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What changed in TFS Financial CORP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of TFS Financial CORP's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+445 added−433 removedSource: 10-K (2025-11-25) vs 10-K (2024-11-22)

Top changes in TFS Financial CORP's 2025 10-K

445 paragraphs added · 433 removed · 376 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

195 edited+14 added−18 removed177 unchanged
Biggest changeLoans Delinquent For 30-89 Days 90 Days or More Total September 30, 2024 (Dollars in thousands) Real estate loans: Residential Core Ohio $ 5,490 $ 3,943 $ 9,433 Florida 2,676 1,570 4,246 Other 3,412 3,368 6,780 Total Residential Core 11,578 8,881 20,459 Residential Home Today 1,121 693 1,814 Home equity loans and lines of credit Ohio 1,121 993 2,114 Florida 1,100 625 1,725 California 1,051 781 1,832 Other 1,983 1,961 3,944 Total Home equity loans and lines of credit 5,255 4,360 9,615 Total $ 17,954 $ 13,934 $ 31,888 Loans Delinquent For 30-89 Days 90 Days or More Total September 30, 2023 (Dollars in thousands) Real estate loans: Residential Core Ohio $ 2,616 $ 4,410 $ 7,026 Florida 1,207 1,340 2,547 Other 1,620 2,518 4,138 Total Residential Core 5,443 8,268 13,711 Residential Home Today 989 855 1,844 Home equity loans and lines of credit Ohio 910 600 1,510 Florida 973 813 1,786 California 529 790 1,319 Other 1,549 1,673 3,222 Total Home equity loans and lines of credit 3,961 3,876 7,837 Total $ 10,393 $ 12,999 $ 23,392 Total loans seriously delinquent (i.e. delinquent 90 days or more) were 0.09% of total net loans at both September 30, 2024 and September 30, 2023.
Biggest changeLoans Delinquent For 30-89 Days 90 Days or More Total September 30, 2025 (Dollars in thousands) Real estate loans: Residential Core Ohio $ 5,046 $ 3,939 $ 8,985 Florida 2,578 2,474 5,052 Other 1,725 4,057 5,782 Total Residential Core 9,349 10,470 19,819 Residential Home Today 1,018 560 1,578 Home equity lines of credit Ohio 1,263 916 2,179 Florida 2,045 1,709 3,754 California 1,228 934 2,162 Other 1,637 1,737 3,374 Total Home equity lines of credit 6,173 5,296 11,469 Home equity loans Ohio 218 271 489 Florida 266 363 629 California — 106 106 Other 366 195 561 Total Home equity loans 850 935 1,785 Total $ 17,390 $ 17,261 $ 34,651 15 Table of Contents Loans Delinquent For 30-89 Days 90 Days or More Total September 30, 2024 (Dollars in thousands) Real estate loans: Residential Core Ohio $ 5,490 $ 3,943 $ 9,433 Florida 2,676 1,570 4,246 Other 3,412 3,368 6,780 Total Residential Core 11,578 8,881 20,459 Residential Home Today 1,121 693 1,814 Home equity lines of credit Ohio 1,039 891 1,930 Florida 994 474 1,468 California 848 752 1,600 Other 1,689 1,961 3,650 Total Home equity lines of credit 4,570 4,078 8,648 Home equity loans Ohio 82 102 184 Florida 105 151 256 California 204 29 233 Other 294 — 294 Total Home equity loans 685 282 967 Total $ 17,954 $ 13,934 $ 31,888 Total loans seriously delinquent (i.e. delinquent 90 days or more) were 0.11% of total net loans at September 30, 2025 and 0.09% at September 30, 2024.
A majority of its residential real estate mortgage loans have a mortgage escrow account from which disbursements are made for real estate taxes and to a lesser extent for hazard insurance and flood insurance.
A majority of its residential mortgage loans have a mortgage escrow account from which disbursements are made for real estate taxes and to a lesser extent for hazard insurance and flood insurance.
Mortgage-Backed Securities. We purchase mortgage-backed securities insured or guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae. We invest in mortgage-backed securities to achieve positive interest rate spreads with minimal administrative expense, and to lower our credit risk as a result of the guarantees provided by Freddie Mac, Fannie Mae or Ginnie Mae. The U.S.
We purchase mortgage-backed securities insured or guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae. We invest in mortgage-backed securities to achieve positive interest rate spreads with minimal administrative expense, and to lower our credit risk as a result of the guarantees provided by Freddie Mac, Fannie Mae or Ginnie Mae. The U.S.
The capital standards require the maintenance of common equity Tier 1 capital, Tier 1 capital and total capital to risk-weighted assets of at least 4.5%, 6% and 8%, respectively, and a leverage ratio of at least 4% Tier 1 capital. Common equity Tier 1 capital is generally defined as common stockholders’ equity and retained earnings.
The capital standards require the maintenance of common equity Tier 1 capital, Tier 1 capital and total capital to risk-weighted assets of at least 4.5%, 6% and 8%, respectively, and a leverage ratio of at least 4%. Common equity Tier 1 capital is generally defined as common stockholders’ equity and retained earnings.
Among other things, these provisions require that extensions of credit to insiders: (i) subject to certain exceptions for loan programs made available to all employees, be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than those prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present other unfavorable features; and (ii) do not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based, in part, on the amount of the Association’s capital.
Among other things, these provisions require that extensions of credit to insiders: (i) subject to certain exceptions for loan programs made available to all employees, be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than those prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present other unfavorable features; and (ii) do not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based, in part, on the amount of the Association’s capital and surplus.
Pursuant to Section 10(o) of the HOLA and FRS regulations, a mutual holding company, such as Third Federal Savings, MHC and its mid-tier holding company, the Company, may, with appropriate regulatory approval, engage in the following activities: (i) investing in the stock of a savings association; (ii) acquiring a mutual association through the merger of such association into a savings association subsidiary of the Company or an interim savings association subsidiary of the Company; (iii) merging with or acquiring another holding company, one of whose subsidiaries is a savings association; (iv) investing in a corporation, the capital stock of which is available for purchase by a savings association under federal law or under the law of any state where the subsidiary savings association has its home offices; (v) furnishing or performing management services for a savings association subsidiary of such company; (vi) holding, managing or liquidating assets owned or acquired from a savings association subsidiary of such company; (vii) holding or managing properties used or occupied by a savings association subsidiary of such company; (viii) acting as trustee under deeds of trust; (ix) any other activity: (A) that the FRS, by regulation, has determined to be permissible for bank holding companies under Section 4(c) of the Bank Holding Company Act of 1956, unless the FRS, by regulation, prohibits or limits any such activity for savings and loan holding companies; or 31 Table of Contents (B) in which multiple savings and loan holding companies were authorized (by regulation) to directly engage on March 5, 1987; (x) if the savings and loan holding company meets the criteria to qualify as a financial holding company, any activity permissible for financial holding companies under Section 4(k) of the Bank Holding Company Act, including securities and insurance underwriting; and (xi) purchasing, holding, or disposing of stock acquired in connection with a qualified stock issuance if the purchase of such stock by such savings and loan holding company is approved by the FRS.
Pursuant to Section 10(o) of the HOLA and FRS regulations, a mutual holding company, such as Third Federal Savings, MHC and its mid-tier holding company, the Company, may, with appropriate regulatory approval, engage in the following activities: (i) investing in the stock of a savings association; (ii) acquiring a mutual association through the merger of such association into a savings association subsidiary of the Company or an interim savings association subsidiary of the Company; (iii) merging with or acquiring another holding company, one of whose subsidiaries is a savings association; (iv) investing in a corporation, the capital stock of which is available for purchase by a savings association under federal law or under the law of any state where the subsidiary savings association has its home offices; (v) furnishing or performing management services for a savings association subsidiary of such company; (vi) holding, managing or liquidating assets owned or acquired from a savings association subsidiary of such company; (vii) holding or managing properties used or occupied by a savings association subsidiary of such company; (viii) acting as trustee under deeds of trust; (ix) any other activity: (A) that the FRS, by regulation, has determined to be permissible for bank holding companies under Section 4(c) of the Bank Holding Company Act of 1956, unless the FRS, by regulation, prohibits or limits any such activity for savings and loan holding companies; or (B) in which multiple savings and loan holding companies were authorized (by regulation) to directly engage on March 5, 1987; (x) if the savings and loan holding company meets the criteria to qualify as a financial holding company, any activity permissible for financial holding companies under Section 4(k) of the Bank Holding Company Act, including securities and insurance underwriting; and (xi) purchasing, holding, or disposing of stock acquired in connection with a qualified stock issuance if the purchase of such stock by such savings and loan holding company is approved by the FRS.
As a federal savings association, the Association must satisfy the qualified thrift lender test. Under the QTL test, the Association must maintain at least 65% of its “portfolio assets” in “qualified thrift investments” (primarily residential mortgages and related investments, including mortgage-backed securities) in at least nine months of the most recent 12-month period.
As a federal savings association, the Association must satisfy the qualified thrift lender test. Under the HOLA QTL test, the Association must maintain at least 65% of its “portfolio assets” in “qualified thrift investments” (primarily residential mortgages and related investments, including mortgage-backed securities) in at least nine months of the most recent 12-month period.
A federal savings association must file an application with the OCC for approval of a capital distribution if: • the total capital distributions for the applicable calendar year exceed the sum of the association’s net income for that year to date plus the association’s retained net income for the preceding two years; • the association would not be at least adequately capitalized following the distribution; • the distribution would violate any applicable statute, regulation, agreement or condition imposed by a regulator; or • the association is not eligible for expedited treatment of its filings. 26 Table of Contents Regardless of whether an application is required, every federal savings association that is a subsidiary of a holding company must still file a notice with the FRS at least 30 days before the board of directors declares a dividend or approves a capital distribution.
A federal savings association must file an application with the OCC for approval of a capital distribution if: • the total capital distributions for the applicable calendar year exceed the sum of the association’s net income for that year to date plus the association’s retained net income for the preceding two years; • the association would not be at least adequately capitalized following the distribution; • the distribution would violate any applicable statute, regulation, agreement or condition imposed by a regulator; or • the association is not eligible for expedited treatment of its filings. 27 Table of Contents Regardless of whether an application is required, every federal savings association that is a subsidiary of a holding company must still file a notice with the FRS at least 30 days before the board of directors declares a dividend or approves a capital distribution.
The Association’s operations are also subject to federal laws and regulations applicable to credit transactions, such as the: • Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; • Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; • Real Estate Settlement Procedures Act, requiring that borrowers for mortgage loans for one- to four-family residential real estate receive various disclosures, including good faith estimates of settlement costs, lender servicing and escrow account practices, and prohibiting certain practices that increase the cost of settlement services; • Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; • Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies; • Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and 30 Table of Contents • Implementing regulations of the relevant federal agencies charged with the responsibility of implementing such federal laws that have supervisory authority over the Association.
The Association’s operations are also subject to federal laws and regulations applicable to credit transactions, such as the: • Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; • Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; • Real Estate Settlement Procedures Act, requiring that borrowers for mortgage loans for one- to four-family residential real estate receive various disclosures, including good faith estimates of settlement costs, lender servicing and escrow account practices, and prohibiting certain practices that increase the cost of settlement services; • Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; • Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies; • Fair Debt Collection Practices Act, governing the manner in which consumer debts may be collected by collection agencies; and • Implementing regulations of the relevant federal agencies charged with the responsibility of implementing such federal laws that have supervisory authority over the Association.
See Delinquent Loans and Non-performing Assets and Modified Loans for discussions of the asset quality of this portion of the Company’s loan portfolio. The Company currently retains the servicing rights on all loans sold in order to generate fee income and reinforce its commitment to customer service.
See Delinquent Loans and Non-performing Assets and Modified Loans for discussions of the asset quality of this portion of the Company’s loan portfolio. The Company currently retains the servicing rights on all conforming loans sold in order to generate fee income and reinforce its commitment to customer service.
The Company has never offered “Option ARM” loans, where borrowers can pay less than the interest owed on their loan, resulting in an increased principal balance during the life of the loan. The Company has always considered the promotion of home ownership a primary goal.
The Company has never offered “Option ARM” loans, where borrowers can pay less than the interest owed on their loan, resulting in an increased principal balance during the life of the loan. The Company has always considered the promotion of successful home ownership a primary goal.
Loans originated with the intent to hold for investment, all adjustable-rate loans and some fixed-rate loans are originated using guidelines that are similar, but not identical to Fannie Mae processing and underwriting guidelines. The Company originates both adjustable-rate and fixed-rate loans and advertises extensively throughout its market area.
Certain loans originated with the intent to hold for investment, all adjustable-rate loans and some fixed-rate loans, are originated using guidelines that are similar, but not identical to Fannie Mae processing and underwriting guidelines. The Company originates both adjustable-rate and fixed-rate loans and advertises extensively throughout its market area.
Under current FRS regulations, Third Federal Savings, MHC is required to obtain the approval of its members (depositors and certain loan customers of the Association) every 12 months to enable Third Federal Savings, MHC to waive its right to receive dividends on the Company’s common stock that Third Federal Savings, MHC owns.
Under FRS regulations, Third Federal Savings, MHC is required to obtain the approval of its members (depositors and certain loan customers of the Association) every 12 months to enable Third Federal Savings, MHC to waive its right to receive dividends on the Company’s common stock that Third Federal Savings, MHC owns.
FRS regulations require that all savings and loan holding companies serve as a source of strength to their subsidiary depository institutions by providing capital, liquidity and other support in times of financial stress. Waivers of Dividends by Third Federal Savings, MHC .
FRS regulations require that all savings and loan holding companies serve as a source of financial and managerial strength to their subsidiary depository institutions by providing capital, liquidity and other support in times of financial stress. Waivers of Dividends by Third Federal Savings, MHC .
Any change in these laws or regulations, whether by the FDIC, OCC, FRS, CFPB or Congress, could have a material impact on the Company, the Association, and their operations. Certain statutes and regulations that are applicable to the Association and the Company are described below.
Any change in these laws or regulations, whether by the FDIC, OCC, FRS, CFPB, FHLB or Congress, could have a material impact on the Company, the Association, and their operations. Certain statutes and regulations that are applicable to the Association and the Company are described below.
The Association’s authority to extend credit to its directors, executive officers and 10% shareholders, as well as to entities controlled by such persons, is governed by the requirements of Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O of the FRS.
The Association’s authority to extend credit to its, and its affiliates' directors, executive officers and 10% shareholders, as well as to entities controlled by such persons, is governed by the requirements of Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O of the FRS.
Together, the BSA and USA PATRIOT Act require the Association to implement internal controls, conduct customer due diligence, maintain records, and file reports; • Regulations of the Office of Foreign Assets Control that enforce economic and trade sanctions against targeted foreign countries, regimes, and other designated individuals and organizations; • The Gramm-Leach-Bliley Act, which placed limitations on the sharing of consumer financial information by financial institutions with unaffiliated third parties.
Together, the BSA and USA PATRIOT Act require the Association to implement internal controls, conduct customer due diligence, maintain records, and file reports, among other things; • Regulations of the Office of Foreign Assets Control that enforce economic and trade sanctions against targeted foreign countries, regimes, and other designated individuals and organizations; • The Gramm-Leach-Bliley Act, which placed limitations on the sharing of consumer financial information by financial institutions with unaffiliated third parties.
For the fiscal year ended September 30, 2024, Third Cap Associates, Inc. recorded net income of $0.2 million. THIRD FEDERAL SAVINGS AND LOAN ASSOCIATION OF CLEVELAND General The Association is a federally chartered savings and loan association headquartered in Cleveland, Ohio, that was organized in 1938. In 1997, the Association reorganized into its current two-tier mutual holding company structure.
For the fiscal year ended September 30, 2025, Third Cap Associates, Inc. recorded net income of $0.2 million. THIRD FEDERAL SAVINGS AND LOAN ASSOCIATION OF CLEVELAND General The Association is a federally chartered savings and loan association headquartered in Cleveland, Ohio, that was organized in 1938. In 1997, the Association reorganized into its current two-tier mutual holding company structure.
At September 30, 2024, the Association exceeded the fully phased in regulatory requirement for the "capital conservation buffer." In assessing an institution’s capital adequacy, the OCC takes into consideration not only these numeric factors, but qualitative factors as well, and has the authority to establish higher capital requirements for individual institutions where deemed necessary. As presented in Note 3.
At September 30, 2025, the Association exceeded the fully phased in regulatory requirement for the "capital conservation buffer." In assessing an institution’s capital adequacy, the OCC takes into consideration not only these numeric factors, but qualitative factors as well, and has the authority to establish higher capital requirements for individual institutions where deemed necessary. As presented in Note 3.
There were no dividends paid to the Company by Third Capital, the Company's other wholly owned subsidiary, during the fiscal years ended September 30, 2024, 2023 or 2022. The Company's eighth stock repurchase program, for the repurchase of 10,000,000 shares of its common stock, was announced on October 27, 2016, and began on January 6, 2017.
There were no dividends paid to the Company by Third Capital, the Company's other wholly owned subsidiary, during the fiscal years ended September 30, 2025, 2024 or 2023. The Company's eighth stock repurchase program, for the repurchase of 10,000,000 shares of its common stock, was announced on October 27, 2016, and began on January 6, 2017.
As of September 30, 2024, we held no asset-backed securities or securities with sub-prime credit risk exposure, nor did we hold any banker’s acceptances, term federal funds, repurchase agreements or reverse repurchase agreements. As a federal savings association, the Association is not permitted to invest in equity securities. This general restriction does not apply to the Company.
As of September 30, 2025, we held no asset-backed securities or securities with sub-prime credit risk exposure, nor did we hold any banker’s acceptances, term federal funds, repurchase agreements or reverse repurchase agreements. As a federal savings association, the Association is not permitted to invest in equity securities. This general restriction does not apply to the Company.
REGULATORY MATTERS of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS , at September 30, 2024, the Association exceeded all regulatory capital requirements to be considered “Well Capitalized.” Loans-to-One Borrower. Generally, a federal savings association may not make a loan or extend credit to a single or related group of borrowers in excess of 15% of unimpaired capital and surplus.
REGULATORY MATTERS of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS , at September 30, 2025, the Association exceeded all regulatory capital requirements to be considered “Well Capitalized.” Loans-to-One Borrower. Generally, a federal savings association may not make a loan or extend credit to a single or related group of borrowers in excess of 15% of unimpaired capital and surplus.
An additional amount may be loaned, equal to 10% of unimpaired capital and surplus, if the loan is secured by readily marketable collateral, which generally does not include real estate. As of September 30, 2024, the Association was in compliance with the loans-to-one borrower limitations. Qualified Thrift Lender Test.
An additional amount may be loaned, equal to 10% of unimpaired capital and surplus, if the loan is secured by readily marketable collateral, which generally does not include real estate. As of September 30, 2025, the Association was in compliance with the loans-to-one borrower limitations. Qualified Thrift Lender Test.
As part of a loan retention program, these adjustable-rate loans provide the borrower with an attractive rate reset option, which allows the borrower to re-lock the rate an unlimited number of times at the Company’s then current lending rates, for another three or five years (which must be the same as the original lock period), generally for a fee.
