PART I -- FINANCIAL INFORMATION

Item 1. Financial Statements


CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands, except per share amounts)

	December 31,		September 30,
	2020		2020
ASSETS:
Cash and cash equivalents (includes interest-earning deposits of $139,031 and $172,430)	$	168,032	$	185,148

Available-for-sale ("AFS") securities, at estimated fair value (amortized cost of $1,880,972 and $1,529,605)	1,913,866		1,560,950

Loans receivable, net (allowance for credit losses ("ACL") of $26,125 and $31,527)	7,004,094		7,202,851
Federal Home Loan Bank Topeka ("FHLB") stock, at cost	84,693		93,862
Premises and equipment, net	101,238		101,875


Other assets	335,041		342,532
TOTAL ASSETS	$	9,606,964	$	9,487,218

LIABILITIES:
Deposits	$	6,410,842	$	6,191,408
Borrowings	1,734,275		1,789,313

Advance payments by borrowers for taxes and insurance	33,216		65,721
Income taxes payable, net	3,180		795
Deferred income tax liabilities, net	9,318		8,180
Accounts payable and accrued expenses	139,585		146,942
Total liabilities	8,330,416		8,202,359

STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 100,000,000 shares authorized, 0 shares issued or outstanding	0		0
Common stock, $.01 par value; 1,400,000,000 shares authorized, 138,792,496 and 138,956,296 shares issued and outstanding as of December 31, 2020 and September 30, 2020, respectively	1,388		1,389
Additional paid-in capital	1,188,636		1,189,853
Unearned compensation, Employee Stock Ownership Plan ("ESOP")	(32,627)		(33,040)
Retained earnings	130,522		143,162
Accumulated other comprehensive (loss) income ("AOCI"), net of tax	(11,371)		(16,505)
Total stockholders' equity	1,276,548		1,284,859
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	9,606,964	$	9,487,218


See accompanying notes to consolidated financial statements.

CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands, except per share amounts)

March 31, September 30,
2020 2019
ASSETS:
Cash and cash equivalents (includes interest-earning deposits of $5,512 and $198,809) $ 118,374
$ 220,370
Available-for-sale ("AFS") securities, at estimated fair value 1,236,037
1,204,863
Loans receivable, net (allowance for credit losses ("ACL") of $31,196 and $9,226) 7,476,805
7,416,747
Federal Home Loan Bank Topeka ("FHLB") stock, at cost 101,575
98,456
Premises and equipment, net 98,589
96,784
Income taxes receivable, net 4,255
2
Other assets 335,558
302,796
TOTAL ASSETS $ 9,371,193
$ 9,340,018

LIABILITIES:
Deposits $ 5,774,619
$ 5,581,867
Borrowings 2,115,869
2,239,989
Advance payments by borrowers for taxes and insurance 55,306
65,686
Deferred income tax liabilities, net 10,236
14,282
Accounts payable and accrued expenses 127,370
101,868
Total liabilities 8,083,400
8,003,692

STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 100,000,000 shares authorized, no shares issued or outstanding —
—
Common stock, $.01 par value; 1,400,000,000 shares authorized, 141,512,165 and 141,440,030
shares issued and outstanding as of March 31, 2020 and September 30, 2019, respectively 1,415
1,414
Additional paid-in capital 1,211,466
1,210,226
Unearned compensation, Employee Stock Ownership Plan ("ESOP") (33,866 ) (34,692 )
Retained earnings 130,756
174,277
Accumulated other comprehensive (loss) income ("AOCI"), net of tax (21,978 ) (14,899 )
Total stockholders' equity 1,287,793
1,336,326
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,371,193
$ 9,340,018

See accompanying notes to consolidated financial statements.


CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share amounts)

	For the Three Months Ended
	December 31,
	2020		2019
INTEREST AND DIVIDEND INCOME:
Loans receivable	$	60,694	$	69,914
Mortgage-backed securities ("MBS")	5,710		6,102
FHLB stock	1,069		1,826
Investment securities	683		1,507
Cash and cash equivalents	51		687
Total interest and dividend income	68,207		80,036
INTEREST EXPENSE:
Deposits	14,067		17,962
Borrowings	10,327		13,377

Total interest expense	24,394		31,339
NET INTEREST INCOME	43,813		48,697
PROVISION FOR CREDIT LOSSES	(1,532)		225

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES	45,345		48,472
NON-INTEREST INCOME:
Deposit service fees	2,947		3,062
Insurance commissions	638		691


Other non-interest income	1,485		1,751
Total non-interest income	5,070		5,504
NON-INTEREST EXPENSE:
Salaries and employee benefits	14,138		13,471
Information technology and related expense	4,233		4,141
Occupancy, net	3,379		3,207
Regulatory and outside services	1,585		1,343
Advertising and promotional	838		1,410
Deposit and loan transaction costs	766		711
Federal insurance premium	621		0
Office supplies and related expense	424		519

Other non-interest expense	1,083		1,698
Total non-interest expense	27,067		26,500
INCOME BEFORE INCOME TAX EXPENSE	23,348		27,476
INCOME TAX EXPENSE	4,450		4,965
NET INCOME	$	18,898	$	22,511

Basic earnings per share ("EPS")	$	0.14	$	0.16
Diluted EPS	$	0.14	$	0.16

Basic weighted average common shares	135,397,691		137,898,010
Diluted weighted average common shares	135,398,884		137,976,122

See accompanying notes to consolidated financial statements.

CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share amounts)

For the Three Months Ended For the Six Months Ended
March 31, March 31,
2020 2019 2020 2019
INTEREST AND DIVIDEND INCOME:
Loans receivable $ 69,613
$ 71,657
$ 139,527
$ 142,429
Mortgage-backed securities ("MBS") 5,866
6,301
11,968
12,824
FHLB stock 1,714
1,831
3,540
3,802
Investment securities 1,382
1,505
2,889
2,946
Cash and cash equivalents 380
743
1,067
2,457
Total interest and dividend income 78,955
82,037
158,991
164,458
INTEREST EXPENSE:
Deposits 17,804
16,096
35,766
31,821
Borrowings 12,483
13,344
25,860
27,739
Total interest expense 30,287
29,440
61,626
59,560
NET INTEREST INCOME 48,668
52,597
97,365
104,898
PROVISION FOR CREDIT LOSSES 22,075
—
22,300
—
NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES 26,593
52,597
75,065
104,898
NON-INTEREST INCOME:
Deposit service fees 2,783
3,091
5,845
6,443
Insurance commissions 400
541
1,091
1,167
Other non-interest income 1,488
1,369
3,239
2,815
Total non-interest income 4,671
5,001
10,175
10,425
NON-INTEREST EXPENSE:
Salaries and employee benefits 13,235
12,789
26,706
25,751
Information technology and related expense 4,268
4,284
8,409
8,883
Occupancy, net 3,449
3,292
6,656
6,544
Advertising and promotional 1,359
1,390
2,769
2,150
Regulatory and outside services 1,297
1,056
2,640
2,822
Deposit and loan transaction costs 678
465
1,389
1,201
Office supplies and related expense 592
736
1,111
1,195
Federal insurance premium —
659
—
1,187
Other non-interest expense 1,286
1,470
2,984
3,190
Total non-interest expense 26,164
26,141
52,664
52,923
INCOME BEFORE INCOME TAX EXPENSE 5,100
31,457
32,576
62,400
INCOME TAX EXPENSE 824
6,903
5,789
13,463
NET INCOME $ 4,276
$ 24,554
$ 26,787
$ 48,937

Basic earnings per share ("EPS") $ 0.03
$ 0.18
$ 0.19
$ 0.36
Diluted EPS $ 0.03
$ 0.18
$ 0.19
$ 0.36

Basic weighted average common shares 137,968,327
137,634,820
137,932,976
137,592,409
Diluted weighted average common shares 138,000,334
137,690,717
137,988,649
137,641,126

See accompanying notes to consolidated financial statements.


CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(Dollars in thousands)

	For the Three Months Ended
	December 31,
	2020		2019
Net income	$	18,898	$	22,511
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on AFS securities arising during the period, net of taxes of $(409) and $145	1,140		(452)


Changes in unrealized gains (losses) on cash flow hedges, net of taxes of $(1,220) and $(1,741)	3,994		5,424

Comprehensive income	$	24,032	$	27,483

See accompanying notes to consolidated financial statements.

CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(Dollars in thousands)

For the Three Months Ended For the Six Months Ended
March 31, March 31,
2020 2019 2020 2019
Net income $ 4,276
$ 24,554
$ 26,787
$ 48,937
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on AFS securities arising during the period,
net of taxes of $(3,332), $(982), $(3,187) and $(2,115) 10,378
3,061
9,926
6,588
Changes in unrealized gains (losses) on cash flow hedges,
net of taxes of $7,200, $2,118, $5,459 and $5,246 (22,429 ) (6,600 ) (17,005 ) (16,344 )
Comprehensive (loss) income $ (7,775 ) $ 21,015
$ 19,708
$ 39,181

See accompanying notes to consolidated financial statements.


CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
(Dollars in thousands, except per share amounts)

	For the Three Months Ended December 31, 2020
			Additional		Unearned						Total
	Common		Paid-In		Compensation		Retained				Stockholders'
	Stock		Capital		ESOP		Earnings		AOCI		Equity
Balance at September 30, 2020	$	1,389	$	1,189,853	$	(33,040)	$	143,162	$	(16,505)	$	1,284,859

Net income							18,898				18,898
Other comprehensive income, net of tax									5,134		5,134

Cumulative effect of adopting Accounting Standards Update ("ASU") 2016-13, net of tax							(2,288)				(2,288)

ESOP activity			80		413						493
Restricted stock activity, net			(8)								(8)
Stock-based compensation			118								118
Repurchase of common stock	(1)		(1,407)				(122)				(1,530)

Cash dividends to stockholders ($0.215 per share)							(29,128)				(29,128)
Balance at December 31, 2020	$	1,388	$	1,188,636	$	(32,627)	$	130,522	$	(11,371)	$	1,276,548


	For the Three Months Ended December 31, 2019
			Additional		Unearned						Total
	Common		Paid-In		Compensation		Retained				Stockholders'
	Stock		Capital		ESOP		Earnings		AOCI		Equity
Balance at September 30, 2019	$	1,414	$	1,210,226	$	(34,692)	$	174,277	$	(14,899)	$	1,336,326

Cumulative effect of adopting ASU 2016-02, net of tax							88				88

Net income							22,511				22,511
Other comprehensive income, net of tax									4,972		4,972

ESOP activity			169		413						582
Restricted stock activity, net			(1)								(1)
Stock-based compensation			166								166

Stock options exercised	1		612								613
Cash dividends to stockholders ($0.425 per share)							(58,663)				(58,663)
Balance at December 31, 2019	$	1,415	$	1,211,172	$	(34,279)	$	138,213	$	(9,927)	$	1,306,594



























See accompanying notes to consolidated financial statements.

CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
(Dollars in thousands, except per share amounts)

For the Six Months Ended March 31, 2020
Additional Unearned Total
Common Paid-In Compensation Retained Stockholders'
Stock Capital ESOP Earnings AOCI Equity
Balance at September 30, 2019 $ 1,414
$ 1,210,226
$ (34,692 ) $ 174,277
$ (14,899 ) $ 1,336,326
Net income 22,511
22,511
Other comprehensive income, net of tax 4,972
4,972
Cumulative effect of adopting Accounting Standards Update ("ASU") 2016-02 88
88
ESOP activity 169
413
582
Restricted stock activity, net (1 ) (1 )
Stock-based compensation 166
166
Stock options exercised 1
612
613
Cash dividends to stockholders ($0.425 per share) (58,663 ) (58,663 )
Balance at December 31, 2019 $ 1,415
$ 1,211,172
$ (34,279 ) $ 138,213
$ (9,927 ) $ 1,306,594
Net income 4,276
4,276
Other comprehensive loss, net of tax (12,051 ) (12,051 )
ESOP activity 117
413
530
Stock-based compensation 152
152
Stock options exercised 25
25
Cash dividends to stockholders ($0.085 per share) (11,733 ) (11,733 )
Balance at March 31, 2020 1,415
1,211,466
(33,866 ) 130,756
(21,978 ) 1,287,793


CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)

	For the Three Months Ended
	December 31,
	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	18,898	$	22,511
Adjustments to reconcile net income to net cash provided by operating activities:
FHLB stock dividends	(1,069)		(1,826)
Provision for credit losses	(1,532)		225
Originations of loans receivable held-for-sale ("LHFS")	(364)		0
Proceeds from sales of LHFS	366		0
Amortization and accretion of premiums and discounts on securities	1,017		228
Depreciation and amortization of premises and equipment	2,304		2,286
Amortization of intangible assets	422		500
Amortization of deferred amounts related to FHLB advances, net	254		2
Common stock committed to be released for allocation - ESOP	493		582
Stock-based compensation	118		166

Changes in:

Other assets, net	1,942		1,237
Income taxes payable/receivable, net	2,372		3,808
Deferred income tax liabilities, net	248		(597)
Accounts payable and accrued expenses	(6,266)		(2,312)
Net cash provided by operating activities	19,203		26,810

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of AFS securities	(504,780)		(149,359)

Proceeds from calls, maturities and principal reductions of AFS securities	152,396		123,810


Proceeds from the redemption of FHLB stock	10,238		421

Net change in loans receivable	203,698		(12,844)
Purchase of premises and equipment	(2,058)		(3,882)
Proceeds from sale of other real estate owned ("OREO")	53		585



Proceeds from bank-owned life insurance ("BOLI") death benefit	443		490
Net cash used in investing activities	(140,010)		(40,779)


			(Continued)

For the Six Months Ended March 31, 2019
Additional Unearned Total
Common Paid-In Compensation Retained Stockholders'
Stock Capital ESOP Earnings AOCI Equity
Balance at September 30, 2018 $ 1,412
$ 1,207,644
$ (36,343 ) $ 214,569
$ 4,340
$ 1,391,622
Net income 24,383
24,383
Other comprehensive loss, net of tax (6,217 ) (6,217 )
Cumulative effect of adopting ASU 2014-09 394
394
ESOP activity 118
413
531
Stock-based compensation 95
95
Stock options exercised 1
466
467
Cash dividends to stockholders ($0.475 per share) (65,362 ) (65,362 )
Balance at December 31, 2018 $ 1,413
$ 1,208,323
$ (35,930 ) $ 173,984
$ (1,877 ) $ 1,345,913
Net income 24,554
24,554
Other comprehensive loss, net of tax (3,539 ) (3,539 )
ESOP activity 134
413
547
Stock-based compensation 90
90
Stock options exercised 118
118
Cash dividends to stockholders ($0.085 per share) (11,700 ) (11,700 )
Balance at March 31, 2019 1,413
1,208,665
(35,517 ) 186,838
(5,416 ) 1,355,983

See accompanying notes to consolidated financial statements.


CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)









	For the Three Months Ended
	December 31,
	2020		2019
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid	(29,128)		(58,663)
Net change in deposits	219,434		3,984
Proceeds from borrowings	305,000		362,400
Repayments on borrowings	(358,000)		(412,400)

Change in advance payments by borrowers for taxes and insurance	(32,505)		(38,402)
Payment of FHLB prepayment penalties	(2,292)		0
Repurchase of common stock	(4,568)		0
Stock options exercised	0		613


Net cash provided by (used in) financing activities	97,941		(142,468)

NET DECREASE IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS	(22,866)		(156,437)

CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS:
Beginning of period	239,708		253,700
End of period	$	216,842	$	97,263





SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

Operating lease right-of-use assets obtained	$	0	$	15,658
Operating lease liabilities obtained	$	0	$	15,543



See accompanying notes to consolidated financial statements.			(Concluded)

CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)

For the Six Months Ended
March 31,
2020 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 26,787
$ 48,937
Adjustments to reconcile net income to net cash provided by operating activities:
FHLB stock dividends (3,540 ) (3,802 )
Provision for credit losses 22,300
—
Amortization and accretion of premiums and discounts on securities 556
737
Depreciation and amortization of premises and equipment 4,564
4,710
Amortization of intangible assets 997
1,189
Amortization of deferred amounts related to FHLB advances, net 95
4
Common stock committed to be released for allocation - ESOP 1,112
1,078
Stock-based compensation 318
185
Changes in:
Unrestricted cash collateral (provided to)/received from derivative counterparties, net —
(9,970 )
Other assets, net 3,649
1,418
Income taxes payable/receivable, net (4,249 ) 2,291
Deferred income tax liabilities, net (1,800 ) (745 )
Accounts payable and accrued expenses (12,413 ) (13,894 )
Net cash provided by operating activities 38,376
32,138

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of AFS securities (288,319 ) (172,506 )
Proceeds from calls, maturities and principal reductions of AFS securities 269,702
149,524
Proceeds from calls, maturities and principal reductions of held-to-maturity ("HTM") securities —
83,692
Proceeds from the redemption of FHLB stock 421
97,096
Purchase of FHLB stock —
(96,199 )
Net change in loans receivable (82,595 ) (57,073 )
Purchase of premises and equipment (6,497 ) (4,583 )
Proceeds from sale of other real estate owned ("OREO") 987
1,062
Proceeds from bank-owned life insurance ("BOLI") death benefit 490
—
Net cash (used in) provided by investing activities (105,811 ) 1,013

(Continued)

CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)

For the Six Months Ended
March 31,
2020 2019
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid (70,396 ) (77,062 )
Net change in deposits 192,752
97,757
Proceeds from borrowings 1,186,600
2,680,000
Repayments on borrowings (1,306,600 ) (2,625,052 )
Change in advance payments by borrowers for taxes and insurance (10,380 ) (16,963 )
Payment of FHLB prepayment penalties (4,215 ) —
Stock options exercised 638
585
Net cash (used in) provided by financing activities (11,601 ) 59,265

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS (79,036 ) 92,416

CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS:
Beginning of period 253,700
139,055
End of period $ 174,664
$ 231,471

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Operating lease right-of-use assets obtained $ 15,658
$ —
Operating lease liabilities obtained $ 15,543
$ —

See accompanying notes to consolidated financial statements. (Concluded)

Notes to Consolidated Financial Statements (Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation - The consolidated financial statements include the accounts of Capitol Federal Financial, Inc.® (the "Company") and its wholly-owned subsidiary, Capitol Federal Savings Bank (the "Bank"). The Bank has two wholly-owned subsidiaries, Capitol Funds, Inc. and Capital City Investments, Inc. Capitol Funds, Inc. has a wholly-owned subsidiary, Capitol Federal Mortgage Reinsurance Company. Capital City Investments, Inc. is a real estate and investment holding company. All intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019,~~2020, filed with the Securities and Exchange Commission ("SEC"). Interim results are not necessarily indicative of results for a full year.

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - Cash, cash equivalents, restricted cash and restricted cash equivalents reported in the statement of cash flows include cash and cash equivalents of ~~$118.4~~$168.0 million and ~~$220.4~~$185.1 million at ~~March~~December 31, 2020 and September 30, ~~2019,~~2020, respectively, and restricted cash and cash equivalents of ~~$56.3~~$48.8 million and ~~$33.3~~$54.6 million at ~~March~~December 31, 2020 atand September 30, ~~2019,~~2020, respectively, which was included in other assets on the consolidated balance sheet. The restricted cash and cash equivalents relate to the collateral postings to/from the Bank's derivative counterparties associated with the Bank's interest rate swaps. See additional discussion regarding the interest rate swaps in Note 5. Borrowed Funds.

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

Accrued interest receivable for all securities is reported in other assets on the consolidated balance sheet. When the Company adopted ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, the practical expedient to exclude accrued interest from all required disclosures of amortized cost was elected. Additionally, an election was made to not measure ACL for accrued interest receivables. Interest accrued but not received is reversed against interest income.

Securities that management has the intention and ability to hold to maturity are classified as HTM and reported at amortized cost. Such securities are adjusted for the amortization of premiums and discounts which are recognized as adjustments to interest income over the life of the securities using the level-yield method. At ~~times,~~December 31, 2020 and September 30, 2020, the ~~Bank enters into certain FHLB advances~~portfolio did not contain any securities classified as HTM.

Securities that management may sell if necessary for liquidity or asset management purposes are classified as AFS and reported at fair value, with ~~contractual maturities~~unrealized gains and non-credit losses reported as a component of ~~90 days~~AOCI within stockholders' equity, net of deferred income taxes. The amortization of premiums and discounts are recognized as adjustments to interest income over the life of the securities using the level-yield method. Gains or ~~less. Cash flows related~~losses on the disposition of AFS securities are recognized using the specific identification method. The Company primarily uses prices obtained from third-party pricing services to ~~these advances~~determine the fair value of securities. See additional discussion of fair value of AFS securities in "Note 6. Fair Value of Financial Instruments."

Securities that are purchased and held principally for resale in the near future are classified as trading securities and are reported ~~on a net basis~~at fair value, with unrealized gains and losses included in non-interest income in the consolidated statements of income. Neither the Company nor the Bank maintained a trading securities portfolio during the three months ended December 31, 2020 or during fiscal year 2020.

Allowance for Credit Losses on AFS Debt Securities - Management monitors AFS debt securities for impairment on an ongoing basis and performs a formal review quarterly. If an AFS debt security is in an unrealized loss position at the time of the quarterly review, the Company first assesses whether it intends to sell, or if it is more likely than not that it will be required to sell the security before recovery of its amortized cost. If either condition is met, the entire loss in fair value is recognized in current earnings. If neither condition is met, and the Company does not expect to recover the amortized cost basis, the Company determines whether the decline in fair value resulted from credit losses or other factors. In making this assessment, management considers the security structure, the cause(s) and severity of the loss, expectations of future performance including recent events specific to the issuer or industry including

the issuer's financial condition and current ability to make future payments in a timely manner, and external credit ratings and recent downgrades in such ratings. Management's assessment involves a high degree of subjectivity and judgment that is based on information available at a point in time. If the assessment indicates that a credit loss exists, the present value of cash ~~flows. There~~flows expected to be collected is compared to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss has occurred, and an ACL is recorded, which became effective October 1, 2020 when the Company adopted ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments. Accrued interest receivable on AFS debt securities is excluded from the estimate of credit losses. The ACL is limited by the amount that the fair value is less than the amortized cost basis. Any impairment not recorded through the provision for credit losses is recognized in other comprehensive income. Prior to the adoption of ASU 2016-13, management assessed all known facts and circumstances to determine whether an other-than-temporary loss should be recognized for impaired securities. If an other-than-temporary impairment had occurred, the difference between the amortized cost and fair value was recognized as a loss in earnings and the security was written down to fair value.

Changes in the ACL on AFS debt securities are recorded as an increase or decrease in the provision for credit losses on the consolidated statements of income. Losses are charged against the ACL on securities when management believes the collectability of an AFS security is in doubt or when either of the conditions regarding intent or requirement to sell is met. As of October 1, 2020 and December 31, 2020, the Company did not identify any credit losses related to the Company's AFS debt securities so there was no ~~FHLB advance activity~~ACL on AFS debt securities as of those dates.

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

Interest on loans is accrued based on the principal amount outstanding. When the Company adopted ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, the practical expedient to exclude all accrued interest receivable from all required disclosures of amortized cost was elected. Additionally, an election was made to not measure ACL for accrued interest receivables.

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

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

Troubled debt restructurings - For borrowers experiencing financial difficulties, the Bank may grant a ~~net~~concession to the borrower. Such concessions generally involve extensions of loan maturity dates, the granting of periods during which reduced payment amounts are required, and/or reductions in interest rates. The Bank does not forgive principal or interest, nor does it commit to lend additional funds to these borrowers, except for situations generally involving the capitalization of delinquent interest and/or escrow on one- to four-family loans and consumer loans, not to exceed the original loan amount. In the case of commercial loans, the Bank does not forgive principal or interest or commit to lend additional funds unless the borrower provides additional collateral or other enhancements to improve the credit quality.

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

Nonaccrual loans - The accrual of income on loans is generally discontinued when interest or principal payments are 90 days in arrears. We also report certain TDR loans as nonaccrual loans that are required to be reported as such pursuant to regulatory reporting requirements. Loans on which the accrual of income has been discontinued are designated as nonaccrual and outstanding interest previously credited beyond 90 days delinquent is reversed, except in the case of commercial loans in which all delinquent accrued interest is reversed. A nonaccrual one- to four-family or consumer loan is returned to accrual status once the contractual payments have been made to bring the loan less than 90 days past due or, in the case of a TDR loan, the borrower has made the required consecutive loan payments. A nonaccrual commercial loan is returned to accrual status once the loan has been current for a minimum of six months, all fees and interest are paid current, the loan has a sufficient debt service coverage ratio, and the loan is well secured and within policy.

Allowance for Credit Losses on Loans Receivable - The ACL is a valuation amount that is deducted from the amortized cost basis of loans. It represents management's current expectations of total expected credit losses included in the Company's loan portfolio as of the balance sheet date and is determined using relevant information about past events, including historical credit loss experience on loans with similar risk characteristics, current conditions, and reasonable and supportable forecasts, along with the application of qualitative factors when necessary. ACL is recorded upon origination or purchase of a loan and is updated at subsequent reporting dates. Changes in the ACL are recorded through increases or decreases to the provision for credit losses in the consolidated statements of income. The ACL is an estimate that requires significant judgment including projections of the macroeconomic environment. The macroeconomic environment continuously changes, which can cause fluctuations in estimated expected losses.

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

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

The primary credit risk characteristics inherent in the one- to four-family and consumer loan portfolios are a decline in economic conditions, elevated levels of unemployment or underemployment, and declines in residential real estate values. Any one or a combination of these events may adversely affect the ability of borrowers to repay their loans, resulting in increased delinquencies, non-performing assets, charge-offs, and provisions for credit losses. Although the commercial loan portfolio is subject to the same risk of declines in economic conditions, the primary risk characteristics inherent in this portfolio include the ability of the borrower to sustain sufficient cash flows from leases and business operations, the ability to control operational or business expenses to satisfy their contractual debt payments, and the ability to utilize personal or business resources to pay their contractual debt payments if the cash flows are not sufficient. Additionally, if the Bank were to repossess the secured collateral of a commercial real estate loan, the pool of potential buyers is more limited than that for a residential property. Therefore, the Bank could hold the property for an extended period of time, or be forced to sell at a discounted price, resulting in additional losses. Our commercial and industrial loans are primarily secured by accounts receivable, inventory and equipment, which may be difficult to appraise, may be illiquid and may fluctuate in value based on the success of the business.

For loans evaluated for credit losses on a pool basis, average historical loss rates are calculated for each pool using the Company's historical charge-offs, or peer data when the Company's own historical loss rates are not reflective of future loss expectations, and outstanding loan balances during a historical time period. The historical time periods can be different based on the individual pool and represent management's credit expectations for the pool of loans over the remaining contractual life. Generally, the historical time periods are at least one economic cycle. These historical loss rates are compared to historical data related to economic variables including national unemployment rate, changes in commercial real estate price index, changes in home values, and changes in the

United States gross domestic product during the ~~six months ended March 31, 2020~~same time periods over which the historical loss rates were calculated, and ~~2019.~~a correlation is estimated using regression analysis. Each quarter, the Company's ACL model pairs the results of the regression analysis with an economic forecast of these same macroeconomic variables, which is provided by a third party, in order to project future loss rates. The forecast is applied for a reasonable and supportable time period, as determined by management, before reverting back to long-term historical averages at the macroeconomic variable level using a straight-line method. The forecast-adjusted loss rate is applied to the loans over their remaining contractual lives, adjusted for expected prepayments and curtailments. The contractual term excludes expected extensions, renewals and modifications unless there is a reasonable expectation that a TDR will be executed. In the case of revolving lines of credit, since the rate of principal reduction is generally at the discretion of the borrower, remaining contractual lives are calculated by estimating future cash flows expected to be received from the borrower until the outstanding balance has been reduced to zero.

Using all of these inputs, the ACL model generates aggregated estimated cash flows for the time period that remains in each loan's contractual life. These cash flows are discounted back to the reporting date using each loan's effective yield, to arrive at a present value of future cash flows. Each loan pool's ACL is equal to the aggregate shortage, if any, of the present value of future cash flows compared to the amortized cost basis of the loan pool.

~~Leases~~

Additionally, qualitative factors are considered for items not included in historical loss rates, macroeconomic forecasts, or other model inputs and/or other ACL processes, as deemed appropriate by management's current assessment of risks related to loan portfolio attributes and external factors. Such qualitative factor considerations include changes in the loan portfolio composition and credit concentrations, changes in lending policies and procedures and underwriting standards, changes in balances and/or trends in asset quality and/or loan credit performance, model imprecision, and/or external factors such as significant unique events or conditions. Management assesses the potential impact of such items and adjusts the modeled ACL as deemed appropriate based upon the assessment.

Reserve for Off-Balance Sheet Credit Exposures- The ~~Company leases real estate property~~Company's off-balance sheet credit exposures are comprised of unfunded portions of existing loans, such as lines of credit and construction loans, and commitments to originate or purchase loans that are not unconditionally cancellable by the Company. Expected credit losses on these amounts are calculated using the same methodology that is applied in the ACL model; however, the estimate of credit risk for ~~branches, ATMs, and certain equipment. All~~off-balance sheet credit exposures also takes into consideration the likelihood that funding of the ~~leases in which the Company~~commitment will occur. The reserve for these off-balance sheet credit exposures is ~~the lessee are classified~~recorded as ~~operating leases. The Company determines if an arrangement~~a liability and is ~~a lease at inception and if the lease is an operating lease or a finance lease.~~

Operating lease right-of-use assets represent the Company's right to use an underlying asset during the lease term and operating lease liabilities represent the Company's obligation to make lease payments arising from the lease. The right-of-use assets associated with operating leases are recorded in other assets in the Company's consolidated balance sheets. The lease liabilities associated with operating leases are includedpresented in accounts payable and accrued expenses on the consolidated balance ~~sheets. The period over which~~sheet. Changes to the ~~right-of-use asset is amortized is generally~~reserve on off-balance sheet credit exposures are recorded through increases or decreases to the ~~lesser of~~provision for credit losses on the expected remaining term or the remaining useful life of the leased asset. The lease liability is decreased as periodic lease payments are made. The Company performs impairment assessments for right-of-use assets when events or changes in circumstances indicate that their carrying values may not be recoverable.

The calculated amount of the right-of-use assets and lease liabilities are impacted by the length of the lease term and the discount rate used to calculate the present value of the minimum remaining lease payments. The Company's lease agreements often include one or more options to renew at the Company's discretion. If, at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company includes the extended term in the calculation of the right-of-use asset and lease liability. Generally, the Company cannot practically determine the interest rate implicit in the lease so the Company's incremental borrowing rate is used as the discount rate for the lease. The Company uses FHLB advance interest rates, which have been deemed as the Company's incremental borrowing rate, at lease inception based upon the term of the lease. For operating leases existing prior to October 1, 2019, the rate for the remaining lease term as of October 1, 2019 was applied. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

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

Recent Accounting Pronouncements - In ~~February~~June 2016, the Financial Accounting Standards Board ("FASB") ~~issued ASU 2016-02,~~ ~~Leases. The ASU, as amended, revises lease accounting guidance by requiring that lessees recognize the assets and liabilities arising~~

~~from leases on the balance sheet.~~ Additionally, the ASU requires entities to disclose both quantitative and qualitative information regarding their leasing activities. The accounting applied by a lessor is largely unchanged from that applied under the previous guidance. In July 2018, the FASB issued ASU 2018-11, ~~Leases~~, which provides entities with relief from the costs of implementation by allowing the option to not restate comparative periods as part of the transition. The ASU, as amended, became effective for the Company on October 1, 2019. Upon adoption, the Company elected the modified retrospective approach and the optional transition method under which the Company used the effective date as the date of initial application of the amendments. The optional practical expedients the Company elected include: (1) not reassessing whether any expired or existing contracts are or contain leases, (2) not reassessing the classification of any expired or existing contracts, (3) not reassessing initial direct costs for existing leases, and (4) using hindsight for leases existing at adoption date. For leases with an initial term of 12 months or less, the Company elected the short-term lease option, which entails not recognizing right-of-use assets and lease liabilities for these leases. Additionally, the Company elected, for facility-related leases, the practical expedient that allows an entity to elect, by lease class, the ability to not separate lease and non-lease components. Upon adoption, the Company recognized a right-of-use asset of $15.7 million and a lease liability of $15.5 million, related to the Company's non-cancellable operating lease commitments based on the present value of the expected remaining lease payments as of October 1, 2019. ~~The cumulative-effect adjustment to retained earnings at the time of adoption totaled $88 thousand.~~ ~~These ASUs did not have a material impact on the Company's results of operations and cash flows at the time of adoption. The disclosures required by the ASU are included in Note 9. Leases.~~

~~In June 2016, the FASB~~ issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments. The ASU, as amended, replaces the incurred loss ~~impairment~~ methodology in ~~current~~ GAAP, which ~~requires~~required credit losses to be recognized when it is probable that a loss has been incurred, with ~~a new impairment~~an expected credit loss methodology, which is commonly known as the current expected credit loss ("CECL") methodology. The ~~new impairment~~CECL methodology requires an entity to measure, at each reporting date, the expected credit losses of financial assets not measured at fair value, such as loans and ~~loan commitments,~~off-balance sheet credit exposures, over their remaining contractual lives. Under the ~~new impairment~~CECL methodology, expected credit losses ~~will be~~are measured at each reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Additionally, the ASU amends the current credit loss measurements for AFS debt securities. Credit losses related to AFS debt securities will be recorded through the ACL rather than as a direct ~~write-down as per current GAAP.~~write-down. The ASU also requires enhanced disclosures related to credit quality and significant estimates and judgments used by management when estimating credit losses. The ASU, ~~will become~~as amended, became effective for the Company on October 1, 2020.

The Company ~~continues to work~~adopted the ASU, as amended, on October 1, 2020 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Financial results for reporting periods beginning after October 1, 2020 are reported in accordance with ~~a software provider on the application and implementation of~~ the new ~~accounting guidance,~~ASU, as amended, while prior period amounts continue to be reported in accordance with previous GAAP. Upon adoption, the Company recorded a cumulative-effect adjustment for the change in the ACL and reserve for off-balance sheet credit exposures of $2.3 million, net of tax of $739 thousand, which ~~includes assistance with historical data analysis, loan segmentation, model development, and documentation.~~was recognized as a decrease in retained

earnings. The integration of the Company's data with the software provider is complete, along with an analysis of the historical data entered into the software. Management is currently working with the software provider on loan portfolio segmentations and model development, including incorporating economic forecasting into the models. While we are currently unable to reasonably estimatefollowing table presents the impact of ~~adopting this ASU, we expect~~ the ~~impact~~cumulative-effect adjustment for the change in the ACL and reserve for off-balance sheet credit exposures.


