CAPITOL FEDERAL FINANCIAL, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-K)

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 except where the context
indicates otherwise.

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.


The Company recognized net income of $84.5 million, or $0.62 per share, for
fiscal year 2022 compared to net income of $76.1 million, or $0.56 per share,
for the prior fiscal year. The $8.4 million, or 11.0%, increase in net income
was due to an increase in net interest income, partially offset by higher income
tax expense and a lower negative provision for credit losses. The net interest
margin was 1.79% for the current year compared to 1.90% for the prior year. When
the leverage strategy discussed below is in place, it reduces the net interest
margin due to the amount of earnings from the transaction in comparison to the
size of the transaction. Excluding the effects of the leverage strategy, the net
interest margin would have been 2.04% in the current year, a 14 basis point
increase from the prior year. The increase in net interest margin excluding the
effects of the leverage strategy was due mainly to a reduction in the weighted
average cost of retail certificates of deposit. During the latter portion of the
current year, as market interest rates increased, the Bank's cost of borrowings
and deposits began increasing at a faster pace than the yield on assets.
Management anticipates this may continue in the near term.

At times, the Bank has utilized a leverage strategy to increase earnings. The
leverage strategy during the current year involved borrowing up to $2.60 billion
by entering into short-term FHLB advances. The borrowings were repaid prior to
each quarter end. The proceeds from the borrowings, net of the required FHLB
stock holdings which yielded 6.75% during the current year, were deposited at
the Federal Reserve Bank of Kansas City ("FRB of Kansas City"). Net income
attributable to the leverage strategy is largely derived from the dividends
received on FHLB stock holdings, plus the net interest rate spread between the
yield on the cash deposited at the FRB of Kansas City and the rate paid on the
related FHLB borrowings, less applicable federal insurance premiums and
estimated taxes. Net income attributable to the leverage strategy was
$3.1 million during the current year. Management continuously monitors the net
interest rate spread and overall profitability of the strategy. It is expected
that the strategy will be utilized as long as it remains profitable and/or the
borrowing capacity and available capital does not need to be used for other
operational purposes.

Total assets were $9.62 billion at September 30, 2022, a decrease of
$6.3 million from September 30, 2021. Loans receivable increased $383.1 million,
or 5.4%, during the current year to $7.46 billion at September 30, 2022. The
loan growth was primarily in the one-to four-family correspondent and commercial
loan portfolios. This growth was funded by cash flows from the securities
portfolio and FHLB borrowings. The deposit portfolio decreased $402.5 million
during the current year, to $6.19 billion at September 30, 2022. The decrease
was primarily in the certificate of deposit portfolio, partially offset by
increases in the retail checking, savings and money market accounts. During the
third quarter of fiscal year 2022, management began increasing offered rates on
certificates of deposit, which slowed the runoff in this portfolio. Due to
deposit outflows and loan growth, the Bank entered into additional FHLB
borrowings during the second half of the current fiscal year. FHLB borrowings
increased $549.3 million during the year, to $2.13 billion at September 30,
2022. If deposit outflows continue, the Bank will likely increase FHLB
borrowings. If that occurs, the leverage strategy transaction amount may
decrease due to borrowing, collateral capacity and capital levels. Stockholder's
equity was $1.10 billion at September 30, 2022, a decrease of $145.8 million
from September 30, 2021. The decrease was due almost entirely to a reduction in
AOCI as a result of changes in the fair value of AFS securities due to an
increase in market interest rates during the year. The unrealized losses on AFS
securities increased $211.3 million, resulting in a $159.8 million reduction in
AOCI, net of tax.

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, 2022,
loans 30 to 89 days delinquent were 0.09% of total loans receivable, net, and
loans 90 or more days delinquent or in foreclosure were 0.12% 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 0.00%.

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At September 30, 2022, the Bank had a one-year gap position of $(1.14) billion,
or (11.9)% of total assets, meaning the amount of interest-bearing liabilities
exceeds the amount of interest-earning assets maturing or repricing during the
same period. See additional discussion in "Part II, Item 7A. Quantitative and
Qualitative Disclosures About Market Risk."

Management is in the process of implementing a new core processing system
("digital transformation") for the Bank, which is expected to be operational by
September 2023. We expect the new platform will allow us to introduce new
products and services quickly to drive better efficiencies and provide a more
personalized experience for our customers. Our customers will experience a more
modern internet banking experience, including both desktop and mobile. Internet
banking will deliver real-time alerts and provide our customers the ability to
manage their own debit cards. Our customers will also have multiple options for
real-time payments, which positions the Bank for faster payment channels in the
future. Management anticipates information technology and related expenses will
increase in fiscal year 2023 in conjunction with the digital transformation. See
additional discussion in the "Comparison of Operating Results for the Years
Ended September 30, 2022 and 2021" section below.

