CAPITOL FEDERAL FINANCIAL, INC. Management report and analysis of the financial position and operating results (Form 10-K)

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The following discussion and analysis is intended to assist in understanding the
financial condition, results of operations, liquidity, and capital resources of
the Company. The Bank comprises almost all of the consolidated assets and
liabilities of the Company and the Company is dependent primarily upon the
performance of the Bank for the results of its operations. Because of this
relationship, references to management actions, strategies and results of
actions apply to both the Bank and the Company.

Executive Summary
The following summary should be read in conjunction with the Management's
Discussion and Analysis of Financial Condition and Results of Operations section
in its entirety.

Net income for fiscal year 2021 increased $11.5 million, or 17.9% compared to
the prior year, due primarily to recording a $22.3 million provision for credit
losses during the prior year compared to recording a negative provision for
credit losses of $8.5 million in the current year, as a result of improvements
in economic conditions between periods. This was partially offset by a decrease
in net interest income and an increase in income tax expense.

The net interest margin was 1.90% for the current year compared to 2.12% in the
prior year. The decrease in the net interest margin was due primarily to a
reduction in asset yields due to the low interest rate environment, partially
offset by a decrease in the cost of deposits and borrowings. Additionally, cash
flows from the one-to four-family loan portfolio not reinvested into loans were
used to purchase lower yielding securities, which also decreased the overall
asset yield. During the latter portion of the current year, the pace of loan
refinance and payoff activity slowed, resulting in lower premium amortization
related to correspondent one- to four-family loans compared to earlier in the
year, and there was a reduction in the purchases of lower-yielding securities as
cash flows from the loan and deposit portfolios slowed, all of which helped
stabilize the net interest margin.

As discussed above, the Bank experienced high levels of loan refinance and
payoff activity for the majority of the current year, before slowing later in
the year. This was a trend continued from the last half of the prior year.
Additionally, there was significant deposit growth during the latter part of the
prior year and the first half of the current year due to a reduction in customer
spending and high levels of government assistance. The loan portfolio decreased
$121.7 million, or 1.7%, during the current year, primarily in the correspondent
one-to four-family loan portfolio, while the securities portfolio increased
$453.7 million, or 29.1%. Deposit growth during the current year was used to pay
down certain maturing advances and purchase securities. The deposit portfolio
increased $406.0 million, or 6.6%, during the current year, while borrowings
decreased $206.5 million, or 11.5%. The deposit growth was primarily in
non-maturity deposit accounts, partially offset by a decrease in retail
certificates of deposit as customers moved some of the funds from maturing
certificates into more liquid investment options such as the Bank's retail money
market accounts. There is some uncertainty regarding how long the increased
balance of non-maturity deposits will be retained by the Bank as customers
return to more normal spending habits and/or choose to invest in higher-yielding
investment options outside of the Bank. The Bank may be required to replace
deposit outflows with higher costing borrowings, which would increase the cost
of funds over time.

The Bank's asset quality continued to remain strong during the current fiscal
year, reflected in low delinquency and charge-off ratios. At September 30, 2021,
loans 30 to 89 days delinquent were 0.11% of total loans receivable, net, and
loans 90 or more days delinquent or in foreclosure were 0.16% of total loans
receivable, net. The ratio of net charge-offs (recoveries) ("NCOs") during the
current year to average loans outstanding during the current year was 0.01%. In
March 2020, the Bank initiated loan modification programs to support and provide
relief to borrowers during the COVID-19 pandemic ("COVID-19 modifications"). As
of September 30, 2021, $2.7 million of one- to four-family loans and $146.4
million of commercial loans with COVID-19 modifications were still in their
deferral period, compared to $39.8 million and $367.4 million, respectively, as
of September 30, 2020. We have observed very low delinquency rates for loans
that were previously subject to COVID-19 modifications and have since resumed
full payments. Additionally, in March 2020, the Bank suspended the initiation of
foreclosure proceedings for owner-occupied one- to four-family loans, and this
suspension remained in place at September 30, 2021. Approximately 75% of
non-performing one- to four family loans at September 30, 2021 either had
foreclosure proceedings initiated prior to the foreclosure suspension or would
have had foreclosure proceedings initiated if the suspension were not in place.

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At September 30, 2021, the Bank had a one-year gap position of $(664.1) million,
or (6.9)% of total assets, meaning the amount of interest-bearing liabilities
exceeds the amount of interest-earning assets maturing or repricing during the
same period. Despite the negative gap, net interest income is projected to
increase in a rising interest rate environment due to the assumption that the
Bank's deposit balances are not expected to reprice to the full extent of the
interest rate change. This assumption is based on a historical analysis of the
Bank's deposit pricing behavior. See additional discussion in "Part II, Item 7A.
Quantitative and Qualitative Disclosures About Market Risk."

Critical Accounting Estimates
Our most critical accounting estimates are the methodologies used to determine
the ACL and reserve for off-balance sheet credit exposures and fair value
measurements. These estimates are important to the presentation of our financial
condition and results of operations, involve a high degree of complexity, and
require management to make difficult and subjective judgments that may require
assumptions about highly uncertain matters. The use of different judgments,
assumptions, and estimates could affect reported results materially. These
critical accounting estimates and their application are reviewed at least
annually by our audit committee. The following is a description of our critical
accounting estimates and an explanation of the methods and assumptions
underlying their application.

Allowance for Credit Losses and Reserve for Off-Balance Sheet Credit Exposures.
The ACL is a valuation amount that is deducted from the amortized cost basis of
loans and represents management's estimate of lifetime credit losses expected on
the Company's loan portfolio as of the balance sheet date. The reserve for
off-balance sheet credit exposures represents expected credit losses on unfunded
portions of existing loans and commitments to originate or purchase loans that
are not unconditionally cancellable by the Company.

Management estimates the ACL by projecting future loss rates which are dependent
upon forecasted economic indices and applying qualitative factors when deemed
appropriate by management. The key assumptions used in projecting future loss
rates include the economic forecast, the forecast and reversion to mean time
periods, and prepayment and curtailment assumptions. The assumptions are used to
calculate and aggregate estimated cash flows for the time period that remains in
each loan's contractual life. The cash flows are discounted back to the balance
sheet date using each loan's effective yield, to arrive at a present value of
future cash flows, which is compared to the amortized cost basis of the loan
pool to determine the amount of ACL required by the calculation. Management then
considers qualitative factors when accessing the overall level of ACL. See
"Allowance for Credit Losses on Loans Receivable" and "Reserve for Off-Balance
Sheet Credit Exposures" within "Part II, Item 8. Financial Statements and
Supplementary Data - Notes to Consolidated Financial Statements - Note 1.
Summary of Significant Accounting Policies" for additional information.

One of the most significant judgments used in projecting loss rates when
estimating the ACL and reserves for off-balance sheet credit exposures is the
macro-economic forecast provided by a third party. The economic indices sourced
from the macro-economic forecast and used in projecting loss rates are national
unemployment rate, changes in commercial real estate prices, changes in home
values, and changes in the United States gross domestic product. The economic
index used in the calculation to which the calculation is most sensitive is the
national unemployment rate. Each reporting period, several macro-economic
forecast scenarios are considered by management. Management selects the
macro-economic forecast(s) that is/are most reflective of expectations at that
point in time. Changes in the macro-economic forecast, especially for the
national unemployment rate, could significantly impact the calculated estimated
credit losses between reporting periods.

Other key assumptions in the calculation of the ACL and reserve for off-balance
sheet credit exposures estimates include the forecast and reversion to mean time
periods and prepayment and curtailment assumptions. The calculation is much less
sensitive to these assumptions than the macro-economic forecasts. The
macro-economic forecast is applied for a reasonable and supportable time period
before reverting to long-term historical averages for each economic index. The
forecast and reversion to mean time period used for each economic index at
September 30, 2021 was four quarters. Prepayment and curtailment assumptions are
based on the Company's historical experience over the trailing 12 months and are
adjusted by management as deemed necessary. The prepayment and curtailment
assumptions vary based on loan product type.

The ACL and reserves for off-balance sheet credit exposures may be materially
affected by qualitative factors, especially during periods of economic
uncertainty, for items not reflected in the lifetime credit loss calculation,
but which are deemed appropriate by management's current assessment of the risks
related to the loan portfolio and/or external factors. Such qualitative factors
may include changes in the Bank's loan portfolio composition and credit
concentrations, changes in the balances and/or trends in asset quality and/or
loan credit performance, changes in lending underwriting standards, the effect
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of other external factors such as significant unique events or conditions, and
actual and/or expected change in economic conditions, real estate values, and/or
other economic developments. The qualitative factors applied by management at
September 30, 2021 were (1) the balance and trending of large-dollar special
mention loans, (2) economic uncertainties related to the job market and the
unevenness of the recovery in certain industries, and (3) COVID-19 loan
modifications related to commercial real estate loans. The qualitative factors
applied at September 30, 2021, and the importance and levels of the qualitative
factors applied, may change in future periods depending on the level of changes
to items such as the uncertainty of economic conditions and management's
assessment of the level of credit risk within the loan portfolio as a result of
such changes, compared to the amount of ACL calculated by the model. The
evaluation of qualitative factors is inherently imprecise and requires
significant management judgment. See "Part II, Item 8. Financial Statements and
Supplementary Data - Notes to Consolidated Financial Statements - Note 4. Loans
Receivable and Allowance for Credit Losses - Allowance for Credit Losses" for
additional information regarding the qualitative factors applied at
September 30, 2021.

The ACL and the reserves for off balance sheet credit exposures was $19.8
million and $5.7 million, respectively at September 30, 2021, compared to $26.8
million and $7.8 million, respectively, at October 1, 2020, which was the date
we adopted Accounting Standards Update ("ASU") 2016-13, Financial Instruments -
Credit Losses: Measurement of Credit Losses on Financial Instruments. The $7.0
million decrease in the ACL and $2.0 million decrease in the reserves for
off-balance sheet credit exposures was primarily attributable to the improved
economic conditions between time periods, specifically in the national
unemployment rate. The average national unemployment rate during the
four-quarter macro-economic forecast selected by management as of October 1,
2020 was 10.8%, compared to 3.8% during the four-quarter macro-economic forecast
selected at September 30, 2021. See "Part II, Item 8. Financial Statements and
Supplementary Data - Notes to Consolidated Financial Statements - Note 4. Loans
Receivable and Allowance for Credit Losses - Allowance for Credit Losses" for
additional information regarding the assumptions used in the Company's
September 30, 2021 estimate of ACL.