	September 30,
	2020		October 1, 2020
	Balance		Cumulative-Effect Adjustment		Balance
	(Dollars in thousands)
ACL
One- to four-family:
Originated	$	6,085	$	(4,452)	$	1,633
Correspondent purchased	2,691		(367)		2,324
Bulk purchased	467		436		903
Commercial:
Commercial real estate	20,349		699		21,048
Commercial and industrial	1,451		(892)		559
Consumer:
Home equity	370		(289)		81
Other	114		104		218
Total ACL	31,527		(4,761)		26,766
Reserve for off-balance sheet credit exposures	0		7,788		7,788
ACL and reserve for off-balance sheet credit exposures	$	31,527	$	3,027	$	34,554

The Company elected the practical expedient to exclude accrued interest receivable from the amortized cost of ~~adoption will be influenced~~financing receivables and AFS debt securities. Accrued interest totaled $20.0 million and $3.1 million at December 31, 2020 for loans receivable and AFS securities, respectively, and was included in other assets on the consolidated balance sheet. Additionally, an election was made not to measure ACL for accrued interest receivables. All interest accrued on loans but not received is reversed against interest income once it becomes more than 90 days past due. Interest accrued on AFS debt securities but not received is also reversed against interest income.

The enhanced disclosures required by the ~~composition of our loan~~ASU, as amended, are included in the relevant significant accounting policies above and ~~securities portfolios as well as the economic conditions~~in "Note 4. Loans Receivable and ~~forecasts at the time of adoption.~~Allowance for Credit Losses."

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

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

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. This ASU makes clarifications and corrections to the application of the guidance contained in each of the amended topics. According to the provisions of the ASU, entities that have not adopted ASU 2017-12 prior to the issuance of ASU 2019-04 shall adopt the provisions of both ASUs at the same time. Since the Company previously adopted ASU 2017-12, the related provisions included in ASU 2019-04 were adopted at the same time. The ~~effective date of~~Company adopted the non-hedging amendments contained in ASU 2019-04, ~~for the Company is~~including amendments related to ASU 2016-13, on October 1, 2020. The ~~Company is currently evaluating the effect~~adoption of ~~the non-hedging amendments contained in~~ this ASU did not have a material impact on the Company's consolidated financial condition, results of operations, ~~and~~or disclosures. For additional information regarding the impact of adopting ASU 2016-13, see ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments above.

2. EARNINGS PER SHARE

Shares acquired by the ESOP are not included in basic average shares outstanding until the shares are committed for allocation or vested to an employee's individual account. Unvested shares awarded pursuant to the Company's restricted stock benefit plans are treated as participating securities in the computation of EPS pursuant to the two-class method as they contain nonforfeitable rights to dividends. The two-class method is an earnings allocation that determines EPS for each class of common stock and participating security.


	For the Three Months Ended
	December 31,
	2020		2019
	(Dollars in thousands, except per share amounts)
Net income	$	18,898	$	22,511
Income allocated to participating securities	(13)		(19)
Net income available to common stockholders	$	18,885	$	22,492

Average common shares outstanding	135,397,242		137,897,561
Average committed ESOP shares outstanding	449		449
Total basic average common shares outstanding	135,397,691		137,898,010

Effect of dilutive stock options	1,193		78,112

Total diluted average common shares outstanding	135,398,884		137,976,122

Net EPS:
Basic	$	0.14	$	0.16
Diluted	$	0.14	$	0.16

Antidilutive stock options, excluded from the diluted average
common shares outstanding calculation	431,212		435,750

For the Three Months Ended For the Six Months Ended
March 31, March 31,
2020 2019 2020 2019
(Dollars in thousands, except per share amounts)
Net income $ 4,276
$ 24,554
$ 26,787
$ 48,937
Income allocated to participating securities (3 ) (10 ) (22 ) (19 )
Net income available to common stockholders $ 4,273
$ 24,544
$ 26,765
$ 48,918

Average common shares outstanding 137,926,574
137,593,062
137,911,988
137,571,533
Average committed ESOP shares outstanding 41,753
41,758
20,988
20,876
Total basic average common shares outstanding 137,968,327
137,634,820
137,932,976
137,592,409

Effect of dilutive stock options 32,007
55,897
55,673
48,717

Total diluted average common shares outstanding 138,000,334
137,690,717
137,988,649
137,641,126

Net EPS:
Basic $ 0.03
$ 0.18
$ 0.19
$ 0.36
Diluted $ 0.03
$ 0.18
$ 0.19
$ 0.36

Antidilutive stock options, excluded from the diluted average
common shares outstanding calculation 382,894
494,395
387,979
529,261

Financial Condition

The following table presents selected balance sheet information as of the dates indicated.


	December 31,			September 30,			June 30,			March 31,			December 31,
	2020			2020			2020			2020			2019
	(Dollars in thousands)
Total assets	$	9,606,964		$	9,487,218		$	9,558,814		$	9,371,193		$	9,236,572
Cash and cash equivalents	168,032			185,148			396,219			118,374			70,703
AFS securities	1,913,866			1,560,950			1,220,054			1,236,037			1,229,587

Loans receivable, net	7,004,094			7,202,851			7,388,090			7,476,805			7,429,207
FHLB stock, at cost	84,693			93,862			102,782			101,575			99,861
Deposits	6,410,842			6,191,408			6,069,684			5,774,619			5,585,851
Borrowings	1,734,275			1,789,313			1,989,089			2,115,869			2,189,991
Stockholders' equity	1,276,548			1,284,859			1,300,520			1,287,793			1,306,594
Equity to total assets at end of period	13.3		%	13.5		%	13.6		%	13.7		%	14.1		%

March 31, December 31, September 30, June 30, March 31,
2020 2019 2019 2019 2019
(Dollars in thousands)
Total assets $ 9,371,193
$ 9,236,572
$ 9,340,018
$ 9,286,275
$ 9,534,551
Cash and cash equivalents 118,374
70,703
220,370
43,051
218,051
AFS securities 1,236,037
1,229,587
1,204,863
769,393
746,728
HTM securities —
—
—
483,858
527,460
Loans receivable, net 7,476,805
7,429,207
7,416,747
7,507,468
7,570,806
FHLB stock, at cost 101,575
99,861
98,456
100,109
102,631
Deposits 5,774,619
5,585,851
5,581,867
5,580,871
5,701,111
Borrowings 2,115,869
2,189,991
2,239,989
2,239,987
2,339,985
Stockholders' equity 1,287,793
1,306,594
1,336,326
1,327,099
1,355,983
Equity to total assets at end of period 13.7 % 14.1 % 14.3 % 14.3 % 14.2 %

Total assets were $9.37 billion at March 31, 2020, an increase of $134.6 million, or 1.5%, from December 31, 2019, due primarily to increases in the loan portfolio and cash and cash equivalents. The increase in cash and cash equivalents was due mainly to increasing the amount of cash on hand in anticipation of customer cash needs during the COVID-19 pandemic. Total loans were $7.48 billion at March 31, 2020, an increase of $47.6 million, or 0.6%, from December 31, 2019. The increase was primarily in the one- to four-family correspondent loan portfolio and commercial construction portfolio, partially offset by an increase in ACL. During the current quarter, the Bank originated and refinanced $193.6 million of one- to four-family and consumer loans with a weighted average rate of 3.45% and purchased $144.6 million of one- to four-family loans from correspondent lenders with a weighted average rate of 3.40%. The Bank also originated $35.2 million of commercial loans with a weighted average rate of 4.42% and processed commercial loan disbursements, excluding lines of credit, of approximately $49 million at a weighted average rate of 4.56%. Given the current level of total assets and the economic and interest rate environment, it is unlikely that the total loan portfolio will increase materially during the remainder of fiscal year 2020.

Total deposits were $5.77 billion at March 31, 2020, an increase of $188.8 million, or 3.4%, from December 31, 2019. Retail/business certificates of deposit increased $108.8 million due primarily to the Presidents' Day certificate of deposit campaign in February 2020, and non-maturity deposits increased $66.7 million. The increase in the retail/business certificates of deposit was primarily in intermediate-term certificates.

Stockholders' equity was $1.29 billion at March 31, 2020 compared to $1.31 billion at December 31, 2019. The $18.8 million decrease was due primarily to other comprehensive loss, net of tax of $12.1 million, which was due to a reduction in the fair value of our interest rate swaps, partially offset by an increase in unrealized gains on our AFS securities, and the payment of $11.7 million in cash dividends. These decreases were partially offset by net income of $4.3 million during the current quarter.

Loans Receivable. The following table presents the balance and weighted average rate of our loan portfolio as of the dates indicated. ~~Approximately 68% of the one- to four-family loan portfolio balance at March 31, 2020 was comprised of loans that had a balance of $510 thousand or less at the time of origination.~~


	December 31, 2020				September 30, 2020
	Amount		Rate		Amount		Rate
	(Dollars in thousands)
One- to four-family:
Originated	$	3,946,073	3.39	%	$	3,937,310	3.50	%
Correspondent purchased	1,974,086		3.40		2,101,082		3.49
Bulk purchased	199,673		2.24		208,427		2.41
Construction	32,871		3.22		34,593		3.30
Total	6,152,703		3.36		6,281,412		3.46
Commercial:
Commercial real estate	609,936		4.23		626,588		4.29
Commercial and industrial	69,378		3.41		97,614		2.79
Construction	84,564		3.89		105,458		4.04
Total	763,878		4.12		829,660		4.08
Consumer loans:
Home equity	97,717		4.64		103,838		4.66
Other	9,328		4.40		10,086		4.40
Total	107,045		4.62		113,924		4.64
Total loans receivable	7,023,626		3.46		7,224,996		3.55

Less:
ACL	26,125				31,527
Discounts/unearned loan fees	28,825				29,190
Premiums/deferred costs	(35,418)				(38,572)
Total loans receivable, net	$	7,004,094			$	7,202,851

March 31, 2020 December 31, 2019 September 30, 2019
Amount Rate Amount Rate Amount Rate
(Dollars in thousands)
One- to four-family:
Originated $ 3,944,782
3.68 % $ 3,927,015
3.71 % $ 3,873,851
3.74 %
Correspondent purchased 2,385,907
3.60
2,343,750
3.62
2,349,877
3.64
Bulk purchased 228,730
2.88
237,691
2.93
252,347
2.94
Construction 35,798
3.61
38,771
3.82
36,758
4.00
Total 6,595,217
3.62
6,547,227
3.65
6,512,833
3.68
Commercial:
Commercial real estate 584,236
4.45
583,848
4.48
583,617
4.48
Commercial and industrial 62,153
4.62
57,019
4.97
61,094
5.14
Construction 126,266
4.40
107,372
4.68
123,159
4.81
Total 772,655
4.45
748,239
4.54
767,870
4.58
Consumer loans:
Home equity 114,571
5.67
118,491
5.73
120,587
6.15
Other 10,837
4.56
10,877
4.58
11,183
4.57
Total 125,408
5.58
129,368
5.63
131,770
6.02
Total loans receivable 7,493,280
3.74
7,424,834
3.77
7,412,473
3.81

Less:
ACL 31,196
9,435
9,226

Discounts/unearned loan fees 29,645
30,323
31,058

Premiums/deferred costs (44,366 ) (44,131 ) (44,558 )
Total loans receivable, net $ 7,476,805
$ 7,429,207
$ 7,416,747

Loan Activity - The following tables summarize activity in the loan portfolio, along with weighted average rates where applicable, for the periods indicated, excluding changes in ACL, discounts/unearned loan fees, and premiums/deferred costs. Loans that were ~~paid-off~~paid off as a result of refinances ~~and loans that were sold~~ are included in repayments. Loan endorsements are not included in the activity in the following table because a new loan is not generated at the time of the endorsement. The endorsed balance and rate are included in the ending loan portfolio balance and rate. During the current ~~year~~year-to-date period, the Bank endorsed ~~$170.9~~$285.2 million of one- to four-family loans, reducing the average rate on those loans by 8187 basis points. Commercial loan renewals are not included in the activity in the following table unless new funds are disbursed at the time of renewal. ~~As noted earlier, during the initial days of the COVID-19 pandemic, correspondent one- to four-family lending activities were suspended by the Bank but correspondent applications~~The renewal balance and ~~commitments~~rate are included in the ~~pipeline continue to progress through the approval~~ending loan portfolio balance and ~~funding process.~~rate.


	For the Three Months Ended
	December 31, 2020				September 30, 2020				June 30, 2020				March 31, 2020
	Amount		Rate		Amount		Rate		Amount		Rate		Amount		Rate
	(Dollars in thousands)
Beginning balance	$	7,224,996	3.55	%	$	7,407,442	3.64	%	$	7,493,280	3.74	%	$	7,424,834	3.77	%
Originated and refinanced:
Fixed	318,690		2.75		265,424		2.98		277,904		2.83		172,891		3.44
Adjustable	48,946		3.60		44,625		3.68		60,626		3.75		55,946		4.11
Purchased and participations:
Fixed	100,518		2.86		61,435		3.07		131,739		3.28		125,612		3.46
Adjustable	65,315		3.89		4,396		2.76		62,510		3.76		18,985		2.96

Change in undisbursed loan funds	(70,323)				13,898				(32,202)				24,049
Repayments	(664,055)				(572,536)				(586,434)				(328,644)
Principal (charge-offs)/recoveries, net	(464)				312				19				(314)
Other	3				—				—				(79)
Ending balance	$	7,023,626	3.46		$	7,224,996	3.55		$	7,407,442	3.64		$	7,493,280	3.74

For the Three Months Ended
March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019
Amount Rate Amount Rate Amount Rate Amount Rate
(Dollars in thousands)
Beginning balance $ 7,424,834
3.77 % $ 7,412,473
3.81 % $ 7,501,741
3.83 % $ 7,564,076
3.82 %
Originated and refinanced:
Fixed 172,891
3.44
233,693
3.52
188,753
3.60
121,871
4.09
Adjustable 55,946
4.11
55,126
4.30
59,550
4.37
63,341
4.87
Purchased and participations:
Fixed 125,612
3.46
123,118
3.77
49,161
4.12
29,447
4.65
Adjustable 18,985
2.96
13,801
3.06
12,305
3.55
10,018
3.85
Change in undisbursed loan funds 24,049
(9,743 ) 12,293
34,742

Repayments (328,644 ) (403,361 ) (410,624 ) (321,439 )
Principal (charge-offs)/recoveries, net (314 ) (16 ) (110 ) (33 )
Other (79 ) (257 ) (596 ) (282 )
Ending balance $ 7,493,280
3.74
$ 7,424,834
3.77
$ 7,412,473
3.81
$ 7,501,741
3.83

For the Six Months Ended
March 31, 2020 March 31, 2019
Amount Rate Amount Rate
(Dollars in thousands)
Beginning balance $ 7,412,473
3.81 % $ 7,507,645
3.74 %
Originated and refinanced:
Fixed 406,584
3.48
194,710
4.58
Adjustable 111,072
4.20
196,717
4.87
Purchased and participations:
Fixed 248,730
3.61
107,527
4.88
Adjustable 32,786
3.00
53,982
4.70
Change in undisbursed loan funds 14,306
5,185

Repayments (732,005 ) (501,094 )
Principal (charge-offs)/recoveries, net (330 ) 156

Other (336 ) (752 )
Ending balance $ 7,493,280
3.74
$ 7,564,076
3.82

The following ~~tables present~~table presents loan origination, refinance, and purchase activity for the periods indicated, excluding endorsement activity, along with associated weighted average rates and percent of total. Commercial loan renewals are not included in the activity in the following table except to the extent new funds are disbursed at the time of renewal. Loan originations, purchases, and refinances are reported together.


	For the Three Months Ended
	December 31, 2020						December 31, 2019
	Amount		Rate		% of Total		Amount		Rate		% of Total
	(Dollars in thousands)
Fixed-rate:
One- to four-family:(1)
<= 15 years	$	133,990	2.36	%	25.1	%	$	84,504	2.98	%	19.8	%
> 15 years	230,175		2.93		43.1		210,470		3.59		49.4
One- to four-family construction	34,021		2.76		6.4		11,131		3.40		2.6
Commercial:
Commercial real estate	10,127		3.60		1.9		9,400		5.12		2.2
Commercial and industrial	5,444		3.57		1.0		4,047		4.09		1.0
Commercial construction	4,043		3.89		0.8		34,731		4.69		8.2
Home equity	473		5.44		0.1		1,363		5.91		0.3
Other	935		5.27		0.2		1,165		5.58		0.3
Total fixed-rate	419,208		2.77		78.6		356,811		3.60		83.8

Adjustable-rate:
One- to four-family:(2)
<= 36 months	252		2.38		—		2,098		2.86		0.5
> 36 months	18,732		2.60		3.5		31,209		3.06		7.3
One- to four-family construction	2,709		2.70		0.5		5,990		3.04		1.4
Commercial:
Commercial real estate	16,978		3.88		3.2		9,175		4.89		2.2
Commercial and industrial	1,138		4.05		0.2		2,525		5.15		0.6
Commercial construction	60,337		4.00		11.3		979		5.54		0.2
Home equity	13,790		4.40		2.6		16,283		5.73		3.8
Other	325		2.70		0.1		668		4.14		0.2
Total adjustable-rate	114,261		3.76		21.4		68,927		4.05		16.2

Total originated, refinanced and purchased	$	533,469	2.99		100.0	%	$	425,738	3.68		100.0	%

Purchased and participation loans included above:
Fixed-rate:
Correspondent - one- to four-family	$	100,518	2.86				$	94,692	3.50

Participations - commercial	—		—				28,426		4.65

Total fixed-rate purchased/participations	100,518		2.86				123,118		3.77

Adjustable-rate:
Correspondent - one- to four-family	5,315		2.66				13,801		3.06

Participations - commercial	60,000		4.00				—		—

Total adjustable-rate purchased/participations	65,315		3.89				13,801		3.06
Total purchased/participation loans	$	165,833	3.26				$	136,919	3.70

For the Three Months Ended
March 31, 2020 March 31, 2019
Amount Rate % of Total Amount Rate % of Total
(Dollars in thousands)
Fixed-rate:
One- to four-family:⁽¹⁾

<= 15 years $ 68,559
2.95 % 18.4 % $ 13,873
4.25 % 5.5 %
> 15 years 198,373
3.54
53.1
66,993
4.45
27.0
One- to four-family construction 13,971
3.44
3.7
11,801
4.56
4.8
Commercial:
Commercial real estate 3,872
4.71
1.0
15,027
7.23
6.0
Commercial and industrial 9,992
3.82
2.7
3,956
5.29
1.6
Commercial construction 1,522
5.40
0.4
—
—
—
Home equity 1,124
5.85
0.3
1,189
5.83
0.5
Other 1,090
5.51
0.3
1,226
4.67
0.5
Total fixed-rate 298,503
3.45
79.9
114,065
4.85
45.9

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

<= 36 months 1,571
2.86
0.4
2,459
3.83
1.0
> 36 months 35,099
2.98
9.4
30,068
4.03
12.1
One- to four-family construction 4,007
3.00
1.1
3,467
3.87
1.4
Commercial:
Commercial real estate 17,347
4.53
4.7
72,879
4.69
29.3
Commercial and industrial 1,950
5.00
0.5
11,615
5.35
4.7
Commercial construction 508
5.50
0.1
—
—
—
Home equity 13,686
5.16
3.7
13,450
6.42
5.4
Other 763
3.96
0.2
399
3.50
0.2
Total adjustable-rate 74,931
3.82
20.1
134,337
4.73
54.1

Total originated, refinanced and purchased $ 373,434
3.52
100.0 % $ 248,402
4.79
100.0 %

Purchased and participation loans included above:
Fixed-rate:
Correspondent - one- to four-family $ 125,612
3.46
$ 24,611
4.35

Participations - commercial —
—
10,776
8.00

Total fixed-rate purchased/participations 125,612
3.46
35,387
5.46

Adjustable-rate:
Correspondent - one- to four-family 18,985
2.96
11,331
4.01

Participations - commercial —
—
—
—

Total adjustable-rate purchased/participations 18,985
2.96
11,331
4.01

Total purchased/participation loans $ 144,597
3.40
$ 46,718
5.11

For the Six Months Ended
March 31, 2020 March 31, 2019
Amount Rate % of Total Amount Rate % of Total
(Dollars in thousands)
Fixed-rate:
One- to four-family:⁽¹⁾

<= 15 years $ 153,063
2.96 % 19.1 % $ 36,928
4.21 % 6.7 %
> 15 years 408,843
3.56
51.2
173,127
4.53
31.3
One- to four-family construction 25,102
3.42
3.1
28,279
4.53
5.1
Commercial:
Commercial real estate 13,272
5.00
1.7
22,829
6.40
4.1
Commercial and industrial 14,039
3.90
1.8
6,358
5.31
1.2
Commercial construction 36,253
4.72
4.5
29,919
4.78
5.4
Home equity 2,487
5.88
0.3
2,383
6.16
0.4
Other 2,255
5.55
0.3
2,414
4.68
0.5
Total fixed-rate 655,314
3.53
82.0
302,237
4.69
54.7

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

<= 36 months 3,669
2.86
0.5
7,687
3.76
1.4
> 36 months 66,308
3.02
8.3
63,147
4.03
11.4
One- to four-family construction 9,997
3.03
1.2
11,712
4.23
2.1
Commercial:
Commercial real estate 26,522
4.65
3.3
93,583
4.79
16.9
Commercial and industrial 4,475
5.08
0.6
13,950
5.46
2.5
Commercial construction 1,487
5.53
0.2
28,650
5.35
5.2
Home equity 29,969
5.47
3.7
30,876
6.36
5.6
Other 1,431
4.04
0.2
1,094
3.15
0.2
Total adjustable-rate 143,858
3.93
18.0
250,699
4.83
45.3

Total originated, refinanced and purchased $ 799,172
3.60
100.0 % $ 552,936
4.75
100.0 %

Purchased and participation loans included above:
Fixed-rate:
Correspondent - one- to four-family $ 220,304
3.48
$ 63,550
4.46

Participations - commercial 28,426
4.65
43,977
5.49

Total fixed-rate purchased/participations 248,730
3.61
107,527
4.88

Adjustable-rate:
Correspondent - one- to four-family 32,786
3.00
25,332
3.97

Participations - commercial —
—
28,650
5.35

Total adjustable-rate purchased/participations 32,786
3.00
53,982
4.70

Total purchased/participation loans $ 281,516
3.54
$ 161,509
4.82

~~(1)~~

The fixed-rate one- to four-family loans less than or equal to 15 years have an original maturity at origination of less than or equal to 15 years, while fixed-rate one- to four-family loans greater than 15 years have an original maturity at origination of greater than 15 years.

~~(2)~~

The adjustable-rate one- to four-family loans less than or equal to 36 months have a term to first reset of less than or equal to 36 months at origination and adjustable-rate one- to four-family loans greater than 36 months have a term to first reset of greater than 36 months at origination.

(1)The fixed-rate one- to four-family loans less than or equal to 15 years have an original maturity at origination of less than or equal to 15 years, while fixed-rate one- to four-family loans greater than 15 years have an original maturity at origination of greater than 15 years.

(2)The adjustable-rate one- to four-family loans less than or equal to 36 months have a term to first reset of less than or equal to 36 months at origination and adjustable-rate one- to four-family loans greater than 36 months have a term to first reset of greater than 36 months at origination.

One- to Four-Family Loans - The following table presents, for our portfolio of one- to four-family loans, the amount, percent of total, weighted average credit score, weighted average LTV ratio, and average balance per loan as of the dates presented. Credit scores are updated at least annually, with the latest update in ~~September 2019,~~December 2020, from a nationally recognized consumer rating agency. The LTV ratios were based on the current loan balance and either the lesser of the purchase price or original appraisal, or the most recent Bank appraisal, if available. In most cases, the most recent appraisal was obtained at the time of origination.


	December 31, 2020									September 30, 2020
			% of		Credit			Average				% of		Credit			Average
	Amount		Total		Score	LTV		Balance		Amount		Total		Score	LTV		Balance
	(Dollars in thousands)
Originated	$	3,946,073	64.5	%	770	62	%	$	147	$	3,937,310	63.0	%	771	62	%	$	145
Correspondent purchased	1,974,086		32.2		764	64		380		2,101,082		33.6		765	64		379
Bulk purchased	199,673		3.3		770	59		301		208,427		3.4		767	60		300
	$	6,119,832	100.0	%	768	62		187		$	6,246,819	100.0	%	768	63		187

March 31, 2020 September 30, 2019
% of Credit Average % of Credit Average
Amount Total Score LTV Balance Amount Total Score LTV Balance
(Dollars in thousands)
Originated $ 3,944,782
60.1 % 767
62 % $ 143
$ 3,873,851
59.8 % 768
62 % $ 140
Correspondent purchased 2,385,907
36.4
764
65
375
2,349,877
36.3
765
65
371
Bulk purchased 228,730
3.5
763
61
302
252,347
3.9
762
61
304
$ 6,559,419
100.0 % 766
63
189
$ 6,476,075
100.0 % 767
63
186

The following tables present originated, refinanced, and correspondent purchased activity in our one- to four-family loan portfolio, excluding endorsement activity, along with associated weighted average LTVs and weighted average credit scores for the periods indicated. Included in the "Refinanced by Bank customers" line item are correspondent loans that were refinanced with the Bank. Of the loans originated during the current ~~year period, $127.4~~quarter, $101.5 million were refinanced from other lenders. Of the loans originated and refinanced during the current year period, 78% had loan values of $510 thousand or less. Of the correspondent loans purchased during the current year period, 23% had loan values of $510 thousand or less.



	For the Three Months Ended
	December 31, 2020					December 31, 2019
					Credit					Credit
	Amount		LTV		Score	Amount		LTV		Score
	(Dollars in thousands)
Originated	$	221,196	71	%	768	$	172,386	74	%	768
Refinanced by Bank customers	92,850		64		769	64,523		68		761
Correspondent purchased	105,833		69		776	108,493		72		767

	$	419,879	69		770	$	345,402	72		766

For the Three Months Ended
March 31, 2020 March 31, 2019
Credit Credit
Amount LTV Score Amount LTV Score
(Dollars in thousands)
Originated $ 133,513
75 % 764
$ 83,101
77 % 755
Refinanced by Bank customers 43,470
68
758
9,618
67
749
Correspondent purchased 144,597
71
766
35,942
74
761
$ 321,580
73
764
$ 128,661
76
756

For the Six Months Ended
March 31, 2020 March 31, 2019
Credit Credit
Amount LTV Score Amount LTV Score
(Dollars in thousands)
Originated $ 305,900
75 % 766
$ 209,426
77 % 755
Refinanced by Bank customers 107,992
68
760
22,572
67
746
Correspondent purchased 253,090
71
767
88,882
74
762
$ 666,982
72
765
$ 320,880
75
756

The following table presents the amount, percent of total, and weighted average rate, by state, of one- to four-family loan originations and correspondent purchases where originations and purchases in the state exceeded five percent of the total amount originated and purchased during the current quarter.


	For the Three Months Ended
	December 31, 2020
State	Amount		% of Total		Rate
	(Dollars in thousands)
Kansas	$	264,680	63.0	%	2.69	%
Missouri	78,150		18.6		2.69
Texas	24,302		5.8		2.87
Other states	52,747		12.6		2.84


	$	419,879	100.0	%	2.72

As of December 31, 2020, there were $14.2 million of one- to-four family loans with COVID-19 loan modifications that were still in their deferral period. There was $218.3 million of one- to four-family loans with COVID-19 loan modifications that were out of their deferral period ~~ended March~~by December 31, 2020. Of the COVID-19 loan modifications that had completed the deferral period by December 31, 2020, $4.3 million were 30 to 89 days delinquent and $1.5 million were 90 or more days delinquent as of December 31, 2020.

For the Three Months Ended For the Six Months Ended
March 31, 2020 March 31, 2020
State Amount % of Total Rate Amount % of Total Rate
(Dollars in thousands)
Kansas $ 153,911
47.8 % 3.30 % $ 361,548
54.2 % 3.33 %
Missouri 59,433
18.5
3.37
119,514
17.9
3.38
Texas 59,371
18.5
3.29
103,439
15.5
3.32
Other states 48,865
15.2
3.47
82,481
12.4
3.48
$ 321,580
100.0 % 3.34
$ 666,982
100.0 % 3.35

One- to Four-Family Loan Commitments - The following table summarizes our one- to four-family loan origination and refinance commitments and one- to four-family correspondent loan purchase commitments as of ~~March~~December 31, 2020, along with associated weighted average rates. Loan commitments generally have fixed expiration dates or other termination clauses and may require the

payment of a rate lock fee. It is expected that some of the loan commitments will expire unfunded, so the amounts reflected in the table below are not necessarily indicative of our future cash needs. As discussed above, the Bank suspended its purchase of correspondent one- to four-family loans during the initial days of the COVID-19 pandemic, but the Bank continues to progress through the approval and funding of the commitments in the pipeline at the time of the suspension.


	Fixed-Rate
	15 years			More than			Adjustable-			Total
	or less			15 years			Rate			Amount		Rate
	(Dollars in thousands)



Originate/refinance	$	40,270		$	58,716		$	8,301		$	107,287	2.74	%




Correspondent	27,737			84,768			9,236			121,741		2.69




	$	68,007		$	143,484		$	17,537		$	229,028	2.72

Rate	2.35		%	2.91		%	2.56		%

Fixed-Rate
15 years More than Adjustable- Total
or less 15 years Rate Amount Rate
(Dollars in thousands)
Originate/refinance $ 27,472
$ 49,544
$ 12,376
$ 89,392
3.27 %
Correspondent 28,065
68,986
15,668
112,719
3.25
$ 55,537
$ 118,530
$ 28,044
$ 202,111
3.26

Rate 2.90 % 3.50 % 2.96 %

Commercial Loans - During the current ~~year period,~~quarter, the Bank originated ~~$67.6~~$38.1 million of commercial loans and entered into commercial real estate loan participations totaling ~~$28.4 million, and~~$60.0 million. The Bank also processed commercial loan disbursements, excluding lines of credit, of approximately ~~$89~~$45.4 million at a weighted average rate of ~~4.72%~~3.99%. Early during the current quarter, two large participation loans totaling $57.3 million, with a weighted average rate of 3.93%, were paid off. Additionally, during the current quarter $25.5 million of PPP loans were paid off, primarily by the U.S. Small Business Administration ("SBA") following completion of the loan forgiveness process.

The following table presents the Bank's commercial real estate and commercial construction loans and loan commitments by type of primary collateral, as of ~~March~~December 31, 2020. Included in the gross loan amounts in the table, which does not include outstanding commitments, are fixed-rate loans totaling $482.7 million at a weighted average rate of 4.34% and adjustable-rate loans totaling $340.8 million at a weighted average rate of 4.65%. The weighted average rate of fixed-rate loans is lower than that of adjustable-rate loans due primarily to the majority of the fixed-rate loans in the portfolio at March 31, 2020 having shorter terms to maturity. Because the commitments to pay out undisbursed funds are not cancellable by the Bank, unless the loan is in default, we anticipate fully funding the related ~~projects.~~project.


		Unpaid			Undisbursed			Gross Loan			Outstanding						% of
	Count	Principal			Amount			Amount			Commitments			Total			Total
		(Dollars in thousands)
Senior housing	25	$	175,348		$	29,801		$	205,149		$	35,500		$	240,649		24.8	%
Hotel	9	132,194			46,717			178,911			—			178,911			18.4
Retail building	131	126,963			12,023			138,986			15,113			154,099			15.9
Office building	101	59,008			63,566			122,574			556			123,130			12.7
Multi-family	42	67,792			17,418			85,210			25,052			110,262			11.4
One- to four-family property	380	60,037			4,749			64,786			944			65,730			6.8
Single use building	22	43,069			5,095			48,164			14,155			62,319			6.4
Other	95	30,089			3,469			33,558			1,709			35,267			3.6
	805	$	694,500		$	182,838		$	877,338		$	93,029		$	970,367		100.0	%

Weighted average rate		4.19		%	4.06		%	4.16		%	3.81		%	4.13		%

Unpaid Undisbursed Gross Loan Outstanding % of
Principal Amount Amount Commitments Total Total
(Dollars in thousands)
Senior housing $ 227,102
$ 45,545
$ 272,647
$ —
$ 272,647
31.1 %
Hotel 117,462
19,137
136,599
43,757
180,356
20.5
Retail building 120,333
21,609
141,942
4,999
146,941
16.7
Multi-family 59,294
15,452
74,746
1,720
76,466
8.7
One- to four-family property 57,434
4,882
62,316
1,652
63,968
7.3
Office building 53,469
1,039
54,508
590
55,098
6.3
Single use building 44,539
4,556
49,095
807
49,902
5.7
Other 30,869
787
31,656
675
32,331
3.7
$ 710,502
$ 113,007
$ 823,509
$ 54,200
$ 877,709
100.0 %

Weighted average rate 4.44 % 4.65 % 4.47 % 5.35 % 4.52 %

The following table summarizes the Bank's commercial real estate and commercial construction loans and loan commitments by state as of ~~March~~December 31, 2020.


		Unpaid		Undisbursed		Gross Loan		Outstanding				% of
	Count	Principal		Amount		Amount		Commitments		Total		Total
		(Dollars in thousands)
Kansas	624	$	287,371	$	21,118	$	308,489	$	52,120	$	360,609	37.2	%
Texas	11	121,514		108,930		230,444		31,777		262,221		27.0
Missouri	146	181,235		45,025		226,260		7,632		233,892		24.1
Nebraska	6	33,745		16		33,761		—		33,761		3.5
Kentucky	1	25,559		—		25,559		—		25,559		2.6
California	3	5,810		4,300		10,110		1,500		11,610		1.2
Other	14	39,266		3,449		42,715		—		42,715		4.4
	805	$	694,500	$	182,838	$	877,338	$	93,029	$	970,367	100.0	%

Unpaid Undisbursed Gross Loan Outstanding % of
Principal Amount Amount Commitments Total Total
(Dollars in thousands)
Kansas $ 285,283
$ 10,817
$ 296,100
$ 2,919
$ 299,019
34.1 %
Missouri 227,267
66,363
293,630
3,401
297,031
33.8
Texas 99,316
27,934
127,250
43,697
170,947
19.5
Nebraska 31,919
1,690
33,609
—
33,609
3.8
Kentucky 25,230
330
25,560
—
25,560
2.9
California 5,941
4,300
10,241
—
10,241
1.2
Other 35,546
1,573
37,119
4,183
41,302
4.7
$ 710,502
$ 113,007
$ 823,509
$ 54,200
$ 877,709
100.0 %

The following table presents the Bank's commercial and industrial loans and loan commitments by business purpose, as of ~~March~~December 31, 2020. Included in the working capital loan category are $17.3 million of PPP loans.


