amendments in this Update eliminate the accounting guidance for certain equity investments, financial liabilities under the fair value option and presentation andTDR by creditors in Subtopic 310-40, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when the borrower is experiencing financial instruments. Equity investments not accounted for under the equity method of accountingdifficulty. This will be measured at fair value with changes recognizeddone by applying the loan refinancing and restructuring guidance to determine whether a modification results in net income. If there are no readily determinable fair values, the guidance allows entities to measure investments at cost less impairment, whereby impairment is based on a qualitative assessment. The guidance eliminates the requirement to disclose the methods and significant assumptions used to estimate fair valuenew loan or a continuation of financial instruments measured at amortized cost. Ifan existing loan. Additionally, this amendment requires that an entity has elected the fair value option to measure liabilities, the new accounting guidance requires the portiondisclose current-period gross write-offs by year of the changeorigination for financing receivables and net investments in fair value of a liability resulting from credit risk to be presented in OCI. This accounting and disclosure guidance is effective for the fiscal year beginning after December 15, 2017, including interim periods within that fiscal year on a prospective basis, with a cumulative-effect adjustment to the balance sheet at the beginning of the fiscal year adopted. Early adoption is not permitted. The Company is currently evaluating the impact that this accounting guidance may have on its consolidated financial condition or results of operations.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), that revises the criteria for determining when to recognize revenue from contracts with customers and expands disclosure requirements. This ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts areleases within the scope of other standards. In August 2015, the FASB issued ASU 2015-14 which defers the effective date of ASU 2014-09 to annual reporting periods and interim period within those annual periods beginning after December 15, 2017. Early adoption is permitted but only for interim and annual reporting periods beginning after December 15, 2016. During 2016 and 2017, the FASB also issued five separate ASUs which amend the original guidance regarding principal versus agent considerations, identify performance obligations and licensing, address the presentation of sales tax, noncash consideration, contract modifications at transition, and assessing collectability, gains and losses from derecognition of nonfinancial assets and other minor technical corrections and improvements. The requirements within 2014-09 and its subsequent amendments should be applied retrospectively or modified retrospectively with a cumulative-effect adjustment. The Company's preliminary analysis suggests that the adoption of this accounting guidance is not expected to have a material effect on its consolidated financial condition or results of operations.
Adopted in fiscal year ended September 30, 2017
In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for share-based payment transactions, including accounting for income taxes, forfeitures, and classification in the statement of cash flows. Additionally, the ASU expanded the threshold on statutory tax withholding requirements used to qualify for equity classification.Subtopic 326-20. This accounting guidanceupdate is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption is permitted.
The Company early adopted the revised guidance on October 1, 2016. The impact of this adoption on the Company's consolidated financial statements is described below.
On a prospective basis, all excess tax benefits and deficiencies related to share-based payments are recognized as income tax expense or benefit. For the fiscal year ended September 30, 2017, $1,058 was recognized as income tax benefit rather than additional paid-in capital as a result of this adoption. Excess tax benefits and tax deficiencies are