As part of a loan retention program, these adjustable-rate loans provide the borrower with an attractive rate reset alternative, which allows the borrower to re-lock the rate an unlimited number of times at the Company’s then current lending rates, for another three or five years (which must be the same as the original lock period), generally for a fee.
The Company does not conduct environmental testing on residential real estate mortgage loans unless specific concerns for hazards are identified by the appraiser used in connection with the origination of the loan. For home purchase loans with LTV ratios at origination in excess of 85% but equal to or less than 90%, the Company generally requires private mortgage insurance.
The Company does not conduct environmental testing on residential mortgage loans unless specific concerns for hazards are identified by the appraiser used in connection with the origination of the loan. For home purchase loans with LTV ratios at origination in excess of 85% but equal to or less than 90%, the Company generally requires private mortgage insurance.
Under this system of federal regulation, financial institutions are periodically examined to ensure that they satisfy applicable standards with respect to their capital adequacy, assets, management, earnings, liquidity and sensitivity to market risk. Following completion of its examination, the federal agency critiques the institution’s operations and assigns its rating (known as an institution’s CAMELS rating).
Under this system of federal regulation, financial institutions are periodically examined to ensure that they satisfy applicable standards with respect to their capital adequacy, assets, management, earnings, liquidity and sensitivity to market risk. Following completion of its examination, the OCC critiques the institution’s operations and assigns its rating (known as an institution’s CAMELS rating).
Lending Activities The Company’s principal lending activity is the origination of up to 30-year fixed-rate and adjustable-rate, first mortgage loans to purchase or refinance residential real estate. Also, the Company offers home equity loans and lines of credit and originates residential construction loans to individuals (for the construction of their personal residences by a qualified builder).
Lending Activities The Company’s principal lending activity is the origination and acquisition of up to 30-year fixed-rate and adjustable-rate, first mortgage loans used to purchase or refinance residential real estate. Also, the Company offers home equity loans and lines of credit and originates residential construction loans to individuals (for the construction of their personal residences by a qualified builder).
See the Residential Real Estate Mortgage Loans section which follows for a further description of Residential Core and Home Today loans. 8 Table of Contents The following table provides the amortized cost and an analysis of our real estate loans held for investment disaggregated by refreshed FICO score, year of origination and portfolio at September 30, 2024.
See the Residential Mortgage Loans section which follows for a further description of Residential Core and Home Today loans. 8 Table of Contents The following table provides the amortized cost and an analysis of our real estate loans held for investment disaggregated by refreshed FICO score, year of origination and portfolio at September 30, 2025.
Factors impacting the determination of qualitative GVAs include, among other: • changes in lending policies and procedures including underwriting standards, collection, charge-off or recovery practices; • management's view of changes in national, regional, and local economic and business conditions and trends including treasury yields, housing market factors and trends, such as the status of loans in foreclosure, real estate in judgment and real estate owned, and unemployment statistics and trends and how it aligns with economic modeling forecasts; • changes in the nature and volume of the portfolios including home equity lines of credit nearing the end of the draw period and adjustable-rate mortgage loans nearing a rate reset; • changes in the experience, ability or depth of lending management; • changes in the volume or severity of past due loans, volume of non-accrual loans, or the volume and severity of adversely classified loans including the trending of delinquency statistics (both current and historical), historical loan loss experience and trends, the frequency and magnitude of loan modifications, and uncertainty surrounding borrowers’ ability to recover from temporary hardships for which short-term loan restructurings are granted; • changes in the quality of the loan review system; • changes in the value of the underlying collateral including asset disposition loss statistics (both current and historical) and the trending of those statistics, and additional charge-offs and recoveries on individually reviewed loans; • existence of any concentrations of credit; • effect of other external factors such as competition, market interest rate changes or legal and regulatory requirements including market conditions and regulatory directives that impact the entire financial services industry; and • limitations within our models to predict life of loan net losses.
Factors impacting the determination of qualitative GVAs include, among other: • changes in lending policies and procedures including underwriting standards, collection, charge-off or recovery practices; 18 Table of Contents • management's view of changes in national, regional, and local economic and business conditions and trends including treasury yields, housing market factors and trends, such as the status of loans in foreclosure, real estate in judgment and real estate owned, and unemployment statistics and trends and how it aligns with economic modeling forecasts; • changes in the nature and volume of the portfolios including home equity lines of credit utilization and adjustable-rate mortgage loans nearing a rate reset; • changes in the experience, ability or depth of lending management; • changes in the volume or severity of past due loans, volume of non-accrual loans, or the volume and severity of adversely classified loans including the trending of delinquency statistics (both current and historical), historical loan loss experience and trends, the frequency and magnitude of loan modifications, and uncertainty surrounding borrowers’ ability to recover from temporary hardships for which short-term loan restructurings are granted; • changes in the quality of the loan review system; • changes in the value of the underlying collateral including asset disposition loss statistics (both current and historical) and the trending of those statistics, and additional charge-offs and recoveries on individually reviewed loans; • existence of any concentrations of credit; • effect of other external factors such as competition, market interest rate changes or legal and regulatory requirements including market conditions and regulatory directives that impact the entire financial services industry; and • limitations within our models to predict life of loan net losses.
As of September 30, 2024, the only remaining entity in which Third Capital, Inc. has an investment in is Third Cap Associates, Inc., an Ohio corporation that owns 49% and 60% of two title agencies that provide escrow and settlement services in the States of Ohio, Florida and New Jersey, primarily to customers of the Association.
As of September 30, 2025, the only remaining entity in which Third Capital, Inc. has an investment in is Third Cap Associates, Inc., an Ohio corporation that owns 49% and 60% of two title agencies that provide escrow and settlement services in the States of Ohio, Florida and New Jersey, primarily to customers of the Association.
At September 30, 2024, the total federal pre-base year bad debt reserve of the Association was approximately $105.0 million. State Taxation Following its initial public stock offering in 2007, the Company converted from a qualified passive investment company domiciled in the State of Delaware to a qualified holding company in Ohio.
At September 30, 2025, the total federal pre-base year bad debt reserve of the Association was approximately $105.0 million. State Taxation Following its initial public stock offering in 2007, the Company converted from a qualified passive investment company domiciled in the State of Delaware to a qualified holding company in Ohio.
Information on that website is not and should not be considered a part of this document. Market Area The Association conducts its operations from its main office in Cleveland, Ohio, and from 37 additional, full-service branches and two loan production offices located throughout the states of Ohio and Florida.
Information on that website is not and should not be considered a part of this document. Market Area The Association conducts its operations from its main office in Cleveland, Ohio, and from 36 additional, full-service branches and two loan production offices located throughout the states of Ohio and Florida.
In Florida, the Association maintains 16 full-service branches located in the counties of Pasco, Pinellas, Hillsborough, Sarasota, Lee, Collier, Palm Beach and Broward. The Association also provides savings and loan products in states outside of its core markets of Ohio, Florida, Kentucky and Indiana using its customer service call center and its internet site.
In Florida, the Association maintains 15 full-service branches located in the counties of Pasco, Pinellas, Hillsborough, Sarasota, Lee, Collier, Palm Beach and Broward. The Association also provides savings and loan products in states outside of its core markets of Ohio, Florida, Kentucky and Indiana using its customer service call center and its internet site.
(2) Mean CLTV percent at origination for all home equity lines of credit is based on the committed amount. (3) Current Mean CLTV is based on best available first mortgage and property values as of September 30, 2024. Property values are estimated using HPI data published by the FHFA.
(2) Mean CLTV percent at origination for all home equity lines of credit is based on the committed amount. (3) Current Mean CLTV is based on best available first mortgage and property values as of September 30, 2025. Property values are estimated using HPI data published by the FHFA.
Our determinations as to the classification of our assets and the amount of our credit loss allowances are subject to review by the Company's primary federal regulator, the OCC, which can require that we establish additional credit loss allowances. We regularly review our asset portfolio to determine whether any assets require classification in accordance with applicable regulations.
Our determinations as to the classification of our assets and the amount of our credit loss allowances are subject to review by the Association's primary federal regulator, the OCC, which can require that we establish additional credit loss allowances. We regularly review our asset portfolio to determine whether any assets require classification in accordance with applicable regulations.
The Association’s principal business consists of originating and servicing residential real estate mortgage loans and attracting retail savings deposits. The Association’s primary business strategy is to originate mortgage loans with interest rates that are competitive with those of similar products offered by other financial institutions in its markets.
The Association’s principal business consists of originating and servicing residential mortgage loans and attracting retail savings deposits. The Association’s primary business strategy is to originate mortgage loans with interest rates that are competitive with those of similar products offered by other financial institutions in its markets.
The following table sets forth the composition of the portfolio of loans held for investment, by type of loan segregated by geographic location, at the indicated periods, excluding loans held for sale. The majority of our Home Today loan portfolio is secured by properties located in Ohio and the balances of other loans are immaterial.
The following table sets forth the composition of the portfolio of loans held for investment, by principal balance and by type of loan segregated by geographic location, at the indicated periods, excluding loans held for sale. The majority of our Home Today loan portfolio is secured by properties located in Ohio and the balances of other loans are immaterial.
The Association also has the ability to purchase overnight Fed Funds up to $395.0 million through arrangements with other institutions. The ability to borrow from the FRB-Cleveland Discount Window is also available to the Association and is secured by a pledge of specific loans in the Association’s mortgage portfolio.
The Association also has the ability to purchase overnight Fed Funds up to $455.0 million through arrangements with other institutions. The ability to borrow from the FRB-Cleveland Discount Window is also available to the Association and is secured by a pledge of specific loans in the Association’s mortgage portfolio.
Loans having no stated repayment schedule or maturity are reported as being due in the fiscal year ending September 30, 2025. Maturities are based on the final contractual payment date and do not reflect the impact of prepayments and scheduled principal amortization.
Loans having no stated repayment schedule or maturity are reported as being due in the fiscal year ending September 30, 2026. Maturities are based on the final contractual payment date and do not reflect the impact of prepayments and scheduled principal amortization.
(2) No new originations of Home Today loans since fiscal 2016. 9 Table of Contents The following table provides amortized cost and an analysis of our real estate loans held for investment by origination LTV, origination year and portfolio at September 30, 2024.
(2) No new originations of Home Today loans since fiscal 2016. 9 Table of Contents The following table provides amortized cost and an analysis of our real estate loans held for investment by origination LTV, origination year and portfolio at September 30, 2025.
The vast majority of loans originated under the Home Today program had higher risk characteristics than our Core residential real estate mortgage loan, but the Company attempted to mitigate that higher risk through the use of private mortgage insurance and continued pre- and post-purchase counseling.
The vast majority of loans originated under the Home Today program had higher risk characteristics than our Core residential mortgage loan, but the Company attempted to mitigate that higher risk through the use of private mortgage insurance and continued pre- and post-purchase counseling.
Also, the amortized cost of non-accrual loans includes loans that are not included in the amortized cost of collateral-dependent loans because they are included in loans collectively evaluated for credit losses. 16 Table of Contents The table below sets forth a reconciliation of the amortized costs and categories between non-accrual loans and collateral-dependent loans at the dates indicated.
Also, the amortized cost of non-accrual loans includes loans that are not included in the amortized cost of collateral-dependent loans because they are included in loans collectively evaluated for credit losses. The table below sets forth a reconciliation of the amortized costs and categories between non-accrual loans and collateral-dependent loans at the dates indicated.
From October 2023 through August 2024 (the latest date for which information is publicly available), per data furnished by MarketTrac ® , the Association had the second largest market share of conventional purchase mortgage loans originated in Cuyahoga County, Ohio.
From October 2024 through August 2025 (the latest date for which information is publicly available) per data furnished by MarketTrac ® , the Association had the second largest market share of conventional purchase mortgage loans originated in Cuyahoga County, Ohio.
In fiscal year 2022, the Company began purchasing first mortgage loans originated through a correspondent lending partnership. These loans are underwritten by the correspondent lender with generally the same standards as our originated portfolio using Fannie Mae processing and underwriting guidelines.
In fiscal year 2022, the Company began acquiring first mortgage loans originated through a correspondent lending partnership. These loans are underwritten by the correspondent lender with generally the same standards as our originated portfolio using Fannie Mae processing and underwriting guidelines.
As a result of the 2023, 2022, and 2021 approvals, Third Federal Savings, MHC previously waived its right to receive an aggregate of $1.13 per share on common stock for the periods ended June 30, 2024, June 30, 2023 and June 30, 2022. Liquidity.
As a result of the 2024, 2023, and 2022 approvals, Third Federal Savings, MHC previously waived its right to receive an aggregate of $1.13 per share on common stock for the periods ended June 30, 2025, June 30, 2024 and June 30, 2023. Liquidity.
At September 30, 2024, substantially all of the loans serviced for Fannie Mae and others were performing in accordance with their contractual terms and management believes that it had no material repurchase obligations associated with these loans at that date.
At September 30, 2025, substantially all of the loans serviced for Fannie Mae and others were performing in accordance with their contractual terms and management believes that it had no material repurchase obligations associated with these loans at that date.
Borrowings from the FHLB of Cincinnati are secured by the Association’s investment in the common stock of the FHLB of Cincinnati as well as by a blanket pledge of its mortgage portfolio not otherwise pledged. Our current, maximum borrowing capacity with the FHLB of Cincinnati is $6.86 billion.
Borrowings from the FHLB of Cincinnati are secured by the Association’s investment in the common stock of the FHLB of Cincinnati as well as by a blanket pledge of its mortgage portfolio not otherwise pledged. Our current, maximum borrowing capacity with the FHLB of Cincinnati is $6.94 billion.
We reported net recoveries in each quarter for the past five years, primarily due to improvements in the values of properties used to secure loans that were fully or partially charged off after the 2008 collapse of the housing market.
We reported net recoveries in each quarter for the past six years, primarily due to improvements in the values of properties used to secure loans that were fully or partially charged off after the 2008 collapse of the housing market.
Capital. Consolidated regulatory capital requirements identical to those applicable to the subsidiary depository institutions, including the capital conservation buffer, apply to savings and loan holding companies. We are in compliance with the holding company consolidated capital requirements and the capital conservation buffer as of September 30, 2024. Dividends and Repurchases.
Consolidated regulatory capital requirements identical to those applicable to the subsidiary depository institutions, including the capital conservation buffer, apply to savings and loan holding companies. We are in compliance with the holding company consolidated capital requirements and the capital conservation buffer as of September 30, 2025. Dividends and Repurchases.
For more information regarding the allowance for credit losses, see Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations . 18 Table of Contents The following table sets forth activity for credit losses segregated by geographic location for the periods indicated.
For more information regarding the allowance for credit losses, see Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations . 19 Table of Contents The following table sets forth activity for credit losses segregated by geographic location for the periods indicated.
The federal banking agencies adopted Interagency Guidelines Prescribing Standards for Safety and Soundness to implement the safety and soundness standards required under federal law. The guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired.
The federal banking agencies adopted Interagency Guidelines Establishing Standards for Safety and Soundness to implement the safety and soundness standards required under federal law. The guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired.
Specifically, the Gramm-Leach-Bliley Act requires all financial institutions offering financial products or services to retail customers to provide such customers with the financial institution’s privacy policy and provide such customers the opportunity to “opt out” of the sharing of certain personal financial information with unaffiliated third parties; and • The DFA, which holds lenders accountable for ensuring a borrower's ability to repay a mortgage.
Specifically, the Gramm-Leach-Bliley Act requires all financial institutions offering financial products or services to retail customers to provide such customers with the financial institution’s privacy policy and provide such customers the opportunity to “opt out” of the sharing of certain personal financial information with unaffiliated third parties; and 31 Table of Contents • The DFA, which holds lenders accountable for ensuring a borrower's ability to repay a mortgage.
All of the Company’s adjustable-rate mortgage loans are subject to periodic and lifetime limitations on interest rate changes. All adjustable-rate mortgage loans have initial and periodic caps of two percentage points on interest rate changes, with a cap of six percentage points for the life of the loan.
Most of the Company’s adjustable-rate mortgage loans are subject to periodic and lifetime limitations on interest rate changes. Most adjustable-rate mortgage loans have initial and periodic caps of two percentage points on interest rate changes, with a cap of six percentage points for the life of the loan.
On an ongoing basis, we further promote the health and wellness of our associates by strongly encouraging work-life balance, offering flexible work schedules, keeping the associate portion of health care premiums to a minimum and sponsoring various wellness programs, whereby associates are compensated for incorporating healthy habits into their daily routines. 33 Table of Contents
On an ongoing basis, we further promote the health and wellness of our associates by strongly encouraging work-life balance, offering flexible work schedules, keeping the associate portion of health care premiums to a minimum and sponsoring various wellness programs, whereby associates are compensated for incorporating healthy habits into their daily routines.
For the Years Ended September 30, Net recoveries to average loans outstanding during the year 2024 2023 2022 Real estate loans: Residential Core 0.01 % 0.01 % 0.02 % Residential Home Today 0.01 % 0.01 % 0.02 % Home Equity loans and lines of credit 0.01 % 0.02 % 0.03 % Total net recoveries to average loans outstanding 0.03 % 0.04 % 0.07 % We continue to evaluate loans becoming delinquent for potential losses and record provisions for the estimate of those losses.
For the Years Ended September 30, Net recoveries to average loans outstanding during the year 2025 2024 2023 Real estate loans: Residential Core 0.01 % 0.01 % 0.01 % Residential Home Today 0.01 % 0.01 % 0.01 % Home Equity lines of credit 0.01 % 0.01 % 0.02 % Home Equity loans — % — % — % Total net recoveries to average loans outstanding 0.03 % 0.03 % 0.04 % We continue to evaluate loans becoming delinquent for potential losses and record provisions for the estimate of those losses.
Our workplace culture is grounded in a set of core values – love (a genuine concern for others), trust, respect, a commitment to excellence and a little bit of fun – which is lived out daily in our work. We seek to hire well-qualified associates who are also a good fit for our value system.
Our workplace culture is grounded in a set of core values – love (a genuine concern for others), trust, respect, a commitment to excellence and a little bit of fun – which is lived out daily in our work. We seek to hire well-qualified associates 33 Table of Contents who are also a good fit for our value system.
Our allowance for credit losses is a GVA on our portfolio made up of: (1) quantitative GVAs for loans, which are general allowances for credit losses for each loan type based on historical loan loss experience; (2) quantitative GVAs for off-balance sheet credit exposures, which are comprised of expected lifetime losses on unfunded loan commitments to extend credit where the obligations are not unconditionally cancellable; and 17 Table of Contents (3) qualitative GVAs, which are adjustments to the quantitative GVAs, maintained to cover uncertainties that affect the estimate of expected credit losses for each loan type.
Our allowance for credit losses is a general valuation allowance (GVA) on our portfolio made up of: (1) quantitative GVAs for loans, which are general allowances for credit losses for each loan type based on historical loan loss experience; (2) quantitative GVAs for off-balance sheet credit exposures, which are comprised of expected lifetime losses on unfunded loan commitments to extend credit where the obligations are not unconditionally cancellable; and (3) qualitative GVAs, which are adjustments to the quantitative GVAs, maintained to cover uncertainties that affect the estimate of expected credit losses for each loan type.