		Unpaid		Undisbursed		Gross Loan		Outstanding				% of
	Count	Principal		Amount		Amount		Commitments		Total		Total
		(Dollars in thousands)
Working capital	569	$	28,694	$	15,474	$	44,168	$	200	$	44,368	48.4	%
Equipment	124	13,737		302		14,039		2,715		16,754		18.3
Purchase/lease autos	201	11,962		19		11,981		669		12,650		13.8
Business investment	67	10,232		50		10,282		245		10,527		11.5
Other	22	4,753		2,538		7,291		—		7,291		8.0

	983	$	69,378	$	18,383	$	87,761	$	3,829	$	91,590	100.0	%

Unpaid Undisbursed Gross Loan Outstanding % of
Principal Amount Amount Commitments Total Total
(Dollars in thousands)
Working capital $ 17,789
$ 13,116
$ 30,905
$ 2,910
$ 33,815
41.8 %
Equipment 16,943
536
17,479
70
17,549
21.7
Business investment 11,993
80
12,073
125
12,198
15.1
Purchase/lease autos 8,954
95
9,049
—
9,049
11.2
Other 6,474
1,825
8,299
—
8,299
10.2
$ 62,153
$ 15,652
$ 77,805
$ 3,105
$ 80,910
100.0 %

The following table presents the Bank's commercial loan portfolio and outstanding loan commitments, categorized by gross loan amount (unpaid principal plus undisbursed amounts) or outstanding loan commitment amount, as of ~~March~~December 31, 2020.


	Count	Amount
	(Dollars in thousands)
Greater than $30 million	4	$	185,500
>$15 to $30 million	13	308,014
>$10 to $15 million	4	45,795
>$5 to $10 million	15	94,788
$1 to $5 million	104	225,597
Less than $1 million	1,648	202,263
	1,788	$	1,061,957

Count Amount
(Dollars in thousands)
Greater than $30 million 3
$ 121,748
>$15 to $30 million 12
296,150
>$10 to $15 million 4
50,192
>$5 to $10 million 13
83,795
$1 to $5 million 95
214,002
Less than $1 million 1,223
192,732
1,350
$ 958,619

The Bank's commercial lending team ~~is working~~continues to proactively work with our commercial customers as the COVID-19 pandemic continues to present challenging operating conditions. As ~~discussed above, through April 30,~~of December 31, 2020, ~~we have modified or are in the process of modifying $365.8 million of~~there were commercial loans ~~under our~~with a gross balance, including undisbursed amounts, totaling $75.1 million with COVID-19 loan ~~modification program. We have also processed 575 PPP loans for $40.7~~modifications that were still in their deferral period, which includes one loan with a $50.0 million ~~for which we expect to receive approximately $1.7 million in fees under~~balance. Approximately 88% of the ~~first PPP. Approximately 60%~~commercial loan balance with COVID-19 loan modifications during fiscal year 2020 was either out of ~~PPP loans processed are in~~ the ~~following industries: construction, professional/scientific/technical, health care/social assistance, and retail trade.~~

The following table presents the unpaid principal balance of Bank's commercial real estate loans, by type of primary collateral, and commercial and industrial loans, by business purpose, that either have been modifieddeferral period or ~~are in the process of being modified~~paid off as of ~~April~~December 31, 2020. Of the loans that had completed the deferral period by December 31, 2020, one loan for $340 thousand was 30 ~~2020. The information is split by type~~to 89 days delinquent and none were 90 or more days delinquent as of ~~modification and presented as a percentage of total modifications, as well as by a percentage of the related unpaid principal balance of the related property type or business purpose category.~~December 31, 2020.

Modification Type % of
Interest Payment % of Property Type/
Only Deferral Total Total Business Purpose
(Dollars in thousands)
Commercial real estate
Senior housing $ 101,904
$ 46,220
$ 148,124
40.5 % 65.2 %
Hotel 76,249
19,266
95,515
26.1
81.3
Single use building 30,450
5,331
35,781
9.8
80.3
Retail building 31,814
3,119
34,933
9.6
29.0
Office building 16,415
7,012
23,427
6.4
43.8
Multi-family 8,233
—
8,233
2.3
13.9
One- to four-family property 7,680
—
7,680
2.1
13.4
Other 3,297
—
3,297
0.9
10.7
276,042
80,948
356,990
97.7
50.2
Commercial and industrial
Equipment 4,141
—
4,141
1.1
24.4
Business investment 2,372
—
2,372
0.6
19.8
Working capital 869
—
869
0.2
4.9
Purchase/lease autos 587
—
587
0.2
6.6
Other 807
—
807
0.2
12.5
8,776
—
8,776
2.3
14.1
Total $ 284,818
$ 80,948
$ 365,766
100.0 % 47.3 %

Asset Quality. The Bank's traditional one- to four-family underwriting guidelines have provided the Bank with generally low delinquencies and low levels of non-performing assets within this loan category compared to national levels. Of particular importance is the complete and full documentation required for each loan the Bank originates, participates in or purchases. This allows the Bank to make an informed credit decision based upon a thorough assessment of the borrower's ability to repay the loan. The Bank performs more extensive due diligence when underwriting commercial loans than loans secured by one- to four-family residential properties due to the larger loan amounts, the more complex sources of repayment and the riskier nature of such loans. When participating in a commercial loan, the Bank performs the same underwriting procedures as if the loan was being originated by the Bank. See additional discussion regarding underwriting standards in "Part I, Item 1. Business - Lending Practices and Underwriting Standards" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019.~~2020.

Delinquent and non-performing loans and OREO - The following table presents the Company's 30 to 89 day delinquent loans at the dates indicated. Loans subject to payment forbearance under the Bank's COVID-19 loan modification program are not reported as delinquent during the forbearance time period. The amounts in the table represent the unpaid principal balance of the loans less related charge-offs. Of the loans 30 to 89 days delinquent at ~~March~~December 31, 2020, approximately ~~78%~~76% were 59 days or less delinquent.


	Loans Delinquent for 30 to 89 Days at:
	December 31,				September 30,				June 30,				March 31,				December 31,
	2020				2020				2020				2020				2019
	Number	Amount			Number	Amount			Number	Amount			Number	Amount			Number	Amount
	(Dollars in thousands)
One- to four-family:
Originated	62	$	5,844		42	$	3,012		57	$	5,085		92	$	8,360		96	$	9,004
Correspondent purchased	13	4,694			8	3,123			10	2,919			13	4,531			13	4,117
Bulk purchased	9	1,750			12	2,532			19	4,536			12	2,914			14	3,307
Commercial	8	1,047			2	45			9	1,543			7	1,555			7	1,192

Consumer	30	515			26	398			21	431			43	628			40	488
	122	$	13,850		90	$	9,110		116	$	14,514		167	$	17,988		170	$	18,108

Loans 30 to 89 days delinquent
to total loans receivable, net		0.20		%		0.13		%		0.20		%		0.24		%		0.24		%

Loans Delinquent for 30 to 89 Days at:
March 31, December 31, September 30, June 30, March 31,
2020 2019 2019 2019 2019
Number Amount Number Amount Number Amount Number Amount Number Amount
(Dollars in thousands)
One- to four-family:
Originated 92 $ 8,360
96 $ 9,004
90 $ 7,223
94
$ 7,749
79
$ 8,694
Correspondent purchased 13 4,531
13 4,117
9 2,721
14
3,727
13
4,133
Bulk purchased 12 2,914
14 3,307
16 3,581
13
2,249
13
2,722
Commercial 7 1,555
7 1,192
8 826
12
1,699
13
1,361
Consumer 43 628
40 488
42 525
43
630
37
481
167 $ 17,988
170 $ 18,108
165 $ 14,876
176
$ 16,054
155
$ 17,391

Loans 30 to 89 days delinquent
to total loans receivable, net 0.24 % 0.24 % 0.20 % 0.21 % 0.23 %

The table below presents the Company's non-performing loans and OREO at the dates indicated. The amounts in the table represent the unpaid principal balance of the loans less related charge-offs. Non-performing loans are loans that are 90 or more days delinquent or in foreclosure and other loans required to be reported as nonaccrual pursuant to accounting and/or regulatory reporting requirements and/or internal policies, even if the loans are current. At all dates presented, there were no loans 90 or more days delinquent that were still accruing interest. Non-performing assets include non-performing loans and OREO. OREO primarily includes assets acquired in settlement of loans. Over the past 12 months, one- to four-family OREO properties acquired in settlement of one- to four-family loans were owned by the Bank, on average, for approximately ~~three~~four months before the properties were sold.

In late March 2020, the Bank suspended the initiation of foreclosure proceedings for owner-occupied one- to four-family loans.


	Non-Performing Loans and OREO at:																					Non-Performing Loans and OREO at:
	March 31,				December 31,				September 30,				June 30,				March 31,					December 31,				September 30,				June 30,				March 31,				December 31,
	2020				2019				2019				2019				2019					2020				2020				2020				2020				2019
	Number	Amount			Number	Amount			Number	Amount			Number	Amount			Number	Amount				Number	Amount			Number	Amount			Number	Amount			Number	Amount			Number	Amount
	(Dollars in thousands)																					(Dollars in thousands)
Loans 90 or More Days Delinquent or in Foreclosure:	Loans 90 or More Days Delinquent or in Foreclosure:																				Loans 90 or More Days Delinquent or in Foreclosure:
One- to four-family:																					One- to four-family:
Originated	53	$	4,517		44	$	3,552		44	$	3,268		58	$	5,069		67	$	5,172		Originated	51	$	4,370		51	$	4,362		47	$	4,026		53	$	4,517		44	$	3,552
Correspondent purchased	4	1,342			4	1,376			4	1,008			2	871			3	918			Correspondent purchased	9	3,371			6	2,397			7	2,740			4	1,342			4	1,376
Bulk purchased	1	630			2	689			6	1,465			7	2,194			10	2,782			Bulk purchased	13	3,724			12	2,903			3	1,291			1	630			2	689
Commercial	4	716			—	—			4	170			—	—			—	—			Commercial	5	820			5	1,360			4	709			4	716			—	—
Consumer	17	326			20	340			25	362			25	437			27	567			Consumer	26	473			14	304			23	278			17	326			20	340
	79	7,531			70	5,957			83	6,273			92	8,571			107	9,439				104	12,758			88	11,326			84	9,044			79	7,531			70	5,957

Loans 90 or more days delinquent or in foreclosure	Loans 90 or more days delinquent or in foreclosure																				Loans 90 or more days delinquent or in foreclosure
as a percentage of total loans		0.10		%		0.08		%		0.08		%		0.11		%		0.12		%	as a percentage of total loans		0.18		%		0.16		%		0.12		%		0.10		%		0.08		%

Nonaccrual loans less than 90 Days Delinquent:⁽¹⁾	Nonaccrual loans less than 90 Days Delinquent:⁽¹⁾																				Nonaccrual loans less than 90 Days Delinquent:(1)
One- to four-family:																					One- to four-family:
Originated	13	$	811		11	$	634		16	$	1,183		15	$	1,057		18	$	1,761		Originated	9	$	968		9	$	691		14	$	1,132		13	$	811		11	$	634
Correspondent purchased	1	189			—	—			—	—			—	—			—	—			Correspondent purchased	—	—			—	—			—	—			1	189			—	—
Bulk purchased	1	134			1	134			1	65			2	374			—	—			Bulk purchased	—	—			—	—			—	—			1	134			1	134
Commercial	2	129			6	363			1	7			1	7			2	1,712			Commercial	3	411			3	464			1	6			2	129			6	363
Consumer	2	43			—	—			2	35			2	4			3	14			Consumer	1	9			1	9			1	33			2	43			—	—
	19	1,306			18	1,131			20	1,290			20	1,442			23	3,487				13	1,388			13	1,164			16	1,171			19	1,306			18	1,131
Total non-performing loans	98	8,837			88	7,088			103	7,563			112	10,013			130	12,926			Total non-performing loans	117	14,146			101	12,490			100	10,215			98	8,837			88	7,088

Non-performing loans as a percentage of total loans	Non-performing loans as a percentage of total loans	0.12		%		0.10		%		0.10		%		0.13		%		0.17		%	Non-performing loans as a percentage of total loans		0.20		%		0.17		%		0.14		%		0.12		%		0.10		%

OREO:																					OREO:
One- to four-family:																					One- to four-family:
Originated⁽²⁾	5	$	187		8	$	414		8	$	745		8	$	546		5	$	549		Originated(2)	3	$	129		4	$	183		4	$	183		5	$	187		8	$	414
Bulk purchased	—	—			—	—			—	—			—	—			1	322
Commercial	—	—			—	—			1	600			1	600			1	600

Consumer	—	—			1	98			—	—			—	—			—	—			Consumer	—	—			—	—			—	—			—	—			1	98

	5	187			9	512			9	1,345			9	1,146			7	1,471				3	129			4	183			4	183			5	187			9	512
Total non-performing assets	103	$	9,024		97	$	7,600		112	$	8,908		121	$	11,159		137	$	14,397		Total non-performing assets	120	$	14,275		105	$	12,673		104	$	10,398		103	$	9,024		97	$	7,600

Non-performing assets as a percentage of total assets	Non-performing assets as a percentage of total assets	0.10		%		0.08		%		0.10		%		0.12		%		0.15		%	Non-performing assets as a percentage of total assets		0.15		%		0.13		%		0.11		%		0.10		%		0.08		%


~~(1)~~	~~Includes loans required to be reported as nonaccrual pursuant to accounting and/or regulatory reporting requirements and/or internal policies, even if the loans are current.~~


~~(2)~~	~~Real estate-related consumer loans where we also hold the first mortgage are included in the one- to four-family category as the underlying collateral is one- to four-family property.~~

(1)Includes loans required to be reported as nonaccrual pursuant to accounting and/or regulatory reporting requirements and/or internal policies, even if the loans are current.

(2)Real estate-related consumer loans where we also hold the first mortgage are included in the one- to four-family category as the underlying collateral is one- to four-family property.

The following table presents the states where the properties securing five percent or more of the total amount of our one- to four-family loans are located and the corresponding balance of loans 30 to 89 days delinquent, 90 or more days delinquent or in foreclosure, and weighted average LTV ratios for loans 90 or more days delinquent or in foreclosure at ~~March~~December 31, 2020. The LTV ratios were based on the current loan balance and either the lesser of the purchase price or original appraisal, or the most recent Bank appraisal, if available. At ~~March~~December 31, 2020, potential losses, after taking into consideration anticipated private mortgage insurance proceeds and estimated selling costs, have been charged-off.


					Loans 30 to 89				Loans 90 or More Days Delinquent
	One- to Four-Family				Days Delinquent				or in Foreclosure
State	Amount		% of Total		Amount		% of Total		Amount		% of Total		LTV
	(Dollars in thousands)
Kansas	$	3,529,714	57.7	%	$	6,163	50.2	%	$	4,360	38.0	%	66	%
Missouri	1,057,808		17.3		1,075		8.7		1,318		11.5		55
Texas	651,048		10.6		2,389		19.4		1,440		12.6		55
Other states	881,262		14.4		2,661		21.7		4,347		37.9		56



	$	6,119,832	100.0	%	$	12,288	100.0	%	$	11,465	100.0	%	59

Loans 30 to 89 Loans 90 or More Days Delinquent
One- to Four-Family Days Delinquent or in Foreclosure
State Amount % of Total Amount % of Total Amount % of Total LTV
(Dollars in thousands)
Kansas $ 3,592,113
54.7 % $ 6,655
42.1 % $ 4,229
65.2 % 63 %
Missouri 1,179,941
18.0
2,300
14.5
804
12.4
64
Texas 759,064
11.6
1,591
10.1
441
6.8
44
Other states 1,028,301
15.7
5,259
33.3
1,015
15.6
71
$ 6,559,419
100.0 % $ 15,805
100.0 % $ 6,489
100.0 % 63

Classified loans - The following table presents loans classified as special mention or substandard at the dates presented. The ~~amounts~~increase in ~~the table represent the unpaid principal balance of the loans less related charge-offs. The increase in~~commercial special mention loans at ~~March~~December 31, 2020 compared to ~~March 31, 2019~~September 30, 2020 was due ~~primarily~~mainly to ~~one $50.0~~the addition of two commercial loans totaling $51.3 million for which the borrowers have been impacted by the COVID-19 pandemic. Both of these loans were subject to COVID-19 loan modifications during fiscal year 2020 and have since resumed full payments. There are underlying economic conditions that management is monitoring in association with these loans resulting in the special mention classification during the current quarter.


	December 31, 2020				September 30, 2020				December 31, 2019
	Special Mention		Substandard		Special Mention		Substandard		Special Mention		Substandard
	(Dollars in thousands)
One- to four-family	$	12,536	$	27,607	$	11,339	$	25,630	$	15,778	$	25,376
Commercial	101,921		4,772		52,006		4,914		52,809		5,356
Consumer	257		726		332		589		375		683
	$	114,714	$	33,105	$	63,677	$	31,133	$	68,962	$	31,415

Allowance for Credit Losses and Reserve for Off-Balance Sheet Credit Exposures - As discussed previously, ASU 2016-13 became effective for the Company on October 1, 2020. This ASU replaced the incurred loss impairment methodology for calculating ACL under GAAP with a new impairment methodology, commonly known as the CECL methodology. The new methodology requires the Company to measure, at each reporting date, the expected credit losses for loans and loan commitments over their contractual lives based on historical experience, current conditions, and reasonable and supportable forecasts. Upon adoption of the ASU, the Company recorded a cumulative-effect adjustment to retained earnings of $2.3 million (net of tax of $739 thousand), which reduced the ACL by $4.8 million, to $26.8 million, and established a reserve for off-balance sheet credit exposures of $7.8 million, which is recorded in accounts payable and accrued expenses in the consolidated balance sheet. The Bank's off-balance sheet credit exposures are comprised of unfunded portions of existing loans and commitments to originate or purchase new loans that are not unconditionally cancellable by the Bank.

The Bank is utilizing a discounted cash flow approach for estimating expected credit losses for pooled loans and loan commitments. The credit loss estimate for off-balance sheet credit exposures also takes into consideration the likelihood that the commitment will fund. The economic indices used for the reasonable and supportable forecasted time period are the national unemployment rate, changes in commercial ~~participation~~ real estate ~~loan being classified~~price index, changes in home values, and changes in the United States gross domestic product. Management considers several economic forecast scenarios provided by a third party and selects the scenario believed to be the most appropriate considering the facts and circumstances at quarter end. Management also considers several qualitative factors. The qualitative factors account for items not included in historical loss rates, the macroeconomic forecast, and/or other model inputs/assumptions. Any changes to the ACL and reserves on off-balance sheet credit exposures are recorded through increases/decreases in the provision for credit losses on the consolidated statements of income.

The economic forecast scenario selected by management improved at December 31, 2020 compared to October 1, 2020 which resulted in a reduction in the ACL as ~~special mention during~~calculated by the ~~quarter ended June 30, 2019. Management continues~~model. Due to ~~closely monitor~~ the ~~project and surrounding activities. Included~~continued economic uncertainty regarding political party changes in ~~substandard commercial loans at March~~U.S. government offices, the effectiveness of the latest federal stimulus package, potential additional economic stimulus from the

federal government, increasing COVID-19 cases, limited vaccine distribution as of December 31, 2020, and ~~December 31, 2019 were $3.4 million and $3.8 million, respectively, of loans added~~an increase in the CCB acquisition which have since been renewed and on which the related purchase acquisition adjustments have been accreted; as such, these loans are now included in the Bank's ACL formula analysis model or are individually evaluated for impairment. There were no such loans at March 31, 2019.

March 31, 2020 December 31, 2019 March 31, 2019
Special Mention Substandard Special Mention Substandard Special Mention Substandard
(Dollars in thousands)
One- to four-family $ 13,678
$ 26,077
$ 15,778
$ 25,376
$ 11,943
$ 28,774
Commercial 52,515
4,538
52,809
5,356
5,330
1,712
Consumer 479
659
375
683
125
882
$ 66,672
$ 31,274
$ 68,962
$ 31,415
$ 17,398
$ 31,368

~~Allowance for credit losses and Provision for credit losses -~~ ~~Management maintains an ACL to absorb inherent losses in the~~commercial special mention loan portfolio based on quarterly assessments of the loan portfolio. The ACL is maintained through provisions for credit losses which are either charged to or credited to income. Each quarter a formula analysis model is prepared which segregates the loan portfolio into categories based on certain risk characteristics. Historical loss factors and qualitative factors arebalances, management applied to each loan category in the formula analysis model. The factors are reviewed by management quarterly to assess whether the factors adequately cover probable and estimable losses inherent in the loan portfolio. Due to the deterioration of economic conditions as a result of the COVID-19 pandemic, management increased some of the historical loss factors and qualitative factors to account for those uncertainties which mostly offset the ~~increase in the estimated inherent losses in the loan portfolio at March 31, 2020.~~

One- to Four- Family and Consumer Loans: Management took into consideration the unprecedented increase in layoffs/furloughs as a result of COVID-19 and the industries and employee groups impacted by the layoffs/furloughs, the Bank's historical ACL to loans receivable ratios compared to the historical unemployment and housing price index trending, and the Bank's historical charge-off percentages when evaluating the Bank's historical loss factors and qualitative loss factors at March 31, 2020. As a result of the analysis, management increased the historical loss factors and qualitative factors for one- to four-family and consumer loans at March 31, 2020. Management selected the worst historical time periods reviewed and used those factorsreduction in the ACL ~~formula analysis model at March 31, 2020. Management then evaluated the calculated ACL~~due to the ~~Bank's historical ACL to loan ratios to determine the appropriate amount of ACL at March 31, 2020.~~

Commercial Loans: As a result of the very limited historical loan loss experience for our commercial loan portfolio, management considered historical peer ACL to loans receivable percentages and peer charge-off percentages and the economic conditions during those time periods when evaluating the level of ACL at March 31, 2020 for commercial loans. Management also considered the layoffs/furloughs information noted above, along with impacts to certain categories of our commercial loan portfolio related to stay-at-home orders, mandatory closures, social distancing requirements, work-from-home requirements, and populations generally disproportionately

impacted by COVID-19 (e.g., senior housing), among others. Additionally, the commercial lending team closely analyzed the Bank's largest commercial relationships in late March 2020. Approximately 83% of all commercial loan balances outstanding at March 31, 2020 were analyzed. There were $162.5 million of commercial loans, or 21% of the unpaid commercial loan balance at March 31, 2020, considered most at risk of short-term operational cash flow issues and/or to have collateral concerns, primarily in the hotel and single use building categories, which were both among the categories with the highest usage of the Bank's COVID-19 loan modification program. The weighted average LTV ratios based on the unpaid principal balance of senior housing, retail building, hotel, office building, and single use building loans were 68%, 76%, 58%, 80%, and 68%, respectively, at March 31, 2020. We also considered the largest credits in these loan categories. The evaluation of most of our commercial and industrial loans concluded that many of these loans are to businesses that are deemed essential, which we believe reduces the risk of loss on these loans at this time. Management was not aware of any construction delays or other issues that would significantly delay or impact funding of the commercial construction loans at March 31, 2020. After reviewing the economic information noted above, management established a COVID-19 qualitative factor at March 31, 2020. The COVID-19 qualitative factor was developed by analyzing historical peer ACL to loans receivable percentages and peer charge-off percentages.

~~Overall:~~ Programs under the Coronavirus Aid, Relief, and Economic Security ("CARES") Act were not sufficiently in effect at March 31, 2020 to provide relief to borrowers and the extent of the relief to borrowers related to the CARES Act programs is not yet known. Management believes the ACL at March 31, 2020 was adequate to absorb inherent losses in the loan portfolio at that point in time based on the known facts and circumstancesimprovement of the economic ~~environment.~~forecasts. Management will continue to closely monitor economic conditions and will work with borrowers as necessary to assist them through this challenging economic climate. If economic conditions worsen or do not improve in the near term, if COVID-19 cases continue to ~~worsen and/~~increase and the vaccine distribution and adoption is more limited than anticipated, or ~~the CARES Act programs and~~if future government programs, if any, do not provide adequate relief to ~~borrowers,~~businesses and individuals, it is possible the Bank's ACL and reserve for off-balance sheet credit exposures will need to increase in future periods.

The following table presents a summary of changes in ACL and reserve for off-balance sheet credit exposures occurring during the quarter ended December 31, 2020.


	ACL		Reserve for off-balance sheet credit exposures		ACL and Reserve for off-balance sheet credit exposures
	(Dollars in thousands)
Balance at September 30, 2020	$	31,527	$	—	$	31,527
Adoption of CECL	(4,761)		7,788		3,027
Balance at October 1, 2020	26,766		7,788		34,554
For the quarter ended December 31, 2020:
Charge-offs	(532)		—		(532)
Recoveries	68		—		68
Net charge-offs	(464)		—		(464)
Provision for credit losses	(177)		(1,355)		(1,532)
Balance at December 31, 2020	$	26,125	$	6,433	$	32,558

~~See "Part II, Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies - Allowance~~

The negative provision for ~~Credit Losses" and "Part II, Item 8. Financial Statements and Supplementary Data – Notes~~credit losses related to ~~Consolidated Financial Statements – Note 1. Summary of Significant Accounting Policies"~~the ACL was primarily due to a reduction in the ~~Company's Annual Report on~~ ~~Form 10-K~~ ~~for~~correspondent one-to four-family loan portfolio during the ~~fiscal year ended September 30, 2019 for a full discussion~~current quarter. It was partially offset by an increase in the commercial loan ACL due to an increase in special mention loans during the current quarter. The commercial loan portfolio balance decreased during the current quarter, but due to the increase in commercial special mention loans, any reduction in ACL associated with the decrease in the commercial loan portfolio balance was offset by the ACL related to the higher balance of ~~our ACL methodology. See "Note 4. Loans Receivable and Allowance for Credit Losses" for additional information on the ACL.~~special mention loans at December 31, 2020.

The ~~distribution~~negative provision for credit losses related to the reserve for off-balance sheet credit exposures was a result of ~~our ACL at~~ the ~~dates indicated is summarized below.~~improvement in the economic forecast since October 1, 2020, after taking into consideration the fact these loans are being underwritten during a challenging economic environment and are still meeting/exceeding the Bank's conservative underwriting requirements. The balance of off-balance sheet credit exposures increased during the current quarter, but the improvement in the economic forecast as of December 31, 2020 more than offset the impact of the increase in the balance. The gross balance of off-balance sheet credit exposures was $838.0 million as of December 31, 2020 and $688.0 million as of October 1, 2020.

At
March 31, 2020 September 30, 2019
% of ACL % of % of ACL % of
Amount to Total Total Loans to Amount to Total Total Loans to
of ACL ACL Loans Total Loans of ACL ACL Loans Total Loans
(Dollars in thousands)
One- to four-family:
Originated $ 6,420
20.6 % $ 3,944,782
52.6 % $ 1,982
21.6 % $ 3,873,851
52.2 %
Correspondent purchased 3,355
10.7
2,385,907
31.8
1,203
13.0
2,349,877
31.7
Bulk purchased 557
1.8
228,730
3.1
687
7.4
252,347
3.4
Construction 47
0.2
35,798
0.5
18
0.2
36,758
0.5
Total 10,379
33.3
6,595,217
88.0
3,890
42.2
6,512,833
87.8
Commercial:
Commercial real estate 14,672
47.0
584,236
7.8
3,448
37.4
583,617
7.9
Commercial and industrial 1,489
4.8
62,153
0.8
472
5.1
61,094
0.8
Construction 4,167
13.4
126,266
1.7
1,251
13.5
123,159
1.7
Total 20,328
65.2
772,655
10.3
5,171
56.0
767,870
10.4
Consumer loans:
Home equity 397
1.3
114,571
1.5
97
1.1
120,587
1.6
Other consumer 92
0.2
10,837
0.2
68
0.7
11,183
0.2
Total consumer loans 489
1.5
125,408
1.7
165
1.8
131,770
1.8
$ 31,196
100.0 % $ 7,493,280
100.0 % $ 9,226
100.0 % $ 7,412,473
100.0 %

~~The ratio of ACL to loans receivable, by loan type, at the dates indicated is summarized below.~~

At
March 31, December 31, September 30, June 30, March 31,
2020 2019 2019 2019 2019
One- to four-family:
Originated 0.16 % 0.05 % 0.05 % 0.05 % 0.05 %
Correspondent purchased 0.14
0.05
0.05
0.05
0.06
Bulk purchased 0.24
0.26
0.27
0.28
0.29
Construction 0.13
0.05
0.05
0.05
0.05
Total 0.16
0.06
0.06
0.06
0.07
Commercial:
Commercial real estate 2.51
0.62
0.59
0.55
0.51
Commercial and industrial 2.40
1.25
0.77
0.38
0.30
Construction 3.30
1.02
1.02
1.00
0.99
Total 2.63
0.72
0.67
0.61
0.56
Consumer 0.39
0.12
0.13
0.11
0.12
Total 0.42
0.13
0.12
0.12
0.11

The following tables present ACL activity and related ratios at the dates and for the periods indicated. See "Note 4 - Loans Receivable and Allowance for Credit Losses" for additional information related to ACL activity by specific loan categories.


	For the Three Months Ended
	December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019
	(Dollars in thousands)
ACL beginning balance	$	31,527		$	31,215		$	31,196		$	9,435		$	9,226
Adoption of CECL	(4,761)			—			—			—			—
Charge-offs	(532)			(15)			(5)			(375)			(48)
Recoveries	68			327			24			61			32
Provision for credit losses	(177)			—			—			22,075			225
ACL ending balance	$	26,125		$	31,527		$	31,215		$	31,196		$	9,435

ACL to loans receivable at end of period	0.37		%	0.44		%	0.42		%	0.42		%	0.13		%
ACL to non-performing loans at end of period	184.68			252.42			305.58			353.02			133.11
Ratio of net charge-offs (recoveries) during the
period to average loans outstanding	0.01			—			—			—			—
Ratio of net charge-offs (recoveries) during the
period to average non-performing assets	3.44			(2.70)			(0.20)			3.78			0.19
ACL to net charge-offs (annualized)	14.1x			N/M(1)			N/M(1)			24.9x			144.5x

For the Three Months Ended
March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019
(Dollars in thousands)
ACL beginning balance $ 9,435
$ 9,226
$ 9,036
$ 8,619
$ 8,558
Charge-offs (375 ) (48 ) (133 ) (61 ) (12 )
Recoveries 61
32
23
28
73
Provision for credit losses 22,075
225
300
450
—
ACL ending balance $ 31,196
$ 9,435
$ 9,226
$ 9,036
$ 8,619

ACL to loans receivable at end of period 0.42 % 0.13 % 0.12 % 0.12 % 0.11 %
ACL to non-performing loans at end of period 353.02
133.11
121.99
90.24
66.68
Ratio of net charge-offs (recoveries) during the
period to average loans outstanding —
—
—
—
—
Ratio of net charge-offs (recoveries) during the
period to average non-performing assets 3.78
0.19
1.09
0.26
(0.41 )
ACL to net charge-offs (annualized) 24.9x
144.5x
21.1x
68.1x

N/M⁽¹⁾

For the Six Months Ended
March 31, 2020 March 31, 2019
(Dollars in thousands)
ACL beginning balance $ 9,226
$ 8,463
Charge-offs (423 ) (68 )
Recoveries 93
224
Provision for credit losses 22,300
—
ACL ending balance $ 31,196
$ 8,619

Ratio of net charge-offs during the period to
average loans outstanding during the period — % — %
Ratio of net charge-offs during the period to
average non-performing assets during the period 3.68
(1.14 )
ACL to net charge-offs (annualized) 47.3x

N/M⁽¹⁾




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

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

The distribution of our ACL at the dates indicated is summarized below. The October 1, 2020 column represents the ACL at the time the Company adopted ASU 2016-13. The decrease in the ACL on correspondent one- to four-family loans and commercial construction loans since October 1, 2020 was due primarily to a reduction in the loan balance during the current quarter. The increase in the ACL on commercial real estate loans since October 1, 2020 was due mainly to an increase in special mention loans during the current quarter.


	At
	December 31,		October 1,		September 30,		June 30,		March 31,		December 31,
	2020		2020		2020		2020		2020		2019
	(Dollars in thousands)
One- to four-family:
Originated	$	1,516	$	1,609	$	6,044	$	6,298	$	6,420	$	2,027
Correspondent purchased	1,758		2,324		2,691		3,189		3,355		1,200
Bulk purchased	852		903		467		506		557		612
Construction	22		25		41		48		47		20
Total	4,148		4,861		9,243		10,041		10,379		3,859
Commercial:
Commercial real estate	17,813		16,595		16,869		16,353		14,672		3,608
Commercial and industrial	553		559		1,451		1,465		1,489		710
Construction	3,341		4,452		3,480		2,886		4,167		1,100
Total	21,707		21,606		21,800		20,704		20,328		5,418
Consumer	270		299		484		470		489		158
Total	$	26,125	$	26,766	$	31,527	$	31,215	$	31,196	$	9,435

The ratio of ACL to loans receivable, by loan type, at the dates indicated is summarized below.