considered discrete items in the reporting period they occur and are not included in the estimate of the Company's annual effective tax rate in interim periods.
On a prospective basis, excess tax benefits and deficiencies related to share-based payments are classified as operating activities on the Statements of Cash Flows. No change was applied to prior periods.
The Company elects to account for forfeitures as they occur, rather than estimate expected forfeitures. This election was applied using a modified retrospective transition method. The cumulative-effect adjustment to equity recognized as of October 1, 2016 was not material.
In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810), Amendments to the Consolidation Analysis. This accounting guidance changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. The new guidance amends the current accounting guidance to address limited partnerships and similar legal entities, certain investment funds, fees paid to a decision maker or service provider, and the impact of fee arrangements and related parties on the primary beneficiary determination. In addition, the FASB issued ASU 2016-17, Consolidation (Topic 810), Interests Held through Related Parties that are under Common Control in October 2016, amending the consolidation guidance on how a reporting entity that is the single decision maker of a Variable Interest Entity (VIE) should treat indirect interests in the entity held through related parties that are under common control. Both accounting guidances are effective for annual periods beginning after December 15, 2015. A reporting entity may apply the ASU by using a modified retrospective approach (by recording a cumulative-effect adjustment to equity as of the beginning of the year of adoption) or a full retrospective approach (by restating all periods presented). The adoption of this accounting guidance did not have a material effect on the Company's consolidated financial condition or results and operations.
In March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging (Topic 815), Effects of Derivative Contract Novations on Existing Hedge Accounting Relationships. This amendment clarifies that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under Topic 815 does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedging accounting criteria continue to be met. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 20162022, with early adoption permitted. The Company plans to adopt this guidance as of October 1, 2023 and interim periods within those fiscal years. Early adoption is permitted. An entity has an option to apply the amendments in this Update on either a prospective or a modified retrospective basis. The Company electedtransition method that will evaluate loans previously identified as TDRs for credit loss under the Company’s current ACL policy. We expect to early adopt this accounting guidance usingrecognize an increase to opening retained earnings of $7,898, net of income taxes resulting from a prospective method and will consider opportunities provided by these amendments in future transactions. The adoption of this accounting guidance does not currently affect the Company's consolidated financial condition and results of operations.
In May 2015, the FASB issued ASU 2015-07, Fair Value Measurement (Topic 820), Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share. This guidance eliminates the requirement to categorize investments measured at net value per share (or its equivalent) using the practical expedient in the fair value hierarchy table and eliminates certain disclosures required for these investments. Entities will continue to provide information helpful to understanding the nature and risks of these investments and whether the investments, if sold, are probable of being sold at amounts different from net asset value. The amendments in this Update are effective for public companies retrospectively for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. This guidance was appliedpretax decrease to the Company's disclosuresallowance for credit losses on pension assets presented in Note 13. Employee Benefit Plans.
In January 2017,loans and unfunded commitments of $10,262 upon adoption. The enhanced disclosure requirements provided for by the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This Update simplifies how an entity is required to test goodwill impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. An entity will still perform its annual or interim goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount. Under this guidance, an entity would recognize an impairment charge for the amount by which the carry amount exceeds the fair value, not to exceed the total amount of goodwill allocated to that reporting unit. The entity still has the option to perform the qualitative assessment to determine if the quantitative impairment test is necessary. An entity should apply the amendments in this Updatebe adopted on a prospective basis, with disclosure of the nature and reason for a change in accounting principle upon transition. The amendments in this Update are effective for annual and interim goodwill impairment testing in fiscal years beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company adopted and considered this guidance for the fiscal year-end goodwill impairment test. The adoption of this disclosure guidance did not materially affect the Company's consolidated financial condition or results of operations.basis.
The Company has determined that all other recently issued accounting pronouncements will not have a material impact on the Company's consolidated financial statements or do not apply to its operations.

22. SELECTED QUARTERLY DATA (UNAUDITED)21. RELATED PARTY TRANSACTIONS
The following tables are a summaryCompany has periodically made loans and extensions of credit, in the ordinary course of business, to certain quarterly financial data fordirectors and executive officers. These loans were originated with normal credit terms, including interest rate and collateralization, and do not represent more than the fiscal years endednormal risk of collection. The aggregate amount of loans to such related parties at both September 30, 20172023 and 2016.2022 was $0.
120
 Fiscal 2017 Quarter Ended
 December 31 March 31 June 30 September 30
 (In thousands, except per share data)
Interest income$98,214
 $101,083
 $103,721
 $105,977
Interest expense29,984
 30,797
 33,449
 35,869
Net interest income68,230
 70,286
 70,272
 70,108
Provision (credit) for loan losses—
 (6,000) (4,000) (7,000)
Net interest income after provision for loan losses68,230
 76,286
 74,272
 77,108
Non-interest income5,368
 4,552
 4,804
 5,125
Non-interest expense45,262
 45,294
 44,669
 47,179
Income before income tax28,336
 35,544
 34,407
 35,054
Income tax expense8,726
 12,083
 11,619
 12,036
Net income$19,610
 $23,461
 $22,788
 $23,018
Earnings per share—basic and diluted$0.07
 $0.08
 $0.08
 $0.08
 Fiscal 2016 Quarter Ended
 December 31 March 31 June 30 September 30
 (In thousands, except per share data)
Interest income$96,431
 $97,145
 $96,993
 $97,872
Interest expense28,790
 29,386
 29,604
 30,246
Net interest income67,641
 67,759
 67,389
 67,626
Provision (credit) for loan losses(1,000) (1,000) (3,000) (3,000)
Net interest income after provision for loan losses68,641
 68,759
 70,389
 70,626
Non-interest income6,117
 6,703
 6,108
 6,024
Non-interest expense47,633
 46,341
 44,976
 42,054
Income before income tax27,125
 29,121
 31,521
 34,596
Income tax expense9,274
 9,845
 10,901
 11,790
Net income$17,851
 $19,276
 $20,620
 $22,806
Earnings per share—basic and diluted$0.06
 $0.07
 $0.07
 $0.08
Per share amounts for the full fiscal year, as reported in the Consolidated StatementsTable of Income may differ from the totals of the four fiscal quarters as presented above, due to rounding.Contents