While management utilizes its best judgment and information available, the
adequacy of the ACL and reserve for off-balance sheet credit exposures is
determined by certain factors outside of the Company's control, such as the
performance of our portfolios, changes in the economic environment including
economic uncertainty, changes in interest rates, and the view of the regulatory
authorities toward classification of assets and the level of ACL and reserves
for off-balance sheet credit exposures. Additionally, the level of ACL and
reserves for off-balance sheet credit exposures may fluctuate based on the
balance and mix of the loan portfolio and off-balance sheet credit exposures. If
actual results differ significantly from our assumptions, our ACL and reserve
for off-balance sheet credit exposures may not be sufficient to cover inherent
losses in our loan portfolio, resulting in additions to our ACL and an increase
in the provision for credit losses.

Fair Value Measurements. The Company uses fair value measurements to record fair
value adjustments to certain financial instruments and to determine fair value
disclosures in accordance with Accounting Standards Codification ("ASC") 820 and
ASC 825. The Company groups its financial instruments at fair value in three
levels based on the markets in which the instruments are traded and the
reliability of the assumptions used to determine fair value, with Level 1
(quoted prices for identical assets in an active market) being considered the
most reliable, and Level 3 having the most unobservable inputs and therefore
being considered the least reliable. The Company bases its fair values on the
price that would be received from the sale of an asset in an orderly transaction
between market participants at the measurement date. The Company maximizes the
use of observable inputs and minimizes the use of unobservable inputs when
measuring fair value.

The Company's AFS securities are measured at fair value on a recurring
basis. Changes in the fair value of AFS securities, not related to credit loss,
are recorded, net of tax, as AOCI in stockholders' equity. The Company primarily
uses prices obtained from third-party pricing services to determine the fair
value of its AFS securities. Various modeling techniques are used to determine
pricing for the Company's securities, including option pricing, discounted cash
flow models, and similar techniques. The inputs to these models may include
benchmark yields, reported trades, broker/dealer quotes, issuer spreads,
benchmark securities, bids, offers and reference data. All AFS securities are
classified as Level 2.

The Company's interest rate swaps are measured at fair value on a recurring
basis. The estimated fair value of the interest rate swaps are obtained from the
counterparty and are determined by a discounted cash flow analysis using
observable market-based inputs. Changes in the fair value of the interest rate
swaps are recorded, net of tax, as AOCI in stockholders' equity. The Company did
not have any other financial instruments that were measured at fair value on a
recurring basis at September 30, 2021.
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Recent Accounting Pronouncements
For a discussion of Recent Accounting Pronouncements, see "Part II, Item 8.
Financial Statements and Supplementary Data - Notes to Financial Statements -
Note 1. Summary of Significant Accounting Policies."

Financial condition

The following table summarizes the Company's financial condition at the dates
indicated.
                                        September 30,                    Change expressed in:
                                         2021              2020          Dollars            Percent
                                                (Dollars in thousands)
Total assets                   $ 9,631,246       $ 9,487,218       $       144,028            1.5  %
AFS securities                   2,014,608         1,560,950               453,658           29.1
Loans receivable, net            7,081,142         7,202,851              (121,709)          (1.7)
Deposits                         6,597,396         6,191,408               405,988            6.6
Borrowings                       1,582,850         1,789,313              (206,463)         (11.5)
Stockholders' equity             1,242,273         1,284,859               (42,586)          (3.3)
Equity to total assets at end
of period                             12.9  %           13.5  %
Average number of basic shares
outstanding                        135,481           137,897                (2,416)          (1.8)
Average number of diluted
shares outstanding                 135,496           137,901                (2,405)          (1.7)


Assets. Total assets increased primarily due to an increase in the securities portfolio, partially offset by decreases in cash and cash equivalents and loans receivable. The cash flows from the deposit portfolio were used to purchase securities and repay certain maturing borrowings.

Ready to receive. The issuance and purchase of loans secured by residential properties of one to four families is the primary lending activity of the Bank, resulting in a concentration in senior residential mortgages secured by properties located in Kansas and Missouri. The Bank also issues and participates in commercial loans, as well as consumer and construction loans.

The Bank purchases one- to four-family loans, on a loan-by-loan basis, from a
select group of correspondent lenders ("correspondent purchased"). Loan
purchases enable the Bank to attain geographic diversification in the one- to
four-family loan portfolio. We generally pay a premium of 0.50% to 1.0% of the
loan balance to purchase these loans, and 1.0% of the loan balance to purchase
the servicing of these loans. The premium paid is amortized against the interest
earned over the life of the loan, which reduces the loan yield. If a loan pays
off before the scheduled maturity date, the remaining premium is recognized as
reduction in interest income. During the current fiscal year, the Bank
recognized a significant amount of premium amortization due to payoffs and
endorsements.

In the past, the Bank has also purchased one- to four-family loans from
correspondent and nationwide lenders in bulk loan packages ("bulk purchased").
The majority of the Bank's bulk purchased loans were guaranteed by one seller.
The Bank has not experienced any losses with this group of loans since the loan
package was purchased in August 2012.

The Bank originates owner-occupied construction-to-permanent loans secured by
one- to four-family residential real estate. The majority of these loans are
secured by property located within the Bank's Kansas City market area. The
Bank's owner-occupied construction-to-permanent loan program combines the
construction loan and the permanent loan into one loan, allowing the borrower to
secure the same interest rate structure throughout the construction period and
the permanent loan term.

The Bank offers a variety of secured consumer loans, including home equity loans
and lines of credit, home improvement loans, vehicle loans, and loans secured by
savings deposits. The Bank also originates a very limited amount of unsecured
loans. Generally, consumer loans are originated in the Bank's market areas. The
majority of our consumer loan portfolio is comprised of home equity lines of
credit which have adjustable interest rates. For a majority of the home equity
lines of credit, the Bank has the first mortgage or the Bank is in the first
lien position.
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The Bank's commercial loan portfolio is composed of commercial real estate
loans, commercial construction loans and commercial and industrial loans. Our
commercial real estate loans include a variety of property types, including
hotels, office and retail buildings, senior housing facilities, and multi-family
dwellings located in Kansas, Missouri, and 12 other states. The Bank's
commercial and industrial loan portfolio consists largely of loans secured by
accounts receivable, inventory and equipment.
Commercial borrowers are generally required to provide financial information
annually, including borrower financial statements, subject property rental rates
and income, maintenance costs, updated real estate property tax and insurance
payments, and personal financial information for the guarantor(s). This allows
the Bank to monitor compliance with loan covenants and review the borrower's
performance, including cash flows from operations, debt service coverage, and
comparison of performance to projections and year-over-year performance
trending. Additionally, the Bank monitors and performs site visits, or in the
case of participation loans, obtains updates from the lead bank as needed to
determine the condition of the collateral securing the loan. Depending on the
financial strength of the project and/or the complexity of the borrower's
financials, the Bank may also perform a global analysis of cash flows to account
for all other properties owned by the borrower or guarantor. If signs of
weakness are identified, the Bank may begin performing more frequent financial
and/or collateral reviews or will initiate contact with the borrower, or the
lead bank will contact the borrower if the loan is a participation loan, to
ensure cash flows from operations are maintained at a satisfactory level to meet
the debt requirements. Both macro-level and loan-level stress-test scenarios
based on existing and forecasted market conditions are part of the on-going
portfolio management process for the commercial real estate portfolio. The Bank
mitigates the risk of commercial real estate construction lending during the
construction period by monitoring inspection reports from an independent
third-party, project budget, percentage of completion, on-site inspections and
percentage of advanced funds. Commercial and industrial loans are monitored
through a review of borrower performance as indicated by borrower financial
statements, borrowing base reports, accounts receivable aging reports, and
inventory aging reports. These reports are required to be provided by the
borrowers monthly, quarterly, or annually depending on the nature of the
borrowing relationship. The Bank regularly monitors the level of risk in the
entire commercial loan portfolio, including concentrations in such factors as
geographic locations, collateral types, tenant brand name, borrowing
relationships, and lending relationships in the case of participation loans,
among other factors.

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The following table shows the balance and the weighted average rate of our loan portfolio on the dates indicated.

                                      September 30, 2021                 September 30, 2020
                                      Amount             Rate            Amount             Rate
                                                      (Dollars in thousands)
One- to four-family:
Originated                      $       3,956,064       3.18  %    $       3,937,310       3.50  %
Correspondent purchased                 2,003,477       3.02               2,101,082       3.49
Bulk purchased                            173,662       1.65                 208,427       2.41
Construction                               39,142       2.82                  34,593       3.30
Total                                   6,172,345       3.09               6,281,412       3.46
Commercial:
Commercial real estate                    676,908       4.00                 626,588       4.29
Commercial and industrial                  66,497       3.83                  97,614       2.79
Construction                               85,963       4.03                 105,458       4.04
Total                                     829,368       3.99                 829,660       4.08
Consumer loans:
Home equity                                86,274       4.60                 103,838       4.66
Other                                       8,086       4.19                  10,086       4.40
Total                                      94,360       4.57                 113,924       4.64
Total loans receivable                  7,096,073       3.21               7,224,996       3.55

Less:
ACL                                        19,823                             31,527
Discounts/unearned loan fees               29,556                             29,190
Premiums/deferred costs                   (34,448)                           (38,572)
Total loans receivable, net     $       7,081,142                  $       7,202,851