	At
	December 31,		October 1,		September 30,		June 30,		March 31,		December 31,
	2020		2020		2020		2020		2020		2019
One- to four-family:
Originated	0.04	%	0.04	%	0.15	%	0.16	%	0.16	%	0.05	%
Correspondent purchased	0.09		0.11		0.13		0.14		0.14		0.05
Bulk purchased	0.43		0.43		0.22		0.23		0.24		0.26
Construction	0.07		0.07		0.12		0.13		0.13		0.05
Total	0.07		0.08		0.15		0.16		0.16		0.06
Commercial:
Commercial real estate	2.92		2.65		2.69		2.62		2.51		0.62
Commercial and industrial	0.80		0.57		1.49		1.47		2.40		1.25
Construction	3.95		4.22		3.30		3.30		3.30		1.02
Total	2.84		2.60		2.63		2.55		2.63		0.72
Consumer	0.25		0.26		0.42		0.40		0.39		0.12
Total	0.37		0.37		0.44		0.42		0.42		0.13

The distribution of our reserve for off-balance sheet credit exposures at the dates indicated is summarized below. The October 1, 2020 column represents the reserve at the time the Company adopted ASU 2016-13. Prior to October 1, 2020, no such reserve had been recorded. The $1.4 million reduction in the reserve between October 1, 2020 and December 31, 2020 was recorded as a negative provision for credit losses during the current quarter.


	At
	December 31,		October 1,
	2020		2020
	(Dollars in thousands)
One- to four-family	$	131	$	144
Commercial	6,261		7,584
Consumer	41		60
	$	6,433	$	7,788

Securities. Securities increased $352.9 million, or 22.6%, from September 30, 2020 to December 31, 2020, including a $278.5 million increase in MBS and a $74.4 million increase in investment securities. The increase was due primarily to cash flows from the loan portfolio being reinvested into the securities portfolio. The weighted average yield on the securities portfolio decreased 22 basis points, from 1.62% at September 30, 2020 to 1.40% at December 31, 2020, due primarily to purchases at lower market yields. The following table presents the distribution of our securities portfolio, at amortized cost, at the dates indicated. Overall, fixed-rate securities comprised ~~79%~~91% of our securities portfolio at ~~March~~December 31, 2020. The weighted average life ("WAL") is the estimated remaining maturity (in years) after three-month historical prepayment speeds and projected call option assumptions have been applied. Weighted average yields on tax-exempt securities are not calculated on a fully taxable equivalent basis.


	December 31, 2020					September 30, 2020					December 31, 2019
	Amount		Yield		WAL	Amount		Yield		WAL	Amount		Yield		WAL
	(Dollars in thousands)
Fixed-rate securities:
MBS	$	1,249,115	1.56	%	4.1	$	945,432	1.82	%	3.7	$	648,663	2.40	%	2.8
GSE debentures	444,964		0.52		1.0	369,967		0.62		1.7	274,994		2.03		0.8
Municipal bonds	8,792		1.66		0.5	9,716		1.69		0.7	17,050		1.60		0.9
Total fixed-rate securities	1,702,871		1.29		3.3	1,325,115		1.49		3.1	940,707		2.28		2.2

Adjustable-rate securities:
MBS	178,101		2.44		3.3	204,490		2.49		2.9	276,069		3.09		4.3


Total securities portfolio	$	1,880,972	1.40		3.3	$	1,529,605	1.62		3.1	$	1,216,776	2.46		2.7

March 31, 2020 December 31, 2019 September 30, 2019
Amount Yield WAL Amount Yield WAL Amount Yield WAL
(Dollars in thousands)
Fixed-rate securities:
MBS $ 690,220
2.33 % 3.1
$ 648,663
2.40 % 2.8
$ 625,840
2.46 % 2.9
GSE debentures 250,080
1.88
0.3
274,994
2.03
0.8
249,828
2.15
0.7
Municipal bonds 11,887
1.66
0.9
17,050
1.60
0.9
18,371
1.63
1.0
Total fixed-rate securities 952,187
2.20
2.3
940,707
2.28
2.2
894,039
2.35
2.3

Adjustable-rate securities:
MBS 257,329
2.97
4.9
276,069
3.09
4.3
297,416
3.10
4.7
Total securities portfolio $ 1,209,516
2.36
2.9
$ 1,216,776
2.46
2.7
$ 1,191,455
2.54
2.9

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



	December 31, 2020		September 30, 2020		December 31, 2019
	(Dollars in thousands)
FNMA	$	938,387	$	809,232	$	681,383
FHLMC	482,173		327,167		192,821
GNMA	38,740		44,404		63,113

	$	1,459,300	$	1,180,803	$	937,317

March 31, 2020 December 31, 2019 September 30, 2019
(Dollars in thousands)
Federal National Mortgage Association ("FNMA") $ 735,385
$ 681,383
$ 656,799
Federal Home Loan Mortgage Corporation ("FHLMC") 179,987
192,821
208,745
Government National Mortgage Association 57,946
63,113
70,943
$ 973,318
$ 937,317
$ 936,487

Mortgage-Backed Securities - The balance of MBS, which primarily consists of securities of U.S. GSEs, increased ~~$36.8~~$278.5 million, from ~~$936.5 million~~$1.18 billion at September 30, ~~2019,~~2020, to ~~$973.3 million~~$1.46 billion at ~~March~~December 31, 2020. The following ~~tables summarize~~table summarizes the activity in our portfolio of MBS for the periods presented. The weighted average yields and WALs for purchases are presented as recorded at the time of purchase. The weighted average yields for the beginning balances are as of the last day of the period previous to the period presented and the weighted average yields for the ending balances are as of the last day of the period presented and are generally derived from recent prepayment activity on the securities in the portfolio as of the dates presented. The beginning and ending ~~WAL~~WALs are the estimated remaining principal repayment ~~term~~terms (in years) after three-month historical prepayment speeds have been applied.


	For the Three Months Ended
	December 31, 2020					September 30, 2020					June 30, 2020					March 31, 2020
	Amount		Yield		WAL	Amount		Yield		WAL	Amount		Yield		WAL	Amount		Yield		WAL
	(Dollars in thousands)
Beginning balance - carrying value	$	1,180,803	1.94	%	3.5	$	982,587	2.35	%	3.3	$	973,318	2.50	%	3.6	$	937,317	2.61	%	3.3
Maturities and repayments	(101,496)					(95,842)					(75,293)					(65,767)
Net amortization of (premiums)/discounts	(1,003)					(608)					(363)					(279)
Purchases:
Fixed	379,793		1.04		5.4	297,024		1.06		5.9	77,455		1.29		5.0	88,863		1.80		4.5



Change in valuation on AFS securities	1,203					(2,358)					7,470					13,184
Ending balance - carrying value	$	1,459,300	1.67		4.0	$	1,180,803	1.94		3.5	$	982,587	2.35		3.3	$	973,318	2.50		3.6

For the Three Months Ended
March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019
Amount Yield WAL Amount Yield WAL Amount Yield WAL Amount Yield WAL
(Dollars in thousands)
Beginning balance - carrying value $ 937,317
2.61 % 3.3
$ 936,487
2.67 % 3.5
$ 979,256
2.68 % 3.4
$ 985,294
2.67 % 3.7
Maturities and repayments (65,767 ) (72,635 ) (70,865 ) (74,335 )
Net amortization of (premiums)/discounts (279 ) (248 ) (270 ) (375 )
Purchases:
Fixed 88,863
1.80
4.5
74,359
2.05
3.8
25,214
1.93
3.2
23,620
2.74
3.8
Adjustable —
—
—
—
—
—
—
—
—
40,362
2.79
4.5
Valuation transferred from HTM to AFS —
—
3,039
—

Change in valuation on AFS securities 13,184
(646 ) 113
4,690

Ending balance - carrying value $ 973,318
2.50
3.6
$ 937,317
2.61
3.3
$ 936,487
2.67
3.5
$ 979,256
2.68
3.4

For the Six Months Ended
March 31, 2020 March 31, 2019
Amount Yield WAL Amount Yield WAL
(Dollars in thousands)
Beginning balance - carrying value $ 936,487
2.67 % 3.5
$ 1,036,990
2.57 % 3.4
Maturities and repayments (138,402 ) (129,916 )
Net amortization of (premiums)/discounts (527 ) (659 )
Purchases:
Fixed 163,222
1.91
4.2
28,921
2.89
5.1
Adjustable —
—
—
43,776
2.69
4.3
Change in valuation on AFS securities 12,538
6,182

Ending balance - carrying value $ 973,318
2.50
3.6
$ 985,294
2.67
3.7

Investment Securities - Investment securities, which consist of U.S. GSE debentures (primarily issued by FNMA, FHLMC, or Federal Home Loan Banks) and municipal investments, ~~decreased $5.7~~increased $74.4 million, from ~~$268.4~~$380.1 million at September 30, ~~2019,~~2020, to ~~$262.7~~$454.6 million at ~~March~~December 31, 2020. Municipal investments totaled ~~$11.9~~$8.8 million at ~~March~~December 31, 2020. The following ~~tables summarize~~table summarizes the activity of investment securities for the periods presented. The weighted average yields and WALs for purchases are presented as recorded at the time of purchase. The weighted average yields for the beginning balances are as of the last day of the period previous to the period presented and the weighted average yields for the ending balances are as of the last day of the period presented. The beginning and ending WALs represent the estimated remaining principal repayment terms (in years) of the securities after projected call dates have been considered, based upon market rates at each date presented.


	For the Three Months Ended
	December 31, 2020					September 30, 2020					June 30, 2020					March 31, 2020
	Amount		Yield		WAL	Amount		Yield		WAL	Amount		Yield		WAL	Amount		Yield		WAL
	(Dollars in thousands)
Beginning balance - carrying value	$	380,147	0.65	%	1.7	$	237,467	1.23	%	0.8	$	262,719	1.87	%	0.3	$	292,270	2.00	%	0.8
Maturities, calls and sales	(50,900)					(102,115)					(125,000)					(80,125)
Net amortization of (premiums)/discounts	(14)					(54)					(80)					(49)
Purchases:
Fixed	124,987		0.48		3.2	244,975		0.51		3.2	99,990		0.58		1.2	50,097		1.42		0.4



Change in valuation on AFS securities	346					(126)					(162)					526
Ending balance - carrying value	$	454,566	0.54		1.0	$	380,147	0.65		1.7	$	237,467	1.23		0.8	$	262,719	1.87		0.3

For the Three Months Ended
March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019
Amount Yield WAL Amount Yield WAL Amount Yield WAL Amount Yield WAL
(Dollars in thousands)
Beginning balance - carrying value $ 292,270
2.00 % 0.8
$ 268,376
2.11 % 0.8
$ 273,995
2.30 % 1.0
$ 288,894
2.38 % 1.0
Maturities, calls and sales (80,125 ) (51,175 ) (80,690 ) (65,781 )
Net amortization of (premiums)/discounts (49 ) 20
(13 ) 153

Purchases:
Fixed 50,097
1.42
0.4
75,000
1.90
1.7
75,000
2.02
1.1
50,000
2.60
1.0
Valuation transferred from HTM to AFS —
—
47
—

Change in valuation on AFS securities 526
49
37
729

Ending balance - carrying value $ 262,719
1.87
0.3
$ 292,270
2.00
0.8
$ 268,376
2.11
0.8
$ 273,995
2.30
1.0

For the Six Months Ended
March 31, 2020 March 31, 2019
Amount Yield WAL Amount Yield WAL
(Dollars in thousands)
Beginning balance - carrying value $ 268,376
2.11 % 0.8
$ 289,942
2.05 % 2.2
Maturities, calls and sales (131,300 ) (103,300 )
Net amortization of (premiums)/discounts (29 ) (78 )
Purchases:
Fixed 125,097
1.71
1.2
99,809
2.67
0.7
Change in valuation on AFS securities 575
2,521

Ending balance - carrying value $ 262,719
1.87
0.3
$ 288,894
2.38
1.0

Liabilities

Deposits - Total deposits increased $219.4 million, or 3.5%, from September 30, 2020 to December 31, 2020. The increase was in non-maturity deposits, which increased $222.5 million, including a $131.1 million increase in checking accounts, a $69.6 million increase in money market accounts, and a $21.8 million increase in savings accounts. Retail/business certificates of deposit increased $11.5 million during the quarter, offset by a $14.6 million decrease in public unit certificates of deposit. As retail certificates of deposit mature, not all are being renewed. Rather, customers are moving some of those funds to more liquid deposit options such as the Bank's retail money market accounts.

The following table presents the amount, weighted average rate and percent of total for the components of our deposit portfolio at the dates presented. The increase in retail/business certificates of deposit at March 31, 2020 compared to December 31, 2019 was due primarily to the Presidents' Day certificate of deposit campaign in February 2020. As of April 30, 2020, the Bank has processed $101.2 million of deposits related to some form of Economic Impact Payments from the U.S. government to individuals as authorized by the CARES Act, and deposits from PPP loans.



	December 31, 2020						September 30, 2020						December 31, 2019
					% of						% of						% of
	Amount		Rate		Total		Amount		Rate		Total		Amount		Rate		Total
	(Dollars in thousands)
Non-interest-bearing checking	$	494,375	—	%	7.7	%	$	451,394	—	%	7.3	%	$	368,311	—	%	6.6	%
Interest-bearing checking	953,927		0.08		14.9		865,782		0.10		14.0		745,436		0.08		13.3
Savings	455,633		0.06		7.1		433,808		0.06		7.0		358,817		0.09		6.4
Money market	1,488,749		0.31		23.2		1,419,180		0.37		22.9		1,192,972		0.69		21.4
Retail/business certificates of deposit	2,777,948		1.68		43.3		2,766,461		1.83		44.7		2,656,379		2.11		47.6
Public unit certificates of deposit	240,210		0.64		3.8		254,783		0.74		4.1		263,936		2.14		4.7
	$	6,410,842	0.84		100.0	%	$	6,191,408	0.95		100.0	%	$	5,585,851	1.27		100.0	%

March 31, 2020 December 31, 2019 September 30, 2019
% of % of % of
Amount Rate Total Amount Rate Total Amount Rate Total
(Dollars in thousands)
Non-interest-bearing checking $ 385,092
— % 6.7 % $ 368,311
— % 6.6 % $ 357,284
— % 6.4 %
Interest-bearing checking 761,589
0.10
13.2
745,436
0.08
13.3
717,121
0.09
12.8
Savings 377,212
0.08
6.5
358,817
0.09
6.4
321,494
0.05
5.8
Money market 1,208,370
0.62
20.9
1,192,972
0.69
21.4
1,198,343
0.70
21.5
Retail/business certificates of deposit 2,765,142
2.11
47.9
2,656,379
2.11
47.6
2,692,770
2.08
48.2
Public unit certificates of deposit 277,214
1.87
4.8
263,936
2.14
4.7
294,855
2.29
5.3
$ 5,774,619
1.25
100.0 % $ 5,585,851
1.27
100.0 % $ 5,581,867
1.29
100.0 %

The following tables set forth scheduled maturity information for our certificates of deposit, including public unit certificates of deposit, along with associated weighted average rates, as of ~~March~~December 31, 2020.


	Amount Due
				More than			More than
	1 year			1 year to			2 years to 3			More than			Total
Rate range	or less			2 years			years			3 years			Amount		Rate
	(Dollars in thousands)
0.00 – 0.99%	$	635,809		$	115,800		$	35,879		$	31,409		$	818,897	0.54	%
1.00 – 1.99%	607,355			293,640			76,179			164,873			1,142,047		1.63
2.00 – 2.99%	319,185			419,584			219,945			98,247			1,056,961		2.39
3.00 – 3.99%	—			—			253			—			253		3.00



	$	1,562,349		$	829,024		$	332,256		$	294,529		$	3,018,158	1.60

Percent of total	51.8		%	27.5		%	11.0		%	9.7		%
Weighted average rate	1.31			1.91			2.06			1.74
Weighted average maturity (in years)	0.5			1.5			2.5			3.6			1.3
Weighted average maturity for the retail/business certificate of deposit portfolio (in years)													1.4


	Amount Due
			Over		Over
	3 months		3 to 6		6 to 12		Over
	or less		months		months		12 months		Total
	(Dollars in thousands)
Retail/business certificates of deposit less than $100,000	$	170,244	$	192,528	$	310,417	$	819,935	$	1,493,124
Retail/business certificates of deposit of $100,000 or more	144,816		174,244		338,850		626,914		1,284,824

Public unit certificates of deposit of $100,000 or more	77,551		70,688		83,011		8,960		240,210
	$	392,611	$	437,460	$	732,278	$	1,455,809	$	3,018,158

Amount Due
More than More than
1 year 1 year to 2 years to 3 More than Total
Rate range or less 2 years years 3 years Amount Rate
(Dollars in thousands)
  0.00 – 0.99% $ 24,636
$ 3,040
$ 9
$ —
$ 27,685
0.62 %
  1.00 – 1.99% 815,587
390,098
164,390
52,050
1,422,125
1.79
  2.00 – 2.99% 641,838
282,295
436,272
231,894
1,592,299
2.38
  3.00 – 3.99% —
—
247
—
247
3.00
$ 1,482,061
$ 675,433
$ 600,918
$ 283,944
$ 3,042,356
2.09

Percent of total 48.7 % 22.2 % 19.8 % 9.3 %
Weighted average rate 1.99
2.03
2.28
2.36

Weighted average maturity (in years) 0.4
1.5
2.5
3.8
1.4

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

Amount Due
Over Over
3 months 3 to 6 6 to 12 Over
or less months months 12 months Total
(Dollars in thousands)
Retail/business certificates of deposit less than $100,000 $ 233,608
$ 145,979
$ 316,771
$ 877,976
$ 1,574,334
Retail/business certificates of deposit of $100,000 or more 195,779
131,187
221,913
641,929
1,190,808
Public unit certificates of deposit of $100,000 or more 139,526
47,228
50,070
40,390
277,214
$ 568,913
$ 324,394
$ 588,754
$ 1,560,295
$ 3,042,356

Borrowings - Total borrowings at December 31, 2020 were $1.73 billion, a decrease of $55.0 million, or 3.0%, from September 30, 2020. The decrease was due to not renewing borrowings that matured during the current quarter. Cash flows from the deposit portfolio were used to pay off maturing borrowings.

The following tables present borrowing activity for the periods shown. The borrowings presented in the table have original contractual terms of one year or longer or are tied to interest rate swaps with original contractual terms of one year or longer. FHLB advances are presented at par. The effective rate is shown as a weighted average and includes the impact of interest rate swaps and the amortization of deferred prepayment penalties resulting from FHLB advances previously prepaid. The weighted average maturity ("WAM") is the remaining weighted average contractual term in years. The beginning and ending WAMs represent the remaining maturity at each date presented. For new borrowings, the WAMs presented are as of the date of issue. ~~During~~


	For the Three Months Ended
	December 31, 2020					September 30, 2020					June 30, 2020					March 31, 2020
			Effective					Effective					Effective					Effective
	Amount		Rate		WAM	Amount		Rate		WAM	Amount		Rate		WAM	Amount		Rate		WAM
	(Dollars in thousands)
Beginning balance	$	1,790,000	2.31	%	3.0	$	1,990,000	2.29	%	2.9	$	2,090,000	2.25	%	3.0	$	2,090,000	2.37	%	2.6
Maturities and prepayments:
FHLB advances	(350,000)		2.40			(440,000)		2.49			(200,000)		2.35			(415,000)		2.45
Repurchase agreements	—		—			(100,000)		2.53			—		—			—		—

New FHLB borrowings:
Fixed-rate	100,000		1.09		5.0	—		—		—	—		—		—	350,000		1.70		4.7
Interest rate swaps(1)	200,000		2.63		1.5	340,000		2.73		3.5	100,000		3.20		8.0	65,000		2.61		4.0

Ending balance	$	1,740,000	2.26		3.0	$	1,790,000	2.31		3.0	$	1,990,000	2.29		2.9	$	2,090,000	2.25		3.0

(1)Represents adjustable-rate FHLB advances for which the ~~current quarter,~~Bank has entered into interest rate swaps to hedge the variability in cash flows associated with the advances. The effective rate and WAM presented include the effect of the interest rate swaps.

Maturities -The following table presents the maturity of term borrowings which consist entirely of FHLB advances, along with associated weighted average contractual and effective rates as of December 31, 2020. Subsequent to December 31, 2020, the Bank prepaid a $100.0 million fixed-rate FHLB ~~advances~~advance with a rate of 2.25% scheduled to mature ~~within the next 12 months totaling $350.0 million~~in fiscal year 2022, and replaced this advance with a ~~weighted average rate of 2.42%, and replaced these advances with $350.0~~$100.0 million of fixed-rate FHLB ~~advances~~advance with a ~~weighted average~~ term of ~~4.7~~six years and ~~a weighted average~~an effective rate of ~~1.70%~~1.22%, which includes the impact of deferred prepayment penalties being recognized over the life of the new ~~advances. This activity~~advance and which is not reflected in the table below.

For the Three Months Ended
March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019
Effective Effective Effective Effective
Amount Rate WAM Amount Rate WAM Amount Rate WAM Amount Rate WAM
(Dollars in thousands)
Beginning balance $ 2,090,000
2.37 % 2.6
$ 2,140,000
2.38 % 2.6
$ 2,140,000
2.35 % 2.6
$ 2,240,000
2.29 % 2.8
Maturities and prepayments:
FHLB advances (415,000 ) 2.45
(350,000 ) 2.40
(375,000 ) 2.38
(200,000 ) 2.11

New FHLB borrowings:
Fixed-rate 350,000
1.70
4.7
100,000
1.96
5.0
100,000
2.14
4.0
—
—
—
Interest rate swaps⁽¹⁾
65,000
2.61
4.0
200,000
2.57
2.5
275,000
2.70
4.5
100,000
3.09
9.0
Ending balance $ 2,090,000
2.25
3.0
$ 2,090,000
2.37
2.6
$ 2,140,000
2.38
2.6
$ 2,140,000
2.35
2.6

For the Six Months Ended
March 31, 2020 March 31, 2019
Effective Effective
Amount Rate WAM Amount Rate WAM
(Dollars in thousands)
Beginning balance $ 2,140,000
2.38 % 2.6
$ 2,185,052
2.17 % 2.9
Maturities and prepayments:
FHLB advances (765,000 ) 2.43
(300,000 ) 1.73

CCB acquisition - junior subordinated debentures assumed (redeemed) —
—
—
(10,052 ) 8.76
12.3
New FHLB borrowings:
Fixed-rate 450,000
1.76
4.8
100,000
3.39
5.0
Interest rate swaps⁽¹⁾
265,000
2.58
2.9
265,000
2.49
3.9
Ending balance $ 2,090,000
2.25
3.0
$ 2,240,000
2.29
2.8


~~(1)~~	Represents adjustable-rate FHLB advances for which the Bank has entered into interest rate swaps to hedge the variability in cash flows associated with the advances. The effective rate and WAM presented include the effect of the interest rate swaps.


	Term Borrowings Amount
Maturity by			Interest rate		Total		Contractual		Effective
Fiscal Year	Fixed-rate		swaps(1)		Amount		Rate		Rate(2)
	(Dollars in thousands)
2021	$	150,000	$	440,000	$	590,000	0.77	%	2.62	%
2022	100,000		200,000		300,000		1.00		2.50
2023	300,000		—		300,000		1.70		1.81
2024	100,000		—		100,000		3.39		3.39
2025	250,000		—		250,000		1.82		1.94
2026	200,000		—		200,000		0.95		1.35

	$	1,100,000	$	640,000	$	1,740,000	1.29		2.26

~~Maturities~~

(1) -~~The following table presents~~Represents adjustable-rate FHLB advances for which the Bank has entered into interest rate swaps with a notional amount of $640.0 million to hedge the variability in cash flows associated with the advances. These advances are presented based on their contractual maturity dates and will be renewed periodically until the maturity or termination of ~~term borrowings (which includes FHLB advances,~~the interest rate swaps. The expected WAL of the interest rate swaps was 3.2 years at ~~par, and repurchase agreements), along with associated weighted average contractual and effective rates as of March~~December 31, 2020.

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

Term Borrowings Amount
Maturity by
Interest rate Total Contractual Effective
Fiscal Year Fixed-rate
swaps⁽¹⁾
Amount Rate
Rate⁽²⁾
(Dollars in thousands)
2020 $ 300,000
$ 440,000
$ 740,000
1.85 2.46
2021 200,000
200,000
400,000
1.91 2.28
2022 200,000
—
200,000
2.23 2.23
2023 300,000
—
300,000
1.70 1.81
2024 100,000
—
100,000
3.39 3.39
2025 250,000
—
250,000
1.82 1.94
2026 100,000
—
100,000
1.28 1.60
$ 1,450,000
$ 640,000
$ 2,090,000
1.92 2.25

~~(1)~~

Represents adjustable-rate FHLB advances for which the Bank has entered into interest rate swaps with a notional amount of $640.0 million to hedge the variability in cash flows associated with the advances. These advances are presented based on their contractual maturity dates and will be renewed periodically until the maturity or termination of the interest rate swaps. The expected WAL of the interest rate swaps was 4.0 years at March 31, 2020.


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

As of March 31, 2020, the Bank did not have a balance outstanding on its FHLB line of credit. The average outstanding balance of FHLB line of credit borrowings during the current year period was $91.7 million at an average rate of 1.85%, and during the current quarter was $82.4 million at an average rate of 1.74%. During the current quarter, the Bank began utilizing the FRB of Kansas City line of credit rather than the FHLB line of credit, as the rate at the FRB of Kansas City was lower. At March 31, 2020, the Bank had an outstanding balance of $30.0 million on its FRB of Kansas City line of credit. The average outstanding balance of the FRB of Kansas City line of credit borrowing during the current quarter was $5.5 million at an average rate of 0.23%.

The following table presents the maturity and weighted average repricing rate, which is also the weighted average effective rate, of certificates of deposit, split between retail/business and public unit amounts, and term borrowings for the next four quarters as of December 31, 2020. The term borrowings amount of $150.0 million presented in the table below as maturing during the quarter ending March 31, ~~2020.~~2021 matured in January 2021 and was not replaced.


	Retail/ Business				Public Unit				Term
Maturity by	Certificate		Repricing		Certificate		Repricing		Borrowings		Repricing				Repricing
Quarter End	Amount		Rate		Amount		Rate		Amount(1)		Rate		Total		Rate
	(Dollars in thousands)
March 31, 2021	$	315,060	1.73	%	$	77,551	0.66	%	$	150,000	1.97	%	$	542,611	1.64	%
June 30, 2021	366,772		1.43		70,688		0.36		—		—		437,460		1.26
September 30, 2021	308,089		1.38		53,451		0.87		75,000		2.99		436,540		1.59
December 31, 2021	341,178		1.22		29,560		0.52		100,000		3.12		470,738		1.58
	$	1,331,099	1.44		$	231,250	0.60		$	325,000	2.56		$	1,887,349	1.53

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

Retail/ Business Public Unit Term
Maturity by Certificate Repricing Certificate Repricing Borrowings Repricing Repricing
Quarter End Amount Rate Amount Rate Amount Rate Total Rate
(Dollars in thousands)
June 30, 2020 $ 429,387
2.07 % $ 139,526
1.76 % $ 200,000
2.35 % $ 768,913
2.08 %
September 30, 2020 277,166
2.03
47,228
2.10
540,000
2.50
864,394
2.33
December 31, 2020 275,542
1.94
29,261
1.68
250,000
2.47
554,803
2.17
March 31, 2021 263,142
2.00
20,809
2.04
150,000
1.97
433,951
1.99
$ 1,245,237
2.02
$ 236,824
1.84
$ 1,140,000
2.40
$ 2,622,061
2.17

Stockholders' Equity. Stockholders' equity was ~~$1.29~~$1.28 billion at ~~March~~both December 31, 2020 ~~compared to $1.34 billion at~~and September 30, ~~2019. The $48.5~~2020. During the quarter, the Company paid cash dividends totaling $29.1 million ~~decrease was due primarily to the payment of $70.4~~and repurchased common stock totaling $1.5 million, ~~in cash dividends,~~ partially offset by net income of ~~$26.8 million~~$18.9 million. The cash dividends paid during the current quarter totaled $0.215 per share and consisted of a $0.13 per share cash true-up dividend related to fiscal year ~~period.~~2020 earnings and a regular quarterly cash dividend of $0.085 per share. On January 26, 2021, the Company announced a regular quarterly cash dividend of $0.085 per share, or approximately $11.5 million, payable on February 19, 2021 to stockholders of record as of the close of business on February 5, 2021. In the long run, management considers ~~a Bank stockholders'~~the Bank's equity to total assets ratio of at least 10% an appropriate level of capital. At ~~March~~December 31, 2020, this ratio was 12.2%. The cash dividends paid during the current period totaled $0.51 per share and consisted of a $0.34 per share cash true-up dividend related to fiscal year 2019 earnings per the Company's dividend policy, and two regular quarterly cash dividends totaling $0.17 per share. On April 21, 2020, the Company announced a regular quarterly cash dividend of $0.085 per share, or approximately $11.7 million, payable on May 15, 2020 to stockholders of record as of the close of business on May 1, 2020.

At ~~March~~December 31, 2020, Capitol Federal Financial, Inc., at the holding company level, had ~~$101.0~~$66.7 million on deposit at the Bank. For fiscal year ~~2020,~~2021, it is currently the intent of the Board of Directors to continue the payout of 100% of the Company's earnings to the Company's stockholders. Dividend payments depend upon a number of factors including the Company's financial condition and results of operations, regulatory capital requirements, regulatory limitations on the Bank's ability to make capital distributions to the Company, and the amount of cash at the holding company.

There remains $44.7 million authorized under the existing stock repurchase plan for additional purchases of the Company's common stock. Shares may be repurchased from time to time based upon market conditions, available liquidity and other factors. This plan has no expiration date; however, the FRB's approval for the Company to repurchase shares extends through August 2021.

The Company works to find multiple ways to provide stockholder value. This has primarily been through the payment of cash dividends and ~~historically the Company has also utilized~~ stock buybacks. The Company has maintained a policy of paying out 100% of its earnings to stockholders in the form of quarterly cash dividends and an annual cash true-up dividend in December of each year. In order to provide additional stockholder value, the Company ~~has~~ paid a True Blue Capitol cash dividend of $0.25 per share in June ~~of each of the past~~for six ~~years.~~consecutive years ending in 2019. The Company ~~has~~ paid the True Blue Capitol dividend primarily due to excess capital levels at the Company and Bank. The Company considers various business strategies and their impact on capital and asset measures on both a current and future basis, as well as regulatory capital levels and requirements, in determining the amount, if any, and timing of the True Blue dividend. Given the ~~current~~ state of economic uncertainty and how that may play out with the credit risk exposure in the Bank's loan portfolio, the Company ~~has~~ elected to defer the annual True Blue dividend in June 2020 and did not ask for a regulatory non-objection at that time to move capital from the Bank to the Company to pay that dividend. It is management's ~~intent~~intention to ask for a regulatory non-objection at some point in the future and to pay this dividend when economic conditions are more certain. ~~It remains the Company's intent to pay out 100% of its earnings.~~

The following table presents regular quarterly cash dividends and special cash dividends paid in calendar years 2021, 2020, ~~2019,~~ and ~~2018.~~2019. The amounts represent cash dividends paid during each period. For the quarter ending ~~June 30, 2020,~~March 31, 2021, the amount presented represents the dividend payable on ~~May 15, 2020~~February 19, 2021 to stockholders of record as of the close of business on ~~May 1, 2020.~~February 5, 2021.


	Calendar Year
	2021				2020				2019
	Amount		Per Share		Amount		Per Share		Amount		Per Share
	(Dollars in thousands, except per share amounts)
Regular quarterly dividends paid
Quarter ended March 31	$	11,518	$	0.085	$	11,733	$	0.085	$	11,700	$	0.085
Quarter ended June 30	—		—		11,733		0.085		11,708		0.085
Quarter ended September 30	—		—		11,733		0.085		11,713		0.085
Quarter ended December 31	—		—		11,514		0.085		11,731		0.085
True-up dividends paid	—		—		17,614		0.130		46,932		0.340
True Blue dividends paid	—		—		—		—		34,446		0.250
Calendar year-to-date dividends paid	$	11,518	$	0.085	$	64,327	$	0.470	$	128,230	$	0.930

Calendar Year
2020 2019 2018
Amount Per Share Amount Per Share Amount Per Share
(Dollars in thousands, except per share amounts)
Regular quarterly dividends paid
Quarter ended March 31 $ 11,733
$ 0.085
$ 11,700
$ 0.085
$ 11,427
$ 0.085
Quarter ended June 30 11,734
0.085
11,708
0.085
11,429
0.085
Quarter ended September 30

11,713
0.085
11,430
0.085
Quarter ended December 31

11,731
0.085
11,696
0.085
True-up dividends paid

46,932
0.340
53,666
0.390
True Blue dividends paid

34,446
0.250
33,614
0.250
Calendar year-to-date dividends paid $ 23,467
$ 0.170
$ 128,230
$ 0.930
$ 133,262
$ 0.980

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

Operating Results

The following table presents selected income statement and other information for the quarters indicated.



	December 31,			September 30,			June 30,			March 31,			December 31,
	2020			2020			2020			2020			2019
	(Dollars in thousands, except per share data)
Interest and dividend income:
Loans receivable	$	60,694		$	64,315		$	66,652		$	69,613		$	69,914
MBS	5,710			5,425			5,616			5,866			6,102
FHLB stock	1,069			1,080			1,207			1,714			1,826
Investment securities	683			731			847			1,382			1,507
Cash and cash equivalents	51			55			59			380			687
Total interest and dividend income	68,207			71,606			74,381			78,955			80,036

Interest expense:
Deposits	14,067			15,299			16,533			17,804			17,962
Borrowings	10,327			10,624			11,561			12,483			13,377

Total interest expense	24,394			25,923			28,094			30,287			31,339

Net interest income	43,813			45,683			46,287			48,668			48,697

Provision for credit losses	(1,532)			—			—			22,075			225

Net interest income
(after provision for credit losses)	45,345			45,683			46,287			26,593			48,472

Non-interest income	5,070			4,985			4,439			4,671			5,504
Non-interest expense	27,067			27,176			26,164			26,164			26,500
Income tax expense	4,450			5,213			5,088			824			4,965
Net income	$	18,898		$	18,279		$	19,474		$	4,276		$	22,511

Efficiency ratio	55.37		%	53.64		%	51.58		%	49.05		%	48.89		%

Basic EPS	$	0.14		$	0.13		$	0.14		$	0.03		$	0.16
Diluted EPS	0.14			0.13			0.14			0.03			0.16

For the Three Months Ended
March 31, December 31, September 30, June 30, March 31,
2020 2019 2019 2019 2019
(Dollars in thousands, except per share data)
Interest and dividend income:
Loans receivable $ 69,613
$ 69,914
$ 70,366
$ 71,434
$ 71,657
MBS 5,866
6,102
6,293
6,613
6,301
FHLB stock 1,714
1,826
2,156
1,865
1,831
Investment securities 1,382
1,507
1,585
1,835
1,505
Cash and cash equivalents 380
687
2,885
464
743
Total interest and dividend income 78,955
80,036
83,285
82,211
82,037

Interest expense:
Deposits 17,804
17,962
17,471
16,909
16,096
Borrowings 12,483
13,377
16,003
13,621
13,344
Total interest expense 30,287
31,339
33,474
30,530
29,440

Net interest income 48,668
48,697
49,811
51,681
52,597

Provision for credit losses 22,075
225
300
450
—

Net interest income
(after provision for credit losses) 26,593
48,472
49,511
51,231
52,597

Non-interest income 4,671
5,504
5,859
5,674
5,001
Non-interest expense 26,164
26,500
26,330
27,691
26,141
Income tax expense 824
4,965
6,631
6,317
6,903
Net income $ 4,276
$ 22,511
$ 22,409
$ 22,897
$ 24,554

Efficiency ratio 49.05 % 48.89 % 47.30 % 48.28 % 45.38 %

Basic EPS $ 0.03
$ 0.16
$ 0.16
$ 0.17
$ 0.18
Diluted EPS 0.03
0.16
0.16
0.17
0.18

~~Comparison of Operating Results for the Six Months Ended March 31, 2020 and 2019~~

The Company recognized net income of $26.8 million, or $0.19 per share, for the six-month period ended March 31, 2020 compared to net income of $48.9 million, or $0.36 per share, for the six-month period ended March 31, 2019. The decrease in net income was due primarily to a $22.3 million provision for credit losses during the current period.