At September 30, 2024, Third Capital, Inc. had consolidated assets of $9.2 million, and for the fiscal year ended September 30, 2024, Third Capital, Inc. had consolidated net income of $0.2 million. Third Capital, Inc. has no separate operations other than as the holding company for its operating subsidiaries, and as a minority investor or partner in other entities.
At September 30, 2025, Third Capital, Inc. had consolidated assets of $9.4 million, and for the fiscal year ended September 30, 2025, Third Capital, Inc. had consolidated net income of $0.2 million. Third Capital, Inc. has no separate operations other than as the holding company for its operating subsidiaries, and as a minority investor or partner in other entities.
Finally, for customers who adhere to the old adage of trust but verify, we refer them to the safety/security rankings of a nationally recognized, independent rating organization that specializes in the evaluation of financial institutions, which has awarded the Association its highest rating for more than one hundred consecutive quarters.
Finally, for customers who adhere to the old adage of trust but verify, we refer them to the safety/security rankings of a nationally recognized, independent rating organization that specializes in the evaluation of financial institutions, which has awarded the Association its highest rating for more than 100 consecutive quarters.
Many of the borrowers who select adjustable-rate mortgage loans have shorter-term credit needs than those who select long-term, fixed-rate mortgage loans. Adjustable-rate mortgage loans generally present different credit risks than fixed-rate mortgage loans primarily because the underlying debt service payments of the borrowers increase as interest rates increase, thereby increasing the potential for default.
Many of the borrowers who select adjustable-rate mortgage loans have shorter-term credit needs than those who select long-term, fixed-rate mortgage loans. Adjustable-rate 11 Table of Contents mortgage loans generally present different credit risks than fixed-rate mortgage loans primarily because the underlying debt service payments of the borrowers increase as interest rates increase, thereby increasing the potential for default.
The Company offers home equity loans and home equity lines of credit, which are primarily secured by a second mortgage on residences. The home equity product is offered in 27 states and the District of Columbia. Home equity lines of credit originated since 2013 require amortizing loan payments during the draw period.
The Company offers home equity loans and home equity lines of credit, which are primarily secured by a second mortgage on primary residences. The home equity product is offered in 28 states and the District of Columbia. Home equity lines of credit originated since 2013 require amortizing loan payments during the draw period.
We rely on the reputation that has been built during the Association’s 86-year history of serving its customers and the communities in which it operates, the Association’s high capital levels, and the Association's extensive liquidity alternatives which, in combination, serve to maintain and nurture customer and marketplace confidence.
We rely on the reputation that has been built during the Association’s 87-year history of serving its customers and the communities in which it operates, the Association’s high capital levels, and the Association's liquidity alternatives which, in combination, serve to maintain and nurture customer and marketplace confidence.
Estimated fair value generally represents the sale price a buyer would be willing to pay on the basis of current market conditions. Subsequent to acquisition, real estate owned is carried at the lower of the cost basis or estimated fair market value, less estimated costs to sell.
Estimated fair value generally represents the sale price a buyer would 17 Table of Contents be willing to pay on the basis of current market conditions. Subsequent to acquisition, real estate owned is carried at the lower of the cost basis or estimated fair market value, less estimated costs to sell.
The FRS is prohibited from approving any acquisition that would result in a multiple savings and loan holding company controlling savings institutions in more than one state, subject to two exceptions: (i) the approval of interstate supervisory acquisitions by savings and loan holding companies; and (ii) the acquisition of a savings institution in another state if the laws of the state of the target savings institution specifically permit such acquisition.
The FRS is prohibited from approving any acquisition that would result in a multiple savings and loan holding company controlling savings institutions in more than one state, subject to two exceptions: (i) the approval of interstate supervisory acquisitions by savings and loan holding companies; and (ii) the acquisition of a savings institution in another state if the laws of the state of the target savings institution specifically permit such acquisition. 32 Table of Contents Capital.
At September 30, 2024, 39% of our current associates had been with us for fifteen years or more. We believe our commitment to living out our core values, actively prioritizing concern for our associates’ well-being, supporting our associates’ career goals, offering competitive wages and providing valuable fringe benefits aids in retention of our top-performing associates.
At September 30, 2025, 36% of our current associates had been with us for fifteen years or more. We believe our commitment to living out our core values, actively prioritizing concern for our associates’ well-being, supporting our associates’ career goals, offering competitive wages and providing valuable fringe benefits aids in retention of our top-performing associates.
Total capital includes Tier 1 capital (common equity Tier 1 capital plus additional Tier 1 capital) and Tier 2 capital. Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt.
Total capital includes Tier 1 capital 26 Table of Contents (common equity Tier 1 capital plus additional Tier 1 capital) and Tier 2 capital. Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt.
The majority of our Residential Core and Home Today loan portfolios is secured by properties located in Ohio, and therefore was not segregated by state.
The majority of our Residential Core and Home Today loan portfolios is secured by properties located in Ohio, and therefore were not segregated by state.
As of September 30, 2024, the Association exceeded all regulatory requirements to be considered “Well Capitalized” as presented in the table below (dollar amounts in thousands).
As of September 30, 2025, the Association exceeded all regulatory requirements to be considered “Well Capitalized” as presented in the table below (dollar amounts in thousands).
As a financial institution, approximately 43% of our associates are employed at our branch and loan production offices, and another 15% are employed at our customer care call center.
As a financial institution, approximately 42% of our associates are employed at our branch and loan production offices, and another 15% are employed at our customer care call center.
However, at September 30, 2024, a reserve of $0.4 million has been maintained to cover potential losses on repurchases or reimbursements that may arise in connection with representations and warranties made at time of sale. The Company requires title insurance on all of its residential real estate mortgage loans.
However, at September 30, 2025, a reserve of $0.4 million has been maintained to cover potential losses on repurchases or reimbursements that may arise in connection with representations and warranties made at time of sale. The Company requires title insurance on all of its residential mortgage loans.
Ohio equity capital is taxed at a three-tiered rate of 0.8% on the first 24 Table of Contents $200 million, 0.4% on amounts greater than $200 million and less than or equal to $1.3 billion, and 0.25% on amounts greater than $1.3 billion.
Ohio equity capital is taxed at a three-tiered rate of 0.8% on the first 25 Table of Contents $200 million, 0.4% on amounts greater than $200 million and less than $1.30 billion, and 0.25% on amounts greater than or equal to $1.30 billion.
As of September 30, 2024, outstanding borrowings (including accrued interest) from the FHLB of Cincinnati were $4.79 billion and the Association was in compliance with the stock investment requirement. Other Regulations Interest and other charges collected or contracted for by the Association are subject to state usury laws and federal laws concerning interest rates.
As of September 30, 2025, outstanding borrowings (including accrued interest) from the FHLB of Cincinnati were $4.87 billion and the Association was in compliance with the stock investment requirement. Other Regulations Interest and other charges collected or contracted for by the Association are subject to state usury laws and federal laws concerning interest rates.
LTV ratios in excess of 85% are not available for refinance transactions except for Home Ready loans. The Home Ready product requires private mortgage insurance on purchase transactions between 80.01% and 97% LTV and refinance transactions between 80.01% and 95% LTV.
LTV ratios in excess of 85% are not available for refinance transactions except for Home Ready loans. The Home Ready product requires private mortgage insurance on purchase transactions between 80.01% and up to and including 97% LTV and refinance transactions between 80.01% and up to and including 95% LTV.
The Association also purchases first mortgage loans from its correspondent lending partner, in Ohio, Indiana, North Carolina, South Carolina, Pennsylvania and Michigan. Savings products are available in all 50 states, while first mortgage loans, home equity lines of credit, home equity loans and bridge loans are offered in up to 27 states and the District of Columbia.
The Association also acquires first mortgage loans from its correspondent lending partner, in Ohio, Indiana, North Carolina, South Carolina, Pennsylvania and Michigan. Savings products are available in all 50 states, while first mortgage loans, home equity lines of credit, home equity loans and bridge loans are offered in up to 28 states and the District of Columbia.
Our selection and promotion processes are without bias and include the active recruitment of minorities and women. Associate retention helps us operate efficiently and achieve one of our business objectives, which is being a low-cost provider. Our voluntary turnover rate, at 5.5% for the twelve months ending September 30, 2024, excluding retirements, remains one of the lowest in the industry.
Our selection and promotion processes are without bias and include the active recruitment of minorities and women. Associate retention helps us operate efficiently and achieve one of our business objectives, which is being a low-cost provider. Our voluntary turnover rate, at 3.8% for the twelve months ending September 30, 2025, excluding retirements, remains one of the lowest in the industry.
Third Federal Savings, MHC waived its right to receive a $0.2825 per share dividend payment on September 24, 2024.
Third Federal Savings, MHC waived its right to receive a $0.2825 per share dividend payment on September 24, 2025.
At September 30, 2024, the Association satisfied the QTL test. Capital Distributions. Federal regulations govern capital distributions by a federal savings association, which include cash dividends, stock repurchases and other transactions charged to the capital account.
At September 30, 2025, the Association satisfied the HOLA QTL test. Capital Distributions. Federal regulations govern capital distributions by a federal savings association, which include cash dividends, stock repurchases and other transactions charged to the capital account.
Interest rates paid, maturity terms, service fees, and withdrawal penalties are established on a periodic basis. Deposit rates and terms are based primarily on current operating strategies and market interest rates, liquidity requirements, interest rates paid by competitors, and our deposit growth goals. At September 30, 2024, deposits totaled $10.20 billion.
Interest rates paid, maturity terms, service fees, and withdrawal penalties are established on a periodic basis. Deposit rates and terms are based primarily on current operating strategies and market interest rates, liquidity requirements, interest rates paid by competitors, and our deposit growth goals. At September 30, 2025, deposits totaled $10.45 billion.
Management’s Discussion and Analysis of Financial Condition and Results of Operation - Liquidity and Capital Resources . We continue to utilize a multi-faceted approach to support our efforts to instill customer and marketplace confidence.
See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation - Liquidity and Capital Resources . We continue to utilize a multi-faceted approach to support our efforts to instill customer and marketplace confidence.
(2) No new originations of Home Today loans since fiscal 2016. Loan Portfolio Maturities. The following table summarizes the scheduled repayments of principal balances in the loans held for investment portfolio at September 30, 2024, according to each loan's final due date.
(2) No new originations of Home Today loans since fiscal 2016. 10 Table of Contents Loan Portfolio Maturities. The following table summarizes the scheduled repayments of principal balances in the loans held for investment portfolio at September 30, 2025, according to each loan's final due date.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFederal savings associations may pay dividends without the approval of its primary federal regulator only if they meet applicable regulatory capital requirements before and after the payment of the dividends and total dividends do not exceed net income to date over the calendar year plus its retained net income over the preceding two years.
Biggest changeUnder these statutes and regulations, the Association is not permitted to pay dividends on its capital stock to the Company, its sole stockholder, if the dividend would reduce the stockholders' equity of the Association below the amount of the liquidation account established in connection with the mutual-to-stock conversion. 42 Table of Contents Federal savings associations may pay dividends without the approval of its primary federal regulator only if they meet applicable regulatory capital requirements before and after the payment of the dividends and total dividends do not exceed net income to date over the calendar year plus its retained net income over the preceding two years.
Each aspect of amplified supervision and regulation will in all likelihood increase our costs, may be accompanied by the risk of unexpected fines, sanctions, penalties, litigation and corresponding management diversion and may limit our ability to pursue business opportunities and return capital to our shareholders. • Our ability to assess the creditworthiness of our customers may be impaired if the models and approaches we use to select, manage, and underwrite our customers becomes less predictive of future behaviors. • The process we use to estimate losses inherent in our credit exposure require difficult, subjective, and complex judgments, including forecasts of economic conditions and how these economic predictions might impair the ability of our borrowers to repay their loans, which may no longer be capable of viable estimation and which may, in turn, impact the reliability of our evaluation processes, the comfort of our regulators with respect to the adequacy of our allowance for credit losses and who may require adjustments thereto, and ultimately could result in increased provisions for loan losses and reduced levels of earnings and capital. • Our ability to engage in sales of mortgage loans to third parties (including mortgage loan securitization transactions with governmental entities) on favorable terms or at all could be adversely affected by further disruptions in the capital markets or other events, including deteriorating investor expectations. • Competition in our industry could intensify as a result of increasing consolidation of financial services companies in connection with current market conditions.
Each aspect of amplified supervision and regulation will in all likelihood increase our costs, may be accompanied by the risk of unexpected fines, sanctions, penalties, litigation and corresponding management diversion and may limit our ability to pursue business opportunities and return capital to our shareholders. 34 Table of Contents • Our ability to assess the creditworthiness of our customers may be impaired if the models and approaches we use to select, manage, and underwrite our customers becomes less predictive of future behaviors. • The process we use to estimate losses inherent in our credit exposure require difficult, subjective, and complex judgments, including forecasts of economic conditions and how these economic predictions might impair the ability of our borrowers to repay their loans, which may no longer be capable of viable estimation and which may, in turn, impact the reliability of our evaluation processes, the comfort of our regulators with respect to the adequacy of our allowance for credit losses and who may require adjustments thereto, and ultimately could result in increased provisions for loan losses and reduced levels of earnings and capital. • Our ability to engage in sales of mortgage loans to third parties (including mortgage loan securitization transactions with governmental entities) on favorable terms or at all could be adversely affected by further disruptions in the capital markets or other events, including deteriorating investor expectations. • Competition in our industry could intensify as a result of increasing consolidation of financial services companies in connection with current market conditions.
The Association has a standing Technology Steering Committee, consisting of several senior managers (CAO, CIO, CSO, CXO, and ISO). The Committee meets quarterly, or more frequently if needed, and reports to the Board of Directors after each meeting through Committee minutes. The Association also engages outside consultants to support its cybersecurity efforts.
The Association has a standing Technology Steering Committee, consisting of several senior managers (CAO, CIO, CXO, and ISO). The Committee meets quarterly, or more frequently if needed, and reports to the Board of Directors after each meeting through Committee minutes. The Association also engages outside consultants to support its cybersecurity efforts.
If we are required to repurchase mortgage loans or provide indemnification or other recourse, this could significantly increase our costs and thereby affect our future earnings. If our allowance for credit losses is not sufficient to cover actual loan losses, our earnings could decrease.
If we are required to repurchase mortgage loans or provide indemnification or other recourse, this could significantly increase our costs and thereby affect our future earnings. If our allowance for credit losses is not sufficient to cover actual loan losses, our earnings would decrease.
We have established processes and procedures intended to identify, measure, monitor, report and analyze the types of risk to which we are subject to, including credit, liquidity, operational, information technology, regulatory compliance, reputational and strategic.
We have established processes and procedures intended to identify, measure, monitor, report and analyze the types of risk to which we are subject to, including credit, liquidity, operational, information technology, regulatory compliance and strategic.
Failure to comply with these and other regulations, and supervisory expectations related thereto, may result in fines, penalties, lawsuits, regulatory sanctions, reputation damage, or restrictions on our business. 37 Table of Contents Risks Related to our Lending Activities Our lending activities provide lower interest rate returns than financial institutions that originate more commercial loans.
Failure to comply with these and other regulations, and supervisory expectations related thereto, may result in fines, penalties, lawsuits, regulatory sanctions, reputation damage, or restrictions on our business. 38 Table of Contents Risks Related to our Lending Activities Our lending activities provide lower interest rate returns than financial institutions that originate more commercial loans.
Adverse operating results or changes in industry conditions could lead to difficulty or an inability to access these additional 40 Table of Contents funding sources. Our financial flexibility will be severely constrained if we are unable to maintain our access to funding or if adequate financing is not available to accommodate future growth at acceptable interest rates.
Adverse operating results or changes in industry conditions could lead to difficulty or an inability to access these additional 41 Table of Contents funding sources. Our financial flexibility will be severely constrained if we are unable to maintain our access to funding or if adequate financing is not available to accommodate future growth at acceptable interest rates.
Secondary mortgage market conditions could have a material impact on our financial condition and results of operations. Loan sales provide a portion of our non-interest income. In addition to being affected by interest rates, the secondary mortgage markets are also subject to investor demand for residential real estate loans and increased investor yield requirements for these loans.
Secondary mortgage market conditions could have a material impact on our financial condition and results of operations. Loan sales provide a portion of our non-interest income. In addition to being affected by interest rates, the secondary mortgage markets are also subject to investor demand for residential mortgage loans and increased investor yield requirements for these loans.
Similarly, when confidential or proprietary information is collected, compiled, processed, transmitted or stored by third parties on our behalf, our policies and procedures require that the third party agree to maintain the confidentiality of the information, establish and maintain policies and procedures designed to preserve the confidentiality of the information, and permit us to confirm the third party’s 39 Table of Contents compliance with the terms of the agreement.
Similarly, when confidential or proprietary information is collected, compiled, processed, transmitted or stored by third parties on our behalf, our policies and procedures require that the third party agree to maintain the confidentiality of the information, establish and maintain policies and procedures designed to preserve the confidentiality of the information, and permit us to confirm the third party’s 40 Table of Contents compliance with the terms of the agreement.
The effects of such policies upon our business, financial condition and results of operations cannot be predicted. We may be required to raise additional capital in the future, but that capital may not be available when it is needed, or it may only be available on unacceptable terms, which could adversely affect our financial condition and results of operations.
The effects of such policies upon our business, financial condition and results of operations cannot be predicted. We may be required to raise additional capital in the future, but that capital may not be available when it is needed, or it may only be available on unfavorable terms, which could adversely affect our financial condition and results of operations.
Our principal lending activity consists of originating, and essentially all of our loan portfolio consists of, residential real estate mortgage loans. We originate our loans with a focus on limiting credit risk exposure and not necessarily to generate the highest return possible or maximize our interest rate spread.
Our principal lending activity consists of originating, and essentially all of our loan portfolio consists of, residential mortgage loans. We originate our loans with a focus on limiting credit risk exposure and not necessarily to generate the highest return possible or maximize our interest rate spread.
These reasons and the legal and regulatory responses have impacted the foreclosure process and completion time of foreclosures for residential 38 Table of Contents mortgage lenders. This may result in a material adverse effect on collateral values and our ability to minimize its losses.
These reasons and the legal and regulatory responses have impacted the foreclosure process and completion time of foreclosures for residential 39 Table of Contents mortgage lenders. This may result in a material adverse effect on collateral values and our ability to minimize its losses.
Damage to the Company's reputation could cause significant harm to our business and prospects and may arise from numerous sources, including litigation or regulatory actions, failing to deliver minimum standards of service and quality, compliance failures, unethical behavior and the misconduct of employees, advisors and counterparties.
Damage to the Company's reputation could cause significant harm to our business and prospects and may arise from numerous sources, including litigation or regulatory actions, failing to deliver minimum standards of service and quality, compliance failures, unethical behavior and the misconduct of associates, advisors and counterparties.
Our ability to raise additional capital, if needed, will depend on conditions in the capital markets at that time, which are outside of our control, and on our financial performance. Accordingly, we may not be able to raise additional capital, if needed, on terms acceptable to us.