FORM 10-K EXHIBIT INDEX
Exhibit
Number
Description of Exhibit
If Incorporated by Reference, Documents with
Which Exhibit was Previous Filed with SEC
Amendment No. 2 to Registration Statement on Form S-1 No. 333-139295 (filed with the SEC on February 9, 2006; Exhibit 3.2 therein)
Current Report on Form 8-K No. 001-33390 (filed with the SEC on April 28, 2008; Exhibit 3.2 therein)
Current Report on Form 8-K No. 001-33390 (filed with the SEC on October 29, 2018; Exhibit 3 therein)
Current Report on Form 8-K No. 001-33390 (filed with the SEC on July 1, 2022; Exhibit 3 therein)
Registration Statement on Form S-1 No. 333-139295 (filed with the SEC on December 13, 2006; Exhibit 4 therein)
10.1[Intentionally omitted]
Annual Report on Form 10-K No. 001-33390 (filed with the SEC on November 24, 2020; Exhibit 4.2 therein)
10.1[Intentionally omitted]
Registration Statement on Form S-1 No. 333-139295 (filed with the SEC on December 13, 2006; Exhibit 10.2 therein)
Registration Statement on Form S-1 No. 333-139295 (filed with the SEC on December 13, 2006; Exhibit 10.3 therein)
Registration Statement on Form S-1 No. 333-139295 (filed with the SEC on December 13, 2006; Exhibit 10.4 therein)
Registration Statement on Form S-1 No. 333-139295 (filed with the SEC on December 13, 2006; Exhibit 10.5 therein)
Registration Statement on Form S-1 No. 333-139295 (filed with the SEC on December 13, 2006; Exhibit 10.6 therein)
Registration Statement on Form S-1 No. 333-139295 (filed with the SEC on December 13, 2006; Exhibit 10.7 therein)
Registration Statement on Form S-1 No. 333-139295 (filed with the SEC on December 13, 2006; Exhibit 10.8 therein)
10.9[Intentionally omitted]
Quarterly ReportProxy Statement on Form 10-QSchedule 14A, No. 001-33390 (filed with the SEC on May 15, 2007; Exhibit 10.9 therein)January 9, 2018)
Current ReportProxy Statement on Form 8-KSchedule 14A, No. 001-33390 (filed with the SEC on May 30, 2008; Exhibit 10.1 therein)January 9, 2018)
10.11Exhibit
Number
Description of Exhibit
Management Incentive Compensation PlanIf Incorporated by Reference, Documents with
Current Report on Form 8-K No. 001-33390 (filed
Which Exhibit was Previous Filed with the SEC on May 30, 2008; Exhibit 10.2 therein)
121
Table of Contents
Current Report on Form 8-K No. 001-33390 (filed with the SEC on August 9, 2012; Exhibit 10.1 therein)