Net interest income decreased $7.5 million, or 7.2%, from the prior year period to $97.4 million for the current year period. The net interest margin decreased 11 basis points, from 2.30% for the prior year period to 2.19% for the current year period. The leverage strategy was suspended at certain times during the prior year period and during all of the current year period due to the negative interest rate spreads between the related FHLB borrowings and cash held at the FRB of Kansas City, making the transaction unprofitable. See additional discussion regarding the leverage strategy in the Financial Condition section below. When the leverage strategy is in place, it reduces the net interest margin due to the amount of earnings from the transaction in comparison to the size of the transaction. Excluding the effects of the leverage strategy, the net interest margin would have decreased 14 basis points, from 2.33% for the prior year period to 2.19% for the current year period. The decrease in the net interest margin, excluding the effects of the leverage strategy, was due mainly to an increase in the cost of retail/business certificates of deposit, as well as a decrease in the loan portfolio yield.

~~Interest and Dividend Income~~

The weighted average yield on total interest-earning assets decreased four basis points, from 3.60% for the prior year period to 3.56% for the current year period, and the average balance of interest-earning assets decreased $221.2 million. Absent the impact of the leverage strategy, the weighted average yield on total interest-earning assets would have decreased six basis points, from 3.62% for the prior year period to 3.56% for the current year period, and the average balance of interest-earning assets would have decreased $105.8 million. The decrease in the weighted average yield between periods was due primarily to a decrease in the loan portfolio yield discussed below. The following table presents the components of interest and dividend income for the time periods presented, along with the change measured in dollars and percent.

For the Six Months Ended
March 31, Change Expressed in:
2020 2019 Dollars Percent
(Dollars in thousands)
INTEREST AND DIVIDEND INCOME:
Loans receivable $ 139,527
$ 142,429
$ (2,902 ) (2.0 )%
MBS 11,968
12,824
(856 ) (6.7 )
FHLB stock 3,540
3,802
(262 ) (6.9 )
Investment securities 2,889
2,946
(57 ) (1.9 )
Cash and cash equivalents 1,067
2,457
(1,390 ) (56.6 )
Total interest and dividend income $ 158,991
$ 164,458
$ (5,467 ) (3.3 )

The decrease in interest income on loans receivable was due mainly to a decrease in yield resulting from an increase in the amortization of premiums related to correspondent loan payoff and endorsement activity. This was partially offset by a shift in the mix of the loan portfolio, as the average balance of lower-yielding one- to four-family loans decreased $201.6 million, or 3.0%, partially offset by a $128.6 million, or 20%, increase in the average balance of higher-yielding commercial loans. The weighted average yield on the loans receivable portfolio decreased four basis points, from 3.77% for the prior year period to 3.73% for the current year period.

The decrease in interest income on the MBS portfolio was due primarily to a $57.1 million, or 5.8%, decrease in the average balance of the portfolio. The decrease in dividend income on FHLB stock and the decrease in interest income on cash and cash equivalents were due primarily to the leverage strategy being in place for a portion of the prior year period and not being in place during the current period. See additional discussion regarding the leverage strategy in the Executive Summary above.

~~Interest Expense~~

The weighted average rate paid on total interest-bearing liabilities increased eight basis points, from 1.49% for the prior year period to 1.57% for the current year period, while the average balance of interest-bearing liabilities decreased $155.4 million. Absent the impact of the leverage strategy, the weighted average rate paid on total interest-bearing liabilities would have increased nine basis points, from 1.48% for the prior year period to 1.57% for the current year period, while the average balance of interest-bearing liabilities would have decreased $40.0 million. The increase in the weighted average rate from the prior year period was due primarily to an increase in the cost of deposits, specifically the retail/business certificate of deposit portfolio. The following table presents the components of interest expense for the time periods presented, along with the change measured in dollars and percent.

For the Six Months Ended
March 31, Change Expressed in:
2020 2019 Dollars Percent
(Dollars in thousands)
INTEREST EXPENSE:
Deposits $ 35,766
$ 31,821
$ 3,945
12.4 %
Borrowings 25,860
27,739
(1,879 ) (6.8 )
Total interest expense $ 61,626
$ 59,560
$ 2,066
3.5

The increase in interest expense on deposits was due primarily to an increase in the cost of the retail/business certificate of deposit portfolio. The weighted average rate of the retail/business certificate of deposit portfolio increased 26 basis points, to 2.10% for the current year period, and the average balance increased $190.6 million, or approximately 7%. Late in the third quarter of fiscal year 2019, the Bank increased offered rates on short-term and certain intermediate-term certificates of deposit in an effort to encourage customers to move funds to those terms and during the fourth quarter of fiscal year 2019, the Bank held the unTraditional campaign, resulting in growth in the short-term and certain intermediate-term certificates of deposit.

The "Borrowings" line item in the table above includes interest expense associated and not associated with the leverage strategy. Interest expense on borrowings not related to the leverage strategy decreased $503 thousand from the prior year period due primarily to the redemption of the junior subordinated debentures previously added in the CCB acquisition. Additionally, interest expense on the FHLB line of credit decreased $454 thousand, largely offset by an increase in the weighted average effective rate paid on FHLB advances between periods. Interest expense on FHLB borrowings associated with the leverage strategy decreased $1.4 million from the prior year period due to the leverage strategy being in place for a portion of the prior year period and not being in place at all during the current year period.

~~Provision for Credit Losses~~

The Bank recorded a provision for credit losses during the current period of $22.3 million, compared to no provision for credit losses during the prior year period. The $22.3 million provision for credit losses in the current period was primarily related to the deterioration of economic conditions as a result of COVID-19. See additional ACL discussion in the "Financial Condition - Asset Quality - Allowance for credit losses and Provision for credit losses" section above.

~~Non-Interest Income~~

~~The following table presents the components of non-interest income for the time periods presented, along with the change measured in dollars and percent.~~

For the Six Months Ended
March 31, Change Expressed in:
2020 2019 Dollars Percent
(Dollars in thousands)
NON-INTEREST INCOME:
Deposit service fees $ 5,845
$ 6,443
$ (598 ) (9.3 )%
Insurance commissions 1,091
1,167
(76 ) (6.5 )
Other non-interest income 3,239
2,815
424
15.1
Total non-interest income $ 10,175
$ 10,425
$ (250 ) (2.4 )

The decrease in deposit service fees was due mainly to the discontinuation of point-of-sale service charges, which the Bank ceased charging in April 2019. The increase in other non-interest income was due mainly to the receipt of a BOLI death benefit during the current period.

~~Non-Interest Expense~~

~~The following table presents the components of non-interest expense for the time periods presented, along with the change measured in dollars and percent.~~

For the Six Months Ended
March 31, Change Expressed in:
2020 2019 Dollars Percent
(Dollars in thousands)
NON-INTEREST EXPENSE:
Salaries and employee benefits $ 26,706
$ 25,751
$ 955
3.7 %
Information technology and related expense 8,409
8,883
(474 ) (5.3 )
Occupancy, net 6,656
6,544
112
1.7
Advertising and promotional 2,769
2,150
619
28.8
Regulatory and outside services 2,640
2,822
(182 ) (6.4 )
Deposit and loan transaction costs 1,389
1,201
188
15.7
Office supplies and related expense 1,111
1,195
(84 ) (7.0 )
Federal insurance premium —
1,187
(1,187 ) (100.0 )
Other non-interest expense 2,984
3,190
(206 ) (6.5 )
Total non-interest expense $ 52,664
$ 52,923
$ (259 ) (0.5 )

The increase in salaries and employee benefits expense was due primarily to an increase in loan commissions and merit increases. The decrease in information technology and related expense was due mainly to the prior year period including costs related to the integration of CCB operations. The increase in advertising and promotional expense was due to running advertising campaigns in the early part of our fiscal year as we will do less advertising during the various election campaigns in the fall, as well as to the timing of sponsorships. The decrease in the federal insurance premium was due mainly to the Bank receiving an assessment credit from the FDIC. During the prior fiscal year, the Bank began utilizing a credit from the FDIC as a result of the FDIC deposit insurance fund ratio exceeding 1.38%. Pursuant to regulatory guidance, once the insurance fund exceeds 1.38% of insured deposits, deposit insurance assessment credits are allocated to banks with less than $10 billion in assets, to compensate for premiums previously paid that contributed to growth of the fund past 1.15%. These credits fully offset the Bank's premium assessments during the current year period and will continue to offset the Bank's premium assessments as long as the insurance fund ratio remains at or above 1.35% of insured deposits and the Bank still has a remaining assessment credit balance. As of March 31, 2020, the Bank had a remaining assessment credit of approximately $320 thousand. The assessment credit will be fully utilized during the third quarter of fiscal year 2020, so management anticipates recognizing federal insurance premium expense during the next quarter.

Management anticipates that salaries and employee benefits expense in fiscal year 2020 will increase approximately $1.0 million from fiscal year 2019, a decrease from our original estimate of a $4.0 million increase. The reduction in the expense estimate was due primarily to a delay in the implementation of information technology changes pertaining to commercial banking activities and related back office functions, a reduction in commercial lending hiring, along with expense reductions related to the impact of COVID-19, including the postponement of annual merit increases which were to be implemented later this year and the deferral of the True Blue dividend and related compensation expense as discussed above.

The Company's efficiency ratio was 48.97% for the current period compared to 45.89% for the prior year period. The change in the efficiency ratio was due to lower net interest income in the current period compared to the prior year period. The efficiency ratio is a measure of a financial institution's total non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. A lower value indicates that the financial institution is generating revenue with a proportionally lower level of expense.

~~Income Tax Expense~~

Income tax expense was $5.8 million for the current period compared to $13.5 million for the prior year period. The decrease in income tax expense was due primarily to lower pretax income in the current period, as well as a lower effective tax rate. The effective tax rate was 17.8% for the current period compared to 21.6% for the prior year period. The lower effective tax rate in the current period compared to the prior year period was due mainly to the Company's permanent differences having a proportionately larger impact given the lower pretax income in the current year period and a discrete benefit recognized as a result of favorable federal tax guidance that was issued during the current period related to certain BOLI policies added in the CCB acquisition.

Average Balance Sheet

The following table presents the average balances of our assets, liabilities, and stockholders' equity, and the related annualized weighted average yields and rates on our interest-earning assets and interest-bearing liabilities for the periods indicated, as well as selected performance ratios and other information, for the periods indicated. Weighted average yields are derived by dividing annualized income by the average balance of the related assets, and weighted average rates are derived by dividing annualized expense by the average balance of the related liabilities, for the periods shown. Average outstanding balances are derived from average daily balances. The weighted average yields and rates include amortization of fees, costs, premiums and discounts, which are considered adjustments to yields/rates. Weighted average yields on tax-exempt securities are not calculated on a fully taxable equivalent basis.

For the Six Months Ended
March 31, 2020 March 31, 2019
Average Interest Average Interest
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Amount Paid Rate Amount Paid Rate
Assets: (Dollars in thousands)
Interest-earning assets:
One- to four-family loans $ 6,568,525
$ 117,199
3.57 % $ 6,770,175
$ 122,309
3.61 %
Commercial loans 762,799
18,652
4.81
634,229
15,787
4.92
Consumer loans 128,491
3,676
5.72
138,369
4,333
6.28
Total loans receivable⁽¹⁾
7,459,815
139,527
3.73
7,542,773
142,429
3.77
MBS⁽²⁾
926,969
11,968
2.58
984,033
12,824
2.61
Investment securities⁽²⁾⁽³⁾
282,759
2,889
2.04
277,292
2,946
2.13
FHLB stock 99,128
3,540
7.14
104,023
3,802
7.33
Cash and cash equivalents⁽⁴⁾
133,908
1,067
1.57
215,660
2,457
2.25
Total interest-earning assets⁽¹⁾⁽²⁾
8,902,579
158,991
3.56
9,123,781
164,458
3.60
Other non-interest-earning assets 441,199
368,864

Total assets $ 9,343,778
$ 9,492,645

Liabilities and stockholders' equity:
Interest-bearing liabilities:
Checking $ 1,096,466
351
0.06
$ 1,063,346
294
0.06
Savings 361,592
153
0.08
357,243
113
0.06
Money market 1,190,938
4,044
0.68
1,260,999
4,441
0.71
Retail/business certificates 2,686,028
28,215
2.10
2,495,475
22,947
1.84
Wholesale certificates 286,328
3,003
2.10
392,693
4,026
2.06
Total deposits 5,621,352
35,766
1.27
5,569,756
31,821
1.15
Borrowings⁽⁵⁾
2,204,903
25,860
2.33
2,411,905
27,739
2.29
Total interest-bearing liabilities 7,826,255
61,626
1.57
7,981,661
59,560
1.49
Other non-interest-bearing liabilities 194,698
142,060

Stockholders' equity 1,322,825
1,368,924

Total liabilities and stockholders' equity $ 9,343,778
$ 9,492,645

Net interest income⁽⁶⁾
$ 97,365
$ 104,898

Net interest rate spread⁽⁷⁾⁽⁸⁾
1.99
2.11
Net interest-earning assets $ 1,076,324
$ 1,142,120

Net interest margin⁽⁸⁾⁽⁹⁾
2.19
2.30
Ratio of interest-earning assets to interest-bearing liabilities 1.14x
1.14x

Selected performance ratios:
Return on average assets (annualized)⁽⁸⁾
0.57
1.03
Return on average equity (annualized)⁽⁸⁾
4.05
7.15
Average equity to average assets 14.16
14.42
Operating expense ratio⁽¹⁰⁾
1.13
1.12
Efficiency ratio^(8)(11)
48.97
45.89
Pre-tax yield on leverage strategy⁽¹²⁾
—
0.03


~~(1)~~	~~Balances are adjusted for unearned loan fees and deferred costs. Loans that are 90 or more days delinquent are included in the loans receivable average balance with a yield of zero percent.~~


~~(2)~~	~~MBS and investment securities classified as AFS are stated at amortized cost, adjusted for unamortized purchase premiums or discounts.~~


~~(3)~~	The average balance of investment securities includes an average balance of nontaxable securities of $16.1 million and $22.8 million for the six months ended March 31, 2020 and March 31, 2019, respectively.


~~(4)~~	There were no cash and cash equivalents related to the leverage strategy during the six months ended March 31, 2020. The average balance of cash and cash equivalents includes an average balance of cash related to the leverage strategy of $110.2 million for the six months ended March 31, 2019.

~~(5)~~

There were no FHLB borrowings related to the leverage strategy during the six months ended March 31, 2020. Included in this line item, for the six months ended March 31, 2019, are FHLB borrowings related to the leverage strategy with an average outstanding balance of $115.4 million and interest paid of $1.4 million, at a weighted average rate of 2.36%, and FHLB borrowings not related to the leverage strategy with an average outstanding balance of $2.30 billion and interest paid of $26.4 million, at a weighted average rate of 2.29%. The FHLB advance amounts and rates included in this line item include the effect of interest rate swaps and are net of deferred prepayment penalties.


~~(6)~~	Net interest income represents the difference between interest income earned on interest-earning assets and interest paid on interest-bearing liabilities. Net interest income depends on the average balance of interest-earning assets and interest-bearing liabilities, and the interest rates earned or paid on them.


~~(7)~~	~~Net interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.~~

~~(8)~~

The table below provides a reconciliation between certain performance ratios presented in accordance with GAAP and the performance ratios excluding the effects of the leverage strategy, which are not presented in accordance with GAAP. Management believes it is important for comparability purposes to provide the performance ratios without the leverage strategy because of the unique nature of the leverage strategy. The leverage strategy reduces some of our performance ratios due to the small amount of earnings associated with the transaction in comparison to the size of the transaction, while increasing our net income.

For the Six Months Ended
March 31, 2020 March 31, 2019
Actual Leverage Adjusted Actual Leverage Adjusted
(GAAP) Strategy (Non-GAAP) (GAAP) Strategy (Non-GAAP)
Return on average assets (annualized) 0.57 % — % 0.57 % 1.03 % (0.01 )% 1.04 %
Return on average equity (annualized) 4.05
—
4.05
7.15
—
7.15
Net interest margin 2.19
—
2.19
2.30
(0.03 ) 2.33
Net interest rate spread 1.99
—
1.99
2.11
(0.03 ) 2.14
Efficiency Ratio 48.97
—
48.97
45.89
—
45.89


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


~~(10)~~	~~The operating expense ratio represents annualized non-interest expense as a percentage of average assets.~~


~~(11)~~	~~The efficiency ratio represents non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income.~~


~~(12)~~	~~The pre-tax yield on the leverage strategy represents annualized pre-tax income resulting from the transaction as a percentage of the average interest-earning assets associated with the transaction.~~


	For the Three Months Ended
	December 31, 2020						September 30, 2020						December 31, 2019
	Average		Interest				Average		Interest				Average		Interest
	Outstanding		Earned/		Yield/		Outstanding		Earned/		Yield/		Outstanding		Earned/		Yield/
	Amount		Paid		Rate		Amount		Paid		Rate		Amount		Paid		Rate
Assets:	(Dollars in thousands)
Interest-earning assets:
One- to four-family loans	$	6,220,204	$	50,005	3.22	%	$	6,411,923	$	53,858	3.36	%	$	6,543,298	$	58,361	3.57	%
Commercial loans	770,096		9,404		4.78		815,222		9,092		4.37		766,232		9,657		4.94
Consumer loans	110,048		1,285		4.65		115,247		1,365		4.71		130,253		1,896		5.77
Total loans receivable(1)	7,100,348		60,694		3.41		7,342,392		64,315		3.49		7,439,783		69,914		3.75
MBS(2)	1,302,074		5,710		1.75		1,027,875		5,425		2.11		933,448		6,102		2.61
Investment securities(2)(3)	431,493		683		0.63		309,118		731		0.95		284,587		1,507		2.12
FHLB stock	85,187		1,069		4.99		101,163		1,080		4.25		98,384		1,826		7.36
Cash and cash equivalents	201,468		51		0.10		217,475		55		0.10		162,126		687		1.66
Total interest-earning assets	9,120,570		68,207		2.98		8,998,023		71,606		3.17		8,918,328		80,036		3.58
Other non-interest-earning assets	453,422						466,789						427,858
Total assets	$	9,573,992					$	9,464,812					$	9,346,186

Liabilities and stockholders' equity:
Interest-bearing liabilities:
Checking	$	1,360,864	223		0.07		$	1,294,557	212		0.07		$	1,085,818	170		0.06
Savings	442,906		68		0.06		426,798		70		0.07		357,674		79		0.09
Money market	1,474,720		1,184		0.32		1,362,042		1,252		0.37		1,173,545		2,063		0.70
Retail/business certificates	2,745,836		12,178		1.76		2,760,645		13,142		1.89		2,681,081		14,111		2.09
Wholesale certificates	251,634		414		0.66		267,967		623		0.92		275,941		1,539		2.21
Total deposits	6,275,960		14,067		0.89		6,112,009		15,299		1.00		5,574,059		17,962		1.28


Borrowings(4)	1,775,380		10,327		2.30		1,819,601		10,624		2.31		2,233,327		13,377		2.36
Total interest-bearing liabilities	8,051,340		24,394		1.20		7,931,610		25,923		1.30		7,807,386		31,339		1.59
Other non-interest-bearing liabilities	240,476						227,915						206,253
Stockholders' equity	1,282,176						1,305,287						1,332,547
Total liabilities and stockholders' equity	$	9,573,992					$	9,464,812					$	9,346,186

Net interest income(5)			$	43,813					$	45,683					$	48,697
Net interest rate spread(6)					1.78						1.87						1.99
Net interest-earning assets	$	1,069,230					$	1,066,413					$	1,110,942
Net interest margin(7)					1.92						2.03						2.18
Ratio of interest-earning assets to interest-bearing liabilities					1.13x						1.13x						1.14x

Selected performance ratios:
Return on average assets (annualized)					0.79	%					0.77	%					0.96	%
Return on average equity (annualized)					5.90						5.60						6.76
Average equity to average assets					13.39						13.79						14.26
Operating expense ratio(8)					1.13						1.15						1.13
Efficiency ratio(9)					55.37						53.64						48.89

(1)Balances are adjusted for unearned loan fees and deferred costs. Loans that are 90 or more days delinquent are included in the loans receivable average balance with a yield of zero percent.

(2)AFS securities are adjusted for unamortized purchase premiums or discounts.

(3)The average balance of investment securities includes an average balance of nontaxable securities of $9.1 million, $10.9 million and $17.3 million for the three months ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively.

(4)The FHLB advance amounts and rates included in this line item include the effect of interest rate swaps and are net of deferred prepayment penalties.

(5)Net interest income represents the difference between interest income earned on interest-earning assets and interest paid on interest-bearing liabilities. Net interest income depends on the average balance of interest-earning assets and interest-bearing liabilities, and the interest rates earned or paid on them.

(6)Net interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

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

(8)The operating expense ratio represents annualized non-interest expense as a percentage of average assets.

(9)The efficiency ratio represents non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income.

Rate/Volume Analysis

The table below presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities, comparing the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (1) changes in volume, which are changes in the average balance multiplied by the previous period's average rate, and (2) changes in rate, which are changes in the average rate multiplied by the average balance from the previous period. The net changes attributable to the combined impact of both rate and volume have been allocated proportionately to the changes due to volume and the changes due to rate.


	For the Three Months Ended
	December 31, 2020 vs. December 31, 2019						December 31, 2020 vs. September 30, 2020
	Increase (Decrease) Due to						Increase (Decrease) Due to
	Volume		Rate		Total		Volume		Rate		Total
	(Dollars in thousands)
Interest-earning assets:
Loans receivable	$	(3,016)	$	(6,204)	$	(9,220)	$	(2,162)	$	(1,459)	$	(3,621)
MBS	1,977		(2,369)		(392)		1,297		(1,012)		285
Investment securities	546		(1,370)		(824)		238		(286)		(48)
FHLB stock	(221)		(536)		(757)		(185)		174		(11)
Cash and cash equivalents	134		(770)		(636)		(4)		—		(4)
Total interest-earning assets	(580)		(11,249)		(11,829)		(816)		(2,583)		(3,399)

Interest-bearing liabilities:
Checking	45		9		54		11		—		11
Savings	16		(27)		(11)		3		(5)		(2)
Money market	437		(1,317)		(880)		98		(166)		(68)
Certificates of deposit	211		(3,269)		(3,058)		(141)		(1,032)		(1,173)
Borrowings	(2,032)		(1,018)		(3,050)		(179)		(118)		(297)

Total interest-bearing liabilities	(1,323)		(5,622)		(6,945)		(208)		(1,321)		(1,529)

Net change in net interest income	$	743	$	(5,627)	$	(4,884)	$	(608)	$	(1,262)	$	(1,870)

For the Six Months Ended
March 31, 2020 vs. March 31, 2019
Increase (Decrease) Due to
Volume Rate Total
(Dollars in thousands)
Interest-earning assets:
Loans receivable $ (722 ) $ (2,180 ) $ (2,902 )
MBS (738 ) (118 ) (856 )
Investment securities 58
(115 ) (57 )
FHLB stock (164 ) (98 ) (262 )
Cash and cash equivalents (771 ) (619 ) (1,390 )
Total interest-earning assets (2,337 ) (3,130 ) (5,467 )

Interest-bearing liabilities:
Checking 10
47
57
Savings 1
39
40
Money market (228 ) (168 ) (396 )
Certificates of deposit 838
3,406
4,244
Borrowings (2,654 ) 775
(1,879 )
Total interest-bearing liabilities (2,033 ) 4,099
2,066

Net change in net interest income $ (304 ) $ (7,229 ) $ (7,533 )

Comparison of Operating Results for the Three Months Ended ~~March~~December 31, 2020 and 2019

~~For the quarter ended March 31, 2020, the~~The Company recognized net income of ~~$4.3~~$18.9 million, or ~~$0.03 per share, compared to net income of $24.6 million, or $0.18~~$0.14 per share, for the quarter ended ~~March~~December 31, 2020 compared to net income of $22.5 million, or $0.16 per share, for the quarter ended December 31, 2019. The decrease in net income was due primarily to ~~$22.1 million of~~a decrease in net interest income compared to the prior year quarter, partially offset by recording a negative provision for credit losses ~~during~~in the current quarter. Net interest income decreased $4.9 million, or 10.0%, from the prior year quarter to $43.8 million for the current quarter. The net interest margin decreased 1426 basis points, from ~~2.33%~~2.18% for the prior year quarter to ~~2.19%~~1.92% for the current quarter. The decrease in the net interest margin was due mainly to a decrease in asset yields, along with a change in asset mix as cash flows from the loan portfolio ~~yield and an increase~~have been used to purchase lower yielding securities, partially offset by a decrease in the cost of ~~deposits.~~deposits and borrowings.

Interest and Dividend Income

The weighted average yield on total interest-earning assets decreased ~~nine~~60 basis points, from ~~3.64%~~3.58% for the prior year quarter to ~~3.55%~~2.98% for the current quarter, ~~and~~while the average balance of interest-earning assets ~~decreased $133.7~~increased $202.2 million. The decrease in the weighted average yield between periods was due primarily to a decrease in the loan portfolio yield, along with a change in asset mix as cash flows from the loan portfolio have been used to purchase lower yielding securities. The following table presents the components of interest and dividend income for the time periods presented, along with the change measured in dollars and percent.


	For the Three Months Ended
	December 31,				Change Expressed in:
	2020		2019		Dollars		Percent
	(Dollars in thousands)
INTEREST AND DIVIDEND INCOME:
Loans receivable	$	60,694	$	69,914	$	(9,220)	(13.2)	%
MBS	5,710		6,102		(392)		(6.4)
FHLB stock	1,069		1,826		(757)		(41.5)
Investment securities	683		1,507		(824)		(54.7)
Cash and cash equivalents	51		687		(636)		(92.6)
Total interest and dividend income	$	68,207	$	80,036	$	(11,829)	(14.8)

For the Three Months Ended
March 31, Change Expressed in:
2020 2019 Dollars Percent
(Dollars in thousands)
INTEREST AND DIVIDEND INCOME:
Loans receivable $ 69,613
$ 71,657
$ (2,044 ) (2.9 )%
MBS 5,866
6,301
(435 ) (6.9 )
FHLB stock 1,714
1,831
(117 ) (6.4 )
Investment securities 1,382
1,505
(123 ) (8.2 )
Cash and cash equivalents 380
743
(363 ) (48.9 )
Total interest and dividend income $ 78,955
$ 82,037
$ (3,082 ) (3.8 )

The decrease in interest income on loans receivable was due mainly to a 34 basis point decrease in ~~yield resulting from an increase in~~ the ~~amortization of premiums related to correspondent loan payoff and endorsement activity. The~~ weighted average yield on the ~~loans receivable~~ portfolio, ~~decreased seven basis points,~~ from ~~3.79%~~3.75% for the prior year quarter to ~~3.72%~~3.41% for the current quarter, primarily on correspondent loans related to higher premium amortization resulting from increases in payoff and endorsement activity, as well as adjustable-rate loans repricing to lower market rates, endorsements and refinances of one- to four-family originated loans to lower market rates, and the origination of new loans at lower market rates. Additionally, the average balance of the portfolio decreased $339.4 million compared to the prior year quarter. The majority of the decrease in the average balance of the loan portfolio between periods was due to a reduction in the correspondent one-to four-family loan portfolio as we suspended accepting new applications for these loans in mid-March 2020 to mid-June 2020. This was done to manage the influx of refinance requests from current customers in our local market areas during that time period while also managing changing Bank operations due to the COVID-19 pandemic.

The decrease in interest income on the MBS portfolio was due ~~primarily~~ to ~~a $39.5 million, or 4.1%, decrease in the average balance of the portfolio, along with~~ an ~~eight~~86 basis point decrease in the weighted average yield ~~on the portfolio, from 2.63% for the prior year quarter~~ to ~~2.55% for~~1.75% in the current ~~quarter.~~ quarter as a result of new purchases at lower market yields and the repricing of existing adjustable-rate MBS to lower market yields, partially offset by a $368.6 million increase in the average balance of the portfolio.

The decrease in dividend income on FHLB stock was due mainly to a decrease in the dividend rate paid by FHLB, along with a decrease in the average balance of FHLB stock. The average balance decreased as the Bank did not replace certain maturing FHLB advances between periods, which reduced the amount of FHLB stock owned by the Bank per FHLB requirements.

The decrease in interest income on investment securities was due to a 149 basis point decrease in the weighted average yield ~~was due primarily~~ to 0.63% for the ~~purchase~~current quarter as a result of ~~MBS~~new purchases at lower market ~~rates lower than~~yields, partially offset by a $146.9 million increase in the ~~existing~~average balance of the portfolio.

The decrease in interest income on cash and cash equivalents was due ~~mainly~~ to a decrease in the yield earned on cash held at the FRB of Kansas City, ~~as well as~~partially offset by a ~~decrease~~$39.3 million increase in the average ~~balance of operating cash.~~balance.

Interest Expense

The weighted average rate paid on total interest-bearing liabilities ~~increased four~~decreased 39 basis points, from ~~1.51%~~1.59% for the prior year quarter to ~~1.55%~~1.20% for the current quarter, while the average balance of interest-bearing liabilities ~~decreased $67.2~~increased $244.0 million. The increase in the average balance was primarily in checking, savings and money market accounts, partially offset by a decrease in borrowings. The following table presents the components of interest expense for the time periods presented, along with the change measured in dollars and percent.


	For the Three Months Ended
	December 31,				Change Expressed in:
	2020		2019		Dollars		Percent
	(Dollars in thousands)
INTEREST EXPENSE:
Deposits	$	14,067	$	17,962	$	(3,895)	(21.7)	%
Borrowings	10,327		13,377		(3,050)		(22.8)
Total interest expense	$	24,394	$	31,339	$	(6,945)	(22.2)

For the Three Months Ended
March 31, Change Expressed in:
2020 2019 Dollars Percent
(Dollars in thousands)
INTEREST EXPENSE:
Deposits $ 17,804
$ 16,096
$ 1,708
10.6 %
Borrowings 12,483
13,344
(861 ) (6.5 )
Total interest expense $ 30,287
$ 29,440
$ 847
2.9

The ~~increase~~decrease in interest expense on deposits was due ~~primarily~~mainly to ~~an increase~~a decrease in the ~~cost of the retail/business certificate of deposit portfolio. The~~ weighted average rate ~~of the~~paid on retail/business certificate of deposit portfolio increased 24 basis points, to 2.11% for the current quarter, and the average balance increased $199.2 million, or approximately 8%. Late in the third quarter of fiscal year 2019, the Bank increased offered rates on short-term and certain intermediate-term certificates of deposit, ~~in an effort to encourage customers to move funds to those terms~~money market accounts, and ~~during the fourth quarter of fiscal year 2019, the Bank held the unTraditional campaign, resulting in growth in the short-term and certain intermediate-term~~wholesale certificates of ~~deposit.~~deposit, which decreased by 33 basis points, 38 basis points, and 155 basis points, respectively. Since the onset of the COVID-19 pandemic, certificates of deposit have been gradually repricing down as they renew or are replaced at lower offered rates and rates on money market accounts have been lowered.

The decrease in interest expense on borrowings was due primarily to a $457.9 million decrease in the average balance, ofas certain maturing FHLB advances asand repurchase agreements were not ~~all of~~replaced and the ~~advances maturing between periods were renewed, as well as a decrease in the average rate~~Bank paid ~~on the~~down its FHLB line of ~~credit.~~

credit with funds generated from the deposit portfolio.

Provision for Credit Losses

~~The~~For the quarter ended December 31, 2020, the Bank recorded a negative provision for credit losses ~~during the current quarter~~ of ~~$22.1~~$1.5 million, compared to noa $225 thousand provision for credit losses during the prior year quarter. The ~~$22.1 million~~negative provision ~~for credit losses~~ in the current quarter was ~~in recognition~~composed of ~~the deterioration of economic conditions as~~ a ~~result of the COVID-19 pandemic. See additional ACL discussion~~$177 thousand decrease in the ACL for loans and a $1.4 million decrease in the reserve for off-balance sheet credit exposures. The $177 thousand decrease in the ACL for loans was due primarily to a reduction in the correspondent one- to four-family loan portfolio, partially offset by a slight increase in the ACL for commercial loans due to an increase in the balance of special mention loans during the current quarter. The $1.4 million reduction in the reserve for off-balance sheet credit exposures was due primarily to an improved economic forecast during the current quarter with consideration given to the current economic climate in which these loans are being underwritten. See "Financial Condition - Asset ~~Quality - Allowance~~Quality" above for additional discussion regarding management's evaluation of the adequacy of the Bank's ACL and reserve for off-balance sheet credit ~~losses and Provision for credit losses" section above.~~exposures at December 31, 2020.

Non-Interest Income

The following table presents the components of non-interest income for the time periods presented, along with the change measured in dollars and percent.