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The following table presents the contractual maturity of our loan portfolio,
along with associated weighted average yields, at September 30, 2021. Loans
which have adjustable interest rates are shown as maturing in the period during
which the contract is due. The table does not reflect the effects of possible
prepayments or enforcement of due on sale clauses.
                                                            Over one year 

at five

                                One year or less(1)                 years              Over five years to 15 years          Over 15 years                     Total
                                 Amount        Yield         Amount         Yield          Amount          Yield          Amount         Yield         Amount         Yield
                                                                                          (Dollars in thousands)
One- to four-family:
Originated                    $      845       4.17  %    $    63,633       3.81  %    $   1,438,945       2.93  %    $  2,452,641       3.39  %    $ 3,956,064       3.23  %
Correspondent purchased               79       3.63             4,515       3.16             508,895       2.49          1,489,988       3.05         2,003,477       2.91
Bulk purchased                         6       5.88               313       4.39              34,651       2.10            138,692       1.42           173,662       1.56
Construction(2)                        -          -                 -          -               2,568       2.71             36,574       2.83            39,142       2.82
Total                                930       4.13            68,461       3.77           1,985,059       2.80          4,117,895       3.20         6,172,345       3.08
Commercial:
Commercial real estate           117,713       3.75           142,047       4.46             329,868       4.25             87,280       4.08           676,908       4.18
Commercial and industrial         17,626       4.17            34,216       4.00               9,615       4.59              5,040       4.17            66,497       4.14
Construction(2)                    6,369       4.05            38,260       3.87              15,706       3.78             25,628       4.57            85,963       4.07
Total                            141,708       3.81           214,523       4.28             355,189       4.24            117,948       4.19           829,368       4.17
Consumer:
Home equity(3)                     1,672       4.83             2,071       5.74              44,874       4.51             37,657       4.57            86,274       4.57
Other                                868       3.02             6,770       4.30                 448       6.64                  -          -             8,086       4.29
Total                              2,540       4.21             8,841       4.64              45,322       4.53             37,657       4.57            94,360       4.55
Total loans receivable        $  145,178       3.82       $   291,825       4.17       $   2,385,570       3.05       $  4,273,500       3.24         7,096,073       3.23

Less:
ACL                                                                                                                                                      19,823
Discounts/unearned loan fees                                                                                                                             29,556
Premiums/deferred costs                                                                                                                                 (34,448)
Total loans receivable, net                                                                                                                         $ 7,081,142



(1)Includes demand loans, loans having no stated maturity, and overdraft loans.
(2)Construction loans are presented based upon the contractual maturity date,
which includes the permanent financing period for construction-to-permanent
loans.
(3)For home equity loans, including those that do not have a stated maturity
date, the maturity date calculated assumes the borrower always makes the
required minimum payment. The majority of home equity loans assume a maximum
term of 240 months.

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The following table presents, as of September 30, 2021, the amount of loans due
after September 30, 2022, and whether these loans have fixed or adjustable
interest rates.
                                Fixed         Adjustable         Total
                                        (Dollars in thousands)
One- to four-family:
Originated                  $ 3,709,020      $  246,199      $ 3,955,219
Correspondent purchased       1,838,138         165,260        2,003,398
Bulk purchased                    5,477         168,179          173,656
Construction                     36,492           2,650           39,142
Total                         5,589,127         582,288        6,171,415
Commercial:
Commercial real estate          304,031         255,164          559,195
Commercial and industrial        35,197          13,674           48,871
Construction                     37,956          41,638           79,594
Total                           377,184         310,476          687,660
Consumer:
Home equity                      11,518      $   73,084           84,602
Other                             5,262           1,956            7,218
Total                            16,780          75,040           91,820
Total loans receivable      $ 5,983,091      $  967,804      $ 6,950,895



Loan Activity - The following table summarizes activity in the loan portfolio,
along with weighted average rates where applicable, for the periods indicated,
excluding changes in ACL, discounts/unearned loan fees, and premiums/deferred
costs. Loans that were paid off as a result of refinances are included in
repayments. Loan endorsements are not included in the activity in the following
table because a new loan is not generated at the time of the endorsement. The
endorsed balance and rate are included in the ending loan portfolio balance and
rate. Commercial loan renewals are not included in the activity in the following
table unless new funds are disbursed at the time of renewal. The renewal balance
and rate are included in the ending loan portfolio balance and rate.
                                                                   For the Year Ended
                                                 September 30, 2021                 September 30, 2020
                                                 Amount             Rate            Amount             Rate
                                                                 (Dollars in thousands)
Beginning balance                          $       7,224,996       3.55  %    $       7,412,473       3.81  %
Originated and refinanced                          1,437,454       2.89               1,166,235       3.30
Purchased and participations                         824,241       2.89                 541,596       3.44

Change in undisbursed loan funds                    (174,416)                            (3,998)
Repayments                                        (2,215,585)               

(1,890,975)

Principal recoveries/(charge-offs), net                 (478)                                 1
Other                                                   (139)                              (336)
Ending balance                             $       7,096,073       3.21       $       7,224,996       3.55



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The following table presents loan origination, refinance, and purchase activity
for the periods indicated, excluding endorsement activity, along with associated
weighted average rates and percent of total. During the current fiscal year, the
Bank endorsed $765.5 million of one- to four-family loans, reducing the average
rate on those loans by 92 basis points. Commercial loan renewals are not
included in the activity in the following table except to the extent new funds
are disbursed at the time of renewal. Loan originations, purchases, and
refinances are reported together.
                                                                  For the Year Ended
                                         September 30, 2021                                September 30, 2020
                                 Amount            Rate       % of Total           Amount            Rate       % of Total
                                                                (Dollars in thousands)
Fixed-rate:
One- to four-family        $      1,615,165       2.66  %         71.4  %    $      1,189,835       3.21  %         69.6  %
One- to four-family
construction                        125,309       2.77             5.5                 44,754       3.28             2.6
Commercial:
Real estate                          28,944       3.85             1.3                 44,005       4.17             2.7
Commercial and industrial            49,857       2.45             2.2                 65,174       1.92             3.8
Construction                         42,505       3.65             1.9                 39,346       4.71             2.3
Home equity                           3,491       5.42             0.2                  4,493       5.83             0.3
Other                                 2,994       5.48             0.1                  4,209       5.67             0.2
Total fixed-rate                  1,868,265       2.71            82.6              1,391,816       3.24            81.5

Adjustable-rate:
One- to four-family                  59,813       2.52             2.6                131,665       2.94             7.7
One- to four-family
construction                         11,069       2.64             0.5                 12,984       2.97             0.8
Commercial:
Real estate                         120,202       3.70             5.3                 50,697       4.56             3.0
Commercial and industrial            18,581       3.97             0.8                  6,360       4.72             0.4
Construction                        126,155       4.08             5.6                 53,563       4.06             3.1
Home equity                          55,740       4.42             2.5                 58,709       4.95             3.4
Other                                 1,870       3.34             0.1                  2,037       3.86             0.1
Total adjustable-rate               393,430       3.73            17.4                316,015       3.81            18.5

Total originated,
refinanced and purchased   $      2,261,695       2.89           100.0  %    $      1,707,831       3.35           100.0  %

Purchased and participation loans included
above:
Fixed-rate:
Correspondent purchased -
one- to four-family        $        671,077       2.65                       $        395,778       3.34

Participations -
commercial                           40,314       3.66                                 46,126       4.29

Total fixed-rate
purchased/participations            711,391       2.70                                441,904       3.44

Adjustable-rate:
Correspondent purchased -
one- to four-family                  18,450       2.45                                 52,192       2.94

Participations -
commercial                           94,400       4.36                                 47,500       4.04

Total adjustable-rate
purchased/participations            112,850       4.05                                 99,692       3.47
Total
purchased/participation
loans                      $        824,241       2.89                       $        541,596       3.44



                                       26
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One- to Four-Family Loans - The following table presents, for our portfolio of
one- to four-family loans, the amount, percent of total, weighted average rate,
weighted average credit score, weighted average loan-to-value ("LTV") ratio, and
average balance per loan as of September 30, 2021. Credit scores are updated at
least annually, with the latest update in September 2021, from a nationally
recognized consumer rating agency. The LTV ratios were based on the current loan
balance and either the lesser of the purchase price or original appraisal, or
the most recent Bank appraisal, if available. In most cases, the most recent
appraisal was obtained at the time of origination.
                                              % of                    Credit                Average
                              Amount          Total        Rate       Score       LTV       Balance
                                                     (Dollars in thousands)
Originated                 $ 3,956,064        64.5  %     3.18  %     771         61  %    $    152
Correspondent purchased      2,003,477        32.7        3.02        765         64            407
Bulk purchased                 173,662         2.8        1.65        771         58            294
                           $ 6,133,203       100.0  %     3.09        769         62            194



The following table presents originated and correspondent purchased activity in
our one- to four-family loan portfolio, excluding endorsement activity, along
with associated weighted average rates, weighted average LTVs and weighted
average credit scores for the current fiscal year.
                                                                   Credit
                              Amount          Rate       LTV       Score
                                       (Dollars in thousands)
Originated                 $ 1,121,829       2.68  %     70  %     767

Correspondent purchased        689,527       2.64        69        772

                           $ 1,811,356       2.66        70        769



The following table summarizes our one- to four-family loan origination and
refinance commitments and one- to four-family correspondent loan purchase
commitments as of September 30, 2021, along with associated weighted average
rates. Loan commitments generally have fixed expiration dates or other
termination clauses and may require the payment of a rate lock fee. It is
expected that some of the loan commitments will expire unfunded, so the amounts
reflected in the table below are not necessarily indicative of our future cash
needs.
                                  Amount                 Rate
                                (Dollars in thousands)
Originate/refinance     $         87,117                2.78  %
Correspondent                     95,395                2.54
                        $        182,512                2.65



Commercial Loans - During fiscal year 2021, the Bank originated $251.5 million
of commercial loans, including $22.8 million of Paycheck Protection Program
("PPP") loans, and entered into commercial loan participations totaling $134.7
million. The Bank also processed commercial loan disbursements, excluding lines
of credit, of approximately $270.0 million at a weighted average rate of 3.59%.
Additionally, during the current fiscal year, $63.5 million of PPP loans were
paid off, primarily by the U.S. Small Business Administration (SBA) following
completion of the loan forgiveness process.