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 assessing 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 the
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 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, 2022 was four quarters. Prepayment and
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curtailment assumptions are based on the Company’s historical experience 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 economic forecast and/or discounted
cash flow model, 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 of other external factors such as significant unique
events or conditions, and actual and/or expected changes in economic conditions,
real estate values, and/or other economic developments. The qualitative factors
applied by management at September 30, 2022 were (1) economic uncertainty that
may not be adequately captured in the third party economic forecast scenarios
and (2) other management considerations related to commercial loans to account
for credit risks not fully reflected in the discounted cash flow model. The
qualitative factors applied at September 30, 2022, 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, 2022.

The ACL and the reserves for off-balance sheet credit exposures was $16.4
million and $4.8 million, respectively at September 30, 2022, compared to $19.8
million and $5.7 million, respectively, at September 30, 2021. The $3.5 million
decrease in the ACL and $992 thousand decrease in the reserves for off-balance
sheet credit exposures was primarily attributable to a reduction in commercial
loan qualitative factors, partially offset by an increase related to (1) growth
in the loan portfolio and an increase in the balance of off-balance sheet credit
exposures and (2) a less favorable economic forecast compared to the prior year.
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, 2022 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.

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The Company's interest rate swaps are measured at fair value on a recurring
basis. The estimated fair values 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, 2022.

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:
                                           2022              2021         Dollars           Percent
                                           (Dollars and shares in thousands)
Total assets                     $ 9,624,897       $ 9,631,246       $         (6,349)       (0.1) %
AFS securities                     1,563,307         2,014,608               (451,301)      (22.4)
Loans receivable, net              7,464,208         7,081,142                383,066         5.4
Deposits                           6,194,866         6,597,396               (402,530)       (6.1)
Borrowings                         2,132,154         1,582,850                549,304        34.7
Stockholders' equity               1,096,499         1,242,273               (145,774)      (11.7)
Equity to total assets at end of
period                                  11.4  %           12.9  %
Average number of basic shares
outstanding                          135,700           135,481                    219         0.2
Average number of diluted shares
outstanding                          135,700           135,496                    204         0.2




Loans Receivable. Total loans, net at September 30, 2022 was $7.46 billion, an
increase of $383.1 million from September 30, 2021. The increase was primarily
due to growth in the one- to four-family correspondent loan portfolio and
commercial real estate and construction loan portfolio, along with a slow down
in one- to four-family prepayment speeds due to higher market interest rates.

Originating and purchasing loans secured by one- to four-family residential
properties is the Bank's primary lending business, resulting in a concentration
in residential first mortgage loans secured by properties located in Kansas and
Missouri. The Bank also originates and participates in commercial loans, and
originates consumer loans 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 fiscal year 2021, the Bank recognized a
significant amount of premium amortization due to prepayment and endorsement
activity. Prepayment and endorsement activity slowed significantly during the
last half of the current fiscal year due to the increase in market interest
rates.

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,
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allowing the borrower to secure the same interest rate structure throughout the
construction period and the permanent loan term.


As of September 30, 2022, there were $178.0 million of adjustable-rate one- to
four-family loans in the portfolio for which the repricing index was tied to
LIBOR, which is being discontinued and will no longer be available after June
30, 2023. The Bank's one- to four-family loan agreements allow the Bank to
choose a new alternative reference rate based upon comparable information if the
current index is no longer available. During the June 30, 2019 quarter, the Bank
discontinued the use of LIBOR for the origination of adjustable-rate one- to
four-family loans and no longer purchases correspondent one- to four-family
loans that use LIBOR.

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.

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 11 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.