	For the Three Months Ended
	December 31,				Change Expressed in:
	2020		2019		Dollars		Percent
	(Dollars in thousands)
NON-INTEREST INCOME:
Deposit service fees	$	2,947	$	3,062	$	(115)	(3.8)	%
Insurance commissions	638		691		(53)		(7.7)


Other non-interest income	1,485		1,751		(266)		(15.2)
Total non-interest income	$	5,070	$	5,504	$	(434)	(7.9)

For the Three Months Ended
March 31, Change Expressed in:
2020 2019 Dollars Percent
(Dollars in thousands)
NON-INTEREST INCOME:
Deposit service fees $ 2,783
$ 3,091
$ (308 ) (10.0 )%
Insurance commissions 400
541
(141 ) (26.1 )
Other non-interest income 1,488
1,369
119
8.7
Total non-interest income $ 4,671
$ 5,001
$ (330 ) (6.6 )

The decrease in ~~deposit service fees~~other non-interest income was ~~due~~ mainly the result of a decrease in income from BOLI compared to the ~~discontinuation of point-of-sale service charges, which~~prior year quarter due to a reduction in the yield and lower death benefit receipts between the two periods.

Subsequent to December 31, 2020, the Bank ~~ceased charging in April 2019. The decrease in insurance commissions was due primarily~~sold its Class B VISA shares and expects to recognize a gain of approximately $7 million during the ~~receipt of annual contingent insurance commissions and adjustments to the related accruals.~~March 31, 2021 quarter.

Non-Interest Expense

The following table presents the components of non-interest expense for the time periods presented, along with the change measured in dollars and percent.


	For the Three Months Ended
	December 31,				Change Expressed in:
	2020		2019		Dollars		Percent
	(Dollars in thousands)
NON-INTEREST EXPENSE:
Salaries and employee benefits	$	14,138	$	13,471	$	667	5.0	%
Information technology and related expense	4,233		4,141		92		2.2
Occupancy, net	3,379		3,207		172		5.4
Regulatory and outside services	1,585		1,343		242		18.0
Advertising and promotional	838		1,410		(572)		(40.6)
Deposit and loan transaction costs	766		711		55		7.7
Federal insurance premium	621		—		621		N/A
Office supplies and related expense	424		519		(95)		(18.3)

Other non-interest expense	1,083		1,698		(615)		(36.2)
Total non-interest expense	$	27,067	$	26,500	$	567	2.1

For the Three Months Ended
March 31, Change Expressed in:
2020 2019 Dollars Percent
(Dollars in thousands)
NON-INTEREST EXPENSE:
Salaries and employee benefits $ 13,235
$ 12,789
$ 446
3.5 %
Information technology and related expense 4,268
4,284
(16 ) (0.4 )
Occupancy, net 3,449
3,292
157
4.8
Advertising and promotional 1,359
1,390
(31 ) (2.2 )
Regulatory and outside services 1,297
1,056
241
22.8
Deposit and loan transaction costs 678
465
213
45.8
Office supplies and related expense 592
736
(144 ) (19.6 )
Federal insurance premium —
659
(659 ) (100.0 )
Other non-interest expense 1,286
1,470
(184 ) (12.5 )
Total non-interest expense $ 26,164
$ 26,141
$ 23
0.1

The increase in salaries and employee benefits ~~expense~~ was due ~~mainly~~primarily to an increase in loan commissions, an increase in full-time equivalent employees, and ~~merit increases between periods.~~higher non-officer related bonuses paid in the current quarter. The increase in regulatory and outside services was due ~~primarily~~mainly to ~~cash delivery services related~~higher progress billings from our external auditors and other professional service fees. The decrease in advertising and promotional expenses was due mainly to ~~increasing~~ the ~~amount~~timing of ~~cash on hand in anticipation of customer cash needs during the COVID-19 pandemic, as well as an increase in consulting expenses.~~campaigns. The increase in ~~deposit and loan transaction costs was due primarily to an increase in loan activities in~~ the ~~current quarter as compared to the prior year quarter. The decrease in~~ federal insurance premium was due mainly to the Bank ~~receiving~~utilizing an assessment credit from the ~~FDIC as discussed above.~~Federal Deposit Insurance Corporation ("FDIC") during the prior year quarter. The decrease in other non-interest expense was due primarily to a decrease in write-downs of OREO properties in the current quarter compared to the prior year quarter.

The Company's efficiency ratio was ~~49.05%~~55.37% for the current quarter compared to ~~45.38%~~48.89% for the prior year quarter. The change in the efficiency ratio was due ~~mainly~~ to ~~a decrease in~~lower net interest ~~income.~~

~~Income Tax Expense~~

~~Income tax expense was $824 thousand for~~income in the current quarter compared to ~~$6.9 million for~~ the prior year quarter. The efficiency ratio is a measure of a financial institution's total non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. A higher value indicates that the financial institution is generating revenue with a proportionally higher level of expense, relative to the net interest margin.

Income Tax Expense

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


	For the Three Months Ended
	December 31,						Change Expressed in:
	2020			2019			Dollars		Percent
	(Dollars in thousands)
Income before income tax expense	$	23,348		$	27,476		$	(4,128)	(15.0)	%
Income tax expense	4,450			4,965			(515)		(10.4)
Net income	$	18,898		$	22,511		$	(3,613)	(16.0)

Effective Tax Rate	19.1		%	18.1		%

The decrease in income tax expense was due primarily to lower pretax income in the current quarter, ~~as well as a lower~~partially offset by an increase in the effective tax rate. The effective tax rate ~~for the current quarter~~ was ~~16.2% compared to 21.9% for~~lower in the prior year ~~quarter. The lower effective tax rate~~due primarily to a discrete benefit recognized in ~~the current quarter compared to~~ the prior year quarter ~~was due mainly~~related to certain BOLI policies that were acquired in fiscal year 2018. Management anticipates the ~~Company's permanent differences having a proportionately larger impact given the lower pretax~~effective income ~~in the current quarter.~~tax rate for fiscal year 2021 will be approximately 21% to 22%.

~~Average Balance Sheet~~

Weighted average yields are derived by dividing annualized income by the average balance of the related assets, and weighted average rates are derived by dividing annualized expense by the average balance of the related liabilities, for the periods shown. Average outstanding balances are derived from average daily balances. The weighted average yields and rates include amortization of fees, costs, premiums and discounts, which are considered adjustments to yields/rates. Weighted average yields on tax-exempt securities are not calculated on a fully taxable equivalent basis.

For the Three Months Ended
March 31, 2020 March 31, 2019
Average Interest Average Interest
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Amount Paid Rate Amount Paid Rate
Assets: (Dollars in thousands)
Interest-earning assets:
One- to four-family loans $ 6,594,029
$ 58,838
3.57 % $ 6,746,611
$ 61,325
3.64 %
Commercial loans 759,328
8,994
4.69
680,110
8,186
4.80
Consumer loans 126,710
1,781
5.65
137,342
2,146
6.33
Total loans receivable⁽¹⁾
7,480,067
69,613
3.72
7,564,063
71,657
3.79
MBS⁽²⁾
920,419
5,866
2.55
959,897
6,301
2.63
Investment securities⁽²⁾⁽³⁾
280,911
1,382
1.97
272,218
1,505
2.21
FHLB stock 99,879
1,714
6.90
99,725
1,831
7.45
Cash and cash equivalents⁽⁴⁾
105,381
380
1.43
124,444
743
2.39
Total interest-earning assets⁽¹⁾⁽²⁾
8,886,657
78,955
3.55
9,020,347
82,037
3.64
Other non-interest-earning assets 454,687
370,396

Total assets $ 9,341,344
$ 9,390,743

Liabilities and stockholders' equity:
Interest-bearing liabilities:
Checking $ 1,107,232
181
0.07
$ 1,076,504
149
0.06
Savings 365,554
74
0.08
358,733
56
0.06
Money market 1,208,521
1,981
0.66
1,275,504
2,269
0.72
Retail/business certificates 2,691,029
14,103
2.11
2,491,814
11,492
1.87
Wholesale certificates 296,828
1,465
1.98
401,722
2,130
2.15
Total deposits 5,669,164
17,804
1.26
5,604,277
16,096
1.16
Borrowings⁽⁵⁾
2,176,166
12,483
2.29
2,308,271
13,344
2.33
Total interest-bearing liabilities 7,845,330
30,287
1.55
7,912,548
29,440
1.51
Other non-interest-bearing liabilities 183,018
123,280

Stockholders' equity 1,312,996
1,354,915

Total liabilities and stockholders' equity $ 9,341,344
$ 9,390,743

Net interest income⁽⁶⁾
$ 48,668
$ 52,597

Net interest rate spread⁽⁷⁾⁽⁸⁾
2.00
2.13
Net interest-earning assets $ 1,041,327
$ 1,107,799

Net interest margin⁽⁸⁾⁽⁹⁾
2.19
2.33
Ratio of interest-earning assets to interest-bearing liabilities 1.13x
1.14x

Selected performance ratios:
Return on average assets (annualized)⁽⁸⁾
0.18 % 1.05 %
Return on average equity (annualized)⁽⁸⁾
1.30
7.25
Average equity to average assets 14.06
14.43
Operating expense ratio⁽¹⁰⁾
1.12
1.11
Efficiency ratio^(8)(11)
49.05
45.38


~~(1)~~	~~Balances are adjusted for unearned loan fees and deferred costs. Loans that are 90 or more days delinquent are included in the loans receivable average balance with a yield of zero percent.~~


~~(2)~~	~~AFS securities are adjusted for unamortized purchase premiums or discounts.~~


~~(3)~~	The average balance of investment securities includes an average balance of nontaxable securities of $15.0 million and $22.0 million for the three months ended March 31, 2020 and March 31, 2019, respectively.


~~(4)~~	~~There were no cash and cash equivalents related to the leverage strategy during the quarters ended March 31, 2020 and March 31, 2019.~~


~~(5)~~	There were no borrowings related to the leverage strategy during the quarters ended March 31, 2020 and March 31, 2019. The FHLB advance amounts and rates included in this line include the effect of interest rate swaps and are net of deferred prepayment penalties.


~~(6)~~	Net interest income represents the difference between interest income earned on interest-earning assets and interest paid on interest-bearing liabilities. Net interest income depends on the average balance of interest-earning assets and interest-bearing liabilities, and the interest rates earned or paid on them.


~~(7)~~	~~Net interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.~~


~~(8)~~	~~The leverage strategy was not in place during the quarters ended March 31, 2020 and March 31, 2019.~~


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


~~(10)~~	~~The operating expense ratio represents annualized non-interest expense as a percentage of average assets.~~


~~(11)~~	~~The efficiency ratio represents non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income.~~

~~Rate/Volume Analysis~~

The table below presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities, comparing the three months ended March 31, 2020 to the three months ended March 31, 2019. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (1) changes in volume, which are changes in the average balance multiplied by the previous year's average rate and (2) changes in rate, which are changes in the average rate multiplied by the average balance from the previous year period. The net changes attributable to the combined impact of both rate and volume have been allocated proportionately to the changes due to volume and the changes due to rate.

For the Three Months Ended March 31,
2020 vs. 2019
Increase (Decrease) Due to
Volume Rate Total
(Dollars in thousands)
Interest-earning assets:
Loans receivable $ (564 ) $ (1,480 ) $ (2,044 )
MBS (255 ) (180 ) (435 )
Investment securities 47
(170 ) (123 )
FHLB stock 3
(120 ) (117 )
Cash and cash equivalents (100 ) (263 ) (363 )
Total interest-earning assets (869 ) (2,213 ) (3,082 )

Interest-bearing liabilities:
Checking 5
27
32
Savings 1
17
18
Money market (107 ) (181 ) (288 )
Certificates of deposit 498
1,448
1,946
Borrowings (775 ) (86 ) (861 )
Total interest-bearing liabilities (378 ) 1,225
847

Net change in net interest income $ (491 ) $ (3,438 ) $ (3,929 )

Comparison of Operating Results for the Three Months Ended ~~March~~December 31, 2020 and ~~December 31, 2019~~September 30, 2020

For the quarter ended ~~March~~December 31, 2020, the Company recognized net income of ~~$4.3~~$18.9 million, or ~~$0.03~~$0.14 per share, compared to net income of ~~$22.5~~$18.3 million, or ~~$0.16~~$0.13 per share, for the quarter ended ~~December 31, 2019.~~September 30, 2020. The ~~decrease~~increase was due primarily to ~~recording~~ a ~~$22.1 million provision for credit losses during~~lower effective tax rate compared to the ~~current~~prior quarter. The net interest margin ~~increased one~~decreased 11 basis ~~point,~~points, from ~~2.18%~~2.03% for the prior quarter to ~~2.19%~~1.92% for the current quarter. The ~~increase~~decrease in the net interest margin was due mainly to a decrease in the loan portfolio and securities portfolio yields, along with a decrease in the average balance of the loan portfolio, partially offset by a decrease in the cost of ~~borrowings compared to the prior quarter.~~deposits.

Interest and Dividend Income

The weighted average yield on total interest-earning assets decreased ~~three~~19 basis points, from ~~3.58%~~3.17% for the prior quarter to ~~3.55%~~2.98% for the current quarter, ~~and~~while the average balance of interest-earning assets ~~decreased $31.7~~increased $122.5 million between the two periods. The following table presents the components of interest and dividend income for the time periods presented, along with the change measured in dollars and percent.


	For the Three Months Ended
	December 31,		September 30,		Change Expressed in:
	2020		2020		Dollars		Percent
	(Dollars in thousands)
INTEREST AND DIVIDEND INCOME:
Loans receivable	$	60,694	$	64,315	$	(3,621)	(5.6)	%
MBS	5,710		5,425		285		5.3
FHLB stock	1,069		1,080		(11)		(1.0)
Investment securities	683		731		(48)		(6.6)
Cash and cash equivalents	51		55		(4)		(7.3)
Total interest and dividend income	$	68,207	$	71,606	$	(3,399)	(4.7)

For the Three Months Ended
March 31, December 31, Change Expressed in:
2020 2019 Dollars Percent
(Dollars in thousands)
INTEREST AND DIVIDEND INCOME:
Loans receivable $ 69,613
$ 69,914
$ (301 ) (0.4 )%
MBS 5,866
6,102
(236 ) (3.9 )
FHLB stock 1,714
1,826
(112 ) (6.1 )
Investment securities 1,382
1,507
(125 ) (8.3 )
Cash and cash equivalents 380
687
(307 ) (44.7 )
Total interest and dividend income $ 78,955
$ 80,036
$ (1,081 ) (1.4 )

The decrease in interest income on loans receivable was due to a $242.0 million decrease in the average balance and eight basis point decrease in the weighted average portfolio yield. The decrease in the average balance was primarily in the correspondent loan portfolio, as payoff activity outpaced purchases during the current quarter, along with a decrease in the commercial loan portfolio due primarily to the payoff of two large loans at the beginning of the current quarter. The weighted average yield on the loans receivable portfolio decreased ~~three basis points,~~ from ~~3.75%~~3.49% for the prior quarter to ~~3.72%~~3.41% for the current quarter, due mainly to ~~a reduction~~endorsements and refinances of one- to four-family loans to lower current market rates, along with an increase in ~~deferred fee recognition~~premium amortization related to ~~commercial~~correspondent loan payoff ~~activity, as well as the origination and purchase of new loans at market rates lower than the existing portfolio.~~ activity.

The ~~decrease~~increase in interest income on the MBS portfolio was due ~~primarily~~ to a ~~six~~$274.2 million increase in the average balance as a result of purchases, primarily utilizing funds received from loan repayments. This was partially offset by a 36 basis point decrease in the weighted average yield, ~~on the portfolio~~ to ~~2.55%~~1.75% for the current ~~quarter. The decrease in the weighted average yield was~~quarter, due primarily to ~~the purchase of MBS~~purchases at lower market ~~rates lower than the existing portfolio. The decrease in interest income on cash and cash equivalents was due mainly to a decrease~~yields, along with an increase in the ~~average balance~~impact of ~~operating cash.~~net premium amortization.

Interest Expense

The weighted average rate paid on total interest-bearing liabilities decreased ~~four~~10 basis points, from ~~1.59%~~1.30% for the prior quarter to ~~1.55%~~1.20% for the current quarter, while the average balance of interest-bearing liabilities increased ~~$37.9~~$119.7 million between the two periods. The following table presents the components of interest expense for the time periods presented, along with the change measured in dollars and percent.


	For the Three Months Ended
	December 31,		September 30,		Change Expressed in:
	2020		2020		Dollars		Percent
	(Dollars in thousands)
INTEREST EXPENSE:
Deposits	$	14,067	$	15,299	$	(1,232)	(8.1)	%
Borrowings	10,327		10,624		(297)		(2.8)
Total interest expense	$	24,394	$	25,923	$	(1,529)	(5.9)

For the Three Months Ended
March 31, December 31, Change Expressed in:
2020 2019 Dollars Percent
(Dollars in thousands)
INTEREST EXPENSE:
Deposits $ 17,804
$ 17,962
$ (158 ) (0.9 )%
Borrowings 12,483
13,377
(894 ) (6.7 )
Total interest expense $ 30,287
$ 31,339
$ (1,052 ) (3.4 )
The decrease in interest expense on deposits was due primarily to a decrease in the weighted average rate paid on the certificate of deposit portfolio. Management has generally reduced deposit offer rates as discussed above. See "Financial Condition - Liabilities" above for additional information on deposits.

The decrease in interest expense on borrowings was due primarily to ~~the replacement of certain FHLB advances to take advantage of lower market rates late in the December 31, 2019 quarter and~~not replacing term borrowings that matured during the current quarter and prior quarter. ~~During~~Cash flows from the deposit portfolio were generally utilized to repay maturing term borrowings during the current ~~quarter,~~and prior quarters. The average balance of borrowings decreased $44.2 million compared to the Bank prepaid fixed-rate FHLB advances scheduled to mature in the next year totaling $350.0 million with a weighted average rate of 2.42%, and replaced these advances with $350.0 million of fixed-rate FHLB advances with a weighted average term of 4.7 years and a weighted average effective rate of 1.70%, which includes the impact of deferred prepayment penalties being recognized over the life of the new advances.prior quarter.

Provision for Credit Losses

The Bank recorded a negative provision for credit losses during the current quarter of ~~$22.1~~$1.5 million, compared to ano provision for credit losses ~~during~~for the ~~prior~~ quarter ended September 30, 2020. See the Comparison of ~~$225 thousand. The $22.1 million~~Operating Results for the Three Months Ended December 31, 2020 and 2019 above for discussion regarding the negative provision for credit losses in the current ~~quarter was in recognition of the deterioration of economic conditions as a result of the COVID-19 pandemic.~~quarter. See ~~additional ACL discussion in the~~ "Financial Condition - Asset ~~Quality - Allowance~~Quality" above for additional discussion regarding management's evaluation of the adequacy of the Bank's ACL and reserve for off-balance sheet credit ~~losses and Provision for credit losses" section above.~~exposures at December 31, 2020.

Non-Interest Income

The following table presents the components of non-interest income for the time periods presented, along with the change measured in dollars and percent.

For the Three Months Ended
March 31, December 31, Change Expressed in:
2020 2019 Dollars Percent
(Dollars in thousands)
NON-INTEREST INCOME:
Deposit service fees $ 2,783
$ 3,062
$ (279 ) (9.1 )%
Insurance commissions 400
691
(291 ) (42.1 )
Other non-interest income 1,488
1,751
(263 ) (15.0 )
Total non-interest income $ 4,671
$ 5,504
$ (833 ) (15.1 )


	For the Three Months Ended
	December 31,		September 30,		Change Expressed in:
	2020		2020		Dollars		Percent
	(Dollars in thousands)
NON-INTEREST INCOME:
Deposit service fees	$	2,947	$	2,901	$	46	1.6	%
Insurance commissions	638		725		(87)		(12.0)


Other non-interest income	1,485		1,359		126		9.3
Total non-interest income	$	5,070	$	4,985	$	85	1.7

The decrease in deposit service fees was due mainly to a decrease in debit card income resulting from a reduction in transaction volume related to the seasonality of such activity, as well as a decrease in service charge income. The decrease in insurance commissions was due primarily to the receipt of annual contingent insurance commissions and adjustments to the related accruals. Contingent insurance commissions are performance-based incentives based on certain criteria established by the insurance carriers. Contingent insurance commissions are accrued based on management's expectations and are adjusted when the funds are received. The decrease in other non-interest income was due mainly to the receipt of a BOLI death benefit during the prior quarter, and no such benefit during the current quarter.

Non-Interest Expense

The following table presents the components of non-interest expense for the time periods presented, along with the change measured in dollars and percent.


	For the Three Months Ended
	December 31,		September 30,		Change Expressed in:
	2020		2020		Dollars		Percent
	(Dollars in thousands)
NON-INTEREST EXPENSE:
Salaries and employee benefits	$	14,138	$	13,231	$	907	6.9	%
Information technology and related expense	4,233		4,280		(47)		(1.1)
Occupancy, net	3,379		3,658		(279)		(7.6)
Regulatory and outside services	1,585		1,574		11		0.7
Advertising and promotional	838		1,116		(278)		(24.9)
Deposit and loan transaction costs	766		804		(38)		(4.7)
Federal insurance premium	621		627		(6)		(1.0)
Office supplies and related expense	424		609		(185)		(30.4)
Other non-interest expense	1,083		1,277		(194)		(15.2)
Total non-interest expense	$	27,067	$	27,176	$	(109)	(0.4)

For the Three Months Ended
March 31, December 31, Change Expressed in:
2020 2019 Dollars Percent
(Dollars in thousands)
NON-INTEREST EXPENSE:
Salaries and employee benefits $ 13,235
$ 13,471
$ (236 ) (1.8 )%
Information technology and related expense 4,268
4,141
127
3.1
Occupancy, net 3,449
3,207
242
7.5
Advertising and promotional 1,359
1,410
(51 ) (3.6 )
Regulatory and outside services 1,297
1,343
(46 ) (3.4 )
Deposit and loan transaction costs 678
711
(33 ) (4.6 )
Office supplies and related expense 592
519
73
14.1
Other non-interest expense 1,286
1,698
(412 ) (24.3 )
Total non-interest expense $ 26,164
$ 26,500
$ (336 ) (1.3 )

The ~~decrease~~increase in salaries and employee benefits ~~expense~~was due primarily to non-officer employee bonuses of $313 thousand paid during the current quarter in appreciation of all the hard work and dedication by our non-officer employees during these challenging times, along with an increase in loan commissions. The decrease in occupancy, net was due mainly to a decrease in ~~loan commissions.~~utilities and maintenance

during the current quarter. The decrease in advertising and promotional expenses was due to the timing of campaigns. The decrease in office supplies and related expenses was due to the timing of supply purchases. The decrease in other non-interest expense was due ~~primarily~~ to ~~the prior quarter including~~ a ~~write-down~~reduction in customer debit card fraud losses, a decrease in mortgage servicing asset valuation charges related to changes in prepayment speeds, and a decrease in amortization of ~~an OREO property. This property was sold during the prior quarter.~~deposit intangibles.

The Company's efficiency ratio was ~~49.05%~~55.37% for the current quarter compared to ~~48.89%~~53.64% for the prior quarter. The change in the efficiency ratio was due primarily to lower ~~non-interest~~net interest income in the current quarter compared to the prior quarter.

Income Tax Expense

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


	For the Three Months Ended
	December 31,			September 30,			Change Expressed in:
	2020			2020			Dollars		Percent
	(Dollars in thousands)
Income before income tax expense	$	23,348		$	23,492		$	(144)	(0.6)	%
Income tax expense	4,450			5,213			(763)		(14.6)
Net income	$	18,898		$	18,279		$	619	3.4

Effective Tax Rate	19.1		%	22.2		%

The decrease in income tax expense was ~~$824 thousand for the current quarter,~~due mainly to a lower effective tax rate compared to ~~$5.0 million for~~ the prior quarter. The lower effective tax rate was ~~16.2% for the current quarter compared to 18.1% for the prior quarter. The effective tax rate was lower in the current quarter~~ due primarily to ~~lower pretax income due mainly~~true-ups related to the provision for credit losses in the current quarter. The decrease in pretax income resulted in the Company's permanent differences having a proportionately larger impact on the effective tax rate. Management anticipates the effective income tax rate for the remainder of fiscal year 2020 will be approximately 21% each quarter, resulting in an effective tax rate of approximately 20% for fiscal year 2020.

~~Average Balance Sheet~~

~~Weighted average yields are derived by dividing annualized income by the average balance~~preparation of the ~~related assets,~~September 30, 2020 federal and weighted average rates are derived by dividing annualized expense by the average balance of the related liabilities, for the periods shown. Average outstanding balances are derived from average daily balances. The weighted average yields and rates include amortization of fees, costs, premiums and discounts, which are considered adjustments to yields/rates. Weighted average yields on tax-exempt securities are not calculated on a fully taxable equivalent basis.state tax returns.

For the Three Months Ended
March 31, 2020 December 31, 2019
Average Interest Average Interest
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Amount Paid Rate Amount Paid Rate
Assets: (Dollars in thousands)
Interest-earning assets:
One- to four-family loans $ 6,594,029
$ 58,838
3.57 % $ 6,543,298
$ 58,361
3.57 %
Commercial loans 759,328
8,994
4.69
766,232
9,657
4.94
Consumer loans 126,710
1,781
5.65
130,253
1,896
5.77
Total loans receivable⁽¹⁾
7,480,067
69,613
3.72
7,439,783
69,914
3.75
MBS⁽²⁾
920,419
5,866
2.55
933,448
6,102
2.61
Investment securities⁽²⁾⁽³⁾
280,911
1,382
1.97
284,587
1,507
2.12
FHLB stock 99,879
1,714
6.90
98,384
1,826
7.36
Cash and cash equivalents⁽⁴⁾
105,381
380
1.43
162,126
687
1.66
Total interest-earning assets⁽¹⁾⁽²⁾
8,886,657
78,955
3.55
8,918,328
80,036
3.58
Other non-interest-earning assets 454,687
427,858

Total assets $ 9,341,344
$ 9,346,186

Liabilities and stockholders' equity:
Interest-bearing liabilities:
Checking $ 1,107,232
181
0.07
$ 1,085,818
170
0.06
Savings 365,554
74
0.08
357,674
79
0.09
Money market 1,208,521
1,981
0.66
1,173,545
2,063
0.70
Retail/business certificates 2,691,029
14,103
2.11
2,681,081
14,111
2.09
Wholesale certificates 296,828
1,465
1.98
275,941
1,539
2.21
Total deposits 5,669,164
17,804
1.26
5,574,059
17,962
1.28
Borrowings⁽⁵⁾
2,176,166
12,483
2.29
2,233,327
13,377
2.36
Total interest-bearing liabilities 7,845,330
30,287
1.55
7,807,386
31,339
1.59
Other non-interest-bearing liabilities 183,018
206,253

Stockholders' equity 1,312,996
1,332,547

Total liabilities and stockholders' equity $ 9,341,344
$ 9,346,186

Net interest income⁽⁶⁾
$ 48,668
$ 48,697

Net interest rate spread⁽⁷⁾⁽⁸⁾
2.00
1.99
Net interest-earning assets $ 1,041,327
$ 1,110,942

Net interest margin⁽⁸⁾⁽⁹⁾
2.19
2.18
Ratio of interest-earning assets to interest-bearing liabilities 1.13x
1.14x

Selected performance ratios:
Return on average assets (annualized)⁽⁸⁾
0.18 % 0.96 %
Return on average equity (annualized)⁽⁸⁾
1.30
6.76
Average equity to average assets 14.06
14.26
Operating expense ratio⁽¹⁰⁾
1.12
1.13
Efficiency ratio^(8)(11)
49.05
48.89


~~(1)~~	~~Balances are adjusted for unearned loan fees and deferred costs. Loans that are 90 or more days delinquent are included in the loans receivable average balance with a yield of zero percent.~~


~~(2)~~	~~AFS securities are adjusted for unamortized purchase premiums or discounts.~~


~~(3)~~	The average balance of investment securities includes an average balance of nontaxable securities of $15.0 million and $17.3 million for the quarters ended March 31, 2020 and December 31, 2019, respectively.


~~(4)~~	~~There were no cash and cash equivalents related to the leverage strategy during the quarters ended March 31, 2020 and December 31, 2019.~~


~~(5)~~	There were no FHLB borrowings related to the leverage strategy during the quarters ended March 31, 2020 and December 31, 2019. The FHLB advance amounts and rates included in this line include the effect of interest rate swaps and are net of deferred prepayment penalties.


~~(6)~~	Net interest income represents the difference between interest income earned on interest-earning assets and interest paid on interest-bearing liabilities. Net interest income depends on the average balance of interest-earning assets and interest-bearing liabilities, and the interest rates earned or paid on them.


~~(7)~~	~~Net interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.~~


~~(8)~~	~~The leverage strategy was not in place during the quarters ended March 31, 2020 and December 31, 2019.~~


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


~~(10)~~	~~The operating expense ratio represents annualized non-interest expense as a percentage of average assets.~~


~~(11)~~	~~The efficiency ratio represents non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income.~~

~~Rate/Volume Analysis~~

The table below presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities, comparing the three months ended March 31, 2020 to the three months ended December 31, 2019. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (1) changes in volume, which are changes in the average balance multiplied by the previous year's average rate and (2) changes in rate, which are changes in the average rate multiplied by the average balance from the previous year period. The net changes attributable to the combined impact of both rate and volume have been allocated proportionately to the changes due to volume and the changes due to rate.

For the Three Months Ended
March 31, 2020 vs. December 31, 2019
Increase (Decrease) Due to
Volume Rate Total
(Dollars in thousands)
Interest-earning assets:
Loans receivable $ 267
$ (568 ) $ (301 )
MBS (84 ) (152 ) (236 )
Investment securities (19 ) (106 ) (125 )
FHLB stock 23
(135 ) (112 )
Cash and cash equivalents (220 ) (87 ) (307 )
Total interest-earning assets (33 ) (1,048 ) (1,081 )

Interest-bearing liabilities:
Checking 3
9
12
Savings 1
(6 ) (5 )
Money market 52
(135 ) (83 )
Certificates of deposit 44
(126 ) (82 )
Borrowings (376 ) (518 ) (894 )
Total interest-bearing liabilities (276 ) (776 ) (1,052 )

Net change in net interest income $ 243
$ (272 ) $ (29 )

Liquidity and Capital Resources

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

We generally intend to manage cash reserves sufficient to meet short-term liquidity needs, which are routinely forecasted for 10, 30, and 365 days. Additionally, on a monthly basis, we perform a liquidity stress test in accordance with the Interagency Policy Statement on Funding and Liquidity Risk Management. The liquidity stress test incorporates both short-term and long-term liquidity scenarios in order to identify and to quantify liquidity risk. Management also monitors key liquidity statistics related to items such as wholesale funding gaps, borrowings capacity, and available unpledged collateral, as well as various liquidity ratios. See the "Executive Summary" above for information regarding the impact of the COVID-19 pandemic on our liquidity.

In the event short-term liquidity needs exceed available cash, the Bank has access to a line of credit at FHLB and the FRB of Kansas City's discount window. ~~Per FHLB's lending guidelines, total FHLB borrowings cannot exceed 40%~~See "Part I, Item 1. Business - Sources of ~~regulatory total assets without the pre-approval of FHLB senior management. The president of FHLB has approved an increase, through July 2020,~~Funds" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2020 for information regarding limits on the Bank's ~~borrowing limit to 55% of Bank Call Report total assets. When the leverage strategy is in place, the Bank maintains the resulting excess cash reserves from the~~ FHLB ~~borrowings at the FRB of Kansas City, which can be used to meet any short-term liquidity needs.~~borrowings. The amount that can be borrowed from the FRB of Kansas City's discount window is based upon the fair value of securities pledged as collateral and certain other characteristics of those securities. Management ~~had tested~~tests the Bank's access to the FRB of Kansas City's discount window annually with a nominal, overnight borrowing. At March 31, 2020, the Bank had pledged securities with an estimated value of $396.5 million as collateral at the FRB of Kansas City and had drawn down $30.0 million on the related line-of-credit. Management is currently using the FRB line of credit rather than the FHLB line of credit for short-term funding needs as the interest rate on the FRB line of credit is lower than the FHLB line of credit.

If management observes ~~a trend~~unusual trends in the amount and frequency of line of credit utilization and/or short-term borrowings, ~~that is not in conjunction with a planned strategy, such as the leverage strategy,~~ the Bank will likely utilize long-term wholesale borrowing sources such as FHLB advances and/or repurchase agreements to provide long-term, fixed-rate funding. The maturities of these long-term borrowings are generally staggered in order to mitigate the risk of a highly negative cash flow position at maturity. The Bank's internal policy limits total borrowings to 55% of total assets. At ~~March~~December 31, 2020, the Bank had total borrowings, at par, of ~~$2.12~~$1.74 billion, or approximately ~~23%~~18% of total ~~assets.~~assets, all of which were FHLB advances.

The amount of FHLB borrowings outstanding at ~~March~~December 31, 2020 was ~~$1.99~~$1.74 billion, of which ~~$1.04 billion~~$790.0 million were advances scheduled to mature in the next 12 months, including $640.0 million of one-year floating-rate FHLB advances tied to interest rate swaps. All FHLB borrowings are secured by certain qualifying loans pursuant to a blanket collateral agreement with FHLB. At March 31, 2020, the ratio of the par value of the Bank's FHLB borrowings to Call Report total assets was 21%. When the full leverage strategy is in place, FHLB borrowings may be in excess of 40% of the Bank's Call Report total assets, and may be in excess of 40% as long as the Bank continues its leverage strategy and FHLB senior management continues to approve the Bank's borrowing limit being in excess of 40% of Call Report total assets. All or a portion of the FHLB borrowings in conjunction with the leverage strategy can be repaid at any point in time while the strategy is in effect, if necessary or desired.

At ~~March~~December 31, 2020, the Bank had no repurchase ~~agreements of $100.0 million, or approximately 1% of total assets, all of which were scheduled to mature in the next 12 months.~~agreements. The Bank may enter into ~~additional~~ repurchase agreements as management deems appropriate, not to exceed 15% of total assets, and subject to the total borrowings internal policy limit of 55% as discussed above. The Bank has pledged securities with an estimated fair value of $109.4 million as collateral for repurchase agreements as of March 31, 2020. The securities pledged for the repurchase agreements will be delivered back to the Bank when the repurchase agreements mature.