                                       27
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The following table presents the Bank's commercial real estate and commercial
construction loans and loan commitments by type of primary collateral, as of
September 30, 2021. Because the commitments to pay out undisbursed funds are not
cancellable by the Bank, unless the loan is in default, we generally anticipate
fully funding the related projects.
                                   Unpaid        Undisbursed      Gross Loan      Outstanding                            % of
                     Count       Principal         Amount           Amount        Commitments          Total            Total
                                                                     (Dollars in thousands)
Senior housing        34        $ 229,082       $   36,202       $ 265,284       $    30,500       $   295,784            27.8  %
Retail building      135          158,834           49,705         208,539            11,622           220,161            20.7
Hotel                 10          137,301           57,364         194,665                 -           194,665            18.3
Office building       92           49,608           60,379         109,987                 -           109,987            10.3
One- to four-family
property             385           61,717            7,457          69,174             1,453            70,627             6.6
Single use building   25           42,155            4,873          47,028            21,300            68,328             6.4
Multi-family          38           53,173           13,026          66,199               690            66,889             6.3
Other                101           31,001            5,166          36,167             1,502            37,669             3.6
                     820        $ 762,871       $  234,172       $ 997,043       $    67,067       $ 1,064,110           100.0  %

Weighted average
rate                                 4.00  %          4.03  %         4.01  %           3.73  %           3.99  %


The following table summarizes the Bank’s commercial real estate and commercial construction loans and loan commitments by state in September 30, 2021.

                         Unpaid        Undisbursed       Gross Loan      Outstanding                         % of
            Count       Principal         Amount           Amount        Commitments          Total          Total
                                                          (Dollars in thousands)
Kansas      636        $ 327,419      $     21,416      $  348,835      $     44,302      $   393,137        36.9  %
Texas        11          135,644           137,480         273,124                 -          273,124        25.7
Missouri    146          205,989            26,052         232,041            21,265          253,306        23.8
Colorado      7           16,087            20,012          36,099                 -           36,099         3.4
Arkansas      3           12,143            21,620          33,763                 -           33,763         3.2
Nebraska      6           33,464                 4          33,468                 -           33,468         3.1
Other        11           32,125             7,588          39,713             1,500           41,213         3.9
            820        $ 762,871      $    234,172      $  997,043      $     67,067      $ 1,064,110       100.0  %



The following table presents the Bank's commercial loan portfolio and
outstanding loan commitments, categorized by gross loan amount (unpaid principal
plus undisbursed amounts) or outstanding loan commitment amount, as of
September 30, 2021.
                              Count               Amount
                                (Dollars in thousands)
Greater than $30 million        4              $   180,500
>$15 to $30 million            16                  363,129
>$10 to $15 million             7                   85,141
>$5 to $10 million             15                   96,776
$1 to $5 million              111                  251,794
Less than $1 million        1,324                  194,423
                            1,477              $ 1,171,763




                                       28

————————————————– ——————————

Asset quality

Delinquent and nonaccrual loans and other real estate owned ("OREO"). The
following table presents the Company's 30 to 89 day delinquent loans at the
dates indicated. Loans subject to payment forbearance under the Bank's COVID-19
loan modification program are not reported as delinquent during the forbearance
time period. The amounts in the table represent the unpaid principal balance of
the loans less related charge-offs, if any. Of the loans 30 to 89 days
delinquent at September 30, 2021 and 2020, approximately 61% and 70%,
respectively, were 59 days or less delinquent.
                                      Loans Delinquent for 30 to 89 Days at September 30,
                                                 2021                                    2020
                                         Number                     Amount       Number       Amount
                                                     (Dollars in thousands)
One- to four-family:
Originated                                              48        $ 4,156         42        $ 3,012
Correspondent purchased                                  7          2,590          8          3,123
Bulk purchased                                           4            541         12          2,532
Commercial                                               2             37          2             45

Consumer                                                25            498         26            398

                                                        86        $ 7,822         90        $ 9,110

Loans 30 to 89 days delinquent
to total loans receivable, net                                       0.11  %                   0.13  %



                                       29
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The following table presents the Company's nonaccrual loans and OREO at the
dates indicated. The amounts in the table represent the unpaid principal balance
of the loans less related charge-offs, if any. Nonaccrual loans are loans that
are 90 or more days delinquent or in foreclosure and other loans required to be
reported as nonaccrual pursuant to accounting and/or regulatory reporting
requirements and/or internal policies, even if the loans are current. At all
dates presented, there were no loans 90 or more days delinquent that were still
accruing interest. Non-performing assets include nonaccrual loans and OREO. OREO
primarily includes assets acquired in settlement of loans. In late March 2020,
the Bank suspended the initiation of foreclosure proceedings for owner-occupied
one- to four-family loans. At September 30, 2021, there were $7.4 million of
nonaccrual one- to four-family loans for which foreclosure proceedings either
had been initiated prior to the foreclosure suspension or would have been
initiated if the foreclosure suspension were not in place.
                                                                      September 30,
                                                             2021                       2020
                                                     Number       Amount        Number       Amount
                                                                  (Dollars in thousands)
Loans 90 or More Days Delinquent or in Foreclosure:
One- to four-family:
Originated                                            50        $  3,693         51        $  4,362
Correspondent purchased                               10           3,210          6           2,397
Bulk purchased                                         9           2,974         12           2,903
Commercial                                             6           1,214          5           1,360
Consumer                                              21             498         14             304
                                                      96          11,589         88          11,326

Loans 90 days or more past due or foreclosed

 as a percentage of total loans                                     0.16  %                    0.16  %

Nonaccrual loans less than 90 Days Delinquent:(1)
One- to four-family:
Originated                                             7        $  1,288          9        $    691
Correspondent purchased                                -               -          -               -
Bulk purchased                                         1             131          -               -
Commercial                                             4             419          3             464
Consumer                                               1               9          1               9
                                                      13           1,847         13           1,164
Total nonaccrual loans                               109          13,436        101          12,490

Nonaccrual loans as a percentage of total loans                     0.19  %                    0.17  %

OREO:
One- to four-family:
Originated(2)                                          3        $    170          4        $    183

Total non-performing assets                          112        $ 13,606        105        $ 12,673

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


(1)Includes loans required to be reported as nonaccrual pursuant to accounting
and/or regulatory reporting requirements and/or internal policies, even if the
loans are current.
(2)Real estate-related consumer loans where we also hold the first mortgage are
included in the one- to four-family category as the underlying collateral is
one- to four-family property.

Of the one- to four-family COVID-19 loan modifications that had completed the
deferral period by September 30, 2021, $2.2 million were 30 to 89 days
delinquent and $2.8 million were 90 or more days delinquent as of September 30,
2021. Of the commercial COVID-19 loan modifications that had completed the
deferral period by September 30, 2021, $3 thousand were 30 to 89 days delinquent
and none were 90 or more days delinquent as of September 30, 2021.
                                       30
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The following table presents the states where the properties securing five
percent or more of the total amount of our one- to four-family loans are located
and the corresponding balance of loans 30 to 89 days delinquent, 90 or more days
delinquent or in foreclosure, and weighted average LTV ratios for loans 90 or
more days delinquent or in foreclosure at September 30, 2021. The LTV ratios
were based on the current loan balance and either the lesser of the purchase
price or original appraisal, or the most recent Bank appraisal, if available. At
September 30, 2021, potential losses, after taking into consideration
anticipated private mortgage insurance proceeds and estimated selling costs,
have been charged-off.
                                                             Loans 30 to 89                Loans 90 or More Days Delinquent
                       One- to Four-Family                  Days Delinquent                       or in Foreclosure
State                 Amount         % of Total          Amount          % of Total        Amount        % of Total      LTV
                                                             (Dollars in thousands)
Kansas            $  3,516,327           57.3  %    $        3,900           53.5  %    $    3,511           35.6  %     57  %
Missouri             1,042,467           17.0                1,316           18.1            1,442           14.6        56
Texas                  597,161            9.8                    -              -            1,929           19.5        41
Other states           977,248           15.9                2,071           28.4            2,995           30.3        56

                  $  6,133,203          100.0  %    $        7,287          100.0  %    $    9,877          100.0  %     53



Classified Assets. In accordance with the Bank's asset classification policy,
management regularly reviews the problem assets in the Bank's portfolio to
determine whether any assets require classification. See "Part II, Item 8.
Financial Statements and Supplementary Data - Notes to Consolidated Financial
Statements - Note 4. Loans Receivable and Allowance for Credit Losses" for asset
classification definitions.

The following table presents loans classified as special mention or substandard
at the dates presented. The amounts in the table represent the unpaid principal
balance of the loans less related charge-offs, if any. The increase in
commercial special mention loans at September 30, 2021 compared to September 30,
2020 was due mainly to the addition of two commercial loans for which the
borrowers have been impacted by the COVID-19 pandemic. Both of these loans were
subject to COVID-19 loan modifications during fiscal year 2020 and have since
resumed full payments. Subsequent to September 30, 2021, the underlying economic
considerations being monitored for these two loans returned to levels deemed
appropriate by the Company, and the loans were removed from special mention,
resulting in a $49.4 million reduction in the balance of special mention loans.
The special mention ACL associated with these two loans at September 30, 2021
was approximately $2.2 million.
                                September 30, 2021                     

September 30, 2020

                         Special Mention      Substandard       Special Mention      Substandard
                                                  (Dollars in thousands)
One- to four-family     $        14,332      $     23,458      $        11,339      $     25,630
Commercial                       99,729             3,259               52,006             4,914
Consumer                            135               718                  332               589
                        $       114,196      $     27,435      $        63,677      $     31,133



                                       31
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Allowance for Credit Losses. The distribution of our ACL at the dates indicated
is summarized below. The Company adopted ASU 2016-13, Financial Instruments -
Credit Losses: Measurement of Credit Losses on Financial Instruments on October
1, 2020. The ASU, as amended, replaces the incurred loss methodology in
accounting principles generally accepted in the United States of America
("GAAP"), which required credit losses to be recognized when it is probable that
a loss has been incurred, with an expected credit loss methodology, which is
commonly known as the current expected credit loss ("CECL") methodology.
Information as of October 1, 2020 is included in the tables below for
comparability purposes.
                                 September 30, 2021                  October 1, 2020                  September 30, 2020
                                               % of                                 % of                            % of
                              Amount         Loans to            Amount           Loans to         Amount         Loans to
                              of ACL        Total Loans          of ACL          Total Loans       of ACL        Total Loans
                                                                 (Dollars in thousands)
One- to four-family:
Originated                  $   1,590            55.8  %    $        1,609            54.5  %    $   6,044            54.5  %
Correspondent purchased         2,062            28.2                2,324            29.1           2,691            29.1
Bulk purchased                    304             2.4                  903             2.9             467             2.9
Construction                       22             0.6                   25             0.5              41             0.5
Total                           3,978            87.0                4,861            87.0           9,243            87.0
Commercial:
Real estate                    13,706             9.6               16,595             8.6          16,869             8.6
Commercial and industrial         344             0.9                  559             1.4           1,451             1.4
Construction                    1,602             1.2                4,452             1.5           3,480             1.5
Total                          15,652            11.7               21,606            11.5          21,800            11.5
Consumer loans:
Home equity                       126             1.2                   81             1.4             370             1.4
Other consumer                     67             0.1                  218             0.1             114             0.1
Total consumer loans              193             1.3                  299             1.5             484             1.5
                            $  19,823           100.0  %    $       26,766           100.0  %    $  31,527           100.0  %