Our ability to raise additional capital, if needed, will depend on conditions in the capital markets at that time, which are outside of our control, and on our financial performance. Accordingly, we may not be able to raise additional capital, if needed, on terms favorable to us.
Furthermore, our customers are also affected by inflation, higher interest rates, and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us. Risks Related to Market Interest Rates Future changes in interest rates could reduce our net income.
Furthermore, our customers are also affected by inflation, higher interest rates, and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us. 35 Table of Contents Risks Related to Market Interest Rates Future changes in interest rates could reduce our net income.
See Item 7A. Quantitative and Qualitative Disclosures about Market Risk . Hedging against interest rate risk exposure may adversely affect our earnings. On occasion we have employed various financial risk methodologies that limit, or "hedge," the adverse effects of rising or decreasing interest rates on our loan portfolios and short-term liabilities.
Quantitative and Qualitative Disclosures about Market Risk . Hedging against interest rate risk exposure may adversely affect our earnings. On occasion we have employed various financial risk methodologies that limit, or "hedge," the adverse effects of rising or decreasing interest rates on our loan portfolios and short-term liabilities.
In general, changes in market and competitive interest rates result from events that we do not control and over which we generally have little or no influence. As a result, mitigation of the adverse effects of changing interest rates is generally limited 35 Table of Contents to controlling the composition of the assets and liabilities that we hold.
In general, changes in market and competitive interest rates result from events that we do not control and over which we generally have little or no influence. As a result, mitigation of the adverse effects of changing interest rates is generally limited to controlling the composition of the assets and liabilities that we hold.
Using customized modeling software, the Association prepares periodic estimates of the amounts by which the net present value of its cash flows from assets, liabilities and off balance sheet items (the institution’s EVE) would change in the event of a range of assumed changes in market interest rates.
Using customized modeling software, the Association prepares periodic estimates of the amounts by which the net present value of its cash flows from assets, liabilities and off balance sheet items (the institution’s EVE) would change in the event of a range of assumed changes in market interest 36 Table of Contents rates.
Moreover, our ability to pay dividends, and the amount of such dividends, is affected by the ability of Third Federal Savings, MHC, our mutual holding company, to waive the receipt of dividends declared by the Company. 41 Table of Contents Federal regulations require Third Federal Savings, MHC, to notify the FRS of any proposed waiver of its receipt of dividends from the Company.
Moreover, our ability to pay dividends, and the amount of such dividends, is affected by the ability of Third Federal Savings, MHC, our mutual holding company, to waive the receipt of dividends declared by the Company. Federal regulations require Third Federal Savings, MHC, to notify the FRS of any proposed waiver of its receipt of dividends from the Company.
These, and other negative effects of future hurricanes or tropical storms may adversely affect our business or results of operations. 42 Table of Contents We are subject to environmental liability risk associated with lending activities or properties we own.
These, and other negative effects of future hurricanes or tropical storms may adversely affect our business or results of operations. We are subject to environmental liability risk associated with lending activities or properties we own.
Third Federal Savings, MHC, has received the approval of its members in 11 separate meetings (held in either July or August of each year from 2014 through 2024) to waive the receipt of dividends for a twelve-month period, and the FRS has “non-objected” to Third Federal Savings, MHC’s waiver each time.
Third Federal Savings, MHC, has received the approval of its members in 12 separate meetings (held in either July or August of each year from 2014 through 2025) to waive the receipt of dividends for a twelve-month period, and the FRS has “non-objected” to Third Federal Savings, MHC’s waiver each time.
The minimum capital requirements are: (1) a common equity Tier 1 capital ratio of 4.5%; (2) a Tier 1 risk-based assets capital ratio of 6%; (3) a total capital ratio of 8%; and 36 Table of Contents (4) a Tier 1 leverage ratio of 4%.
The minimum capital requirements are: (1) a common equity Tier 1 capital ratio of 4.5%; (2) a Tier 1 risk-based assets capital ratio of 6%; (3) a total capital ratio of 8%; and (4) a Tier 1 leverage ratio of 4%.
The ability to attract and retain customers, investors, employees and advisors may depend upon external perceptions of the Company.
The ability to attract and retain customers, investors, associates and advisors may depend upon external perceptions of the Company.
In addition, residential real estate mortgage loans generally have lower interest rates than commercial business loans, commercial real estate loans and consumer loans. As a result, we may generate lower interest rate spreads and rates of return when compared to our competitors who originate more consumer or commercial loans than we do.
In addition, residential mortgage loans generally have lower interest rates than commercial business loans, commercial real estate loans and consumer loans. As a result, we may generate lower interest rate spreads and rates of return when compared to our competitors who originate more consumer or commercial loans than we do. We intend to continue our focus on residential lending.
Specifically, our ability to pay dividends to the Company is limited for any association that does not maintain the capital conservation buffer required by the capital rules, which may limit our ability to pay dividends to our stockholders.
Specifically, our ability to pay dividends to the Company 37 Table of Contents is limited for any association that does not maintain the capital conservation buffer required by the capital rules, which may limit our ability to pay dividends to our stockholders.
At September 30, 2024, we held $3.32 billion of home equity lines of credit loans and $2.00 billion of interest-bearing checking and savings deposits. Our net income can also be reduced by the impact that changes in interest rates can have on the value of our capitalized mortgage servicing rights.
At September 30, 2025, we held $4.06 billion of home equity lines of credit loans and $2.09 billion of interest-bearing checking and savings deposits. Our net income can also be reduced by the impact that changes in interest rates can have on the value of our capitalized mortgage servicing rights.
We intend to continue our focus on residential real estate lending. Our business may be adversely affected by credit risk associated with residential property. A significant portion of our total residential mortgage loan portfolio is secured by one- to four-family real estate.
Our business may be adversely affected by credit risk associated with residential property. A significant portion of our total residential mortgage loan portfolio is secured by one- to four-family real estate.
A federal government shutdown could also result in reduced income for government employees or employees of companies that engage in business with the federal government, which could result in greater loan delinquencies, increased in our non-performing, criticized, and classified assets, and a decline in demand for our products and services. 43 Table of Contents Item 1B. Unresolved Staff Comments None.
A federal government shutdown could also result in reduced income for government employees or 44 Table of Contents employees of companies that engage in business with the federal government, which could result in greater loan delinquencies, increased in our non-performing, criticized, and classified assets, and a decline in demand for our products and services.
The simulation model uses a discounted cash flow analysis and an option-based pricing approach in measuring the interest rate sensitivity of EVE. At September 30, 2024, in the event of an immediate 200 basis point increase in all interest rates, our model projects that we would experience a $311.5 million, or 27.24%, decrease in EVE.
The simulation model uses a discounted cash flow analysis and an option-based pricing approach in measuring the interest rate sensitivity of EVE. At September 30, 2025, in the event of an immediate 200 basis point increase in all interest rates, our model projects that we would experience a $333.1 million, or 23.62%, decrease in EVE. See Item 7A.
As of September 30, 2024, we serviced $1.97 billion of loans sold to third parties, and the mortgage servicing rights associated with such loans had an amortized cost of $7.6 million and an estimated fair value, at that date, of $17.1 million.
As of September 30, 2025, we serviced $2.13 billion of loans sold to third parties, and the mortgage servicing rights associated with such loans had an amortized cost of $8.5 million and an estimated fair value, at that date, of $17.5 million.
Other Risks Related to Our Business Hurricanes or other adverse weather events could negatively affect the economy in our Florida market area or cause disruptions to our branch office locations, which could have an adverse effect on our business or results of operations.
In some cases, we could be required to apply new or revised guidance retroactively. 43 Table of Contents Other Risks Related to Our Business Hurricanes or other adverse weather events could negatively affect the economy in our Florida market area or cause disruptions to our branch office locations, which could have an adverse effect on our business or results of operations.
Some of the loans we originate are sold directly to government agencies, and some of these sales may be unable to be consummated during a shutdown. In addition, we believe that some borrowers may decide not to proceed with their home purchase and not close on their loans, which would result in a permanent loss of the related non-interest income.
In addition, we believe that some borrowers may decide not to proceed with their home purchase and not close on their loans, which would result in a permanent loss of the related non-interest income.
Our increased levels of certificates of deposit have resulted in a higher cost of funds than would otherwise be the case if we had a higher percentage of demand deposits and savings deposits.
At September 30, 2025, certificates of deposit comprised 81.1% of our total deposits, as compared to 78.7% as of September 30, 2024. Our increased levels of certificates of deposit have resulted in a higher cost of funds than would otherwise be the case if we had a higher percentage of demand deposits and savings deposits.
These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply new or revised guidance retroactively.
These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations.
A protracted government shutdown may result in reduced loan originations and related gains on sales and could negatively affect our financial condition and results of operations. During any protracted federal government shutdown, we may not be able to close certain loans and we may not be able to recognize non-interest income on the sale of loans.
During any protracted federal government shutdown, we may not be able to close certain loans and we may not be able to recognize non-interest income on the sale of loans. Some of the loans we originate are sold directly to government agencies, and some of these sales may be unable to be consummated during a shutdown.
As inflation increases, the value of our investment securities, particularly those with longer maturities, would decrease, although this effect can be less pronounced for floating rate instruments. In addition, inflation increases the cost of goods and services we use in our business operations, such as electricity and other utilities, which increases our non- 34 Table of Contents interest expense.
In addition, inflation increases the cost of goods and services we use in our business operations, such as electricity and other utilities, which increases our non-interest expense.
Adverse developments with respect to the financial services industry may also, by association, negatively impact the Company's reputation or result in greater regulatory or legislative scrutiny or litigation against the Company. Furthermore, shareholders, customers and other stakeholders have begun to consider how corporations are addressing ESG issues.
Adverse developments with respect to the financial services industry may also, by association, negatively impact the Company's reputation or result in greater regulatory or legislative scrutiny or litigation against the Company. A protracted government shutdown may result in reduced loan originations and related gains on sales and could negatively affect our financial condition and results of operations.
Recently we have held larger levels of certificates of deposit, which has increased our cost of funds and could continue to do so in the future. At September 30, 2024, certificates of deposit comprised 78.7% of our total deposits, as compared to 70.4% as of September 30, 2023.
Furthermore, as with any of our other operating systems, a failure to fully implement security measures could expose us to greater risk of cyber-security attacks or other security breaches. Recently we have held larger levels of certificates of deposit, which has increased our cost of funds and could continue to do so in the future.
Inflation can have an adverse impact on our business and on our customers. Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. From 2022 to 2023, the FRS raised certain benchmark interest rates in an effort to combat elevated inflation,.
Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. As inflation increases, the value of our investment securities, particularly those with longer maturities, would decrease, although this effect can be less pronounced for floating rate instruments.
Removed
Our calculations further project that, at September 30, 2024, in the event that market interest rates used in the simulation were adjusted in equal monthly amounts (termed a "ramped" format) during the twelve month measurement period to an aggregate increase in 200 basis points, we would expect our projected net interest income for the twelve months ended September 30, 2025, to increase by 1.27%.
Added
Significant changes to the size, structure, powers and operations of the federal government, changes to U.S. economic policies, and uncertainties regarding the potential for these changes may cause economic disruptions that could, in turn, adversely impact our business, results of operations and financial condition.
Removed
Under these statutes and regulations, the Association is not permitted to pay dividends on its capital stock to the Company, its sole stockholder, if the dividend would reduce the stockholders' equity of the Association below the amount of the liquidation account established in connection with the mutual-to-stock conversion.
Added
The current U.S. administration has implemented significant changes in federal priorities and has taken steps to change the operations, structure, and policy focus of various federal agencies, as well as regulatory priorities, policy approaches and interpretations of existing laws by those federal agencies.
Removed
Governments, investors, customers and the general public are increasingly focused on ESG practices and disclosures, and views about ESG are diverse and rapidly changing. These shifts in investing priorities may result in adverse effects on the trading price of the Company’s common stock if investors determine that the Company has not made sufficient progress on ESG matters.
Added
For example, recent executive actions and proposed legislation has changed agency mandates, modified or reduced federal program funding, altered regulatory frameworks, or adjusted the size and composition of the federal workforce. Moreover, leadership transitions at key federal agencies have impacted or may impact rulemaking, supervision, enforcement, and examination priorities across the financial regulatory landscape.
Removed
We could also face potential negative ESG-related publicity in traditional media or social media if shareholders or other stakeholders determine that we have not adequately considered or addressed ESG matters.
Added
These developments in the federal government may have varying effects on the banking and financial services industry that are difficult to predict, which makes it difficult for us to anticipate and mitigate attendant risks.
Removed
If the Company, or our relationships with certain customers, vendors or suppliers, became the subject of negative publicity, our ability to attract and retain customers and employees, and our financial condition and results of operations, could be adversely impacted.
Added
Compliance with changing federal and regulatory priorities could, among other things, increase the costs of operating our business, reduce the demand for our products and services, impact our ability to achieve our business goals, and increase our legal, operational and reputational risks, any or all of which could materially adversely affect our results of operations.
Added
The current U.S. administration also has implemented rapid shifts in macroeconomic policies, such as those relating to trade restrictions and tariffs, which have created significant uncertainties regarding U.S. economic growth, the potential for recession, and concerns over an increase in inflation.
Added
Slow economic growth, economic contraction or recession, or shifts in broader consumer and business trends would significantly impact our ability to originate loans, the ability of borrowers to repay loans, and the value of the collateral securing loans.
Added
Other political and economic events within the U.S., including a contentious domestic political environment, changes in or disagreements over U.S. monetary policy and actions of the FRS, disagreements over long-term federal budget and deficit reduction plans, disagreements over or threats not to increase the U.S. government's borrowing limit (or "debt ceiling"), and risk of further downgrade of the ratings of U.S. government debt obligations, also may negatively impact financial markets and the U.S. economy.
Added
Further, the perception of the potential for additional significant changes in federal regulatory or economic policy has also increased uncertainty and may exacerbate declines in investor and consumer confidence, which in turn may adversely impact financial markets and the broader economy of the U.S. Regional business and economic conditions are a major driver of our results of operations.
Added
Difficult conditions in the regionals business and economic environment, including those cause by the lack of stability and predictability of U.S. policymaking, may materially adversely affect our operating expenses, the quality of our assets, credit losses, and the demand for our products and services. Inflation can have an adverse impact on our business and on our customers.
Added
Potential complications with the implementation of our new core banking system could have an adverse effect on our business and operations. We are in the process of implementing a new core banking system, which is expected to be operational by July 2026.
Added
The new core system will modernize the system currently used, improve efficiency throughout the Company, and enhance customer experience. This upgrade is a major investment in our technology needs and is a key initiative within our strategic plan. The new core system implementation process has required, and will continue to require, the investment of significant personnel and financial resources.
Added
We may not be able to successfully implement the new core system without experiencing delays, increased costs and other operational difficulties. If we are unable to successfully implement the new core system as planned, our operations, financial positions, results of operations and cash flows could be negatively impacted.
Added
Additionally, if we do not effectively implement the new core system as planned or the new core system does not operate as intended, the effectiveness of our internal control over financial reporting could be adversely affected or our ability to assess those controls adequately could be delayed or diminished.
Added
Fraud by merchants or others could have a material adverse effect on our business and financial condition. We may be liable for fraudulent transactions initiated by merchants or others.
Added
Examples of fraud include when a merchant or other party knowingly uses a stolen or counterfeit card to make a transaction, or if a merchant intentionally fails to deliver the merchandise or services sold in an otherwise valid transaction. Criminals are using increasingly sophisticated methods to engage in illegal activities such as counterfeiting and fraud.
Added
It is possible that incidents of fraud could increase in the future. Failure to effectively managed risk and prevent fraud would increase our chargeback liability or other liability, and as result could have a material adverse effect on our business, financial condition, and results of operations.
Added
The potential for fraud in the card payment industry is significant and could adversely affect our business and results of operations. Issuers of prepaid and debit cards and other companies have suffered significant losses in recent years with respect to the theft of cardholder data that has been illegally exploited for personal gain.
Added
The theft of such information is regulatory reported and affects individuals and businesses. Losses from various types of fraud have been substantial for certain card industry participants. We also rely upon third parties for transaction processing services, which subjects us and our customers to risks related to the vulnerabilities of those third parties.
Added
We, in many cases, have indemnification agreements with third parties; however, these agreements may not fully cover losses. Fraudulent activity could also result in the imposition of regulatory sanctions, including significant monetary fines, which could adversely affect our business, results of operations and financial condition.
Added
Although fraud has not had a material impact on our profitability, it is possible that such activity could adversely impact profitability in the future. The grant of bank charters and special purpose fintech charters by the OCC to fintech companies could present financial risk and market risk to us generally and the payments processing business specifically.
Added
In 2018, the OCC announced that it would begin to accept and evaluate charters for entities that wanted to conduct certain components of a banking business pursuant to a federal charter, known as a special purpose national bank charter.
Added
Intended to promote economic opportunity and spur financial innovation, an institution with a special purpose national bank charter may engage in paying checks, lending money and taking deposits. The OCC has granted national bank charters to companies that were previously non-bank fintech companies.
Added
If, in the future, the OCC determines to grant any special purpose national bank charter applications or continues to grant bank charters to fintech applicants, recipients of such charters may enter the U.S. payments market and other business activities that we conduct, which could increase the competition we face and have a material adverse effect on us.
Added
This could result in lower fee income and loss of deposits, related to our payment processing business. We face funds transfer and payments-related risks. As a financial institution, we bear funds transfer risks of different types, which result from large transaction volumes and large dollar amounts of incoming and outgoing money transfers.
Added
Loss exposure may result if money is transferred before it is received, or legal rights to reclaim monies transferred are asserted, including payments made to merchants for payment clearing, while customers have statutory periods to reverse their payments. Exposure also results from payments made prior to receipt of offsetting funds, as an accommodation to our customers.
Added
We are subject to unique settlement risks as our transfers may be larger than typical financial institutions of our size. Transfers could also be made in error or as a result of fraud.
Added
Additionally, as with other financial institutions, we may incur legal liability or reputational risk if we unknowingly process payments for companies in violation of money laundering laws or other regulations or immoral activities. Item 1B. Unresolved Staff Comments None.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+0 added−0 removed8 unchanged
Biggest changeThe Company employs a multi-layered, risk-based approach to cyber and information security, incorporating a variety of tools and processes to aid in risk identification, assessment and management. In addition to periodic risk assessments, we rely on continuous monitoring of systems and environments, regular vulnerability scanning, external auditing and penetration testing and active participation in industry intelligence sharing partnerships.
Biggest changeIn addition to periodic risk assessments, we rely on continuous monitoring of systems and environments, regular vulnerability scanning, external auditing and penetration testing and active participation in industry intelligence sharing partnerships. The Company maintains Cybersecurity Incident Response Guidelines and Procedures to assist in response to real or suspected security incidents.
The Company has not experienced any material losses relating to cybersecurity threats or incidents to date. We are not aware of any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company, including our business strategy, results of operations or financial condition.
We are not aware of any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company, including our business strategy, results of operations or financial condition.
The Company maintains Cybersecurity Incident Response Guidelines and Procedures to assist in response to real or suspected security incidents. The Incident Response Guidelines prescribe points of escalation and mechanisms for collaboration should the need arise to engage outside partnerships such as external counsel, cybersecurity forensic examiners, cyber insurance vendors and regulatory bodies.