Exhibit
Number10.13
Description of Exhibit
If Incorporated by Reference, Documents with
Which Exhibit was Previous Filed with SEC
10.13
First Amendment to the Restricted Stock Unit Award Agreement (May 12, 2009 award), dated August 9, 2012
Current Report on Form 8K No. 001-33390 (filed with the SEC on August 9, 2012; Exhibit 10.2 therein)
Current Report on Form 8K No. 001-33390 (filed with the SEC on August 9, 2012; Exhibit 10.3 therein)
14Code of EthicsAvailable on our website, www.thirdfederal.com
Filed herewith
Registration Statement on Form S-1 No. 333-139295 (filed with the SEC on December 13, 2006; Exhibit 21 therein)
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
100XBRL related documentsThe following financial statements from TFS Financial Corporation’s Annual Report on Form 10-K for the year ended September 30, 20172023 filed on November 22, 201721, 2023 formatted in XBRL:Inline XBRL (Extensible Business Reporting Language) includes: (i) Consolidated Statements of Condition, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Shareholders' Equity, (v) Consolidated Statements of Cash Flows, (vi) Notes to Consolidated Financial Statements.
101.INS  Interactive datafileXBRL Instance Document
101.SCHInteractive datafileXBRL Taxonomy Extension Schema Document
101.CALInteractive datafileXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInteractive datafileXBRL Taxonomy Extension Definition Linkbase Document
101.LABInteractive datafileXBRL Taxonomy Extension Label Linkbase Document
101.PREInteractive datafileXBRL Taxonomy Extension Presentation Linkbase Document
104Interactive datafileCover Page Interactive Datafile (embedded within the Inline XBRL document and included in Exhibit 101)
122
Table of

Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
TFS Financial Corporation
 
Dated:November 22, 201721, 2023/S/     MARC A. STEFANSKI        
Marc A. Stefanski

Chairman of the Board, President

and Chief Executive Officer

(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
 
Dated:November 21, 2023/S/     MARC A. STEFANSKI        
Marc A. Stefanski
Chairman of the Board, President
and Chief Executive Officer
(Principal Executive Officer)
Dated:November 21, 2023/S/     TIMOTHY W. MULHERN        
Timothy W. Mulhern
Chief Financial Officer
(Principal Financial Officer)
Dated:November 21, 2023/S/ SUSANNE N. MILLER
Susanne N. Miller
Chief Accounting Officer
(Principal Accounting Officer)
Dated:November 21, 2023/S/     BARBARA J. ANDERSON
Barbara J. Anderson, Director
Dated:November 21, 2023/S/     ANTHONY J. ASHER        
Anthony J. Asher, Director
Dated:November 21, 2023/S/     MARTIN J. COHEN        
Martin J. Cohen, Director
Dated:November 21, 2023/S/     ROBERT A. FIALA        
Robert A. Fiala, Director
Dated:November 22, 2017/S/     MARC A. STEFANSKI        
Marc A. Stefanski
Chairman of the Board, President
and Chief Executive Officer
(Principal Executive Officer)
Dated:November 21, 2023
Dated:November 22, 2017/S/     DAVID S. HUFFMAN        
David S. Huffman
Chief Financial Officer and Secretary
(Principal Financial Officer)
Dated:November 22, 2017/S/     PAUL J. HUML        
Paul J. Huml
Chief Accounting Officer
(Principal Accounting Officer)
Dated:November 22, 2017/S/     ANTHONY J. ASHER        
Anthony J. Asher, Director
Dated:November 22, 2017/S/     MARTIN J. COHEN        
Martin J. Cohen, Director
Dated:November 22, 2017/S/     ROBERT A. FIALA        
Robert A. Fiala, Director
Dated:November 22, 2017/S/     WILLIAM C. MULLIGAN        
William C. Mulligan, Director
Dated:November 22, 201721, 2023/S/     TERRENCE R. OZAN        
Terrence R. Ozan, Director
Dated:November 22, 201721, 2023/S/     JOHN P. RINGENBACH       
John P. Ringenbach, Director
Dated:November 22, 201721, 2023/S/     BEN S. STEFANSKI III        
Ben S. Stefanski III, Director
Dated:November 22, 2017/S/     MEREDITH S. WEIL
Meredith S. Weil, Director
Dated:November 21, 2023/S/    DANIEL F. WEIR
Daniel F. Weir, Director
Dated:November 21, 2023/S/     ASHLEY H. WILLIAMS
Ashley H. Williams, Director



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