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

                             September 30,      October 1,      September 30,
                                 2021              2020             2020
One- to four-family:
Originated                          0.04  %         0.04  %            0.15  %
Correspondent purchased             0.10            0.11               0.13
Bulk purchased                      0.18            0.43               0.22
Construction                        0.06            0.07               0.12
Total                               0.06            0.08               0.15
Commercial:
Commercial real estate              2.02            2.65               2.69
Commercial and industrial           0.52            0.57               1.49
Construction                        1.86            4.22               3.30
Total                               1.89            2.60               2.63
Consumer                            0.20            0.26               0.42
Total                               0.28            0.37               0.44



See "Part II, Item 8. Financial Statements and Supplementary Data - Notes to
Consolidated Financial Statements - Note 1. Summary of Significant Accounting
Policies and Note 4. Loans Receivable and Allowance for Credit Losses" for
additional information regarding the Bank's ACL.
                                       32
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The following tables present ACL activity and related ratios at the dates and
for the periods indicated. The current year NCOs were primarily in the
commercial loan portfolio. The ratio of NCOs during the current year to average
non-performing assets was higher than the prior year due to higher NCOs in the
current year compared to a net recovery in the prior year. The ACL to nonaccrual
loans at end of period ratio and ACL to loans receivable, net at end of period
ratio were lower in the current year compared to the prior year due primarily to
a lower ACL balance at September 30, 2021. As discussed above, on October 1,
2020, the Company adopted CECL, which is a different credit loss estimate
methodology than the methodology applicable at September 30, 2020.

                                                        Year Ended September 30,
                                                   2021           2020           2019
                                                         (Dollars in thousands)
Balance at beginning of period                  $ 31,527       $  9,226       $ 8,463
Adoption of CECL                                  (4,761)             -             -
Charge-offs                                         (715)          (443)         (262)
Recoveries                                           237            444           275
Net (charge-offs) recoveries                        (478)             1            13
Provision for credit losses                       (6,465)        22,300           750
Balance at end of period                        $ 19,823       $ 31,527       $ 9,226

Ratio of NCOs during the period
to average non-performing assets                    3.63  %       (0.01) %  

(0.12)%

ACL on loans not accrued at the end of the period 147.54 252.42

121.99

ACL to loans receivable, net at end of period       0.28           0.44          0.12

ACL to NCOs                                           41.5x         N/M(1)        N/M(1)


(1) This ratio is not presented for the periods shown due to loan recoveries exceeding loan write-offs during the periods.

                                       33

————————————————– ——————————

The following table shows NCOs, Average Loans, and NCOs as a Percentage of Average Loans, by Loan Type, for the periods shown.

                                                                                Year Ended September 30,
                                              2021                                        2020                                        2019
                                                           NCOs as a                                   NCOs as a                                   NCOs as a
                                                             % of                                        % of                                        % of
                                                            Average                                     Average                                     Average
                             NCOs       Average Loans        Loans       NCOs       Average Loans        Loans       NCOs       Average Loans        Loans
                                                                                 (Dollars in thousands)
One- to four-family:
Originated                  $  20      $    3,936,166        0.00  %    $  23      $    3,916,716        0.00  %    $  53      $    3,892,585        0.00  %
Correspondent                   -           2,010,823        0.00           -           2,348,120        0.00           -           2,487,560        0.00
Bulk purchased                 21             191,029        0.01        (265)            230,720       (0.11)        (80)            274,289       (0.03)
Construction                    -              29,893        0.00           -              33,709        0.00           -              27,007        0.00
Total                          41           6,167,911        0.00        (242)          6,529,265        0.00         (27)          6,681,441        0.00
Commercial:
Real estate                   465             637,712        0.07         215             602,482        0.04         (22)            535,151        0.00
Commercial and industrial       -              75,219        0.00          24              76,473        0.03         122              61,044        0.20
Construction                    -              75,771        0.00           -             106,172        0.00         (25)            105,576       (0.02)
Total                         465             788,702        0.06         239             785,127        0.03          75             701,771        0.01
Consumer:
Home equity                   (26)             92,495       (0.03)        (13)            112,939       (0.01)        (52)            125,164       (0.04)
Other                          (2)              8,782       (0.02)         15              10,395        0.14          (9)             10,519       (0.09)
Total                         (28)            101,277       (0.03)          2             123,334        0.00         (61)            135,683       (0.04)
                            $ 478      $    7,057,890        0.01       $  (1)     $    7,437,726        0.00       $ (13)     $    7,518,895        0.00



                                       34
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Securities. The following table presents the distribution of our securities
portfolio, at amortized cost, at the dates indicated. Overall, fixed-rate
securities comprised 94% of our securities portfolio at September 30, 2021.
During the current fiscal year purchases exceeded maturities and repayments,
resulting in a $453.7 million increase in the balance. Securities were purchased
with cash flows from the loan portfolio and growth in the deposit portfolio that
was not used to pay down maturing borrowings. The portfolio weighted average
yield decreased due to purchases of securities at yields lower than the existing
portfolio due to the low interest rate environment during the current year.
Weighted average yields on tax-exempt securities are not calculated on a fully
tax-equivalent basis.
                                    September 30, 2021                      

September 30, 2020

                              Amount            Yield       WAL(1)           Amount            Yield       WAL(1)
                                                          (Dollars in 

thousands)

Fixed-rate securities:
MBS                     $       1,363,645       1.30  %     3.5        $         945,432       1.82  %     3.7
U.S.
government-sponsored
enterprises ("GSE")
debentures                        519,971       0.61        3.7                  369,967       0.62        1.7
Municipal bonds                     4,274       1.81        0.3                    9,716       1.69        0.7
Total fixed-rate
securities                      1,887,890       1.11        3.6                1,325,115       1.49        3.1

Adjustable-rate
securities:
MBS                               120,566       1.99        3.2                  204,490       2.49        2.9

Total securities
portfolio               $       2,008,456       1.16        3.5        $       1,529,605       1.62        3.1



(1)The weighted average life ("WAL") is the estimated remaining maturity (in
years) after three-month historical prepayment speeds and projected call option
assumptions have been applied.

The composition and maturities of the investment and MBS portfolio at
September 30, 2021 are indicated in the following table by remaining contractual
maturity, without consideration of call features or pre-refunding dates, along
with associated weighted average yields. The weighted average yields were
calculated by multiplying each carrying value by its yield and dividing the sum
of these results by the total carrying values. Yields on tax-exempt investments
are not calculated on a fully tax equivalent basis.
                        1 year or less            More than 1 to 5 years       More than 5 to 10 years           Over 10 years                  Total Securities
                     Carrying                      Carrying                     Carrying                      Carrying                        Carrying
                       Value          Yield          Value         Yield          Value         Yield          Value          Yield            Value            Yield
                                                                                 (Dollars in thousands)
MBS               $         325       2.87  %    $    58,838       2.48  %    $   277,200       1.65  %    $  1,157,630       1.23  %    $      1,493,993       1.35  %
GSE debentures                -          -           491,475       0.59            24,851       1.00                  -          -                516,326       0.61

Municipal bonds           4,079       1.80               210       2.00                 -          -                  -          -                  4,289       1.81
                  $       4,404       1.87       $   550,523       0.79       $   302,051       1.60       $  1,157,630       1.23       $      2,014,608       1.16



                                       35
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The following table summarizes the activity in our securities portfolio for the
periods presented. The weighted average yields and WALs for purchases are
presented as recorded at the time of purchase. The weighted average yields for
the beginning balances are as of the last day of the period previous to the
period presented and the weighted average yields for the ending balances are as
of the last day of the period presented and are generally derived from recent
prepayment activity on the securities in the portfolio as of the dates
presented. The beginning and ending WALs are the estimated remaining principal
repayment terms (in years) after three-month historical prepayment speeds have
been applied.
                                                          For the Year Ended
                                   September 30, 2021                            September 30, 2020
                             Amount            Yield        WAL            Amount            Yield        WAL
                                                        (Dollars in thousands)
Beginning balance -
carrying value         $       1,560,950       1.63  %     3.1       $       1,204,863       2.55  %     2.9
Maturities and
repayments                      (594,294)                                     (667,952)
Net amortization of
(premiums)/discounts              (6,206)                                       (1,661)
Purchases                      1,079,351       1.01        5.0               1,007,763       1.11        3.9

Change in valuation on
AFS securities                   (25,193)                                       17,937
Ending balance -
carrying value         $       2,014,608       1.16        3.5       $       1,560,950       1.63        3.1



Liabilities. Total liabilities increased $ 186.6 million, or 2.3% in the current year, due to an increase in deposits, partially offset by a decrease in borrowings, as the cash flows from growth in deposits were used to repay the deposits. loans coming to maturity.

Deposits. The following table presents the amount, weighted average rate and
percent of total for the components of our deposit portfolio at the dates
presented. The decrease in the deposit portfolio rate during the current year
was due to a reduction in offered rates due to the low interest rate
environment, which resulted in certificates of deposit repricing to lower
offered rates as balances renewed, along with growth in lower costing
non-maturity deposits.
                                                                    At September 30,
                                                   2021                                          2020
                                                                 % of                                          % of
                                   Amount          Rate          Total           Amount          Rate          Total
                                                                 (Dollars in thousands)
Non-interest-bearing checking   $   543,849          -  %           8.2  %    $   451,394          -  %           7.3  %
Interest-bearing checking         1,037,362       0.07             15.7           865,782       0.10             14.0
Savings                             519,069       0.05              7.9           433,808       0.06              7.0
Money market                      1,753,525       0.19             26.6         1,419,180       0.37             22.9
Retail certificates of deposit    2,341,531       1.41             35.5         2,623,336       1.88             42.4
Commercial certificates of
deposit                             190,215       0.66              2.9           143,125       1.05              2.3
Public unit certificates of
deposit                             211,845       0.21              3.2           254,783       0.74              4.1
                                $ 6,597,396       0.59            100.0  %    $ 6,191,408       0.95            100.0  %


The following table presents information on the weighted average maturity (“WAM”) of our certificates of deposit, in years, at September 30, 2021. Retail certificates of deposit

            1.3
Commercial certificates of deposit        0.5
Public unit certificates of deposit       0.5
Total certificates of deposit             1.1



                                       36
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As of September 30, 2021 and 2020, approximately $866.0 million and $557.0
million, respectively, of our deposit portfolio was uninsured. The uninsured
amounts are estimates based on the methodologies and assumptions used for the
Bank's regulatory reporting requirements.