The Incident Response Guidelines prescribe points of escalation and mechanisms for collaboration should the need arise to engage outside partnerships such as external counsel, cybersecurity forensic examiners, cyber insurance vendors and regulatory bodies. The Company has not experienced any material losses relating to cybersecurity threats or incidents to date.
Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy The Company is committed to enacting a cybersecurity strategy that provides the necessary framework to ensure confidentiality, integrity and availability of customer, associate and proprietary information.
Cybersecurity Cybersecurity Risk Management and Strategy The Company is committed to enacting a cybersecurity strategy that provides the necessary framework to ensure confidentiality, integrity and availability of customer, associate and proprietary information. 45 Table of Contents The Company employs a multi-layered, risk-based approach to cyber and information security, incorporating a variety of tools and processes to aid in risk identification, assessment and management.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−1 removed1 unchanged
Biggest changeThe Company owns the building in which its home office and executive offices are located, and six other office locations.
Biggest changeThe Company owns the building in which its home office and executive offices are located, and six other office locations. Additional information regarding the Company's owned facilities and leased locations can be found within Notes: 7. PREMISES, EQUIPMENT AND SOFTWARE and 8. LEASES , respectfully, in the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Item 2. Properties We operate from our main office in Cleveland, Ohio, our 37 full-service branch offices located in Ohio and Florida and our two loan production offices located in Ohio.
Item 2. Properties We operate from our main office in Cleveland, Ohio, our 36 full-service branch offices located in Ohio and Florida and our two loan production offices located in Ohio.
Removed
The net book value of our land, premises, equipment and software was $33.2 million at September 30, 2024, a $1.5 million decrease from September 30, 2023. 44 Table of Contents Depreciation was partially offset by a $1.1 million increase in DP Equipment and a $1.5 million increase in Leasehold Improvements.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings The Company and its subsidiaries are subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s consolidated financial condition, results of operation, or statements of cash flows. Item 4.
Biggest changeItem 3. Legal Proceedings The Company and its subsidiaries are subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s consolidated financial condition, results of operation, or statements of cash flows.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+2 added−2 removed4 unchanged
Biggest changeBMI Banks Index 100.00 73.42 133.58 102.63 99.42 146.57 KBW NASDAQ Bank Index 100.00 75.76 138.93 104.94 89.01 134.92 NASDAQ Composite Index 100.00 140.96 183.61 135.41 170.76 236.74 Source: S&P Global Market Intelligence We did not sell any unregistered equity securities during the fiscal year ended September 30, 2024.
Biggest changeBMI Banks Index 100.00 181.94 139.78 135.41 199.63 270.17 KBW NASDAQ Bank Index 100.00 183.39 138.52 117.49 178.10 244.27 NASDAQ Composite Index 100.00 130.26 96.06 121.14 167.95 210.64 Source: S&P Global Market Intelligence We did not sell any unregistered equity securities during the fiscal year ended September 30, 2025. 48 Table of Contents The following table summarizes our stock repurchase activity during the three months ended September 30, 2025 and the stock repurchase plans approved by our Board of Directors.
At the July 9, 2024 special meeting of members of Third Federal Savings and Loan Association of Cleveland, MHC (the "MHC"), the mutual holding company of TFS Financial Corporation (the "Company"), the members of the MHC (depositors and certain loan customers of Third Federal Savings and Loan Association of Cleveland) voted to approve the MHC's proposed waiver of dividends, aggregating up to $1.13 per share to be declared on the Company's common stock during the twelve months subsequent to the members' approval (i.e., through July 9, 2025).
At the July 8, 2025 special meeting of members of Third Federal Savings and Loan Association of Cleveland, MHC (the "MHC"), the mutual holding company of TFS Financial Corporation (the "Company"), the members of the MHC (depositors and certain loan customers of Third Federal Savings and Loan Association of Cleveland) voted to approve the MHC's proposed waiver of dividends, aggregating up to $1.13 per share to be declared on the Company's common stock during the twelve months subsequent to the members' approval (i.e., through July 8, 2026).
The members approved the waiver by casting 58% of the total eligible votes. Of the votes cast, 97% were in favor of the proposal. The MHC is the 81% majority shareholder of the Company.
The members approved the waiver by casting 59% of the total eligible votes. Of the votes cast, 97% were in favor of the proposal. The MHC is the 81% majority shareholder of the Company.
As of November 15, 2024, we had 5,842 shareholders of record, which does not include persons or entities holding shares in “nominee” or “street” name through brokerage firms. Through September 30, 2010, Third Federal Savings, MHC, waived its right to receive dividends. The waivers complied with regulatory authorizations (in the form of non-objection) obtained by Third Federal Savings, MHC.
As of November 19, 2025, we had 5,633 shareholders of record, which does not include persons or entities holding shares in “nominee” or “street” name through brokerage firms. Through September 30, 2010, Third Federal Savings, MHC, waived its right to receive dividends. The waivers complied with regulatory authorizations (in the form of non-objection) obtained by Third Federal Savings, MHC.
Following the receipt of the members’ approval at the July 9, 2024, special meeting, Third Federal Savings, MHC filed a notice with, and subsequently received the non-objection from the FRB-Cleveland for the proposed dividend waiver. 45 Table of Contents In the table and graph that follow, we have provided summary information regarding the performance of the cumulative total return of our common stock from September 30, 2019 through September 30, 2024, relative to the cumulative total return on stocks included in the S&P U.S.
Following the receipt of the members’ approval at the July 8, 2025, special meeting, Third Federal Savings, MHC filed a notice with, and subsequently received the non-objection from the FRB-Cleveland for the proposed dividend waiver. 47 Table of Contents In the table and graph that follow, we have provided summary information regarding the performance of the cumulative total return of our common stock from September 30, 2020 through September 30, 2025, relative to the cumulative total return on stocks included in the S&P U.S.
Purchases under the program will be subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses of capital, and our financial performance. Repurchased shares will be held as treasury stock and be available for general corporate use. There were no stock repurchases during the fiscal year ended September 30, 2024.
Purchases under the program will be subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses of capital, and our financial performance. Repurchased shares will be held as treasury stock and be available for general corporate use.
Measurement Date Index (with base price at 9/30/2019) 9/30/2019 9/30/2020 9/30/2021 9/30/2022 9/30/2023 9/30/2024 TFS Financial Corporation 100.00 86.66 118.93 87.08 86.31 102.49 S&P U.S.
Measurement Date Index (with base price at 9/30/2020) 9/30/2020 9/30/2021 9/30/2022 9/30/2023 9/30/2024 9/30/2025 TFS Financial Corporation 100.00 137.24 100.49 99.60 118.27 131.96 S&P U.S.
Removed
We did not repurchase any shares of our common stock during the quarter ended September 30, 2024. On October 27, 2016, the Company announced that the Board of Directors approved the Company's eighth stock repurchase program, which authorizes the repurchase of up to 10,000,000 shares of the Company's outstanding common stock.
Added
Average Total Number of Maximum Number Total Number Price Shares Purchased of Shares that May of Shares Paid per as Part of Publicly Yet be Purchased Period Purchased Share Announced Plans (1) Under the Plans July 1, 2025 through July 31, 2025 76,552 $ 12.99 76,552 5,057,899 August 1, 2025 through August 31, 2025 61,611 12.99 61,611 4,996,288 September 1, 2025 through September 30, 2025 52,202 13.39 52,202 4,944,086 190,365 $ 13.10 190,365 On October 27, 2016, the Company announced that the Board of Directors approved the Company's eighth stock repurchase program, which authorizes the repurchase of up to 10,000,000 shares of the Company's outstanding common stock.
Removed
The program has 5,191,951 shares yet to be purchased as of September 30, 2024. The program has no expiration date.
Added
For the fiscal year ended September 30, 2025, stock repurchases totaled 247,865 shares at an average price per share of $13.05. The program has 4,944,086 shares yet to be purchased as of September 30, 2025. The program has no expiration date. Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAt September 30, 2024 2023 2022 2021 2020 Selected Financial Condition Data: (In thousands) Total assets $ 17,090,785 $ 16,917,979 $ 15,789,879 $ 14,057,450 $ 14,642,221 Cash and cash equivalents 463,718 466,746 369,564 488,326 498,033 Investment securities available for sale 526,251 508,324 457,908 421,783 453,438 Mortgage loans held for sale 17,775 3,260 9,661 8,848 36,871 Loans held for investment, net 15,322,059 15,165,747 14,257,067 12,509,035 13,103,062 Bank owned life insurance contracts 317,977 312,072 304,040 297,332 222,919 Other assets 114,125 117,270 95,428 91,586 104,832 Deposits 10,195,079 9,449,820 8,921,017 8,993,605 9,225,554 Borrowed funds 4,792,847 5,273,637 4,793,221 3,091,815 3,521,745 Shareholders’ equity 1,862,624 1,927,361 1,844,339 1,732,280 1,671,853 47 Table of Contents For the Years Ended September 30, 2024 2023 2022 2021 2020 Selected Operating Data: (In thousands, except per share amounts) Interest and dividend income $ 734,074 $ 611,919 $ 409,333 $ 389,351 $ 455,298 Interest expense 455,616 328,352 141,937 157,721 213,030 Net interest income 278,458 283,567 267,396 231,630 242,268 Provision (release) for credit losses (1,500) (1,500) 1,000 (9,000) 3,000 Net interest income after provision (release) for credit losses 279,958 285,067 266,396 240,630 239,268 Non-interest income 24,702 21,429 23,804 55,299 53,251 Non-interest expenses 204,347 213,129 198,146 195,835 192,274 Income before income taxes 100,313 93,367 92,054 100,094 100,245 Income tax expense 20,725 18,117 17,489 19,087 16,928 Net income $ 79,588 $ 75,250 $ 74,565 $ 81,007 $ 83,317 Earnings per share Basic $ 0.28 $ 0.27 $ 0.26 $ 0.29 $ 0.30 Diluted $ 0.28 $ 0.26 $ 0.26 $ 0.29 $ 0.29 Cash dividends declared per share $ 1.13 $ 1.13 $ 1.13 $ 1.12 $ 1.11 48 Table of Contents At or For The Years Ended September 30, 2024 2023 2022 2021 2020 Selected Financial Ratios and Other Data: Performance Ratios: Return on average total assets 0.47 % 0.46 % 0.51 % 0.56 % 0.56 % Return on average equity 4.12 % 4.00 % 4.14 % 4.77 % 4.88 % Interest rate spread(1) 1.38 % 1.57 % 1.75 % 1.52 % 1.52 % Net interest margin(2) 1.69 % 1.80 % 1.88 % 1.66 % 1.69 % Efficiency ratio(3) 67.41 % 69.88 % 68.04 % 68.25 % 65.06 % Non-interest expense to average total assets 1.20 % 1.31 % 1.34 % 1.35 % 1.29 % Average interest-earning assets to average interest-bearing liabilities 111.07 % 111.36 % 112.42 % 111.92 % 111.41 % Asset Quality Ratios: Non-performing assets as a percent of total assets 0.20 % 0.20 % 0.23 % 0.32 % 0.37 % Non-accruing loans as a percent of total loans 0.22 % 0.21 % 0.25 % 0.35 % 0.41 % Allowance for credit losses on loans as a percent of non-accruing loans 208.28 % 242.26 % 204.73 % 145.96 % 87.95 % Allowance for credit losses on loans as a percent of total loans 0.45 % 0.51 % 0.51 % 0.51 % 0.36 % Capital Ratios: Association Total capital to risk-weighted assets 17.91 % 17.87 % 18.84 % 21.00 % 19.96 % Tier 1 (leverage) capital to net average assets 10.11 % 9.82 % 10.33 % 11.15 % 10.39 % Tier 1 capital to risk-weighted assets 17.17 % 17.15 % 18.25 % 20.43 % 19.37 % Common equity tier 1 capital to risk-weighted assets 17.17 % 17.15 % 18.25 % 20.43 % 19.37 % TFS Financial Corporation Total capital to risk-weighted assets 19.24 % 19.85 % 21.18 % 23.75 % 22.71 % Tier 1 (leverage) capital to net average assets 10.89 % 10.96 % 11.66 % 12.65 % 11.88 % Tier 1 capital to risk-weighted assets 18.50 % 19.13 % 20.59 % 23.18 % 22.13 % Common equity tier 1 capital to risk-weighted assets 18.50 % 19.13 % 20.59 % 23.18 % 22.13 % Average equity to average total assets 11.33 % 11.58 % 12.23 % 11.72 % 11.50 % Other Data: Association: Number of full service offices 37 37 37 37 37 Loan production offices 2 4 5 7 7 ______________________ (1) Represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities for the year.
Biggest changeAt September 30, 2025 2024 2023 2022 2021 Selected Financial Condition Data: (In thousands) Total assets $ 17,456,316 $ 17,090,785 $ 16,917,979 $ 15,789,879 $ 14,057,450 Cash and cash equivalents 429,439 463,718 466,746 369,564 488,326 Investment securities available for sale 520,659 526,251 508,324 457,908 421,783 Mortgage loans held for sale 57,662 17,775 3,260 9,661 8,848 Loans held for investment, net 15,663,312 15,322,059 15,165,747 14,257,067 12,509,035 Bank owned life insurance contracts 325,149 317,977 312,072 304,040 297,332 Total liabilities 15,562,392 15,228,161 14,990,618 13,945,540 12,325,170 Deposits 10,446,968 10,195,079 9,449,820 8,921,017 8,993,605 Borrowed funds 4,870,219 4,792,847 5,273,637 4,793,221 3,091,815 Shareholders’ equity 1,893,924 1,862,624 1,927,361 1,844,339 1,732,280 For the Years Ended September 30, 2025 2024 2023 2022 2021 Selected Operating Data: (In thousands, except per share amounts) Interest and dividend income $ 763,180 $ 734,074 $ 611,919 $ 409,333 $ 389,351 Interest expense 470,486 455,616 328,352 141,937 157,721 Net interest income 292,694 278,458 283,567 267,396 231,630 Provision (release) for credit losses 2,500 (1,500) (1,500) 1,000 (9,000) Net interest income after provision (release) for credit losses 290,194 279,958 285,067 266,396 240,630 Non-interest income 28,780 24,702 21,429 23,804 55,299 Non-interest expenses 204,259 204,347 213,129 198,146 195,835 Income before income taxes 114,715 100,313 93,367 92,054 100,094 Income tax expense 23,756 20,725 18,117 17,489 19,087 Net income $ 90,959 $ 79,588 $ 75,250 $ 74,565 $ 81,007 Earnings per share Basic $ 0.32 $ 0.28 $ 0.27 $ 0.26 $ 0.29 Diluted $ 0.32 $ 0.28 $ 0.26 $ 0.26 $ 0.29 Cash dividends declared per share $ 1.13 $ 1.13 $ 1.13 $ 1.13 $ 1.12 50 Table of Contents At or For The Years Ended September 30, 2025 2024 2023 2022 2021 Selected Financial Ratios and Other Data: Performance Ratios: Return on average total assets 0.53 % 0.47 % 0.46 % 0.51 % 0.56 % Return on average equity 4.74 % 4.12 % 4.00 % 4.14 % 4.77 % Interest rate spread (1) 1.45 % 1.38 % 1.57 % 1.75 % 1.52 % Net interest margin (2) 1.76 % 1.69 % 1.80 % 1.88 % 1.66 % Efficiency ratio (3) 63.54 % 67.41 % 69.88 % 68.04 % 68.25 % Non-interest expense to average total assets 1.19 % 1.20 % 1.31 % 1.34 % 1.35 % Average interest-earning assets to average interest-bearing liabilities 110.86 % 111.07 % 111.36 % 112.42 % 111.92 % Asset Quality Ratios: Non-performing assets as a percent of total assets 0.23 % 0.20 % 0.20 % 0.23 % 0.32 % Non-accruing loans as a percent of total loans 0.25 % 0.22 % 0.21 % 0.25 % 0.35 % Allowance for credit losses on loans as a percent of non-accruing loans 191.82 % 208.28 % 242.26 % 204.73 % 145.96 % Allowance for credit losses on loans as a percent of total loans 0.47 % 0.45 % 0.51 % 0.51 % 0.51 % Capital Ratios: Association Total capital to risk-weighted assets 17.40 % 17.91 % 17.87 % 18.84 % 21.00 % Tier 1 (leverage) capital to net average assets 10.11 % 10.11 % 9.82 % 10.33 % 11.15 % Tier 1 capital to risk-weighted assets 16.53 % 17.17 % 17.15 % 18.25 % 20.43 % Common equity tier 1 capital to risk-weighted assets 16.53 % 17.17 % 17.15 % 18.25 % 20.43 % TFS Financial Corporation Total capital to risk-weighted assets 18.46 % 19.24 % 19.85 % 21.18 % 23.75 % Tier 1 (leverage) capital to net average assets 10.76 % 10.89 % 10.96 % 11.66 % 12.65 % Tier 1 capital to risk-weighted assets 17.60 % 18.50 % 19.13 % 20.59 % 23.18 % Common equity tier 1 capital to risk-weighted assets 17.60 % 18.50 % 19.13 % 20.59 % 23.18 % Average equity to average total assets 11.19 % 11.33 % 11.58 % 12.23 % 11.72 % Other Data: Association: Number of full service offices 36 37 37 37 37 Loan production offices 2 2 4 5 7 ______________________ (1) Represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities for the year.
Although the yield curve became positive in early September 2024, rapid and substantial decreases in short-term rates can also pose a challenge when interest rates on our home equity line of credit portfolio, indexed to the prime rate, reprice more quickly than interest rates on borrowings and certificate of deposit accounts which generally reprice at maturity.
Although the yield curve became positive in September 2024, rapid and substantial decreases in short-term rates can also pose a challenge when interest rates on our home equity line of credit portfolio, indexed to the prime rate, reprice more quickly than interest rates on borrowings and certificate of deposit accounts which generally reprice at maturity.
While, historically, we had been successful in limiting our credit risk exposure by generally imposing high credit standards with respect to lending, the memory of the 2008 housing market collapse and financial crisis is a constant reminder to focus on credit risk.
Monitoring and Limiting Our Credit Risk. While, historically, we had been successful in limiting our credit risk exposure by generally imposing high credit standards with respect to lending, the memory of the 2008 housing market collapse and financial crisis is a constant reminder to focus on credit risk.
Currently, in addition to Ohio and Florida, we are actively lending in 25 other states and the District of Columbia, and as a result of that activity, the concentration ratios of the combined total of our residential Core and construction loans held for investment in Ohio and Florida have trended downward from their September 30, 2010 levels when the concentrations were 79.1% in Ohio and 19.0% in Florida.
Currently, in addition to Ohio and Florida, we are actively lending in 26 other states and the District of Columbia, and as a result of that activity, the concentration ratios of the combined total of our residential Core and construction loans held for investment in Ohio and Florida have trended downward from their September 30, 2010 levels when the concentrations were 79.1% in Ohio and 19.0% in Florida.