The Bank could utilize the repayment and maturity of outstanding loans, MBS, and other investments for liquidity needs rather than reinvesting such funds into the related portfolios. At ~~March~~December 31, 2020, the Bank had ~~$759.3 million~~$1.55 billion of securities that were eligible but unused as collateral for borrowing or other liquidity needs.

The Bank has access to other sources of funds for liquidity purposes, such as brokered and public unit certificates of deposit. As of ~~March~~December 31, 2020, the Bank's policy allowed for combined brokered and public unit certificates of deposit up to 15% of total deposits. At ~~March~~December 31, 2020, the Bank did not have any brokered certificates of deposit, and public unit certificates of deposit were approximately 5%4% of total deposits. The Bank had pledged securities with an estimated fair value of ~~$321.5~~$304.8 million as collateral for public unit certificates of deposit at ~~March~~December 31, 2020. The securities pledged as collateral for public unit certificates of deposit are held under joint custody with FHLB and generally will be released upon deposit maturity.

At ~~March~~December 31, 2020, ~~$1.48~~$1.56 billion of the Bank's certificate of deposit portfolio was scheduled to mature within the next 12 months, including ~~$236.8~~$231.3 million of public unit certificates of deposit. Based on our deposit retention experience and our current pricing strategy, we anticipate the majority of the maturing retail certificates of deposit will renew or transfer to other deposit products of the Bank at ~~the~~ prevailing ~~rate,~~rates, although no assurance can be given in this regard. We also anticipate the majority of the maturing public unit certificates of deposit will be replaced with similar wholesale funding ~~products.~~products, depending on availability and pricing.

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

The following table presents the contractual maturities of our loan, MBS, and investment securities portfolios at ~~March~~December 31, 2020, along with associated weighted average yields. Loans and securities which have adjustable interest rates are shown as maturing in the period during which the contract is due. The table does not reflect the effects of possible prepayments or enforcement of due on sale clauses. As of ~~March~~December 31, 2020, the amortized cost of investment securities in our portfolio which are callable or have pre-refunding dates within one year was ~~$202.9~~$252.3 million.


	Loans(1)				MBS				Investment Securities				Total
	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
	(Dollars in thousands)
Amounts due:
Within one year	$	181,011	3.85	%	$	1,999	2.94	%	$	4,937	1.54	%	$	187,947	3.78	%

After one year:
Over one to two years	98,804		3.90		5,589		1.76		3,917		1.81		108,310		3.72
Over two to three years	77,144		4.63		24,855		1.67		75,071		0.36		177,070		2.40
Over three to five years	140,217		4.25		37,979		2.49		370,641		0.55		548,837		1.63
Over five to ten years	752,300		3.67		303,115		1.94		—		—		1,055,415		3.17
Over ten to fifteen years	1,526,380		3.10		839,404		1.43		—		—		2,365,784		2.51
After fifteen years	4,247,770		3.50		246,359		2.00		—		—		4,494,129		3.42
Total due after one year	6,842,615		3.46		1,457,301		1.67		449,629		0.53		8,749,545		3.01

	$	7,023,626	3.47		$	1,459,300	1.67		$	454,566	0.54		$	8,937,492	3.03

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

Loans⁽¹⁾
MBS Investment Securities Total
Amount Yield Amount Yield Amount Yield Amount Yield
(Dollars in thousands)
Amounts due:
Within one year $ 313,736
4.31 % $ 5,196
2.59 % $ 55,245
1.52 % $ 374,177
3.88 %

After one year:
Over one to two years 40,947
4.52
5,544
2.64
4,270
1.75
50,761
4.08
Over two to three years 60,480
4.42
27,140
1.53
27,490
1.98
115,110
3.16
Over three to five years 113,991
4.68
35,098
1.83
175,714
1.96
324,803
2.90
Over five to ten years 689,582
3.70
309,180
2.38
—
—
998,762
3.29
Over ten to fifteen years 1,280,491
3.54
339,352
2.50
—
—
1,619,843
3.33
After fifteen years 4,994,053
3.72
251,808
2.84
—
—
5,245,861
3.67
Total due after one year 7,179,544
3.71
968,122
2.50
207,474
1.96
8,355,140
3.53

$ 7,493,280
3.74
$ 973,318
2.50
$ 262,719
1.87
$ 8,729,317
3.54


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

Limitations on Dividends and Other Capital Distributions

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

The long-term ability of the Company to pay dividends to its stockholders is based primarily upon the ability of the Bank to make capital distributions to the Company. So long as the Bank remains well capitalized after each capital distribution (as evidenced by maintaining a Community Bank Leverage Ratio ("CBLR") greater than the required percentage), and operates in a safe and sound manner, it is management's belief that the OCC and FRB will continue to allow the Bank to distribute its earnings to the Company, although no assurance can be given in this regard. The Company has elected to not submit a regulatory non-objection notice of distribution of the Bank's current quarter earnings at this time due to the economic uncertainties associated with the COVID-19 pandemic. Management may submit a regulatory non-objection notice of distribution of the Bank's current quarter earnings in the future.

Off-Balance Sheet Arrangements, Commitments and Contractual Obligations

The Company, in the normal course of business, makes commitments to buy or sell assets, to extend credit, or to incur or fund liabilities. There have been no material changes in commitments, contractual obligations or off-balance sheet arrangements from September 30, ~~2019.~~2020. For additional information, see "Part II, Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Off-Balance Sheet Arrangements, Commitments and Contractual Obligations" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019.~~2020. We anticipate we will continue to have sufficient funds, through repayments and maturities of loans and securities, deposits and borrowings, to meet our current commitments.

The maximum balance of short-term FHLB borrowings outstanding at any month-end during the ~~six~~three months ended ~~March~~December 31, 2020 was ~~$1.24 billion,~~$840.0 million, and the average balance of short-term FHLB borrowings outstanding during this period was ~~$1.14 billion~~$823.4 million at a weighted average contractual rate of ~~1.97%~~0.72%. The balance of short-term FHLB borrowings outstanding at ~~March~~December 31, 2020 was ~~$1.04 billion,~~$790.0 million, at a weighted average contractual rate of ~~1.81%~~0.66%. Short-term FHLB borrowings for this purpose are defined as those with maturity dates within the next 12 months.

Contingencies

In the normal course of business, the Company and its subsidiary are named defendants in various lawsuits and counter claims. In the opinion of management, after consultation with legal counsel, none of the currently pending suits had or are expected to have a materially adverse effect on the Company's consolidated financial statements for the quarter ended ~~March~~December 31, 2020, or future periods.

Capital

Consistent with our goal to operate a sound and profitable financial organization, we actively seek to maintain a well-capitalized status for the Bank per the regulatory framework for prompt corrective action ("PCA"). In September 2019, the regulatory agencies, including the OCC and FRB, adopted a final rule, effective January 1, 2020, creating the CBLR for institutions with total consolidated assets of less than $10 billion and that meet other qualifying criteria. The CBLR provides for a simple measure of capital adequacy for qualifying institutions. According to the final rule, qualifyingQualifying institutions that elect to use the CBLR framework, such as the Bank and the Company, that maintain athe required minimum leverage ratio ~~of greater than 9%~~ will be considered to have satisfied the generally applicable risk-based and leverage capital requirements in the regulatory agencies' capital rules, and to have met the well-capitalized ratio requirements. In April 2020, the federal bank regulatory agencies announced the issuance of two interim final rules, effective immediately, to provide temporary relief to community banking organizations. Under the interim final rules, the CBLR requirement is a minimum of 8%capital requirements for the ~~remainder of calendar year 2020, 8.5% for calendar year 2021, and 9% thereafter. The Bank elected~~well capitalized category under the ~~CBLR framework during the current quarter.~~agencies' PCA framework. As of ~~March~~December 31, 2020, the Bank's CBLR was ~~12.4%~~12.2% and the Company's CBLR was ~~13.9%~~13.3%, which exceeded the minimum requirements. See "Part I, Item 1. Business - Regulation and Supervision - Regulatory Capital Requirements" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2020 for additional information related to regulatory capital.

The following table presents a reconciliation of equity under GAAP to regulatory capital amounts, as of ~~March~~December 31, 2020, for the Bank and the Company (dollars in thousands):


	Bank		Company
Total equity as reported under GAAP	$	1,169,923	$	1,276,548
AOCI	11,371		11,371
Goodwill and other intangibles, net of associated deferred taxes	(13,493)		(13,493)

Total tier 1 capital	$	1,167,801	$	1,274,426

Bank Company
Total equity as reported under GAAP $ 1,145,134
$ 1,287,793
AOCI 21,978
21,978
Goodwill and other intangibles, net of associated deferred taxes (14,478 ) (14,478 )
Total tier 1 capital $ 1,152,634
$ 1,295,293

Item 3. Quantitative and Qualitative Disclosure about Market Risk

Asset and Liability Management and Market Risk

For a complete discussion of the Bank's asset and liability management policies, as well as the potential impact of interest rate changes upon the market value of the Bank's portfolios, see "Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk" in the Company's Annual Report on Form 10-K for the year ended September 30, ~~2019.~~2020. The analysis presented in the tables below reflects the level of market risk at the Bank, including the cash the holding company has on deposit at the Bank.

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

On a weekly basis, management reviews deposit flows, loan demand, cash levels, and changes in several market rates to assess all pricing strategies. The Bank's pricing strategy for first mortgage loan products includes setting interest rates based on secondary market prices and competitor pricing for our local and correspondent lending markets. Pricing for commercial loans is generally based on competitor pricing and the credit risk of the borrower with consideration given to the overall relationship of the borrower. Generally, deposit pricing is based upon a survey of competitors in the Bank's market areas, and the need to attract funding and retain maturing deposits. The majority of our loans are fixed-rate products with maturities up to 30 years, while the majority of our retail deposits have stated maturities or repricing dates of less than two years.

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

Qualitative Disclosure about Market Risk

At ~~March~~December 31, 2020, the Bank's gap between the amount of interest-earning assets and interest-bearing liabilities projected to reprice within one year was ~~$508.6~~$86.8 million, or ~~5.43%~~0.90% of total assets, compared to ~~$251.9~~$436.4 million, or ~~2.73%~~4.6% of total assets, at ~~December 31, 2019.~~September 30, 2020. The ~~increase~~decrease in the one-year gap amount was due primarily to ~~lower~~an increase in non-maturity deposits during the quarter. In the Bank's interest rate risk model, short-term increases in non-maturity deposits are assumed to be unstable and thus are not considered to be long-term core deposits. As a result, these deposits are assumed to mature or reprice in the short term. At December 31, 2020, the amount of the Bank's non-maturity deposits projected to reprice in the first month was $829.5 million, which is $274.7 million higher than at September 30, 2020. This resulted in an increase in the amount of liabilities repricing in the one-year horizon. Additionally, interest rates ~~as of March~~were higher at December 31, 2020 compared to December 31, 2019. As interest rates decrease, borrowers have more economic incentive to refinance their mortgages and agency debt issuers have more economic incentive or opportunity to exercise their call options in order to issue new debt at lower interest rates,September 30, 2020, resulting in ~~lower projected cash flows on these assets.~~a decrease in the prepayment projections of mortgage-related assets compared to the previous quarter.

The majority of interest-earning assets anticipated to reprice in the coming year are repayments and prepayments on one- to four-family loans and MBS, both of which include the option to prepay without a fee being paid by the contract holder. The amount of interest-bearing liabilities expected to reprice in a given period is not typically impacted significantly by changes in interest rates, but did increase this quarter, because the Bank's borrowings and certificate of deposit portfolios have contractual maturities and generally cannot be terminated early without a prepayment ~~penalty, but did increase this quarter, as previously discussed.~~penalty. If interest rates were to increase 200 basis points, as of ~~March~~December 31, 2020, the Bank's one-year gap is projected to be ~~$(312.8)~~$(995.3) million, or ~~(3.34)~~(10.36)% of total assets. The decrease in the gap compared to when there is no change in rates is due to lower anticipated net cash flows primarily due to lower repayments on mortgage-related assets in the higher rate environment. This compares to a one-year gap of ~~$(523.0)~~$(609.6) million, or ~~(5.66)~~(6.43)% of total assets, if interest rates were to have increased 200 basis points as of ~~December 31, 2019.~~September 30, 2020.

During the current quarter, loan repayments totaled ~~$328.6~~$664.1 million and cash flows from the securities portfolio totaled ~~$145.9~~$152.4 million. The majority of these cash flows were reinvested into new loans and securities at current market interest rates. Total cash flows from

term liabilities that matured ~~and~~and/or repriced into current market interest rates during the current quarter were ~~$439.7~~$465.6 million, including ~~$65.0~~$53.0 million in ~~FHLB~~term borrowings. These offsetting cash flows allow the Bank to manage its interest rate risk and gap position more precisely than if the Bank did not have offsetting cash flows due to its mix of assets or maturity structure of liabilities.

The Bank primarily uses long-term fixed-rate borrowings with no embedded options to lengthen the average life of the Bank's liabilities. The fixed-rate characteristics of these borrowings lock-in the cost until maturity and thus decrease the amount of liabilities repricing as interest rates move higher compared to funding with lower-cost short-term borrowings. These borrowings are laddered in order to prevent large amounts of liabilities repricing in any one period. The WAL of the Bank's term borrowings as of ~~March~~December 31, 2020 was ~~1.9~~2.0 years. However, including the impact of interest rate swaps related to $640.0 million of adjustable-rate FHLB advances, the WAL of the Bank's term borrowings as of ~~March~~December 31, 2020 was 3.0 years. The interest rate swaps effectively convert the adjustable-rate borrowings into long-term, fixed-rate liabilities. It is anticipated that the Bank will renew the upcoming advances to lower costing term advances, or not renew them based upon our assessment of lending opportunities and our liquidity position at that time.

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

In addition to these wholesale strategies, the Bank has ~~sought to~~benefited from an increase in non-maturity deposits. ~~Non-maturity deposits are expected to reduce the risk of higher~~As market interest rates ~~because their interest~~rise, rates paid on non-maturity deposits are not expected to increase ~~significantly~~ as ~~market interest rates rise.~~quickly. Specifically, checking accounts and savings accounts have had minimal interest rate fluctuations throughout ~~historical~~previous interest rate cycles, though no assurance can be given that this will be the case in future interest rate cycles. The balances and rates of these accounts have historically tended to remain very stable over time, giving them the characteristic of long-term liabilities. The Bank uses historical data pertaining to these accounts to estimate their future balances. Additionally, ~~to the extent~~as we expand the commercial banking business, we expect to have the ability to obtain lower-costing commercial deposits, which could be used to reduce the cost of funds by replacing FHLB borrowings and wholesale deposits.

With the significant decrease in interest rates during ~~the current quarter,~~calendar year 2020, the Bank has decreased the rates on certificates of deposit and money market accounts ~~at a~~on pace with competitors in its market areas. The Bank ~~currently expects it~~ will continue to ~~lower~~adjust rates as market conditions allow.

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


				More Than			More Than												More Than			More Than
	Within			One Year to			Three Years			Over						Within			One Year to			Three Years			Over
	One Year			Three Years			to Five Years			Five Years			Total			One Year			Three Years			to Five Years			Five Years			Total
Interest-earning assets:	(Dollars in thousands)														Interest-earning assets:	(Dollars in thousands)
Loans receivable⁽¹⁾	$	2,075,424		$	2,221,032		$	1,295,807		$	1,893,486		$	7,485,749	Loans receivable(1)	$	2,166,912		$	2,146,114		$	1,010,178		$	1,694,174		$	7,017,378
Securities⁽²⁾	620,926			320,938			139,868			127,784			1,209,516		Securities(2)	688,893			656,438			229,747			305,894			1,880,972
Other interest-earning assets	5,336			—			—			—			5,336		Other interest-earning assets	138,542			—			—			—			138,542
Total interest-earning assets	2,701,686			2,541,970			1,435,675			2,021,270			8,700,601		Total interest-earning assets	2,994,347			2,802,552			1,239,925			2,000,068			9,036,892

Interest-bearing liabilities:															Interest-bearing liabilities:
Non-maturity deposits⁽³⁾	180,978			313,620			251,303			2,087,371			2,833,272		Non-maturity deposits(3)	1,018,765			389,182			410,162			1,641,260			3,459,369
Certificates of deposit	1,482,061			1,276,351			283,507			437			3,042,356		Certificates of deposit	1,562,350			1,161,280			294,082			446			3,018,158
Borrowings⁽⁴⁾	530,000			575,000			715,000			339,971			2,159,971		Borrowings(4)	326,401			602,940			618,134			231,139			1,778,614
Total interest-bearing liabilities	2,193,039			2,164,971			1,249,810			2,427,779			8,035,599		Total interest-bearing liabilities	2,907,516			2,153,402			1,322,378			1,872,845			8,256,141

Excess (deficiency) of interest-earning assets over	Excess (deficiency) of interest-earning assets over														Excess (deficiency) of interest-earning assets over
interest-bearing liabilities	$	508,647		$	376,999		$	185,865		$	(406,509	)	$	665,002	interest-bearing liabilities	$	86,831		$	649,150		$	(82,453)		$	127,223		$	780,751

Cumulative excess of interest-earning assets over	Cumulative excess of interest-earning assets over														Cumulative excess of interest-earning assets over
interest-bearing liabilities	$	508,647		$	885,646		$	1,071,511		$	665,002				interest-bearing liabilities	$	86,831		$	735,981		$	653,528		$	780,751

Cumulative excess of interest-earning assets over interest-bearing	Cumulative excess of interest-earning assets over interest-bearing														Cumulative excess of interest-earning assets over interest-bearing
liabilities as a percent of total Bank assets at:	liabilities as a percent of total Bank assets at:														liabilities as a percent of total Bank assets at:
March 31, 2020	5.43		%	9.45		%	11.44		%	7.10		%
September 30, 2019	5.21
December 31, 2020															December 31, 2020	0.90		%	7.66		%	6.80		%	8.13		%

September 30, 2020															September 30, 2020	4.58


Cumulative one-year gap - interest rates +200 bps at:	Cumulative one-year gap - interest rates +200 bps at:														Cumulative one-year gap - interest rates +200 bps at:
March 31, 2020	(3.34		)
September 30, 2019	(3.88		)
December 31, 2020															December 31, 2020	(10.36)

September 30, 2020															September 30, 2020	(6.44)

(1)Adjustable-rate loans are included in the period in which the rate is next scheduled to adjust or in the period in which repayments are expected to occur, or prepayments are expected to be received, prior to their next rate adjustment, rather than in the period in which the loans are due. Fixed-rate loans are included in the periods in which they are scheduled to be repaid, based on scheduled amortization and prepayment assumptions. Balances are net of undisbursed amounts and deferred fees and exclude loans 90 or more days delinquent or in foreclosure.

(2)MBS reflect projected prepayments at amortized cost. Investment securities are presented based on contractual maturities, term to call dates or pre-refunding dates as of December 31, 2020, at amortized cost.

(3)Although the Bank's checking, savings, and money market accounts are subject to immediate withdrawal, management considers a substantial amount of these accounts to be core deposits having significantly longer effective maturities. The decay rates (the assumed rates at which the balances of existing accounts decline) used on these accounts is based on assumptions developed from our actual experiences with these accounts. If all of the Bank's checking, savings, and money market accounts had been assumed to be subject to repricing within one year, interest-bearing liabilities which were estimated to mature or reprice within one year would have exceeded interest-earning assets with comparable characteristics by $2.35 billion, for a cumulative one-year gap of (24.5)% of total assets.

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

~~(1)~~

Adjustable-rate loans are included in the period in which the rate is next scheduled to adjust or in the period in which repayments are expected to occur, or prepayments are expected to be received, prior to their next rate adjustment, rather than in the period in which the loans are due. Fixed-rate loans are included in the periods in which they are scheduled to be repaid, based on scheduled amortization and prepayment assumptions. Balances are net of undisbursed amounts and deferred fees and exclude loans 90 or more days delinquent or in foreclosure.


~~(2)~~	MBS reflect projected prepayments at amortized cost. Investment securities are presented based on contractual maturities, term to call dates or pre-refunding dates as of March 31, 2020, at amortized cost.

~~(3)~~

Although the Bank's checking, savings, and money market accounts are subject to immediate withdrawal, management considers a substantial amount of these accounts to be core deposits having significantly longer effective maturities. The decay rates (the assumed rates at which the balances of existing accounts decline) used on these accounts is based on assumptions developed from our actual experiences with these accounts. If all of the Bank's checking, savings, and money market accounts had been assumed to be subject to repricing within one year, interest-bearing liabilities which were estimated to mature or reprice within one year would have exceeded interest-earning assets with comparable characteristics by $2.14 billion, for a cumulative one-year gap of (22.9)% of total assets.


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

Change in Net Interest Income. For each date presented in the following table, the estimated change in the Bank's net interest income is based on the indicated instantaneous, parallel and permanent change in interest rates. The change in each interest rate environment represents the difference between estimated net interest income in the 0 basis point interest rate environment ("base case," assumes the forward market and product interest rates implied by the yield curve are realized) and the estimated net interest income in each alternative interest rate environment (assumes market and product interest rates have a parallel shift in rates across all maturities by the indicated change in rates). Projected cash flows for each scenario are based upon varying prepayment assumptions to model likely customer behavior changes as market rates change. For the current quarter, multiple yields along the yield curve were less than one percent, so the -100 basis points scenario was not applicable. Estimations of net interest income used in preparing the table below were based upon the assumptions that the total composition of interest-earning assets and interest-bearing liabilities does not change materially and that any repricing of assets or liabilities occurs at anticipated product and market rates for the alternative rate environments as of the dates presented. The estimation of net interest income does not include any projected gains or losses related to the sale of loans or securities, or income derived from non-interest income sources, but does include the use of different prepayment assumptions in the alternative interest rate environments. It is important to consider that estimated changes in net interest income are for a cumulative four-quarter period. These do not reflect the earnings expectations of management.


Change	Net Interest Income At
(in Basis Points)	December 31, 2020						September 30, 2020
in Interest Rates(1)	Amount ($)		Change ($)		Change (%)		Amount ($)		Change ($)		Change (%)
	(Dollars in thousands)

000 bp	$	174,872	$	—	—	%	$	183,596	$	—	—	%
+100 bp	178,906		4,034		2.31		188,084		4,488		2.44
+200 bp	178,582		3,710		2.12		188,417		4,821		2.63
+300 bp	175,634		762		0.44		186,441		2,845		1.55

Change Net Interest Income At
(in Basis Points) March 31, 2020 September 30, 2019
in Interest Rates⁽¹⁾
Amount ($) Change ($) Change (%) Amount ($) Change ($) Change (%)
(Dollars in thousands)
000 bp $ 202,863
$ —
— % $ 193,329
$ —
— %
+100 bp 207,807
4,944
2.44
194,093
764
0.40
+200 bp 206,017
3,154
1.55
192,111
(1,218 ) (0.63 )
+300 bp 202,361
(502 ) (0.25 ) 188,752
(4,577 ) (2.37 )

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


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

The net interest income projection was ~~higher~~lower in the base case scenario at ~~March~~December 31, 2020 compared to September 30, ~~2019~~2020 due primarily to a ~~larger projected~~ decrease in the balance and yield on the Bank's loans receivable portfolio. As a result of the low level of interest ~~expense than interest income. The~~rates during the current quarter, the Bank continued to see a decrease in ~~interest expense~~the yield on loans receivable due to refinances and endorsements. In addition, the Bank experienced a decrease in the overall balance of the loans receivable portfolio, resulting in these cash flows being deployed into lower yielding securities. This was ~~driven primarily~~partially offset by a decrease in the ~~actual~~ cost of the Bank's deposits and ~~borrowings. During the current quarter, the Bank modified $350.0 million of term~~ borrowings into new long-term borrowings with a lower cost. As a result, the cost on the Bank's term borrowings portfolio decreased by 12 basis points. The Bank was also able to lower the cost of its deposit portfolio by two basis points due to lower money market rates and a decrease in the interest rates offered on certificates of deposit. In addition, during the current quarter management changed the way that future certificate of deposit rates are forecasted in the Bank's interest rate risk model. This change was made to more closely align the forecasted rates with the current rates offered, thus lowering the projected interest expense.quarter.

The net interest income projections increase from the base case in ~~the +100 and +200 basis point~~all rising interest rate scenarios at ~~March~~December 31, 2020 and September 30, 2020. The increase in net interest income projection was ~~more adversely impacted in the rising interest rate scenarios~~smaller at ~~September 30, 2019~~December 31, 2020 compared to ~~March 31,~~September 30, 2020, due primarily to ~~higher interest rates at September 30, 2019. In addition,~~a decrease in the ~~modification of $350.0 million of borrowings~~positive gap during the ~~current quarter lengthened the Bank's liabilities, thus reducing the risk to higher interest rates.~~quarter. The positive impact of rising interest rates is diminished as interest rates ~~increase until turning negative in the +300 basis point scenario.~~increase. Higher interest rates decreased the projected cash flows from the Bank's mortgage-related assets, thus ~~increasing~~decreasing the ~~negative~~positive impact of rising interest ~~rates.~~rates compared to the base case.

Change in MVPE. The following table sets forth the estimated change in the MVPE for each date presented based on the indicated instantaneous, parallel, and permanent change in interest rates. The change in each interest rate environment represents the difference between the MVPE in the base case (assumes the forward market interest rates implied by the yield curve are realized) and the MVPE in each alternative interest rate environment (assumes market interest rates have a parallel shift in rates). Projected cash flows for each scenario are based upon varying prepayment assumptions to model likely customer behavior as market rates change. For the current quarter, multiple yields along the yield curve were less than one percent, so the -100 basis points scenario was not applicable. The estimations of the MVPE used in preparing the table below were based upon the assumptions that the total composition of interest-earning assets and interest-bearing liabilities does not change, that any repricing of assets or liabilities occurs at current product or market rates for the alternative rate environments as of the dates presented, and that different prepayment rates were used in each alternative interest rate environment. The estimated MVPE results from the valuation of cash flows from financial assets and liabilities over the anticipated lives of each for each interest rate environment. The table below presents the effects of the changes in interest rates on our assets and liabilities as they mature, repay, or reprice, as shown by the change in the MVPE for alternative interest rates.


Change	Market Value of Portfolio Equity At
(in Basis Points)	December 31, 2020						September 30, 2020
in Interest Rates(1)	Amount ($)		Change ($)		Change (%)		Amount ($)		Change ($)		Change (%)
	(Dollars in thousands)

000 bp	$	1,458,318	$	—	—	%	$	1,301,409	$	—	—	%
+100 bp	1,416,171		(42,147)		(2.89)		1,290,877		(10,532)		(0.81)
+200 bp	1,263,224		(195,094)		(13.38)		1,157,368		(144,041)		(11.07)
+300 bp	1,047,654		(410,664)		(28.16)		967,997		(333,412)		(25.62)

Change Market Value of Portfolio Equity At
(in Basis Points) March 31, 2020 September 30, 2019
in Interest Rates⁽¹⁾
Amount ($) Change ($) Change (%) Amount ($) Change ($) Change (%)
(Dollars in thousands)
000 bp $ 1,087,074
$ —
— % $ 1,283,429
$ —
— %
+100 bp 1,185,836
98,762
9.09
1,286,446
3,017
0.24
+200 bp 1,116,523
29,449
2.71
1,162,151
(121,278 ) (9.45 )
+300 bp 980,783
(106,291 ) (9.78 ) 992,060
(291,369 ) (22.70 )

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


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

The percentage change in the Bank's MVPE at ~~March~~December 31, 2020 ~~was positive in the +100~~ and ~~+200 basis point scenarios and~~September 30, 2020 was negative in ~~the +300 basis point scenario. At September 30, 2019 the percentage change in~~all scenarios. The negative impact to the Bank's MVPE ~~was negative in the +200 and +300 basis point scenarios.~~is greater at December 31, 2020 compared to September 30, 2020. This change was due primarily to ~~lower~~an increase in the duration of the Bank's mortgage-related assets at December 31, 2020 compared to the previous quarter. This was due in part to higher interest rates at ~~March~~December 31, ~~2020 and the modification of $350.0 million of borrowings during the current quarter into long-term liabilities which reduced the Bank's risk to higher interest rates.~~2020. As interest rates increase, borrowers have less economic incentive to refinance their mortgages and agency debt issuers have less economic incentive or opportunity to exercise their call options in order to issue new debt at lower interest rates, resulting in lower projected cash flows on these assets. As interest rates increase in the rising rate scenarios, repayments on mortgage-related assets are more likely to decrease and only be realized through significant changes in borrowers' lives such as divorce, death, job-related relocations, or other events as there is less economic incentive for borrowers to prepay their debt, resulting in an increase in the average life of mortgage-related assets. Similarly, call projections for the Bank's callable agency debentures decrease as interest rates rise, which results in cash flows related to these assets moving closer to the contractual maturity dates. The higher expected average lives of these assets, relative to the assumptions in the base case interest rate environment, increases the sensitivity of their market value to changes in interest rates. In addition, as mortgage loans are refinanced or endorsed to lower interest rates, their average lives also increase as further prepayments are diminished.

InOn the ~~+100 and +200 basis point scenarios,~~liability side of the ~~market value of liabilities decrease at a faster pace than the market value of assets~~balance sheet, deposit durations decreased between periods due to ~~having~~the increase in the Bank's non-maturity deposits during the current quarter. Short-term increases in non-maturity deposits are not considered to be long-term liabilities in the Bank's interest rate risk model until sufficient time has passed for the model to reasonably assume that they will not leave the Bank in a ~~longer duration in these scenarios. The longer duration makes the market value~~rapid fashion. Both of these ~~liabilities more sensitive to~~ changes resulted in interest rates. In the +300 basis point scenario, prepayment speeds on mortgage-related assets and call projections on investment securities decrease to a point where the durations of assets are longer, and thus more sensitivean increased risk to rising interest ~~rates. This results in a larger decrease in the market value of assets than liabilities in this scenario.~~rates at December 31, 2020 compared to September 30, 2020.

The following table presents the weighted average yields/rates and WALs (in years), after applying prepayment, call assumptions, and decay rates for our interest-earning assets and interest-bearing liabilities as of ~~March~~December 31, 2020. Yields presented for interest-earning assets include the amortization of fees, costs, premiums and discounts, which are considered adjustments to the yield. The interest rate presented for term borrowings is the effective rate, which includes the impact of interest rate swaps and the amortization of deferred prepayment penalties resulting from FHLB advances previously prepaid. The WAL presented for term borrowings includes the effect of interest rate swaps. The maturity and repricing terms presented for one- to four-family loans represent the contractual terms of the loan.


	Amount		Yield/Rate		WAL	% of Category		% of Total
	(Dollars in thousands)
Investment securities	$	454,566	0.54	%	1.0	23.7	%	4.9	%
MBS - fixed	1,276,159		1.56		3.4	66.7		13.9
MBS - adjustable	183,141		2.44		3.2	9.6		2.0
Total securities	1,913,866		1.40		2.8	100.0	%	20.8
Loans receivable:
Fixed-rate one- to four-family:
<= 15 years	1,179,678		2.89		3.1	16.8	%	12.8
> 15 years	4,178,726		3.58		4.2	59.5		45.5
Fixed-rate commercial	500,075		4.26		3.9	7.1		5.4
All other fixed-rate loans	43,802		4.46		4.7	0.6		0.5
Total fixed-rate loans	5,902,281		3.50		4.0	84.0		64.2
Adjustable-rate one- to four-family:
<= 36 months	183,690		2.11		4.9	2.6		2.0
> 36 months	577,738		2.99		3.1	8.2		6.3
Adjustable-rate commercial	263,803		4.58		6.6	3.8		2.9
All other adjustable-rate loans	96,114		4.21		2.4	1.4		1.0
Total adjustable-rate loans	1,121,345		3.32		4.1	16.0		12.2
Total loans receivable	7,023,626		3.47		4.0	100.0	%	76.4
FHLB stock	84,693		4.97		2.0			0.9
Cash and cash equivalents	168,032		0.08		—			1.9
Total interest-earning assets	$	9,190,217	2.99		3.6			100.0	%

Non-maturity deposits	$	3,392,684	0.17		5.5	52.9	%	41.6	%
Retail/business certificates of deposit	2,777,948		1.68		1.4	43.3		34.1
Public unit certificates of deposit	240,210		0.64		0.4	3.8		2.9
Total deposits	6,410,842		0.84		3.5	100.0	%	78.6
Term borrowings	1,740,000		2.26		3.0			21.4


Total interest-bearing liabilities	$	8,150,842	1.14		3.4			100.0	%

Amount Yield/Rate WAL % of Category % of Total
(Dollars in thousands)
Investment securities $ 262,719
1.87 % 0.3
21.3 % 2.9 %
MBS - fixed 713,154
2.33
3.1
57.7
8.0
MBS - adjustable 260,164
2.97
2.4
21.0
2.9
Total securities 1,236,037
2.36
2.3
100.0 % 13.8
Loans receivable:
Fixed-rate one- to four-family:
<= 15 years 1,061,681
3.09
3.4
14.2 % 11.9
> 15 years 4,515,742
3.82
4.8
60.3
50.5
Fixed-rate commercial 441,343
4.45
3.1
5.9
4.9
All other fixed-rate loans 49,676
4.81
3.3
0.7
0.6
Total fixed-rate loans 6,068,442
3.75
4.4
81.1
67.9
Adjustable-rate one- to four-family:
<= 36 months 205,019
2.55
2.8
2.7
2.3
> 36 months 776,977
3.27
2.1
10.4
8.7
Adjustable-rate commercial 331,312
4.84
7.1
4.4
3.7
All other adjustable-rate loans 111,530
5.30
1.6
1.4
1.2
Total adjustable-rate loans 1,424,838
3.69
3.3
18.9
15.9
Total loans receivable 7,493,280
3.74
4.2
100.0 % 83.8
FHLB stock 101,575
6.72
2.0
1.1
Cash and cash equivalents 118,374
—
—
1.3
Total interest-earning assets $ 8,949,266
3.53
3.9
100.0 %

Non-maturity deposits $ 2,732,263
0.31
15.3
47.3 % 34.6 %
Retail/business certificates of deposit 2,765,142
2.11
1.5
47.9
35.0
Public unit certificates of deposit 277,214
1.87
0.5
4.8
3.5
Total deposits 5,774,619
1.25
7.9
100.0 % 73.1
Term borrowings 2,090,000
2.25
3.0
98.6 % 26.5
Line of credit borrowings 30,000
0.25
—
1.4
0.4
Total borrowings 2,120,000
2.22
3.0
100.0 % 26.9
Total interest-bearing liabilities $ 7,894,619
1.51
6.6
100.0 %

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, the "Act") as of ~~March~~December 31, 2020. Based upon this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of ~~March~~December 31, 2020, such disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Act is accumulated and communicated to the Company's management (including the Chief Executive Officer and Chief Financial Officer) to allow timely decisions regarding required disclosure, and is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms.