The following table shows the proportion of the Bank’s term deposits, by account, which exceeds the FDIC insurance limit, in time remaining until maturity, from September 30, 2021 (dollars in thousands). 3 months or less

           $ 179,393
Over 3 through 6 months      130,300
Over 6 through 12 months     158,123
Over 12 months               129,588
                           $ 597,404




Borrowings. The Bank primarily uses long-term fixed-rate borrowings with no
embedded options to lengthen the average life of the Bank's liabilities. The
fixed-rate characteristics of these borrowings lock-in the cost until maturity
and thus decrease the amount of liabilities repricing as interest rates move
higher compared to funding with lower-cost short-term borrowings. These
borrowings are laddered in order to prevent large amounts of liabilities
repricing in any one period.

The following table shows the maturity of the term loans, which are entirely made up of FHLB advances, as well as the contractual and weighted average rates associated with the September 30, 2021.

 Maturity by          FHLB          Interest rate       Contractual      Effective
 Fiscal Year        Advances           swaps(1)            Rate           Rate(2)
                                       (Dollars in thousands)
     2022         $    75,000      $      100,000            0.26  %        1.92  %
     2023             300,000                   -            1.70           1.81
     2024             150,000             165,000            1.32           2.46
     2025             300,000             100,000            1.33           2.09
     2026             250,000                   -            0.96           1.27
     2027             150,000                   -            0.93           1.24

                  $ 1,225,000      $      365,000            1.18           1.88



(1)Represents adjustable-rate FHLB advances for which the Bank has entered into
interest rate swaps with a notional amount of $365.0 million to hedge the
variability in cash flows associated with the advances. These advances are
presented based on their contractual maturity dates and will be renewed
periodically until the maturity or termination of the interest rate swaps. The
expected WAL of the interest rate swaps was 4.1 years at September 30, 2021.
(2)The effective rate includes the impact of interest rate swaps and the
amortization of deferred prepayment penalties resulting from FHLB advances
previously prepaid.

                                       37
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The following table presents borrowing activity for the periods shown with
borrowings being reported at par. The borrowings presented in the table have
original contractual terms of one year or longer or are tied to interest rate
swaps with original contractual terms of one year or longer. The decrease in
total borrowings during the current year was due to not renewing borrowings that
matured. Cash flows from deposit growth were used to pay off maturing
borrowings. The effective rate is shown as a weighted average and includes the
impact of interest rate swaps and the amortization of deferred prepayment
penalties resulting from FHLB advances previously prepaid. The decrease in the
effective rate during the current year was due primarily to terminating certain
interest rate swaps, prepaying certain advances, and replacing maturing advances
at lower market interest rates. The WAM is the remaining weighted average
contractual term in years. The beginning and ending WAMs represent the remaining
maturity at each date presented. For new borrowings, the WAMs presented are as
of the date of issue.
                                                              For the Year Ended
                                     September 30, 2021                               September 30, 2020
                                                Effective                                        Effective
                              Amount              Rate          WAM            Amount              Rate          WAM
                                                            (Dollars in thousands)
Beginning balance       $       1,790,000          2.31  %     3.0       $       2,140,000          2.38  %     2.6
Maturities and
prepayments                    (1,305,000)         2.18          -              (1,505,000)         2.44          -
New FHLB borrowings             1,105,000          1.96        3.7               1,155,000          2.36        4.3
Ending balance          $       1,590,000          1.88        3.3       $       1,790,000          2.31        3.0





Maturities of Interest-Bearing Liabilities. The following table presents the
maturity and weighted average repricing rate, which is also the weighted average
effective rate, of certificates of deposit, split between retail/commercial and
public unit amounts, and term borrowings for the next four quarters as of
September 30, 2021.
                       December 31,       March 31,        June 30,       September 30,
                           2021              2022            2022              2022              Total
                                                     (Dollars in thousands)
Retail/Commercial Certificates:
Amount                $    385,038       $ 329,419       $ 314,758       $     432,378       $ 1,461,593
Repricing Rate                1.09  %         1.15  %         1.15  %             1.40  %           1.21  %
Public Unit
Certificates:
Amount                $     69,063       $  70,776       $  32,175       $      21,501       $   193,515
Repricing Rate                0.26  %         0.28  %         0.09  %             0.09  %           0.22  %
Term Borrowings:(1)
Amount                $          -       $       -       $       -       $      75,000       $    75,000
Repricing Rate                   -  %            -  %            -  %             0.29  %           0.29  %
Total
Amount                $    454,101       $ 400,195       $ 346,933       $     528,879       $ 1,730,108
Repricing Rate                0.96  %         0.99  %         1.05  %             1.19  %           1.06  %


(1) The maturity date of FHLB advances linked to interest rate swaps is based on the maturity date of the corresponding interest rate swap.


Stockholders' Equity. During the current year, the Company paid cash dividends
totaling $117.9 million and repurchased common stock totaling $1.5 million. The
cash dividends paid during the current year totaled $0.87 per share and
consisted of a $0.40 per share True Blue Capitol cash dividend, a $0.13 per
share cash true-up dividend related to fiscal year 2020 earnings, and four
regular quarterly cash dividends of $0.085 per share, totaling $0.34 per share.
In the long run, management considers the Bank's equity to total assets ratio of
at least 9% an appropriate level of capital. At September 30, 2021, this ratio
was 11.5%.

                                       38
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On October 19, 2021, the Company announced a regular quarterly cash dividend of
$0.085 per share, or approximately $11.5 million, payable on November 19, 2021
to stockholders of record as of the close of business on November 5, 2021. On
October 28, 2021, the Company announced a fiscal year 2021 cash true-up dividend
of $0.22 per share, or approximately $29.9 million, related to fiscal year 2021
earnings. The $0.22 per share cash true-up dividend was determined by taking the
difference between total earnings for fiscal year 2021 and total regular
quarterly cash dividends paid during fiscal year 2021, divided by the number of
shares outstanding. The cash true-up dividend is payable on December 3, 2021 to
stockholders of record as of the close of business on November 19, 2021, and is
the result of the Board of Directors' commitment to distribute to stockholders
100% of the annual earnings of the Company for fiscal year 2021.

There remains $44.7 million authorized under the existing stock repurchase plan
for additional purchases of the Company's common stock. Shares may be
repurchased from time to time based upon market conditions, available liquidity
and other factors. This plan has no expiration date; however, the FRB's existing
approval for the Company to repurchase shares extends through August 2022.

At October 1, 2021, Capitol Federal Financial, Inc., at the holding company
level, had $93.8 million on deposit at the Bank. For fiscal year 2022, it is the
intention of the Board of Directors to continue the payout of 100% of the
Company's earnings to the Company's stockholders. The payout is expected to be
in the form of regular quarterly cash dividends of $0.085 per share, totaling
$0.34 for the year, and a cash true-up dividend equal to fiscal year 2022
earnings in excess of the amount paid as regular quarterly cash dividends during
fiscal year 2022. It is anticipated that the fiscal year 2022 cash true-up
dividend will be paid in December 2022. Dividend payments depend upon a number
of factors including the Company's financial condition and results of
operations, regulatory capital requirements, regulatory limitations on the
Bank's ability to make capital distributions to the Company, and the amount of
cash at the holding company.

The Company works to find multiple ways to provide stockholder value. This has
primarily been through the payment of cash dividends and stock buybacks. The
Company has maintained a policy of paying out 100% of its earnings to
stockholders in the form of quarterly cash dividends and an annual cash true-up
dividend in December of each year. In order to provide additional stockholder
value, the Company paid a True Blue Capitol cash dividend of $0.25 per share in
June for six consecutive years ending in 2019. Given the state of economic
uncertainty, the Company elected to defer the annual True Blue dividend in June
2020. In June 2021, the Company paid a True Blue Capitol cash dividend of $0.40
per share. The $0.40 per share True Blue Capitol cash dividend represented a
$0.20 per share cash dividend from fiscal year 2020 and a $0.20 per share cash
dividend from fiscal year 2021. The Company has paid the True Blue Capitol
dividend primarily due to excess capital levels at the Company and Bank. The
Company considers various business strategies and their impact on capital and
asset measures on both a current and future basis, as well as regulatory capital
levels and requirements, in determining the amount, if any, and timing of the
True Blue dividend.