We believe that we had sufficient sources of liquidity to satisfy our short- and long-term liquidity needs as of September 30, 2024. We regularly adjust our investments in liquid assets based upon our assessment of expected loan demand, expected deposit flows, yields available on interest-earning deposits and securities, scheduled liability maturities and the objectives of our asset/liability management program.
We believe that we had sufficient sources of liquidity to satisfy our short- and long-term liquidity needs as of September 30, 2025. We regularly adjust our investments in liquid assets based upon our assessment of expected loan demand, expected deposit flows, yields available on interest-earning deposits and securities, scheduled liability maturities and the objectives of our asset/liability management program.
Our values are further reflected in a long-term revitalization program encompassing the three-mile corridor of the Broadway-Slavic Village neighborhood in Cleveland, Ohio where our main office was established and continues to be located and where we've been the developer of a community of 40 homes, intended to serve the low- to moderate income home owner.
Our values are further reflected in a long-term revitalization program encompassing the three-mile corridor of the Broadway-Slavic Village neighborhood in Cleveland, Ohio where our main office was established and continues to be located and where we've been the developer of a community of 42 homes, intended to serve the low- to moderate income home owner.
First mortgage loans (primarily fixed-rate mortgages with terms of 15 years or more, Home Ready and certain loans purchased through our correspondent lending partner) are originated under Fannie Mae guidelines and are eligible for sale to Fannie Mae either as whole loans or within mortgage-backed securities.
First mortgage loans (primarily fixed-rate mortgages with terms of 15 years or more, Home Ready and certain loans acquired through our correspondent lending partner) are originated under Fannie Mae guidelines and are eligible for sale to Fannie Mae either as whole loans or within mortgage-backed securities.
Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the CDs due on or before September 30, 2025. We believe, however, based on past experience, that a significant portion of such deposits will remain with us.
Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the CDs due on or before September 30, 2026. We believe, however, based on past experience, that a significant portion of such deposits will remain with us.
One aspect of our credit risk concern relates to high concentrations of our loans that are secured by residential real estate in specific states, particularly Ohio and Florida, where a large portion of our historical lending has occurred.
One aspect of our credit risk exposure relates to high concentrations of our loans that are secured by residential real estate in specific states, particularly Ohio and Florida, where a large portion of our historical lending has occurred.
This evaluation is inherently subjective as it requires material estimates by management that may be susceptible to significant change based on changes in economic and real estate market conditions. Refer to Note 5. LOANS AND ALLOWANCES FOR CREDIT LOSSES of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS and the Lending Activities section of Item 1.
This evaluation is inherently subjective as it requires material estimates by management that may be susceptible to significant change based on changes in economic and real estate market conditions. Refer to Note 5. LOANS AND ALLOWANCES FOR CREDIT 57 Table of Contents LOSSES of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS and the Lending Activities section of Item 1.
(2) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. 57 Table of Contents (3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. (4) Net interest margin represents net interest income divided by total interest-earning assets. Rate/Volume Analysis.
(2) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. (3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. (4) Net interest margin represents net interest income divided by total interest-earning assets. 60 Table of Contents Rate/Volume Analysis.
In each of the Association's agreements, interest paid is based on a fixed rate of interest throughout the term of each agreement while interest received is based on an interest rate that resets and compounds daily over a specified interval (generally three months) throughout the term of each agreement.
In each of the Association's agreements, interest paid is based on a fixed rate of interest throughout the term of each agreement while interest received is based on an interest rate that resets and compounds daily over a specified interval (generally one to three months) throughout the term of each agreement.
In response to the evolving economic landscape, we continuously revise and update our quarterly analysis and evaluation procedures, as needed, for each category of our lending with the objective of identifying and recognizing all appropriate credit losses.
In response to the evolving economic landscape, we continuously revise and update our quarterly analysis and evaluation procedures, as needed, for each category of our lending with the objective of identifying and recognizing all estimated credit losses.
These efforts include monitoring the relative costs of alternative funding sources such as retail certificates of deposit, brokered certificates of deposit, longer-term (e.g. three years or greater) fixed-rate advances from the FHLB of Cincinnati, and shorter-term (e.g. one or three months) funding, the durations of 52 Table of Contents which are extended by correlated interest rate exchange contracts ("swap").
These efforts include monitoring the relative costs of alternative funding sources such as retail certificates of deposit, brokered certificates of deposit, longer-term (e.g. three years or greater) fixed-rate advances from the FHLB of Cincinnati, and shorter-term (e.g. one or three months) funding, the durations of which are extended by correlated interest rate exchange contracts ("swap").
Business in Part I. for further discussion. Actual loan losses may be significantly more than the allowances we have established, which would have a materially adverse effect on our financial results.
Business in Part I. for further discussion. Actual credit losses may be significantly more than the allowances we have established, which would have a materially adverse effect on our financial results.
The allowance for credit losses is the amount estimated by management as necessary to absorb credit losses related to both the loan portfolio and off-balance sheet commitments based on a life of loan methodology.
The allowance for credit losses is the amount estimated by management as adequate to absorb credit losses related to both the loan portfolio and off-balance sheet commitments based on a life of loan methodology.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities for additional details regarding the repurchase of shares of common stock and the payment of dividends. Analysis of Net Interest Income Net interest income represents the difference between the income we earn on our interest-earning assets and the expense we pay on our interest-bearing liabilities.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities for additional details regarding the repurchase of shares of common stock and the payment of dividends. 59 Table of Contents Analysis of Net Interest Income Net interest income represents the difference between the income we earn on our interest-earning assets and the expense we pay on our interest-bearing liabilities.
Our primary sources of funds consist of deposit inflows, loan repayments, advances from the FHLB of Cincinnati, borrowings from the FRB-Cleveland 59 Table of Contents Discount Window, overnight Fed Funds through various arrangements with other institutions, proceeds from brokered CDs transactions, principal repayments and maturities of securities, and sales of loans.
Our primary sources of funds consist of deposit inflows, loan repayments, advances from the FHLB of Cincinnati, borrowings from the FRB-Cleveland Discount Window, overnight Fed Funds through various arrangements with other institutions, proceeds from brokered CDs transactions, principal repayments and maturities of securities, and sales of loans.
This difference has been an important component of our net interest income and is fundamental to our operations. 49 Table of Contents A challenge to our business model occurs when there is a rapid and substantial increase in short-term rates or there is an extended inverted yield curve where short-term rates exceed long-term rates, both of which occurred in the past two years.
This difference has been an important component of our net interest income and is fundamental to our operations. 51 Table of Contents A challenge to our business model occurs when there is a rapid and substantial increase in short-term rates or there is an extended inverted yield curve where short-term rates exceed long-term rates, both of which occurred in the past three years.
Products that do not result in an effective mix of repayment ability are not offered. We use stringent, conservative lending standards for underwriting to reduce our credit risk. For first mortgage loans originated or purchased during the current fiscal year, the average credit score was 778, and the average LTV was 70% at origination.
Products that do not result in an effective mix of repayment ability are not offered. We use stringent, conservative lending standards for underwriting to reduce our credit risk. For first mortgage loans originated or acquired during the current fiscal year, the average credit score was 776, and the average LTV was 71% at origination.
For a comparison of operating results for the fiscal years ended September 30, 2023 and 2022, see the Company's Form 10-K for the fiscal year ended September 30, 2023. Liquidity and Capital Resources Liquidity is the ability to meet current and future financial obligations of a short-term nature.
For a comparison of operating results for the fiscal years ended September 30, 2024 and 2023, see the Company's Form 10-K for the fiscal year ended September 30, 2024. 62 Table of Contents Liquidity and Capital Resources Liquidity is the ability to meet current and future financial obligations of a short-term nature.
Each funding alternative is monitored and evaluated based on its effective interest payment rate, options exercisable by the creditor (early withdrawal, right to call, etc.), and collateral requirements. Refer to Notes 9. DEPOSITS and 10. BORROWED FUNDS of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for additional details on balances.
For more details, refer to Notes 10. BORROWED FUNDS and 17. DERIVATIVE INSTRUMENTS of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . Each funding alternative is monitored and evaluated based on its effective interest payment rate, options exercisable by the creditor (early withdrawal, right to call, etc.), and collateral requirements. Refer to Notes 9. DEPOSITS and 10.
We generally seek to maintain a minimum liquidity ratio of 5% (which we compute as the sum of cash and cash equivalents plus unencumbered investment securities for which ready markets exist, divided by total average assets). For the year ended September 30, 2024, the liquidity ratio averaged 5.95% for the Association.
We generally seek to maintain a minimum liquidity ratio of 5% (which we compute as the sum of cash and cash equivalents plus unencumbered investment securities for which ready markets exist, divided by total average interest-earning assets). For the year ended September 30, 2025, the liquidity ratio averaged 5.47% for the Association.
Weighted average yields are based on principal balances as of September 30, 2024.
Weighted average yields are based on principal balances as of September 30, 2025.
The amount of dividends that the Association may declare and pay to the Company in any calendar year, without the receipt of prior approval from the OCC but with prior notice to the FRB-Cleveland, cannot exceed net income for the current calendar year-to-date period plus retained net income (as defined) for the preceding two calendar years, reduced by prior dividend payments made during those periods.
The amount of dividends that the Association may declare and pay to the Company in any calendar year, without the receipt of prior approval from the OCC but with prior notice to the FRB-Cleveland, cannot exceed net income for the current calendar year-to-date period plus retained net income (as defined) for the preceding two calendar years.
Principal and interest received on loans serviced for others and owed to investors experienced a net decrease of $1.0 million to $28.8 million during the year ended September 30, 2024, compared to a net decrease of $0.1 million to $29.8 million during the year ended September 30, 2023.
Principal and interest received on loans serviced for others and owed to investors experienced a net increase of $1.6 million to $30.3 million during the year ended September 30, 2025, compared to a net decrease of $1.0 million to $28.8 million during the year ended September 30, 2024.
At September 30, 2023, the allowance for credit losses was $104.8 million, or 0.69% of total loans receivable and included a $27.5 million liability for unfunded commitments. Refer to Note 5. LOANS AND ALLOWANCE FOR CREDIT LOSSES of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for additional discussion.
At September 30, 2024, the allowance for credit losses was $97.8 million, or 0.64%, of total loans receivable and included a $27.8 million allowance for unfunded commitments. Refer to Note 5. LOANS AND ALLOWANCE FOR CREDIT LOSSES of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for additional discussion.
As a result of a mutual member vote, Third Federal Savings and Loan Association of Cleveland, MHC, the mutual holding company that owns approximately 81% of the outstanding stock of the Company, was able to waive receipt of its share of each dividend paid. Refer to Item 5.
As a result of a mutual member vote, Third Federal Savings, MHC, the mutual holding company that owns approximately 80.9% of the outstanding stock of the Company, was able to waive receipt of its share of each dividend paid. Refer to Item 5.
Of the total mortgage loan originations and purchases for the year ended September 30, 2024, 20.7% are secured by properties in states other than Ohio or Florida. Maintaining Access to Adequate Liquidity and Diverse Funding Sources to Support our Growth.
Of the total mortgage loan originations and acquisitions for the year ended September 30, 2025, 28.9% are secured by properties in states other than Ohio or Florida. Maintaining Access to Adequate Liquidity and Diverse Funding Sources to Support our Growth.
Additionally, sales to private investors are dependent upon favorable market conditions, including motivated buyers, and involve more complicated negotiations and longer settlement timelines. During the fiscal year ended September 30, 2024, $247.4 million of agency-compliant, long-term (15 to 30 years), fixed-rate mortgage loans were sold, or committed to be sold, to Fannie Mae on a servicing retained basis.
Additionally, sales to private investors are dependent upon favorable market conditions, including motivated buyers, and involve more complicated negotiations and longer settlement timelines. During the fiscal year ended September 30, 2025, $411.3 million of agency-compliant, long-term (15 to 30 years), fixed-rate mortgage loans were sold, or committed to be sold, primarily to Fannie Mae.
At September 30, 2024, 90% of our assets consisted of residential real estate loans (both “held for sale” and “held for investment”) and home equity loans and lines of credit.
At September 30, 2025, 90% of our assets consisted of residential mortgage loans (both “held for sale” and “held for investment”) and home equity loans and lines of credit.
As delinquencies in the portfolio are resolved through pay-off, short sale or foreclosure, or management determines the collateral is not sufficient to satisfy the loan, uncollected balances have been charged against the allowance for credit losses previously provided.
As delinquencies in the portfolio are resolved through pay-off, short sale or foreclosure, or management determines the collateral is not sufficient to satisfy the loan, uncollected balances have been charged against the allowance for credit losses previously provided. Refer to the Lending Activities section of the Overview and Note 5.
During the year ended September 30, 2024, we originated $854.2 million of residential mortgage loans, and $2.28 billion of commitments for home equity loans and lines of credit, while during the year ended September 30, 2023, we originated $1.86 billion of residential mortgage loans and $1.70 billion of commitments for home equity loans and lines of credit.
During the year ended September 30, 2025, we originated and acquired $1.19 billion of residential mortgage loans, and $2.52 billion of commitments for home equity loans and lines of credit, while during the year ended September 30, 2024, we originated and acquired $854.2 million of residential mortgage loans and $2.28 billion of commitments for home equity loans and lines of credit.
To attract deposits, we typically offer rates that are competitive with the rates on similar products offered by other financial institutions. At September 30, 2024, deposits totaled $10.20 billion (including $1.22 billion of brokered CDs), while borrowings totaled $4.79 billion and borrowers’ advances and servicing escrows totaled $142.4 million, combined.
To attract deposits, we typically offer rates that are competitive with the rates on similar products offered by other financial institutions. At September 30, 2025, deposits totaled $10.45 billion (including $902.1 million of brokered CDs), while borrowings totaled $4.87 billion and borrowers’ advances and servicing escrows totaled $143.5 million, combined.
Interest rate swaps have been used to extend the duration of short-term borrowings at inception by paying a fixed rate of interest and receiving a variable rate. Refer to the Extending the Duration of Funding Sources section of the Overview and Part II , Item 7A.
Interest rate swaps have been used to extend the duration of short-term borrowings at inception by paying a fixed rate of interest and receiving a variable rate. Refer to the Extending the Duration of Funding Sources section of the Overview for additional discussion regarding short-term borrowings and interest-rate swaps.
Extending the Duration of Funding Sources As a complement to our strategies to shorten the fixed rate duration of our interest-earning assets, as described above, we also seek to lengthen the duration of our interest-bearing funding sources.
THIRD FEDERAL SAVINGS AND LOAN ASSOCIATION OF CLEVELAND . Extending the Duration of Funding Sources As a complement to our strategies to shorten the duration of our fixed rate interest-earning assets, as described above, we also seek to lengthen the duration of our interest-bearing funding sources.
At September 30, 2024, the Association’s ratio of Tier 1 (leverage) capital to net average assets (a basic industry measure that deems 5.00% or above to represent a “well capitalized” status) was 10.11%. We expect to continue to remain a well capitalized institution.
At September 30, 2025, the Association’s ratio of Tier 1 (leverage) capital to net average assets (a basic industry measure that deems 5.00% or above to represent a “well capitalized” status) was 10.11%.
Our current delinquency levels reflect the higher credit standards to which we subject all new originations. As of September 30, 2024, loans originated or purchased had a balance of $15.41 billion, of which $31.9 million, or 0.2%, were delinquent.
Our current delinquency levels reflect the higher credit standards to which we subject all new originations. As of September 30, 2025, loans originated or acquired had a balance of $15.80 billion, of which $34.6 million, or 0.2%, were delinquent.
The Company did not receive a cash dividend from the Association in December 2023. Because of its intercompany nature, this dividend payment would not have had an impact on the Company's capital ratios or its consolidated statement of condition but would have reduced the Association's 61 Table of Contents reported capital ratios.
The Company received a $40.0 million cash dividend from the Association in December 2024. Because of its intercompany nature, this dividend payment would not have had an impact on the Company's capital ratios or its consolidated statement of condition but would have reduced the Association's reported capital ratios.
At September 30, 2024, approximately 58.1% and 17.3% of the combined total of our residential Core and construction loans held for investment and approximately 23.6% and 22.5% of our home equity loans and lines of credit were secured by properties in Ohio and Florida, respectively.
At September 30, 2025, approximately 58.4% and 16.8% of the combined total of our residential Core and construction loans held for investment and approximately 22.4% and 21.5% of our home equity loans and lines of credit were secured by properties in Ohio and Florida, respectively.
Total bank owned life insurance contracts increased $5.9 million, to $318.0 million at September 30, 2024, from $312.1 million at September 30, 2023, primarily due to changes in cash surrender value. Deposits increased $745.3 million, or 7.9%, to $10.20 billion at September 30, 2024, from $9.45 billion at September 30, 2023.
Total bank owned life insurance contracts increased $7.2 million, or 2.23%, to $325.1 million at September 30, 2025, from $318.0 million at September 30, 2024, primarily due to changes in cash surrender value. Deposits increased $251.9 million, or 2.47%, to $10.45 billion at September 30, 2025, from $10.20 billion at September 30, 2024.
Refer to the Extending the Duration of Funding Sources section of the Overview and Comparison of Financial Condition for further discussion. Net Interest Income . Net interest income decreased $5.1 million, or 2%, to $278.5 million during the year ended September 30, 2024, from $283.6 million during the year ended September 30, 2023.
Refer to the Extending the Duration of Funding Sources section of the Overview and Comparison of Financial Condition for further discussion. Net Interest Income . Net interest income increased $14.2 million, or 5.10%, to $292.7 million during the year ended September 30, 2025, from $278.5 million during the year ended September 30, 2024.
At September 30, 2024, cash and cash equivalents totaled $463.7 million, which represented a decrease of 0.64% from September 30, 2023. Investment securities classified as available for sale, which provide additional sources of liquidity, totaled $526.3 million at September 30, 2024.
At September 30, 2025, cash and cash equivalents totaled $429.4 million, which represented a decrease of 7.40% from $463.7 million at September 30, 2024. Investment securities classified as available for sale, which provide additional sources of liquidity, totaled $520.7 million at September 30, 2025.
The provision for income taxes was $20.7 million during the year ended September 30, 2024, compared to $18.1 million during the year ended September 30, 2023. The provision for the current year included $18.8 million of federal income tax provision and $1.9 million of state income tax provision.
The provision for income taxes was $23.8 million during the year ended September 30, 2025, compared to $20.7 million during the year ended September 30, 2024. The provision for the current year included $21.8 million of federal income tax provision and $2.0 million of state income tax provision.
At September 30, 2024, the allowance for credit losses was $97.8 million, or 0.64% of total loans. An increase or decrease of 10% in the allowance at September 30, 2024, would result in a $9.8 million charge or release, respectively, to income before income taxes.
An increase or decrease of 10% in the total allowance for credit losses at September 30, 2025, would result in a $10.4 million charge or release, respectively, to income before income taxes.
Specifically, (1) our capital ratios remain a primary source of financial strength; (2) our deposits provide a stable source of funding and the majority of our deposit accounts fall within FDIC insurance limits; (3) we maintain adequate access to contingent sources of liquidity; and (4) our risk management practices around an array of financial disciplines which are robust and commensurate to an institution of our size and complexity.