Changes in Internal Control Over Financial Reporting

~~Management reviewed the Company’s internal control over financial reporting in consideration of operational changes as a result of COVID-19.~~ There have been no changes in the Company's internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Act) that occurred during the Company's quarter ended ~~March~~December 31, 2020 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The Company and the Bank are involved as plaintiff or defendant in various legal actions arising in the normal course of business. In our opinion, after consultation with legal counsel, we believe it unlikely that such pending legal actions will have a material adverse effect on our financial condition, results of operations or liquidity.

Item 1A. Risk Factors

There have been no material changes to our risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019; however, in light of recent developments relating to the COVID-19 pandemic, the Company is supplementing its risk factors in this Form 10-Q.~~2020.

The Impact of the COVID-19 Pandemic on Our Customers, Employees and Business Operations Has Had, and Will Likely Continue to Have, a Significant Adverse Effect on Our Business, Results of Operations and Financial Condition

The COVID-19 pandemic has created a global public-health crisis that has resulted in widespread market volatility and deteriorating economic conditions for households and businesses. The deteriorating economic conditions, most of which are unprecedented, include more than 20 million people becoming unemployed in the United States in one month's time, cuts in consumer spending on almost all categories of purchases except groceries and staples, and closure or significantly reduced operations of restaurants, bars, airlines, hotels, and entertainment and hospitality venues, among others. In the Bank's local markets, governments put stay-at-home orders into effect which only allow for essential businesses to remain open.

In response to the COVID-19 pandemic, an essential business, the Company implemented business continuity measures, including activating its Crisis Management Team to put into action our business continuity plan, monitoring potential business interruptions, making further improvements to our information technology allowing nearly half of our employees to work from home, and conducting regular discussions with our third-party service providers providing services to facilities that are open. Heightened cybersecurity, information security and operational risks may result from these remote work-from-home arrangements. Preventative health measures were put in place including elimination of business-related travel, implementing mandatory work from home for all employees able to do so, social distancing precautions for all employees in the office, adjusting branch banking hours and operational measures to promote social distancing when customers do visit branches, and preventative cleaning at offices and branches. These actions have resulted in changes to our business operations, but have not yet significantly impacted most business operations. Depending on the severity and length of the COVID-19 pandemic, which is impossible to predict, we could experience significant disruptions in our business operations if key personnel or a significant number of employees were to become unavailable due to the effects of, and restrictions resulting from, the COVID-19 pandemic, as well as decreased demand for our products and services.

There is pervasive uncertainty surrounding the future economic conditions that will emerge in the months and years following the start of the COVID-19 pandemic. As a result, management is confronted with a significant and unfamiliar degree of uncertainty in estimating the impact of the pandemic on credit quality, revenues and asset values. The unknown economic recovery time resulting from the COVID-19 pandemic creates risks that loan modification programs made available to our customers will be insufficient to prevent or reduce delinquencies or help our customers stay in business. Businesses that do not take advantage of loan modification programs provided by the Bank could also be at risk of becoming delinquent or going out of business. The PPP loans made by the Bank are guaranteed by the SBA and, if used by the borrower for authorized purposes, may be fully forgiven. However, in the event of a loss resulting from a default on a PPP loan and a determination by the SBA that there was a deficiency in the manner in which the PPP loan was originated, funded or serviced by the Bank, the SBA may deny its liability under the guaranty, reduce the amount of the guaranty or, if it has already made payment under the guaranty, seek recovery of any loss related to the deficiency from the Bank.

Since the commencement of the PPP, several larger banks have been subject to litigation regarding their processing of PPP loan applications. The Bank may be exposed to the risk of similar litigation, from both customers and non-customers that approached the Bank seeking PPP loans. PPP lenders, including the Bank, may also be subject to the risk of litigation in connection with other aspects of the PPP, including but not limited to borrowers seeking forgiveness of their loans. If any such litigation is filed against the Bank, it may result in significant financial or reputational harm to us.

It is likely that many of our individual borrowers have become unemployed and may not be able to continue making mortgage payments under the terms of their loans. Also included in the CARES Act were Economic Impact Payments to individuals meeting certain income requirements. Individuals began receiving those payments in mid-April 2020. This may help mitigate the risk that some borrowers become delinquent or delay the potential for default until they can return to work. However, it is uncertain how long borrowers may need some form of assistance or forbearance.

In order to help our customers, it is likely that utilization of our COVID-19 loan modification programs may increase in the future. Asset quality may deteriorate further and the amount of our ACL may not be sufficient for future loan losses we may experience. This could require us to increase our reserves and recognize more expense in future periods. The changes in market rates of interest and the impact that has on our ability to price our products may reduce our net interest income in the future or negatively impact the demand for our products. There is some risk that operational costs could increase as we maintain existing facilities in accordance with health guidelines as well as potentially continuing to have staff work remotely.

The extent to which the COVID-19 pandemic impacts our business, results of operations and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the COVID-19 pandemic and actions taken by governmental authorities and other third parties in response to the pandemic.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

See "Liquidity and Capital Resources - Capital" in "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding OCC restrictions on dividends from the Bank to the Company.

The following table summarizes our stock repurchase activity during the three months ended ~~March~~December 31, 2020 and additional information regarding our stock repurchase program. The Company has ~~$70.0~~$44.7 million of common stock authorized under its existing stock repurchase plan. There is no expiration for this repurchase ~~plan.~~plan; however, the Federal Reserve Bank's approval for the Company to repurchase shares is through August 2021. Shares may be repurchased from time to time in the open-market based upon market conditions and available liquidity.


				Total Number of	Approximate Dollar
	Total			Shares Purchased as	Value of Shares
	Number of	Average		Part of Publicly	that May Yet Be
	Shares	Price Paid		Announced Plans	Purchased Under the
	Purchased	per Share		or Programs	Plans or Programs
October 1, 2020 through
October 31, 2020	164,400	$	9.31	164,400	$	44,665,205
November 1, 2020 through
November 30, 2020	—	—		—	44,665,205
December 1, 2020 through
December 31, 2020	—	—		—	44,665,205
Total	164,400	9.31		164,400	44,665,205

Total Number of Approximate Dollar
Total Shares Purchased as Value of Shares
Number of Average Part of Publicly that May Yet Be
Shares Price Paid Announced Plans Purchased Under the
Purchased per Share or Programs Plans or Programs
January 1, 2020 through
January 31, 2020 —
$ —
—
$ 70,000,000
February 1, 2020 through
February 29, 2020 —
—
—
70,000,000
March 1, 2020 through
March 31, 2020 —
—
—
70,000,000
Total —
—
—
70,000,000

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

See Index to Exhibits.

INDEX TO EXHIBITS



Exhibit Number		Document
3(i)		Charter of Capitol Federal Financial, Inc., as filed on May 6, 2010, as Exhibit 3(i) to Capitol Federal Financial, Inc.'s Registration Statement on Form S-1 (File No. 333-166578) and incorporated herein by reference
3(ii)		Bylaws of Capitol Federal Financial, Inc., as amended, filed on March 30, 2020, as Exhibit 3.2 to Form 8-K for Capitol Federal Financial Inc. and incorporated herein by reference
4		Description of the Registrant's Securities, as filed on November 27, 2019, as Exhibit 4 to the Registrant's Annual Report on Form 10-K and incorporated herein by reference
10.1(i)		Form of Change of Control Agreement with each of John B. Dicus, Kent G. Townsend, and Rick C. Jackson filed on January 20, 2011 as Exhibit 10.1 to the Registrant's Current Report on Form 8-K and incorporated herein by reference
10.1(ii)		Form of Change of Control Agreement with Natalie G. Haag filed on November 29, 2012 as Exhibit 10.1(iv) to the Registrant's Annual Report on Form 10-K and incorporated herein by reference
10.1(iii)		Form of Change of Control Agreement with Daniel L. Lehman filed on November 29, 2016 as Exhibit 10.1(v) to the Registrant's Annual Report on Form 10-K and incorporated herein by reference
10.1(iv)		Form of Change of Control Agreement with Robert D. Kobbeman filed on November 29, 2018 as Exhibit 10.1(iv) to the Registrant's Annual Report on Form 10-K and incorporated herein by reference
10.1(v)		~~Employment Agreement with Robert D. Kobbeman, as amended, filed on November 29, 2018 as Exhibit 10.1(v) to the Registrant's Annual Report on Form 10-K and incorporated herein by reference~~
~~10.1(vi)~~	Form of Change of Control Agreement with Anthony S. Barry filed on May 10, 2019 as Exhibit 10.1(vi) to the Registrant's March 31, 2019 Form 10-Q and incorporated herein by reference
10.2		Capitol Federal Financial's 2000 Stock Option and Incentive Plan (the "Stock Option Plan") filed on April 13, 2000 as Appendix A to Capitol Federal Financial's Revised Proxy Statement (File No. 000-25391) and incorporated herein by reference
10.3		Capitol Federal Financial Deferred Incentive Bonus Plan, as amended, filed on May 8, 2020 as Exhibit 10.3 to the Registrant's March 31, 2020 Form 10-Q and incorporated herein by reference
10.4		Form of Incentive Stock Option Agreement under the Stock Option Plan filed on February 4, 2005 as Exhibit 10.5 to the December 31, 2004 Form 10-Q for Capitol Federal Financial and incorporated herein by reference
10.5		Form of Non-Qualified Stock Option Agreement under the Stock Option Plan filed on February 4, 2005 as Exhibit 10.6 to the December 31, 2004 Form 10-Q for Capitol Federal Financial and incorporated herein by reference
10.6		Description of Director Fee Arrangements filed on November 29, 2018 as Exhibit 10.6 to the Registrant's September 30, 2018 Form 10-K and incorporated herein by reference
10.7		Short-term Performance Plan, as amended, filed on May 8, 2020 as Exhibit 10.7 to the Registrant's March 31, 2020 Form 10-Q and incorporated herein by reference
10.8		Capitol Federal Financial, Inc. 2012 Equity Incentive Plan (the "Equity Incentive Plan") filed on December 22, 2011 as Appendix A to Capitol Federal Financial, Inc.'s Proxy Statement (File No. 001-34814) and incorporated herein by reference
10.9		Form of Incentive Stock Option Agreement under the Equity Incentive Plan filed on February 6, 2012 as Exhibit 10.12 to the Registrant's December 31, 2011 Form 10-Q and incorporated herein by reference
10.10		Form of Non-Qualified Stock Option Agreement under the Equity Incentive Plan filed on February 6, 2012 as Exhibit 10.13 to the Registrant's December 31, 2011 Form 10-Q and incorporated herein by reference
10.11		Form of Stock Appreciation Right Agreement under the Equity Incentive Plan filed on February 6, 2012 as Exhibit 10.14 to the Registrant's December 31, 2011 Form 10-Q and incorporated herein by reference
10.12		Form of Restricted Stock Agreement under the Equity Incentive Plan filed on February 6, 2012 as Exhibit 10.15 to the Registrant's December 31, 2011 Form 10-Q and incorporated herein by reference
31.1		Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002 made by John B. Dicus, Chairman, President and Chief Executive Officer
31.2		Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002 made by Kent G. Townsend, Executive Vice President, Chief Financial Officer and Treasurer
32		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 made by John B. Dicus, Chairman, President and Chief Executive Officer, and Kent G. Townsend, Executive Vice President, Chief Financial Officer and Treasurer



101						The following information from the Company's Quarterly Report on Form 10-Q for the quarterly period ended ~~March~~December 31, 2020, filed with the Securities and Exchange Commission on ~~May 8, 2020,~~February 9, 2021, has been formatted in Inline eXtensible Business Reporting Language ("XBRL"): (i) Consolidated Balance Sheets at ~~March~~December 31, 2020 and September 30, ~~2019,~~2020, (ii) Consolidated Statements of Income for the three ~~and six~~ months ended ~~March~~December 31, 2020 and 2019, (iii) Consolidated Statements of Comprehensive Income for the three ~~and six~~ months ended ~~March~~December 31, 2020 and 2019, (iv) Consolidated Statements of Stockholders' Equity for the three ~~and six~~ months ended ~~March~~December 31, 2020 and 2019, (v) Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~March~~December 31, 2020 and 2019, and (vi) Notes to the Unaudited Consolidated Financial Statements.
104						Cover Page Interactive Data File, formatted in Inline XBRL and included in Exhibit 101

SIGNATURES

Pursuant to the requirements of 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.


CAPITOL FEDERAL FINANCIAL, INC.


~~CAPITOL FEDERAL FINANCIAL, INC.~~
			Date: February 9, 2021	By:


	~~Date: May 8, 2020~~	~~By:~~	/s/ John B. Dicus
					John B. Dicus, Chairman, President and Chief Executive Officer

			Date: ~~May 8, 2020~~February 9, 2021	By:	/s/ Kent G. Townsend
					Kent G. Townsend, Executive Vice President,
					Chief Financial Officer and Treasurer



Maryland			27-2631712
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

700 South Kansas Avenue,	Topeka,	Kansas	66603
(Address of principal executive offices)			(Zip Code)



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



	December 31, 2020		September 30, 2020
	(Dollars in thousands)
Public unit deposits	$	304,768	$	330,986
Federal Reserve Bank of Kansas City ("FRB of Kansas City")	207,401		259,851

Retail deposits	47,362		0
	$	559,531	$	590,837



	March 31, 2020		September 30, 2019
	(Dollars in thousands)
Federal Reserve Bank of Kansas City ("FRB of Kansas City")	$	396,458	$	6,636
Public unit deposits	321,451		381,143
Repurchase agreements	109,425		108,271
	$	827,334	$	496,050


	December 31, 2020
	Current		Fiscal		Fiscal		Fiscal		Fiscal				Revolving
	Fiscal		Year		Year		Year		Year		Prior		Line of
	Year		2020		2019		2018		2017		Years		Credit		Total
	(Dollars in thousands)
One- to four-family:
Originated
Pass	$	274,145	$	805,755	$	404,651	$	315,587	$	354,212	$	1,784,798	$	0	$	3,939,148
Special Mention	124		443		244		241		639		7,572		0		9,263
Substandard	0		285		903		52		259		14,364		0		15,863
Correspondent purchased
Pass	58,120		408,309		112,323		200,255		246,482		963,862		0		1,989,351
Special Mention	0		0		0		0		0		3,149		0		3,149
Substandard	0		0		0		0		0		5,498		0		5,498
Bulk purchased
Pass	0		0		—		0		0		194,336		0		194,336
Special Mention	0		0		0		0		0		96		0		96
Substandard	0		0		0		0		0		6,124		0		6,124
	332,389		1,214,792		518,121		516,135		601,592		2,979,799		0		6,162,828
Commercial:
Commercial real estate
Pass	68,729		155,596		129,381		122,344		51,233		53,767		5,895		586,945
Special Mention	0		0		0		0		0		101,276		0		101,276
Substandard	1,296		674		229		695		391		0		0		3,285
Commercial and industrial
Pass	4,856		34,835		9,295		4,342		3,886		1,031		8,487		66,732
Special Mention	0		0		223		0		402		0		0		625
Substandard	0		2		0		94		54		0		1,336		1,486
	74,881		191,107		139,128		127,475		55,966		156,074		15,718		760,349
Consumer:
Home equity
Pass	467		3,653		2,540		2,051		908		3,505		83,639		96,763
Special Mention	0		0		0		13		0		9		236		258
Substandard	0		0		0		0		0		24		687		711
Other
Pass	1,166		3,309		2,182		1,392		691		277		278		9,295
Special Mention	0		0		0		0		0		0		0		0
Substandard	0		4		0		5		4		2		0		15
	1,633		6,966		4,722		3,461		1,603		3,817		84,840		107,042

Total	$	408,903	$	1,412,865	$	661,971	$	647,071	$	659,161	$	3,139,690	$	100,558	$	7,030,219


PART I - FINANCIAL INFORMATION				Page Number
Item 1.			Financial Statements (Unaudited)	3
			Consolidated Balance Sheets at ~~March~~December 31, 2020 and September 30, ~~2019~~2020	3
			Consolidated Statements of Income for the three ~~and six~~ months ended ~~March~~December 31, 2020 and 2019	4
			Consolidated Statements of Comprehensive Income for the three ~~and six~~ months ended ~~March~~December 31, 2020 and 2019	5
			Consolidated Statements of Stockholders' Equity for the three ~~and six~~ months ended ~~March~~December 31, 2020 and 2019	6
			Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~March~~December 31, 2020 and 2019	7
			Notes to Consolidated Financial Statements	9
Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations	3134
			Financial Condition - Loans Receivable	3740
			Financial Condition - Asset Quality	4546
			Financial Condition - Liabilities	5554
			Financial Condition - Stockholders' Equity	5857
			Operating Results	5958
			~~Comparison of Operating Results for the six months ended March 31, 2020 and 2019~~	60
	Comparison of Operating Results for the three months ended ~~March~~December 31, 2020 and 2019	6561

			Comparison of Operating Results for the three months ended ~~March~~December 31, 2020 and ~~December 31, 2019~~September 30, 2020	6964
Item 3.			Quantitative and Qualitative Disclosure about Market Risk	7970
Item 4.			Controls and Procedures	8475


PART II - OTHER INFORMATION
Item 1.			Legal Proceedings	8576
Item 1A.			Risk Factors	8576
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds	8676
Item 3.			Defaults Upon Senior Securities	8676
Item 4.			Mine Safety Disclosures	8676
Item 5.			Other Information	8676
Item 6.			Exhibits	8676


INDEX TO EXHIBITS				8777


SIGNATURES				8979



	For the Six Months Ended March 31, 2019
			Additional		Unearned									Total
	Common		Paid-In		Compensation			Retained						Stockholders'
	Stock		Capital		ESOP			Earnings			AOCI			Equity
Balance at September 30, 2018	$	1,412	$	1,207,644	$	(36,343	)	$	214,569		$	4,340		$	1,391,622
Net income								24,383						24,383
Other comprehensive loss, net of tax											(6,217		)	(6,217		)
Cumulative effect of adopting ASU 2014-09								394						394
ESOP activity			118		413									531
Stock-based compensation			95											95
Stock options exercised	1		466											467
Cash dividends to stockholders ($0.475 per share)								(65,362		)				(65,362		)
Balance at December 31, 2018	$	1,413	$	1,208,323	$	(35,930	)	$	173,984		$	(1,877	)	$	1,345,913
Net income								24,554						24,554
Other comprehensive loss, net of tax											(3,539		)	(3,539		)
ESOP activity			134		413									547
Stock-based compensation			90											90
Stock options exercised			118											118
Cash dividends to stockholders ($0.085 per share)								(11,700		)				(11,700		)
Balance at March 31, 2019	1,413		1,208,665		(35,517		)	186,838			(5,416		)	1,355,983

See accompanying notes to consolidated financial statements.



	For the Three Months Ended						For the Six Months Ended
	March 31,						March 31,
	2020			2019			2020			2019
	(Dollars in thousands, except per share amounts)
Net income	$	4,276		$	24,554		$	26,787		$	48,937
Income allocated to participating securities	(3		)	(10		)	(22		)	(19		)
Net income available to common stockholders	$	4,273		$	24,544		$	26,765		$	48,918

Average common shares outstanding	137,926,574			137,593,062			137,911,988			137,571,533
Average committed ESOP shares outstanding	41,753			41,758			20,988			20,876
Total basic average common shares outstanding	137,968,327			137,634,820			137,932,976			137,592,409

Effect of dilutive stock options	32,007			55,897			55,673			48,717

Total diluted average common shares outstanding	138,000,334			137,690,717			137,988,649			137,641,126

Net EPS:
Basic	$	0.03		$	0.18		$	0.19		$	0.36
Diluted	$	0.03		$	0.18		$	0.19		$	0.36

Antidilutive stock options, excluded from the diluted average
common shares outstanding calculation	382,894			494,395			387,979			529,261


	December 31, 2020
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(Dollars in thousands)

MBS	$	1,427,216	$	32,178	$	94	$	1,459,300
GSE debentures	444,964		747		0		445,711

Municipal bonds	8,792		63		0		8,855
	$	1,880,972	$	32,988	$	94	$	1,913,866


	December 31, 2020
	Less Than 12 Months				Equal to or Greater Than 12 Months
	Estimated		Unrealized		Estimated		Unrealized
	Fair Value		Losses		Fair Value		Losses
	(Dollars in thousands)

MBS	$	40,462	$	93	$	110	$	1
GSE debentures	0		0		0		0

Municipal bonds	0		0		0		0
	$	40,462	$	93	$	110	$	1



	March 31, 2020
			90 or More Days		Total				Total
	30 to 89 Days		Delinquent or		Delinquent		Current		Recorded
	Delinquent		in Foreclosure		Loans		Loans		Investment
	(Dollars in thousands)
One- to four-family:
Originated	$	8,333	$	4,503	$	12,836	$	3,953,549	$	3,966,385
Correspondent purchased	4,602		1,362		5,964		2,411,591		2,417,555
Bulk purchased	2,950		641		3,591		226,167		229,758
Commercial:
Commercial real estate	1,560		546		2,106		705,058		707,164
Commercial and industrial	—		172		172		61,695		61,867
Consumer:
Home equity	594		304		898		113,577		114,475
Other	34		22		56		10,741		10,797
	$	18,073	$	7,550	$	25,623	$	7,482,378	$	7,508,001



	December 31, 2020				September 30, 2020
	Nonaccrual Loans		Nonaccrual Loans with No ACL		Nonaccrual Loans
	(Dollars in thousands)
One- to four-family:
Originated	$	5,323	$	2,361	$	5,037
Correspondent purchased	3,418		308		2,433
Bulk purchased	3,771		1,463		2,938
Commercial:
Commercial real estate	1,076		72		1,663
Commercial and industrial	150		94		157
Consumer:
Home equity	467		9		305
Other	15		0		8
	$	14,220	$	4,307	$	12,541



	March 31, 2020			September 30, 2019
	Credit Score	LTV		Credit Score	LTV
One- to four-family - originated	767	62	%	768	62	%
One- to four-family - correspondent	764	65		765	65
One- to four-family - bulk purchased	763	61		762	61
Consumer - home equity	752	19		754	19
	766	62		766	62



	For the Three Months Ended					For the Six Months Ended
	March 31, 2019					March 31, 2019
	Number	Pre-		Post-		Number	Pre-		Post-
	of	Restructured		Restructured		of	Restructured		Restructured
	Contracts	Outstanding		Outstanding		Contracts	Outstanding		Outstanding
	(Dollars in thousands)
One- to four-family:
Originated	—	$	—	$	—	1	$	117	$	117
Correspondent purchased	—	—		—		—	—		—
Bulk purchased	1	308		308		1	308		308
Commercial:
Commercial real estate	—	—		—		—	—		—
Commercial and industrial	—	—		—		—	—		—
Consumer:
Home equity	—	—		—		—	—		—
Other	—	—		—		—	—		—
	1	$	308	$	308	2	$	425	$	425


	For the Three Months Ended March 31, 2020																					For the Three Months Ended December 31, 2019
	One- to Four-Family																					One- to Four-Family
				Correspondent		Bulk																		Correspondent		Bulk
	Originated			Purchased		Purchased			Total			Commercial			Consumer			Total				Originated		Purchased		Purchased		Total		Commercial		Consumer		Total
	(Dollars in thousands)																					(Dollars in thousands)
Beginning balance	$	2,047		$	1,200	$	612		$	3,859		$	5,418		$	158		$	9,435		Beginning balance	$	2,000	$	1,203	$	687	$	3,890	$	5,171	$	165	$	9,226
Charge-offs	(46		)	—		—			(46		)	(325		)	(4		)	(375		)	Charge-offs	(18)		0		0		(18)		(24)		(6)		(48)
Recoveries	3			—		—			3			54			4			61			Recoveries	0		0		0		0		27		5		32
Provision for credit losses	4,463			2,155		(55		)	6,563			15,181			331			22,075			Provision for credit losses	65		(3)		(75)		(13)		244		(6)		225
Ending balance	$	6,467		$	3,355	$	557		$	10,379		$	20,328		$	489		$	31,196		Ending balance	$	2,047	$	1,200	$	612	$	3,859	$	5,418	$	158	$	9,435



	For the Six Months Ended March 31, 2020
	One- to Four-Family
				Correspondent		Bulk
	Originated			Purchased		Purchased			Total			Commercial			Consumer			Total
	(Dollars in thousands)
Beginning balance	$	2,000		$	1,203	$	687		$	3,890		$	5,171		$	165		$	9,226
Charge-offs	(64		)	—		—			(64		)	(349		)	(10		)	(423		)
Recoveries	3			—		—			3			81			9			93
Provision for credit losses	4,528			2,152		(130		)	6,550			15,425			325			22,300
Ending balance	$	6,467		$	3,355	$	557		$	10,379		$	20,328		$	489		$	31,196



	For the Three Months Ended March 31, 2019
	One- to Four-Family
				Correspondent			Bulk
	Originated			Purchased			Purchased			Total			Commercial		Consumer			Total
	(Dollars in thousands)
Beginning balance	$	2,761		$	1,748		$	836		$	5,345		$	3,034	$	179		$	8,558
Charge-offs	(10		)	—			—			(10		)	—		(2		)	(12		)
Recoveries	2			—			17			19			25		29			73
Provision for credit losses	(580		)	(356		)	(51		)	(987		)	1,029		(42		)	—
Ending balance	$	2,173		$	1,392		$	802		$	4,367		$	4,088	$	164		$	8,619


	December 31, 2020
			Quoted Prices		Significant		Significant
			in Active Markets		Other Observable		Unobservable
	Carrying		for Identical Assets		Inputs		Inputs
	Value		(Level 1)		(Level 2)		(Level 3)
	(Dollars in thousands)
Assets:
AFS Securities:
MBS	$	1,459,300	$	0	$	1,459,300	$	0
GSE debentures	445,711		0		445,711		0
Municipal bonds	8,855		0		8,855		0

	$	1,913,866	$	0	$	1,913,866	$	0



Liabilities:
Interest rate swaps	$	47,935	$	0	$	47,935	$	0


	December 31, 2020
	Carrying		Estimated Fair Value
	Amount		Total		Level 1		Level 2		Level 3
	(Dollars in thousands)
Assets:
Cash and cash equivalents	$	168,032	$	168,032	$	168,032	$	0	$	0
AFS securities	1,913,866		1,913,866		0		1,913,866		0

Loans receivable	7,004,094		7,532,104		0		0		7,532,104

FHLB stock	84,693		84,693		84,693		0		0


Liabilities:
Deposits	6,410,842		6,475,389		3,392,685		3,082,704		0
Borrowings	1,734,275		1,783,034		0		1,783,034		0

Interest rate swaps	47,935		47,935		0		47,935		0

	September 30, 2020
	Carrying		Estimated Fair Value
	Amount		Total		Level 1		Level 2		Level 3
	(Dollars in thousands)
Assets:
Cash and cash equivalents	$	185,148	$	185,148	$	185,148	$	0	$	0
AFS securities	1,560,950		1,560,950		0		1,560,950		0

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

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


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

Interest rate swaps	53,149		53,149		0		53,149		0



Remainder of fiscal year 2020	$	573
Fiscal year 2021	1,361
Fiscal year 2022	1,327
Fiscal year 2023	1,234
Fiscal year 2024	1,025
Fiscal year 2025	854
Thereafter	15,391
Total future minimum lease payments	21,765
Amounts representing interest	(6,708		)
Present value of net future minimum lease payments	$	15,057



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



	Modification Type								% of
	Interest		Payment				% of		Property Type/
	Only		Deferral		Total		Total		Business Purpose
	(Dollars in thousands)
Commercial real estate
Senior housing	$	101,904	$	46,220	$	148,124	40.5	%	65.2	%
Hotel	76,249		19,266		95,515		26.1		81.3
Single use building	30,450		5,331		35,781		9.8		80.3
Retail building	31,814		3,119		34,933		9.6		29.0
Office building	16,415		7,012		23,427		6.4		43.8
Multi-family	8,233		—		8,233		2.3		13.9
One- to four-family property	7,680		—		7,680		2.1		13.4
Other	3,297		—		3,297		0.9		10.7
	276,042		80,948		356,990		97.7		50.2
Commercial and industrial
Equipment	4,141		—		4,141		1.1		24.4
Business investment	2,372		—		2,372		0.6		19.8
Working capital	869		—		869		0.2		4.9
Purchase/lease autos	587		—		587		0.2		6.6
Other	807		—		807		0.2		12.5
	8,776		—		8,776		2.3		14.1
Total	$	284,818	$	80,948	$	365,766	100.0	%	47.3	%



	At
	March 31, 2020								September 30, 2019
			% of ACL				% of				% of ACL				% of
	Amount		to Total		Total		Loans to		Amount		to Total		Total		Loans to
	of ACL		ACL		Loans		Total Loans		of ACL		ACL		Loans		Total Loans
	(Dollars in thousands)
One- to four-family:
Originated	$	6,420	20.6	%	$	3,944,782	52.6	%	$	1,982	21.6	%	$	3,873,851	52.2	%
Correspondent purchased	3,355		10.7		2,385,907		31.8		1,203		13.0		2,349,877		31.7
Bulk purchased	557		1.8		228,730		3.1		687		7.4		252,347		3.4
Construction	47		0.2		35,798		0.5		18		0.2		36,758		0.5
Total	10,379		33.3		6,595,217		88.0		3,890		42.2		6,512,833		87.8
Commercial:
Commercial real estate	14,672		47.0		584,236		7.8		3,448		37.4		583,617		7.9
Commercial and industrial	1,489		4.8		62,153		0.8		472		5.1		61,094		0.8
Construction	4,167		13.4		126,266		1.7		1,251		13.5		123,159		1.7
Total	20,328		65.2		772,655		10.3		5,171		56.0		767,870		10.4
Consumer loans:
Home equity	397		1.3		114,571		1.5		97		1.1		120,587		1.6
Other consumer	92		0.2		10,837		0.2		68		0.7		11,183		0.2
Total consumer loans	489		1.5		125,408		1.7		165		1.8		131,770		1.8
	$	31,196	100.0	%	$	7,493,280	100.0	%	$	9,226	100.0	%	$	7,412,473	100.0	%



	For the Six Months Ended
	March 31, 2020 vs. March 31, 2019
	Increase (Decrease) Due to
	Volume			Rate			Total
	(Dollars in thousands)
Interest-earning assets:
Loans receivable	$	(722	)	$	(2,180	)	$	(2,902	)
MBS	(738		)	(118		)	(856		)
Investment securities	58			(115		)	(57		)
FHLB stock	(164		)	(98		)	(262		)
Cash and cash equivalents	(771		)	(619		)	(1,390		)
Total interest-earning assets	(2,337		)	(3,130		)	(5,467		)

Interest-bearing liabilities:
Checking	10			47			57
Savings	1			39			40
Money market	(228		)	(168		)	(396		)
Certificates of deposit	838			3,406			4,244
Borrowings	(2,654		)	775			(1,879		)
Total interest-bearing liabilities	(2,033		)	4,099			2,066

Net change in net interest income	$	(304	)	$	(7,229	)	$	(7,533	)



	For the Three Months Ended March 31,
	2020 vs. 2019
	Increase (Decrease) Due to
	Volume			Rate			Total
	(Dollars in thousands)
Interest-earning assets:
Loans receivable	$	(564	)	$	(1,480	)	$	(2,044	)
MBS	(255		)	(180		)	(435		)
Investment securities	47			(170		)	(123		)
FHLB stock	3			(120		)	(117		)
Cash and cash equivalents	(100		)	(263		)	(363		)
Total interest-earning assets	(869		)	(2,213		)	(3,082		)

Interest-bearing liabilities:
Checking	5			27			32
Savings	1			17			18
Money market	(107		)	(181		)	(288		)
Certificates of deposit	498			1,448			1,946
Borrowings	(775		)	(86		)	(861		)
Total interest-bearing liabilities	(378		)	1,225			847

Net change in net interest income	$	(491	)	$	(3,438	)	$	(3,929	)



	For the Three Months Ended
	March 31, 2020 vs. December 31, 2019
	Increase (Decrease) Due to
	Volume			Rate			Total
	(Dollars in thousands)
Interest-earning assets:
Loans receivable	$	267		$	(568	)	$	(301	)
MBS	(84		)	(152		)	(236		)
Investment securities	(19		)	(106		)	(125		)
FHLB stock	23			(135		)	(112		)
Cash and cash equivalents	(220		)	(87		)	(307		)
Total interest-earning assets	(33		)	(1,048		)	(1,081		)

Interest-bearing liabilities:
Checking	3			9			12
Savings	1			(6		)	(5		)
Money market	52			(135		)	(83		)
Certificates of deposit	44			(126		)	(82		)
Borrowings	(376		)	(518		)	(894		)
Total interest-bearing liabilities	(276		)	(776		)	(1,052		)

Net change in net interest income	$	243		$	(272	)	$	(29	)



	Loans⁽¹⁾				MBS				Investment Securities				Total
	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
	(Dollars in thousands)
Amounts due:
Within one year	$	313,736	4.31	%	$	5,196	2.59	%	$	55,245	1.52	%	$	374,177	3.88	%

After one year:
Over one to two years	40,947		4.52		5,544		2.64		4,270		1.75		50,761		4.08
Over two to three years	60,480		4.42		27,140		1.53		27,490		1.98		115,110		3.16
Over three to five years	113,991		4.68		35,098		1.83		175,714		1.96		324,803		2.90
Over five to ten years	689,582		3.70		309,180		2.38		—		—		998,762		3.29
Over ten to fifteen years	1,280,491		3.54		339,352		2.50		—		—		1,619,843		3.33
After fifteen years	4,994,053		3.72		251,808		2.84		—		—		5,245,861		3.67
Total due after one year	7,179,544		3.71		968,122		2.50		207,474		1.96		8,355,140		3.53

	$	7,493,280	3.74		$	973,318	2.50		$	262,719	1.87		$	8,729,317	3.54