The following table presents regular quarterly cash dividends and special cash
dividends paid in calendar years 2021, 2020, and 2019. The amounts represent
cash dividends paid during each period. The 2021 true-up dividend amount
presented represents the dividend payable on December 3, 2021 to stockholders of
record as of November 19, 2021.
                                                               Calendar Year
                                     2021                           2020                          2019
                            Amount        Per Share        Amount       Per Share        Amount        Per Share
                                              (Dollars in thousands, except per share amounts)
Regular quarterly dividends paid
Quarter ended March 31    $  11,518      $    0.085      $ 11,733      $    0.085      $  11,700      $    0.085
Quarter ended June 30        11,516           0.085        11,733           0.085         11,708           0.085
Quarter ended September
30                           11,518           0.085        11,733           0.085         11,713           0.085
Quarter ended December 31    11,534           0.085        11,514           0.085         11,731           0.085
True-up dividends paid       29,853           0.220        17,614           0.130         46,932           0.340
True Blue dividends paid     54,210           0.400             -               -         34,446           0.250
Calendar year-to-date
dividends paid            $ 130,149      $    0.960      $ 64,327      $    0.470      $ 128,230      $    0.930



                                       39
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Average Balance Sheets. The following table presents the average balances of our
assets, liabilities, and stockholders' equity, and the related weighted average
yields and rates on our interest-earning assets and interest-bearing liabilities
for the periods indicated. For fiscal year 2019 information, see "Part II, Item
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's Annual Report on   Form 10-K   for the fiscal year
ended September 30, 2020. Weighted average yields are derived by dividing annual
income by the average balance of the related assets, and weighted average rates
are derived by dividing annual expense by the average balance of the related
liabilities, for the periods shown. Average outstanding balances are derived
from average daily balances. The weighted average yields and rates include
amortization of fees, costs, premiums and discounts, which are considered
adjustments to yields/rates. Weighted average yields on tax-exempt securities
are not calculated on a fully taxable equivalent basis.
                                                       For the Year Ended September 30,
                                               2021                                        2020
                                Average        Interest                     Average        Interest
                              Outstanding       Earned/       Yield/      Outstanding       Earned/       Yield/
                                Amount           Paid          Rate         Amount           Paid          Rate
Assets:                                                     (Dollars in thousands)
Interest-earning assets:
One- to four-family loans:
Originated                   $ 3,966,059      $ 137,461       3.47  %    $ 3,950,425      $ 150,526       3.81  %
Correspondent purchased        2,010,823         48,066       2.39         2,348,120         70,112       2.99
Bulk purchased                   191,029          3,601       1.89           230,720          6,065       2.63
Total one- to four-family
loans                          6,167,911        189,128       3.07         6,529,265        226,703       3.47
Commercial loans                 788,702         36,085       4.51           785,127         37,320       4.68
Consumer loans                   101,277          4,684       4.63           123,334          6,471       5.25
Total loans receivable(1)      7,057,890        229,897       3.25         7,437,726        270,494       3.63
MBS(2)                         1,446,466         21,399       1.48           954,197         23,009       2.41
Investment securities(2)(3)      482,641          2,825       0.59           270,683          4,467       1.65
FHLB stock                        77,250          3,916       5.07           100,251          5,827       5.81
Cash and cash equivalents        131,798            144       0.11           179,142          1,181       0.65
Total interest-earning
assets                         9,196,045        258,181       2.80         8,941,999        304,978       3.40
Other non-interest-earning
assets                           443,724                                     461,614
Total assets                 $ 9,639,769                                 $ 9,403,613

Liabilities and
stockholders' equity:
Interest-bearing
liabilities:
Checking                     $ 1,482,698            772       0.05       $ 1,180,110            762       0.06
Savings                          487,146            280       0.06           388,662            292       0.08
Money market                   1,598,838          4,128       0.26         1,252,992          6,647       0.53
Retail/commercial
certificates                   2,688,811         42,034       1.56         2,716,945         55,238       2.03
Wholesale certificates           252,623          1,192       0.47           282,947          4,659       1.65
Total deposits                 6,510,116         48,406       0.74         5,821,656         67,598       1.16
Borrowings(4)                  1,636,399         34,774       2.11         2,065,966         48,045       2.31
Total interest-bearing
liabilities                    8,146,515         83,180       1.02         7,887,622        115,643       1.46
Other non-interest-bearing
liabilities                      219,328                                     203,990
Stockholders' equity           1,273,926                                   1,312,001
Total liabilities and
stockholders' equity         $ 9,639,769                                 $ 9,403,613

Net interest income(5)                        $ 175,001                                   $ 189,335
Net interest rate spread(6)                                   1.78                                        1.94
Net interest-earning assets  $ 1,049,530                                 $ 1,054,377
Net interest margin(7)                                        1.90                                        2.12
Ratio of interest-earning assets to interest-bearing
liabilities                                                     1.13x                                       1.13x




                                       40
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(1)Balances are adjusted for unearned loan fees and deferred costs. Loans that
are 90 or more days delinquent are included in the loans receivable average
balance with a yield of zero percent.
(2)AFS securities are adjusted for unamortized purchase premiums or discounts.
(3)The average balance of investment securities includes an average balance of
nontaxable securities of $6.6 million, and $13.8 million, for the years ended
September 30, 2021 and 2020, respectively.
(4)The FHLB advance amounts and rates included in this line item include the
effect of interest rate swaps and are net of deferred prepayment penalties.
(5)Net interest income represents the difference between interest income earned
on interest-earning assets and interest paid on interest-bearing liabilities.
Net interest income depends on the average balance of interest-earning assets
and interest-bearing liabilities, and the interest rates earned or paid on them.
(6)Net interest rate spread represents the difference between the average yield
on interest-earning assets and the average cost of interest-bearing liabilities.
(7)Net interest margin represents net interest income as a percentage of average
interest-earning assets.

Rate/Volume Analysis. The table below presents the dollar amount of changes in
interest income and interest expense for major components of interest-earning
assets and interest-bearing liabilities, comparing fiscal years 2021 to 2020.
For the comparison of fiscal years 2020 to 2019, see "Part II, Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's Annual Report on   Form 10-K   for the fiscal year
ended September 30, 2020. For each category of interest-earning assets and
interest-bearing liabilities, information is provided on changes attributable to
(1) changes in volume, which are changes in the average balance multiplied by
the previous year's average rate, and (2) changes in rate, which are changes in
the average rate multiplied by the average balance from the previous year. The
net changes attributable to the combined impact of both rate and volume have
been allocated proportionately to the changes due to volume and the changes due
to rate.
                                              For the Year Ended September 30,
                                                        2021 vs. 2020
                                                 Increase (Decrease) Due to
                                            Volume              Rate           Total
                                                   (Dollars in thousands)
Interest-earning assets:
Loans receivable                      $    (13,055)          $ (27,542)     $ (40,597)
MBS                                          9,247             (10,857)        (1,610)
Investment securities                        2,261              (3,903)        (1,642)
FHLB stock                                  (1,235)               (676)        (1,911)
Cash and cash equivalents                     (250)               (787)        (1,037)
Total interest-earning assets               (3,032)            (43,765)     

(46,797)

Interest-bearing liabilities:
Checking                                       172                (163)             9
Savings                                         65                 (77)           (12)
Money market                                 1,495              (4,014)        (2,519)
Certificates of deposit                     (1,154)            (15,516)       (16,670)
Borrowings                                  (7,892)             (5,379)       (13,271)
Total interest-bearing liabilities          (7,314)            (25,149)     

(32,463)

Net change in net interest income     $      4,282           $ (18,616)     $ (14,334)



                                       41
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Comparison of Operating Results for the Years Ended September 30, 2021 and 2020
The Company recognized net income of $76.1 million, or $0.56 per share, for
fiscal year 2021 compared to net income of $64.5 million, or $0.47 per share,
for fiscal year 2020. The increase in net income was due primarily to recording
a $22.3 million provision for credit losses during the prior year compared to
recording a negative provision for credit losses of $8.5 million in the current
year, partially offset by a decrease in net interest income and an increase in
income tax expense. Net interest income decreased $14.3 million, or 7.6%, from
the prior year to $175.0 million for the current year. The net interest margin
decreased 22 basis points, from 2.12% for the prior year to 1.90% for the
current year. The decreases in net interest income and net interest margin were
due mainly to a decrease in asset yields, along with a change in asset mix as
cash flows from the loan portfolio have been used to purchase lower yielding
securities, partially offset by a decrease in the cost of deposits and
borrowings.

Interest and Dividend Income
The following table presents the components of interest and dividend income for
the time periods presented, along with the change measured in dollars and
percent.
                                   For the Year Ended
                                     September 30,                    Change Expressed in:
                                      2021           2020             Dollars               Percent
                                                (Dollars in thousands)
INTEREST AND DIVIDEND INCOME:
Loans receivable               $ 229,897      $ 270,494      $           (40,597)           (15.0) %
MBS                               21,399         23,009                   (1,610)            (7.0)
FHLB stock                         3,916          5,827                   (1,911)           (32.8)
Investment securities              2,825          4,467                   (1,642)           (36.8)
Cash and cash equivalents            144          1,181                   (1,037)           (87.8)
Total interest and dividend
income                         $ 258,181      $ 304,978      $           (46,797)           (15.3)



The decrease in interest income on loans receivable was due mainly to a decrease
in the weighted average yield, primarily in the one- to four-family loan
portfolio. The decrease in the weighted average yield on the one- to four-family
loan portfolio was due to endorsements and refinances to lower market rates,
higher premium amortization related to correspondent one- to four-family loans
due to high payoff and endorsement activity, along with adjustable-rate loans
repricing to lower market rates, and the origination and purchase of new loans
at lower market rates. Additionally, the average balance of the portfolio
decreased compared to the prior year due primarily to a reduction in the
correspondent one-to four-family loan portfolio. See "Average Balance Sheets"
above.
The decrease in interest income on the MBS portfolio was due to a decrease in
the weighted average yield as a result of purchases at lower market yields and
the repricing of existing adjustable-rate MBS to lower market yields, partially
offset by an increase in the average balance of the portfolio. Cash flows from
the loan portfolio were used to purchase securities during the current fiscal
year.

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

The decrease in interest income on investment securities was due to a decrease
in the weighted average yield as a result of purchases at lower market yields,
partially offset by an increase in the average balance of the portfolio.

The decrease in interest income on cash and cash equivalents was due primarily
to a decrease in the yield earned on cash held at the Federal Reserve Bank of
Kansas City ("FRB of Kansas City").

                                       42
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Interest Expense
The following table presents the components of interest expense for the time
periods presented, along with the change measured in dollars and percent.
                             For the Year Ended
                               September 30,                      Change Expressed in:
                                2021           2020               Dollars                 Percent
                                            (Dollars in thousands)
INTEREST EXPENSE:
Deposits                 $  48,406      $  67,598      $          (19,192)                (28.4) %
Borrowings                  34,774         48,045                 (13,271)                (27.6)
Total interest expense   $  83,180      $ 115,643      $          (32,463)                (28.1)



The decrease in interest expense on deposits was due mainly to a decrease in the
weighted average rate paid on retail certificates of deposit, money market
accounts, and wholesale certificates of deposit. Since the onset of the COVID-19
pandemic, retail certificates of deposit have been repricing downward as they
renew or are replaced at lower offered rates, and rates on money market accounts
have been lowered.