Specifically, (1) our capital ratios remain a primary source of financial strength; (2) our core deposits remain stable and the majority of our deposit accounts fall within FDIC insurance limits; (3) we maintain adequate access to contingent sources of liquidity; and (4) our risk management practices around an array of financial disciplines are robust and commensurate to an institution of our size and complexity. 49 Table of Contents The following tables present select financial data of the Company for the five most recent fiscal years.
The total balance of borrowed funds at September 30, 2024, all from the FHLB, included $40.0 million of overnight advances, $1.81 billion of term advances with a weighted average maturity of approximately 2.0 years, and $2.93 billion of short-term advances aligned with interest rate swap contracts.
The total balance of borrowed funds at September 30, 2025, all from the FHLB, included $1.60 billion of long-term advances with a weighted average maturity of approximately 1.8 years, $3.00 billion of short-term advances aligned with interest rate swap contracts and $248.0 million in overnight borrowings.
The increase was attributed to a 68 basis point increase in the average yield, and a $193.1 million increase in the average balance of the interest-bearing cash equivalents to $549.6 million for the current year compared to $356.5 million during the prior year.
The decrease was attributed to a 93 basis point decrease in the average yield, and a $145.8 million decrease in the average balance of the interest-bearing cash equivalents to $403.8 million for the current year compared to $549.6 million during the prior year.
Loans sold, or committed to be sold, during the fiscal year ended September 30, 2024, were $247.4 million compared to loan sales of $77.2 million during the year ended September 30, 2023. Non-Interest Expense.
Loans sold, or committed to be sold, during the fiscal year ended September 30, 2025, were $411.3 million, compared to loan sales of $247.4 million during the year ended September 30, 2024. Non-Interest Expense. Non-interest expense decreased less than 1% to $204.3 million during the fiscal year ended September 30, 2025.
The Association and the Company are subject to various regulatory capital requirements, including a risk-based capital measure. The Basel III capital framework for U.S. banking organizations ("Basel III Rules") includes both a revised definition of capital and guidelines for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories.
The Basel III capital framework for U.S. banking organizations ("Basel III Rules") includes both a revised definition of capital and guidelines for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories. The Association is subject to the "capital conservation buffer" requirement level of 2.5%.
During the year ended September 30, 2024, we decreased our borrowed funds by $480.8 million to manage future interest costs and to actively manage our liquidity ratio. Liquidity management is both a daily and long-term function of business management.
During the year ended September 30, 2025, we increased our borrowed funds by $77.4 million to appropriately fund future operations and to actively manage our liquidity ratio. Liquidity management is both a daily and long-term function of business management.
Levels of Regulatory Capital At September 30, 2024, the Company’s Tier 1 (leverage) capital totaled $1.86 billion, or 10.89%, of net average assets and 18.50% of risk-weighted assets, while the Association’s Tier 1 (leverage) capital totaled $1.72 billion, or 10.11%, of net average assets and 17.17% of risk-weighted assets.
Levels of Regulatory Capital At September 30, 2025, the Company’s Tier 1 (leverage) capital totaled $1.87 billion, or 10.76%, of net average assets and 17.60% of risk-weighted assets, while the Association’s Tier 1 (leverage) capital totaled $1.76 billion, or 10.11%, of net average assets and 16.53% of risk-weighted assets.
During the year ended September 30, 2024, there was a $54.7 million 60 Table of Contents increase in the balance of brokered CDs (exclusive of acquisition costs and subsequent amortization), which had a balance of $1.22 billion at September 30, 2024. At September 30, 2023, the balance of brokered CDs was $1.16 billion.
During the year ended September 30, 2025, there was a $315.2 million decrease in the balance of brokered CDs (exclusive of acquisition costs and subsequent amortization), which had a balance of $902.1 million at September 30, 2025. At September 30, 2024, the balance of brokered CDs was $1.22 billion.
In evaluating funding sources, we consider many factors, including cost, collateral, duration and optionality, current availability, expected sustainability, impact on operations and capital levels. While our retail deposit customers remain our preferred source of funding, we maintain many alternative funding sources. First, we pledge available real estate mortgage loans with the FHLB of Cincinnati and the FRB-Cleveland.
In evaluating funding sources, we consider many factors, including cost, collateral, duration and optionality, current availability, expected sustainability, impact on operations and capital levels. 56 Table of Contents While our retail deposit customers remain our preferred source of funding, we maintain many alternative funding sources.
At September 30, 2024, we had $248.0 million in outstanding commitments to originate loans. In addition to commitments to originate loans, we had $5.22 billion in unfunded home equity lines of credit to borrowers. CDs due within one year of September 30, 2024, totaled $4.95 billion, or 48.6% of total deposits.
At September 30, 2025, we had $328.1 million in outstanding commitments to originate loans. In addition to commitments to originate loans, we had $5.55 billion in unfunded home equity lines of credit to borrowers. CDs due within one year of September 30, 2025, totaled $5.73 billion, or 54.85% of total deposits.
Each individual swap agreement has been designated as a cash flow hedge of interest rate risk associated with either the Company's variable rate borrowings from the FHLB of Cincinnati or brokered CDs.
Each individual swap agreement has been designated as a cash flow hedge of interest rate risk associated with either the Company's variable rate borrowings from the FHLB of Cincinnati or brokered CDs. The Association has found it financially beneficial to use swaps with a relatively lower cost to extend the duration of our liabilities.
Additionally, dividend income from FHLB Stock increased $7.4 million, or 49% to $22.5 million in the current year from $15.1 million during the prior year. The increase was attributed mainly to a 268 basis point increase in the average yield on FHLB stock. Interest Expense.
Additionally, dividend income from FHLB Stock decreased $2.6 million, or 11.6%, to $19.9 million in the current year from $22.5 million during the prior year. The increase was attributed mainly to a 36 basis point decrease in the average yield on FHLB stock. Interest Expense.
The provision for the year ended September 30, 2023, included $17.3 million of federal income tax provision and $0.8 million of state income tax provision. Our combined effective tax rate was 20.7% during the year ended September 30, 2024, and 19.4% during the year ended September 30, 2023.
The provision for the prior year included $18.8 million of federal income tax provision and $1.9 million of state income tax provision. Our combined effective tax rate was 20.7% during each of the years ended September 30, 2025 and September 30, 2024.
The interest payment rate is a function of market influences that are specific to the nuances and market competitiveness/breadth of each funding source.
BORROWED FUNDS of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for additional details on balances. The interest payment rate is a function of market influences that are specific to the nuances and market competitiveness/breadth of each funding source.
For the Fiscal Years Ended September 30, 2024 2023 2022 Average Balance Interest Income/ Expense Yield/ Cost Average Balance Interest Income/ Expense Yield/ Cost Average Balance Interest Income/ Expense Yield/ Cost Interest-earning assets: (Dollars in thousands) Interest-earning cash equivalents $ 549,598 $ 29,676 5.40% $ 356,450 $ 16,826 4.72 % $ 384,947 $ 3,178 0.83 % Investment securities 70,364 3,581 5.09% 23,636 1,123 4.75 % 3,643 43 1.18 % Mortgage-backed securities 447,942 14,647 3.27% 464,919 13,247 2.85 % 439,269 5,458 1.24 % Loans (1) 15,207,429 663,685 4.36% 14,657,265 565,610 3.86 % 13,258,517 395,691 2.98 % Federal Home Loan Bank stock 245,298 22,485 9.17% 233,013 15,113 6.49 % 173,506 4,963 2.86 % Total interest-earning assets 16,520,631 734,074 4.44% 15,735,283 611,919 3.89 % 14,259,882 409,333 2.87 % Non-interest-earning assets 529,310 515,123 482,501 Total assets $ 17,049,941 $ 16,250,406 $ 14,742,383 Interest-bearing liabilities: Checking accounts $ 880,893 401 0.05% $ 1,093,036 6,081 0.56 % $ 1,326,882 4,186 0.32 % Savings and money market accounts 1,518,453 22,165 1.46% 1,798,663 24,686 1.37 % 1,859,990 4,553 0.24 % Certificates of deposit 7,489,887 270,162 3.61% 6,123,979 143,434 2.34 % 5,826,286 68,204 1.17 % Borrowed funds 4,985,484 162,888 3.27% 5,114,045 154,151 3.01 % 3,671,323 64,994 1.77 % Total interest-bearing liabilities 14,874,717 455,616 3.06% 14,129,723 328,352 2.32 % 12,684,481 141,937 1.12 % Non-interest-bearing liabilities 242,634 239,387 255,388 Total liabilities 15,117,351 14,369,110 12,939,869 Shareholders’ equity 1,932,590 1,881,296 1,802,514 Total liabilities and shareholders’ equity $ 17,049,941 $ 16,250,406 $ 14,742,383 Net interest income $ 278,458 $ 283,567 $ 267,396 Interest rate spread (2) 1.38 % 1.57 % 1.75 % Net interest-earning assets (3) $ 1,645,914 $ 1,605,560 $ 1,575,401 Net interest margin (4) 1.69 % 1.80 % 1.88 % Average interest-earning assets to average interest-bearing liabilities 111.07 % 111.36 % 112.42 % (1) Loans include both mortgage loans held for sale and loans held for investment.
For the Fiscal Years Ended September 30, 2025 2024 2023 Average Balance Interest Income/ Expense Yield/ Cost Average Balance Interest Income/ Expense Yield/ Cost Average Balance Interest Income/ Expense Yield/ Cost Interest-earning assets: (Dollars in thousands) Interest-earning cash equivalents $ 403,751 $ 18,061 4.47% $ 549,598 $ 29,676 5.40 % $ 356,450 $ 16,826 4.72 % Investment securities 55,584 2,328 4.19% 70,364 3,581 5.09 % 23,636 1,123 4.75 % Mortgage-backed securities 464,581 16,406 3.53% 447,942 14,647 3.27 % 464,919 13,247 2.85 % Loans (1) 15,464,682 706,483 4.57% 15,207,429 663,685 4.36 % 14,657,265 565,610 3.86 % Federal Home Loan Bank stock 225,865 19,902 8.81% 245,298 22,485 9.17 % 233,013 15,113 6.49 % Total interest-earning assets 16,614,463 763,180 4.59% 16,520,631 734,074 4.44 % 15,735,283 611,919 3.89 % Non-interest-earning assets 544,412 529,310 515,123 Total assets $ 17,158,875 $ 17,049,941 $ 16,250,406 Interest-bearing liabilities: Checking accounts $ 814,140 439 0.05% $ 880,893 401 0.05 % $ 1,093,036 6,081 0.56 % Savings and money market accounts 1,241,856 12,640 1.02% 1,518,453 22,165 1.46 % 1,798,663 24,686 1.37 % Certificates of deposit 8,255,097 295,681 3.58% 7,489,887 270,162 3.61 % 6,123,979 143,434 2.34 % Borrowed funds 4,675,665 161,726 3.46% 4,985,484 162,888 3.27 % 5,114,045 154,151 3.01 % Total interest-bearing liabilities 14,986,758 470,486 3.14% 14,874,717 455,616 3.06 % 14,129,723 328,352 2.32 % Non-interest-bearing liabilities 251,778 242,634 239,387 Total liabilities 15,238,536 15,117,351 14,369,110 Shareholders’ equity 1,920,339 1,932,590 1,881,296 Total liabilities and shareholders’ equity $ 17,158,875 $ 17,049,941 $ 16,250,406 Net interest income $ 292,694 $ 278,458 $ 283,567 Interest rate spread (2) 1.45 % 1.38 % 1.57 % Net interest-earning assets (3) $ 1,627,705 $ 1,645,914 $ 1,605,560 Net interest margin (4) 1.76 % 1.69 % 1.80 % Average interest-earning assets to average interest-bearing liabilities 110.86 % 111.07 % 111.36 % (1) Loans include both mortgage loans held for sale and loans held for investment.
The amount of FHLB stock owned decreased $18.6 million, or 7.5%, to $228.5 million at September 30, 2024, from $247.1 million at September 30, 2023. FHLB stock ownership requirements dictate the amount of stock owned at any given time.
The amount of FHLB stock owned increased $6.9 million, or 3.02%, to $235.4 million at September 30, 2025, from $228.5 million at September 30, 2024. FHLB stock ownership requirements dictate the amount of stock owned at any given time.
The increase was attributed to a combination of a $128.6 million, or 3%, decrease in the average balance of borrowed funds to $4.99 billion during the current year, from $5.11 billion during the prior year, and a 26 basis point increase in the average rate paid for these funds to 3.27% during the year ended September 30, 2024, from 3.01% for the year ended September 30, 2023.
The decrease was attributed to a combination of a $309.8 million, or 6.21%, decrease in the average balance of borrowed funds to $4.68 billion during the current year, from $4.99 billion during the prior year, as well as a 19 basis point increase in the average rate paid for these funds to 3.46% during the current year, from 3.27% during the prior year.
We purchased $133.5 million of securities during the year ended September 30, 2024, and $144.7 million during the year ended September 30, 2023. Also, during the years ended September 30, 2024 and September 30, 2023, we purchased $308.9 million and $279.2 million of long-term, fixed-rate first mortgage loans.
We purchased $160.3 million of securities during the year ended September 30, 2025, and $133.5 million during the year ended September 30, 2024. Also, during the years ended September 30, 2025 and September 30, 2024, we acquired $432.2 million and $308.9 million of long-term, residential mortgage loans, respectively.
At September 30, 2024, we serviced $1.97 billion of loans we originated and later sold to investors. We continue to consider liquidity and balance sheet management, as well as secondary market pricing, in evaluating the opportunity to sell loans.
At September 30, 2025, we serviced $2.13 billion of loans we originated and later sold to investors. We continue to consider liquidity and balance sheet management, as well as secondary market pricing, in evaluating the opportunity to sell loans. Loan sales are discussed in more detail within the Liquidity and Capital Resources section of this Item 7.
Net income of $79.6 million for the year ended September 30, 2024, increased $4.3 million, compared to $75.3 million for the year ended September 30, 2023. The change was primarily due to lower non-interest expenses and an increase in non-interest income, offset by a decrease in net interest income. Interest and Dividend Income.
Net income increased $11.4 million to $91.0 million for the year ended September 30, 2025, compared to $79.6 million for the year ended September 30, 2024. The increase was primarily driven by an increase in net interest income. Interest and Dividend Income.
At September 30, 2024, we had $4.77 billion of FHLB of Cincinnati advances, no outstanding borrowings from the FRB-Cleveland Discount Window and no outstanding borrowings in the form of Fed Funds. Additionally, at September 30, 2024, we had $1.22 billion of brokered CDs.
At September 30, 2025, we had $4.85 billion of FHLB of Cincinnati advances, no outstanding borrowings from the FRB-Cleveland Discount Window and no outstanding borrowings in the form of Fed Funds. During the year ended September 30, 2025, we had average outstanding borrowed funds of $4.68 billion, as compared to $4.99 billion during the year ended September 30, 2024.
Interest income on interest bearing cash equivalents increased $12.9 million, or 77% to $29.7 million during the current year compared to $16.8 million during the prior year.
Interest income on interest bearing cash equivalents decreased $11.6 million, or 39.1%, to $18.1 million during the current year compared to $29.7 million during the prior year.
The Association is subject to the "capital conservation buffer" requirement level of 2.5%. The requirement limits capital distributions and certain discretionary bonus payments to management if the institution does not hold a "capital conservation buffer" in addition to the minimum capital requirements.
The requirement limits capital distributions and certain discretionary bonus payments to management if the institution does not hold a "capital conservation buffer" in addition to the minimum capital requirements. At September 30, 2025, the Association exceeded the regulatory requirement for the "capital conservation buffer" and all regulatory capital requirements to be considered "Well Capitalized".
The following tables set forth our first mortgage loan production and balances segregated by loan structure at origination: For the Years Ended September 30, 2024 2023 Amount Percent Amount Percent First Mortgage Loan Originations and Purchases: (Dollars in thousands) ARM (all Smart Rate) production $ 157,446 18.4 % $ 624,773 33.7 % Fixed-rate production: Terms less than or equal to 10 years 5,981 0.7 34,710 1.9 Terms greater than 10 years 690,820 80.9 1,195,562 64.4 Total fixed-rate production 696,801 81.6 1,230,272 66.3 Total First Mortgage Loan Originations and Purchases: $ 854,247 100.0 % $ 1,855,045 100.0 % 50 Table of Contents September 30, 2024 September 30, 2023 Amount Percent Amount Percent Balances of First Mortgage Loans Held For Investment: (Dollars in thousands) ARM (primarily Smart Rate) Loans $ 4,379,132 38.3 % $ 4,760,843 39.2 % Fixed-rate Loans: Terms less than or equal to 10 years 836,875 7.3 1,088,048 9.0 Terms greater than 10 years 6,210,073 54.4 6,275,775 51.8 Total fixed-rate loans 7,046,948 61.7 7,363,823 60.8 Total First Mortgage Loans Held For Investment: $ 11,426,080 100.0 % $ 12,124,666 100.0 % The following table sets forth the balances and yields as of September 30, 2024, for all ARM loans segregated by the next scheduled interest rate reset date: Current Balance of ARM Loans Scheduled for Interest Rate Reset Yield During the Fiscal Years Ending September 30, (Dollars in thousands) 2025 $912,871 3.97 % 2026 1,302,274 2.87 % 2027 1,540,938 2.78 % 2028 484,104 4.80 % 2029 125,531 6.46 % 2030 13,414 6.90 % Total $4,379,132 3.39 % 51 Table of Contents Loan Portfolio Yield The following tables set forth the principal balance and interest yield as of September 30, 2024, for the portfolio of loans held for investment, by type of loan, structure and geographic location.
The following tables set forth our first mortgage loan production and balances segregated by loan structure at origination: For the Years Ended September 30, 2025 2024 Amount Percent Amount Percent First Mortgage Loan Originations and Acquisitions: (Dollars in thousands) ARM (all Smart Rate) production $ 136,251 11.5 % $ 157,446 18.4 % Fixed-rate production: Terms less than or equal to 10 years 5,326 0.4 5,981 0.7 Terms greater than 10 years 1,046,489 88.1 690,820 80.9 Total fixed-rate production 1,051,815 88.5 696,801 81.6 Total First Mortgage Loan Originations and Acquisitions: $ 1,188,066 100.0 % $ 854,247 100.0 % 52 Table of Contents September 30, 2025 September 30, 2024 Amount Percent Amount Percent Balances of First Mortgage Loans Held For Investment: (Dollars in thousands) ARM (primarily Smart Rate) Loans $ 3,944,540 36.3 % $ 4,379,132 38.3 % Fixed-rate Loans: Terms less than or equal to 10 years 623,413 5.8 836,875 7.3 Terms greater than 10 years 6,271,793 57.9 6,210,073 54.4 Total fixed-rate loans 6,895,206 63.7 7,046,948 61.7 Total First Mortgage Loans Held For Investment: $ 10,839,746 100.0 % $ 11,426,080 100.0 % The following table sets forth the balances and yields as of September 30, 2025, for all ARM loans segregated by the next scheduled interest rate reset date: Current Balance of ARM Loans Scheduled for Interest Rate Reset Yield During the Fiscal Years Ending September 30, (Dollars in thousands) 2026 $1,853,443 3.82 % 2027 1,381,164 2.73 % 2028 488,977 4.93 % 2029 106,061 6.30 % 2030 96,658 6.60 % 2031 18,237 6.44 % Total $3,944,540 3.72 % 53 Table of Contents Loan Portfolio Yield The following tables set forth the principal balance and interest yield as of September 30, 2025, for the portfolio of loans held for investment, by type of loan, structure and geographic location.