The decrease in interest expense on borrowings was due primarily to a decrease
in the average balance, as certain maturing FHLB advances and repurchase
agreements were not replaced and the Bank paid down its FHLB line of credit with
liquidity generated from the deposit portfolio. The decrease in interest expense
on borrowings was also a result of lowering the cost of FHLB advances by
prepaying certain advances during the current and prior years.
Provision for Credit Losses
The Bank recorded a negative provision for credit losses during the current year
of $8.5 million, compared to a $22.3 million provision for credit losses during
the prior year. The negative provision in the current fiscal year was composed
of a $6.5 million decrease in the ACL for loans and a $2.0 million decrease in
reserves for off-balance sheet credit exposures. The negative provision for
credit losses in the current fiscal year was due primarily to favorable
forecasted economic outlooks during the year, largely related to commercial
loans. See additional discussion regarding the Bank's ACL and reserve for
off-balance sheet credit exposures at September 30, 2021 in the "Asset Quality"
section and in the "Critical Accounting Estimates - Allowance for Credit Losses
and Reserve for Off-Balance Sheet Credit Exposures" section above.

Non-Interest Income
The following table presents the components of non-interest income for the time
periods presented, along with the change measured in dollars and percent.
                                     For the Year Ended
                                       September 30,                   

Change expressed in:

                                         2021          2020            Dollars              Percent
                                                 (Dollars in thousands)
NON-INTEREST INCOME:
Deposit service fees             $   12,282      $ 11,285      $            997               8.8  %
Gain on sale of Visa Class B
shares                                7,386             -                 7,386                  N/A
Insurance commissions                 3,030         2,487                   543              21.8
Other non-interest income             5,388         5,827                  (439)             (7.5)

Total non-interest income $ 28,086 $ 19,599 $ 8,487

              43.3



The increase in deposit service fees was due primarily to an increase in debit
card income as a result of higher transaction volume. During the current year,
the Bank sold its Visa Class B Shares, resulting in a $7.4 million gain. The
increase in insurance commissions was due primarily to higher annual contingent
insurance commissions received in the current year compared to the prior year.
The decrease in other non-interest income was primarily related to lower income
from bank-
                                       43

————————————————– ——————————

life insurance held (“BOLI”), due to reduced yields due to lower market rates and lower death benefits.

Non-Interest Expense
The following table presents the components of non-interest expense for the time
periods presented, along with the change measured in dollars and percent.
                                        For the Year Ended
                                          September 30,                   Change Expressed in:
                                           2021           2020            Dollars             Percent
                                                   (Dollars in thousands)
NON-INTEREST EXPENSE:
Salaries and employee benefits      $  56,002      $  52,996      $          3,006              5.7  %
Information technology and related
expense                                17,922         16,974                   948              5.6
Occupancy, net                         14,045         13,870                   175              1.3
Regulatory and outside services         5,764          5,762                     2                   -
Advertising and promotional             5,133          4,889                   244              5.0
Loss on interest rate swap
termination                             4,752              -                 4,752                 N/A
Deposit and loan transaction costs      2,761          2,890                  (129)            (4.5)
Federal insurance premium               2,545            914                 1,631            178.4
Office supplies and related expense     1,715          2,195                  (480)           (21.9)

Other non-interest expense              4,930          5,514                  (584)           (10.6)
Total non-interest expense          $ 115,569      $ 106,004      $          9,565              9.0



The increase in salaries and employee benefits was due primarily to an increase
in incentive compensation, as well as an increase in loan commissions related to
higher loan origination activity. The increase in information technology and
related expense was due mainly to an increase in software licensing expense and
professional services expense. During the current fiscal year, the Bank
terminated interest rate swaps designated as cash flow hedges with a notional
amount of $200.0 million resulting in the reclassification of unrealized losses
totaling $4.8 million from AOCI into earnings. The increase in the federal
insurance premium was due mainly to the Bank utilizing an assessment credit from
the FDIC during the prior year.

The Company's efficiency ratio was 56.91% for the current year compared to
50.74% for the prior year. The change in the efficiency ratio was due to lower
net interest income and higher non-interest expense, partially offset by higher
non-interest income. The efficiency ratio is a measure of a financial
institution's total non-interest expense as a percentage of the sum of net
interest income (pre-provision for credit losses) and non-interest income. A
higher value indicates that the financial institution is generating revenue with
a proportionally higher level of expense, relative to the net interest margin
and non-interest income. Management continues to strive to control operating
costs. The increase in the efficiency ratio in the current year related to
higher non-interest expense was due primarily to the loss on the termination of
interest rate swaps, which was a unique transaction during the current year,
along with higher federal insurance premium expense as the Bank utilized an
assessment credit from the FDIC during the prior year.

                                       44
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Income Tax Expense
The following table presents pretax income, income tax expense, and net income
for the time periods presented, along with the change measured in dollars and
percent.
                                        For the Year Ended
                                          September 30,                  Change Expressed in:
                                           2021           2020           Dollars            Percent
                                                  (Dollars in thousands)

Profit before tax charge $ 96,028 $ 80,630 $

   15,398        19.1  %
Income tax expense                    19,946         16,090                     3,856        24.0
Net income                          $ 76,082       $ 64,540       $            11,542        17.9

Effective Tax Rate                      20.8  %        20.0  %



The increase in income tax expense was due primarily to higher pretax income in
the current year, as well as a higher effective tax rate compared to the prior
year. The effective tax rate was lower in the prior year due primarily to a
discrete benefit recognized in the prior year related to certain previously
acquired BOLI policies. Management anticipates the effective income tax rate for
fiscal year 2022 will be approximately 21% to 22%, absent any tax law changes.

Comparison of Operating Results for the Years Ended September 30, 2020 and 2019
For this discussion, see "Part II, Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations - Comparison of Operating
Results for the Years Ended September 30, 2020 and 2019" in the Company's Annual
Report on   Form 10-K   for the fiscal year ended September 30, 2020.

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Liquidity and capital resources

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

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

In the event short-term liquidity needs exceed available cash, the Bank has
access to a line of credit at FHLB and the FRB of Kansas City's discount window.
Per FHLB's lending guidelines, total FHLB borrowings cannot exceed 40% of Bank
Call Report total assets without the pre-approval of FHLB senior management. The
Bank's borrowing limit was 50% of Bank Call Report total assets during the
current year, as approved by the president of FHLB. The amount that can be
borrowed from the FRB of Kansas City's discount window is based upon the fair
value of securities pledged as collateral and certain other characteristics of
those securities. Management tests the Bank's access to the FRB of Kansas City's
discount window annually with a nominal, overnight borrowing.

If management observes unusual trends in the amount and frequency of line of
credit utilization and/or short-term borrowings, the Bank will likely utilize
long-term wholesale borrowing sources such as FHLB advances and/or repurchase
agreements to provide long-term, fixed-rate funding. The maturities of these
long-term borrowings are generally staggered in order to mitigate the risk of a
highly negative cash flow position at maturity. The Bank's internal policy
limits total borrowings to 55% of total assets. At September 30, 2021, the Bank
had total borrowings, at par, of $1.59 billion, or approximately 16% of total
assets, all of which were FHLB advances.

The amount of FHLB borrowings outstanding at September 30, 2021 was $1.59
billion, of which $175.0 million were advances scheduled to mature in the next
12 months, all of which were one-year floating-rate FHLB advances tied to
interest rate swaps. All FHLB borrowings are secured by certain qualifying loans
pursuant to a blanket collateral agreement with FHLB.

At September 30, 2021, the Bank had no repurchase agreements. The Bank may enter
into repurchase agreements as management deems appropriate, not to exceed 15% of
total assets, and subject to the total borrowings internal policy limit of 55%
as discussed above.

The Bank could utilize the repayment and maturity of outstanding loans, MBS, and
other investments for liquidity needs rather than reinvesting such funds into
the related portfolios. At September 30, 2021, the Bank had $1.68 billion of
securities that were eligible but unused as collateral for borrowing or other
liquidity needs.

The Bank has access to other sources of funds for liquidity purposes, such as
brokered and public unit certificates of deposit. As of September 30, 2021, the
Bank's policy allowed for combined brokered and public unit certificates of
deposit up to 15% of total deposits. At September 30, 2021, the Bank did not
have any brokered certificates of deposit and public unit certificates of
deposit were approximately 3% of total deposits. The Bank had pledged securities
with an estimated fair value of $264.9 million as collateral for public unit
certificates of deposit at September 30, 2021. The securities pledged as
collateral for public unit certificates of deposit are held under joint custody
with FHLB and generally will be released upon deposit maturity.

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At September 30, 2021, $1.66 billion of the Bank's certificate of deposit
portfolio was scheduled to mature within the next 12 months, including $193.5
million of public unit certificates of deposit and $176.6 million of commercial
certificates of deposit. Based on our deposit retention experience and our
current pricing strategy, we anticipate the majority of the maturing retail
certificates of deposit will renew or transfer to other deposit products of the
Bank at prevailing rates, although no assurance can be given in this regard.
The same is anticipated for our commercial certificates of deposit; however, due
to the nature of these funds, retention rates are not as predictable as for
retail certificates of deposit. We also anticipate the majority of the maturing
public unit certificates of deposit will be replaced with similar wholesale
funding products, depending on availability and pricing.

The Company is a party to financial instruments with off-balance sheet risk in
the normal course of business to meet the financing needs of customers. These
financial instruments consist primarily of commitments to originate, purchase,
or participate in loans or fund lines of credit. Additionally, the Company has
investments in several low income housing partnerships and, under the terms of
the agreements, the Company has a commitment to fund a specified amount that
will be due in installments over the life of the agreements. See "Part II, Item
8. Financial Statements and Supplementary Data - Notes to Consolidated Financial
Statements - Note 6. Low Income Housing Partnerships and Note 12. Commitments
and Contingencies" for additional information regarding these commitments.

While scheduled payments from the amortization of loans and MBS and payments on
short-term investments are relatively predictable sources of funds, deposit
flows, prepayments on loans and MBS, and calls of investment securities are
greatly influenced by general interest rates, economic conditions, and
competition, and are less predictable sources of funds. To the extent possible,
the Bank manages the cash flows of its loan and deposit portfolios by the rates
it offers customers. We anticipate we will continue to have sufficient funds,
through the repayments and maturities of loans and securities, deposits and
borrowings, to meet our current commitments.

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