At September 30, 2024, our investment securities portfolio totaled $526.3 million. Fourth, selling loans in the secondary market is a regular source of liquidity. During the fiscal year ended September 30, 2024, we sold, or committed to sell $247.4 million in loans to Fannie Mae.
Fourth, selling loans in the secondary market is a regular source of liquidity. During the fiscal year ended September 30, 2025, we sold, or committed to sell $411.3 million in loans primarily to Fannie Mae. Finally, cash flows from operating activities have been a regular source of funds.
For the Fiscal Years Ended September 30, 2024 vs. 2023 For the Fiscal Years Ended September 30, 2023 vs. 2022 Increase (Decrease) Due to Increase (Decrease) Due to Volume Rate Net Volume Rate Net Interest-earning assets: (In thousands) Interest-earning cash equivalents $ 10,154 $ 2,696 $ 12,850 $ (218) $ 13,866 $ 13,648 Investment securities 2,373 85 2,458 696 384 1,080 Mortgage-backed securities (460) 1,860 1,400 337 7,452 7,789 Loans 21,850 76,225 98,075 44,983 124,936 169,919 Federal Home Loan Bank stock 834 6,538 7,372 2,162 7,988 10,150 Total interest-earning assets 34,751 87,404 122,155 47,960 154,626 202,586 Interest-bearing liabilities: Checking accounts (991) (4,689) (5,680) (569) 2,464 1,895 Savings and money market accounts (4,259) 1,738 (2,521) (145) 20,278 20,133 Certificates of deposit 37,042 89,686 126,728 3,654 71,576 75,230 Borrowed funds (3,736) 12,473 8,737 31,978 57,179 89,157 Total interest-bearing liabilities 28,056 99,208 127,264 34,918 151,497 186,415 Net change in net interest income $ 6,695 $ (11,804) $ (5,109) $ 13,042 $ 3,129 $ 16,171 Comparison of Operating Results for the Fiscal Years Ended September 30, 2024 and 2023 General.
For the Fiscal Years Ended September 30, 2025 vs. 2024 For the Fiscal Years Ended September 30, 2024 vs. 2023 Increase (Decrease) Due to Increase (Decrease) Due to Volume Rate Net Volume Rate Net Interest-earning assets: (In thousands) Interest-earning cash equivalents $ (7,055) $ (4,560) $ (11,615) $ 10,154 $ 2,696 $ 12,850 Investment securities (680) (573) (1,253) 2,373 85 2,458 Mortgage-backed securities 558 1,201 1,759 (460) 1,860 1,400 Loans 11,367 31,431 42,798 21,850 76,225 98,075 Federal Home Loan Bank stock (1,735) (848) (2,583) 834 6,538 7,372 Total interest-earning assets 2,455 26,651 29,106 34,751 87,404 122,155 Interest-bearing liabilities: Checking accounts (26) 64 38 (991) (4,689) (5,680) Savings and money market accounts (3,578) (5,947) (9,525) (4,259) 1,738 (2,521) Certificates of deposit 27,394 (1,875) 25,519 37,042 89,686 126,728 Borrowed funds (20,699) 19,537 (1,162) (3,736) 12,473 8,737 Total interest-bearing liabilities 3,090 11,780 14,870 28,056 99,208 127,264 Net change in net interest income $ (636) $ 14,872 $ 14,236 $ 6,695 $ (11,804) $ (5,109) Comparison of Operating Results for the Fiscal Years Ended September 30, 2025 and 2024 General.
Adjustable-Rate Loans and Shorter-Term, Fixed-Rate Loans We offer our "Smart Rate" adjustable-rate mortgage loan, which provides us with improved interest rate risk characteristics when compared to a 30-year, fixed-rate mortgage loan. We also offer a 10-year, fully amortizing fixed-rate, first mortgage loan.
Refer to the Liquidity and Capital Resources section of this Item 7 for additional discussion regarding regulatory capital requirements. Adjustable-Rate Loans and Shorter-Term, Fixed-Rate Loans We offer our "Smart Rate" adjustable-rate mortgage loan, which provides us with improved interest rate risk characteristics when compared to a 30-year, fixed-rate mortgage loan.
Second, we have the ability to purchase overnight Fed Funds up to $395.0 million through various arrangements with other institutions. Third, we invest in high quality marketable securities that exhibit limited market price variability and, to the extent that they are not needed as collateral for borrowings, can be sold in the institutional market and converted to cash.
Third, we invest in high quality marketable securities that exhibit limited market price variability and, to the extent that they are not needed as collateral for borrowings, can be sold in the institutional market and converted to cash. At September 30, 2025, our investment securities portfolio totaled $520.7 million.
Overall, while customer and community confidence can never be assured, the Company believes that our liquidity is adequate and that we have adequate access to alternative funding sources. Monitoring and Controlling Our Operating Expenses. We continue to focus on managing operating expenses.
During the fiscal years ended September 30, 2025 and 2024, cash flows from operations provided $82.4 million and $88.6 million, respectively. Overall, while customer and community confidence can never be assured, the Company believes that our liquidity is adequate and that we have adequate access to alternative funding sources. Monitoring and Controlling Our Operating Expenses.
Interest expense on borrowed funds increased $8.7 million, or 6%, to $162.9 million during the year ended September 30, 2024, from $154.2 million during the year ended September 30, 2023.
Interest expense on borrowed funds, net of related interest swap contracts, decreased $1.2 million, or 0.74%, to $161.7 million during the year ended September 30, 2025, from $162.9 million during the year ended September 30, 2024.
Our relatively high average deposits (exclusive of brokered CDs) held at our branch offices ($242.6 million per branch office as of September 30, 2024) contributes to our expense management efforts by limiting the overhead costs of serving our customers. We will continue our efforts to control operating expenses to help safeguard against margin compression.
We believe that each of these measures compares favorably with industry averages. Our relatively high average deposits (exclusive of brokered CDs) held at our branch offices ($265.1 million per branch office as of September 30, 2025) contributes to our expense management efforts by limiting the overhead costs of serving our customers.
Other changes include a $100.8 million net negative change in accumulated other comprehensive income, primarily related to changes in market values due to fluctuations in market interest rates and maturities of swap contracts, and $7.6 million of positive change related to activity in the Company's stock compensation and employee stock ownership plans.
Other changes include an $8.9 million net positive change related to activity in the Company's stock compensation and employee stock ownership plans offset by a $5.6 million net decrease in accumulated other comprehensive income, primarily related to a net decrease in unrealized gains on swaps contracts.
Impact of Inflation and Changing Prices Our consolidated financial statements and related notes have been prepared in accordance with GAAP. GAAP generally requires the measurement of financial position and operating results in terms of historical dollars without consideration for changes in the relative purchasing power of money over time due to inflation.
GAAP generally requires the measurement of financial position and operating results in terms of historical dollars without consideration for changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of our operations. Unlike industrial companies, our assets and liabilities are primarily monetary in nature.
During the fiscal year ended September 30, 2024, no shares were repurchased. The Company's eighth stock repurchase program allows for a total of 10,000,000 shares to be repurchased, with 5,191,951 shares remaining to be repurchased at September 30, 2024.
During the fiscal year ended September 30, 2025, a total of 247,865 shares of our common stock were repurchased for $3.2 million, an average cost of $13.05 per share. The Company's eighth stock repurchase program allows for a total of 10,000,000 shares to be repurchased, with 4,944,086 shares remaining to be repurchased at September 30, 2025.
Each of these measures is in excess of the requirements in effect for the Association at September 30, 2024 for designation as “well capitalized” under regulatory prompt corrective action provisions.
Each of these measures is in excess of the requirements in effect for the Association at September 30, 2025 for designation as “well capitalized” under regulatory prompt corrective action provisions. Beginning this fiscal year, the Company entered into the final year of the five-year transitional period, as provided by a final rule, after CECL was adopted in fiscal year 2021.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeIn the event that there is a breach of policy limits that extends beyond two consecutive quarter end measurement periods, management is responsible for taking such action, similar to those described under the preceding heading of General , as may be necessary in order to return the Association's interest rate risk profile to a position that is in compliance with the policy. 63 Table of Contents The following tables present the estimated changes in the Company's and Association's EVE and NII at September 30, 2024, that would result from the indicated changes in the United States Treasury yield curve and other relevant market interest rates.
Biggest changeIn the event that there is a breach of policy limits that extends beyond two consecutive quarter end measurement periods, management is responsible for taking such action, similar to those described under the preceding heading of General , as may be necessary in order to return the Association's interest rate risk profile to a position that is in compliance with the policy.
The EVE and NII sensitivity analyses are similar in that they both start with the same month end balance sheet amounts, weighted average coupon and maturity. The underlying prepayment, decay and default assumptions are also the same and they both start with the same month end "markets" (Treasury and FHLB yield curves, etc.).
The EVE and NII sensitivity analyses are similar in that they both start with the same month end balance sheet amounts, weighted average coupon and maturity. The underlying prepayment and default assumptions are also the same and they both start with the same month end "markets" (Treasury and FHLB yield curves, etc.).
In our model, we estimate what our net interest income would be for prospective 12 and 24 month periods using customized (based on our portfolio characteristics) assumptions with respect to loan prepayment rates, default rates and deposit decay rates, and the implied forward yield curve as of the market date for assumptions related to projected interest rates.
In our model, we estimate what our net interest income would be for prospective 12 and 24 month periods using customized (based on our portfolio characteristics) assumptions with respect to loan prepayment rates, default rates, and the implied forward yield curve as of the market date for assumptions related to projected interest rates.
In this regard, our EVE estimates assume: • no new growth or business volumes; • that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured, except for reductions to reflect mortgage loan principal repayments along with modeled prepayments and defaults, and deposit decays; and 62 Table of Contents • that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities.
In this regard, our EVE estimates assume: • no new growth or business volumes; • that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured, except for reductions to reflect mortgage loan principal repayments along with modeled prepayments and defaults, and deposit decays; and • that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities.
While our core business activities, as described at the beginning of this paragraph, are generally intended to have a positive impact on our IRR profile, the actual impact is determined by a number of factors, including the pace of mortgage asset additions (reductions) to our balance sheet (including consideration of outstanding commitments to originate those assets), in comparison to the pace of the addition (reduction) of duration extending funding sources.
While our core business activities, as described at the beginning of this paragraph, are generally intended to have a positive impact on our IRR profile, the actual impact is determined by a number of factors, including the pace of mortgage asset additions (reductions) to our balance sheet 67 Table of Contents (including consideration of outstanding commitments to originate those assets), in comparison to the pace of the addition (reduction) of duration extending funding sources.
It provides a long-term view and helps to define changes in equity and duration as a result of changes in interest rates. On the other hand, NII is based on balance sheet projections going one year and two years forward and assumes new business volume and pricing to calculate net interest income under different interest rate environments.
It provides a long-term view and helps to define changes in equity and duration as a result of changes in interest rates. On the other hand, NII is based on flat balance sheet projections going one year and two years forward and assumes static volume and pricing to calculate net interest income under different interest rate environments.
(2) Estimated NII is calculated for the prospective 12 months ending September 30, 2025 in the event that market interest rates used in the simulation were adjusted in incremental amounts (termed a "ramped" format) during the 12 month measurement period to an aggregate increase as indicated in the Change in Interest Rates column.
(2) Estimated NII is calculated for the prospective 12 months ending September 30, 2025, in the event that market interest rates used in the simulation were adjusted instantaneously (termed a "shocked" format) during the 12 month measurement period to an aggregate increase as indicated in the Change in Interest Rates column.
We then calculate what the estimated net interest income would be for the same period under numerous interest rate scenarios. The simulation process is subject to continual enhancement, modification, refinement and adaptation. The Company and Association use a "ramped" assumption in preparing the NII sensitivity simulation estimates for us in its public disclosure.
We then calculate what the estimated net interest income would be for the same period under numerous interest rate scenarios. The simulation process is subject to continual enhancement, modification, refinement and adaptation. The 65 Table of Contents Company and Association use a "shocked" assumption in preparing the NII sensitivity simulation estimates for us in its public disclosure.
In addition to our core business activities, which seek to originate Smart Rate (adjustable) loans, home equity lines of credit (adjustable) and 10-year fixed-rate loans funded by borrowings from the FHLB and intermediate term CDs (including brokered CDs), and which are intended to have a favorable impact on our IRR profile, the impact of several other items and events resulted in an improvement in the Pre-Shock EVE (base valuation) of 4.54% and 9.73% at September 30, 2024, when compared to the measures at September 30, 2023, for the Company and Association, respectively.
In addition to our core business activities, which seek to originate Smart Rate (adjustable) loans, home equity lines of credit (adjustable) and 10-year fixed-rate loans funded by borrowings from the FHLB and intermediate term CDs (including brokered CDs), and which are intended to have a favorable impact on our IRR profile, the impact of several other items and events resulted in an improvement in the Pre-Shock EVE (base valuation) of 18.83% and 23.32% at September 30, 2025, when compared to the measures at September 30, 2024, for the Company and Association, respectively.
EVE is a stochastic model using 150 different interest rate paths to compute market value at the account level for each of the categories on the balance sheet whereas NII uses the implied forward curve to compute interest income/expense at the account level for each of the categories on the balance sheet.
EVE is a stochastic model using 250 different interest rate paths to compute market value at the account level for each of the categories on the balance sheet whereas NII uses the month-end curve to compute interest income/expense at the account level for each of the categories on the balance sheet.
The tables above indicate that at September 30, 2024, in the event of an increase of 200 basis points in all interest rates, the Company and Association would experience a 23.74% and 27.24% decrease in EVE, respectively.
The tables above indicate that at September 30, 2025, in the event of an increase of 200 basis points in all interest rates, the Company and Association would experience a 21.35% and 23.62% decrease in EVE, respectively.
The "ramped" assumption calculates NII sensitivity in the event that the market interest rates used in the simulation were adjusted in incremental amounts during the 12 month measurement period. The manner in which actual yields, costs and consumer behavior respond to changes in market interest rates may vary from the inherent methodologies used to measure interest rate risk through NII.
The "shocked" assumption calculates NII sensitivity in the event that the market interest rates used in the simulation were instantly adjusted. The manner in which actual yields, costs and consumer behavior respond to changes in market interest rates may vary from the inherent methodologies used to measure interest rate risk through NII.
TFS Financial Corporation At September 30, Risk Measure (+200 bp Rate Shock) 2024 2023 Pre-Shock EVE $1,313,560 $1,253,978 Post-Shock EVE $1,001,779 $928,976 Amount Change in EVE $(311,781) $(325,002) Percentage Change in EVE (23.74) % (25.92) % Third Federal Savings and Loan Association At September 30, Risk Measure (+200 bp Rate Shock) 2024 2023 Pre-Shock EVE $1,143,608 $1,032,386 Post-Shock EVE $832,140 $707,707 Amount Change in EVE $(311,468) $(324,679) Percentage Change in EVE (27.24) % (31.45) % Accordingly, although the EVE presented in the tables above provides an indication of our interest rate risk exposure as of the indicated dates, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our EVE and will differ from actual results.
TFS Financial Corporation At September 30, Risk Measure (+200 bp Rate Shock) 2025 2024 Pre-Shock EVE $ 1,560,859 $ 1,313,560 Post-Shock EVE $ 1,227,595 $ 1,001,779 Amount Change in EVE $ (333,264) $ (311,781) Percentage Change in EVE (21.35) % (23.74) % Third Federal Savings and Loan Association At September 30, Risk Measure (+200 bp Rate Shock) 2025 2024 Pre-Shock EVE $ 1,410,325 $ 1,143,608 Post-Shock EVE $ 1,077,257 $ 832,140 Amount Change in EVE $ (333,068) $ (311,468) Percentage Change in EVE (23.62) % (27.24) % Accordingly, although the EVE presented in the tables above provides an indication of our interest rate risk exposure as of the indicated dates, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our EVE and will differ from actual results.
In the event of a 100 basis point decrease in interest rates, the Company and Association would experience a 6.85% and 7.86% increase in EVE, respectively. 64 Table of Contents The following tables are based on the calculations contained in the previous tables, and set forth the change in the EVE at a +200 basis point rate of shock at September 30, 2024, with comparative information as of September 30, 2023.
The following tables are based on the calculations contained in the previous tables, and set forth the change in the EVE at a +200 basis point rate of shock at September 30, 2025, with comparative information as of September 30, 2024.
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TFS Financial Corporation Change in Interest Rates (basis points) Estimated EVE (1) Estimated NII (2) Amount Percentage Change Amount Percentage Change (Dollars in thousands) +200 $ 1,001,779 (23.74) % $ 278,888 1.85 % +100 1,177,196 (10.38) % 276,377 0.93 % 0 1,313,560 — % 273,822 — % -100 1,403,591 6.85 % 259,508 (5.23) % -200 1,431,606 8.99 % 242,603 (11.40) % Third Federal Savings and Loan Association Change in Interest Rates (basis points) Estimated EVE (1) Estimated NII (2) Amount Percentage Change Amount Percentage Change (Dollars in thousands) +200 $ 832,140 (27.24) % $ 269,416 1.27 % +100 1,007,402 (11.91) % 267,688 0.62 % 0 1,143,608 — % 266,030 — % -100 1,233,478 7.86 % 252,437 (5.11) % -200 1,261,328 10.29 % 236,306 (11.17) % _________________ (1) EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.
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The following tables present the estimated changes in the Company's and Association's EVE and NII at September 30, 2025, that would result from the indicated changes in the United States Treasury yield curve and other relevant market interest rates.
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TFS Financial Corporation Change in Interest Rates (basis points) Estimated EVE (1) Estimated NII (2) Amount Percentage Change Amount Percentage Change (Dollars in thousands) +200 $ 1,227,595 (21.35) % $ 358,920 8.23 % +100 1,410,503 (9.63) % 346,297 4.43 % 0 1,560,859 — % 331,619 — % -100 1,651,475 5.81 % 312,416 (5.79) % -200 1,680,172 7.64 % 288,833 (12.90) % 66 Table of Contents Third Federal Savings and Loan Association Change in Interest Rates (basis points) Estimated EVE (1) Estimated NII (2) Amount Percentage Change Amount Percentage Change (Dollars in thousands) +200 $ 1,077,257 (23.62) % $ 349,105 7.53 % +100 1,260,068 (10.65) % 337,910 4.08 % 0 1,410,325 — % 324,652 — % -100 1,500,842 6.42 % 306,861 (5.48) % -200 1,529,437 8.45 % 284,683 (12.31) % _________________ (1) EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.
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In the event of a 100 basis point decrease in interest rates, the Company and Association would experience a 5.81% and 6.42% increase in EVE, respectively.

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