                                       21
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The following table presents the balance and weighted average rate of our loan
portfolio as of the dates indicated. Total loans receivable increased $375.6
million, or 5.3%, during the current year. The rate on the portfolio increased
12 basis points during the current year due primarily to upward repricing of
existing loans as a result of an increase in market interest rates, as well as
originations and purchases at interest rates higher than the overall portfolio
rate.
                                      September 30, 2022                 September 30, 2021
                                      Amount             Rate            Amount             Rate
                                                      (Dollars in thousands)
One- to four-family:
Originated                      $       3,988,469       3.20  %    $       3,956,064       3.18  %
Correspondent purchased                 2,201,886       3.10               2,003,477       3.02
Bulk purchased                            147,939       1.24                 173,662       1.65
Construction                               66,164       2.90                  39,142       2.82
Total                                   6,404,458       3.12               6,172,345       3.09
Commercial:
Commercial real estate                    745,301       4.30                 676,908       4.00
Commercial and industrial                  79,981       4.30                  66,497       3.83
Construction                              141,062       5.34                  85,963       4.03
Total                                     966,344       4.45                 829,368       3.99
Consumer loans:
Home equity                                92,203       6.28                  86,274       4.60
Other                                       8,665       4.21                   8,086       4.19
Total                                     100,868       6.10                  94,360       4.57
Total loans receivable                  7,471,670       3.33               7,096,073       3.21

Less:
ACL                                        16,371                             19,823
Deferred loan fees/discounts               29,736                           

29,556

Premiums/deferred costs                   (38,645)                          

(34,448)

Total loans receivable, net     $       7,464,208                  $       

7,081,142

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The following table presents the contractual maturity of our loan portfolio,
along with associated weighted average yields, at September 30, 2022. Loans that
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 to 

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                  $    1,015       4.09  %    $    70,518       3.60  %    $   1,330,747       2.88  %    $  2,586,189       3.43  %    $ 3,988,469       3.25  %
Correspondent purchased            258       4.39             9,008       3.04             495,250       2.43          1,697,370       3.13         2,201,886       2.97
Bulk purchased                      26       4.24                88       3.92              27,683       2.84            120,142       0.81           147,939       1.19
Construction(2)                      -          -                 -          -               3,872       2.54             62,292       2.92            66,164       2.90
Total                            1,299       4.15            79,614       3.53           1,857,552       2.76          4,465,993       3.24         6,404,458       3.10
Commercial:
Commercial real estate          83,792       5.69           190,307       4.24             358,310       4.16            112,892       4.50           745,301       4.40
Commercial and industrial       14,470       5.85            27,787       3.84              33,189       4.07              4,535       4.05            79,981       4.31
Construction(2)                  7,514       5.87            58,085       3.91              25,506       6.23             49,957       6.46           141,062       5.34
Total                          105,776       5.72           276,179       4.13             417,005       4.28            167,384       5.07           966,344       4.53
Consumer:
Home equity(3)                   1,663       7.44             2,000       6.26              45,063       6.28             43,477       6.21            92,203       6.27
Other                            1,141       3.74             6,900       4.17                 624       6.15                  -          -             8,665       4.25
Total                            2,804       5.93             8,900       4.64              45,687       6.28             43,477       6.21           100,868       6.09
Total loans receivable      $  109,879       5.71       $   364,693       4.01       $   2,320,244       3.10       $  4,676,854       3.33         7,471,670       3.33

Less:
ACL                                                                                                                                                    16,371
Deferred loan fees/discounts                                                                                                                           29,736
Premiums/deferred costs                                                                                                                               (38,645)
Total loans receivable, net                                                                                                                       $ 7,464,208



(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, 2022, the amount of loans due
after September 30, 2023, and whether these loans have fixed or adjustable
interest rates.
                                Fixed         Adjustable          Total
                                        (Dollars in thousands)
One- to four-family:
Originated                  $ 3,703,838      $   283,616      $ 3,987,454
Correspondent purchased       1,965,671          235,957        2,201,628
Bulk purchased                    4,585          143,328          147,913
Construction                     61,435            4,729           66,164
Total                         5,735,529          667,630        6,403,159
Commercial:
Commercial real estate          303,228          358,281          661,509
Commercial and industrial        39,447           26,064           65,511
Construction                     40,335           93,213          133,548
Total                           383,010          477,558          860,568
Consumer:
Home equity                      14,330           76,210           90,540
Other                             5,336            2,188            7,524
Total                            19,666           78,398           98,064
Total loans receivable      $ 6,138,205      $ 1,223,586      $ 7,361,791



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, deferred loan fees/discounts, 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, 2022                 September 30, 2021
                                                 Amount             Rate            Amount             Rate
                                                                 (Dollars in thousands)
Beginning balance                          $       7,096,073       3.21  %    $       7,224,996       3.55  %
Originated and refinanced                          1,065,373       3.74               1,437,454       2.89
Purchased and participations                         701,674       3.46                 824,241       2.89
Change in undisbursed loan funds                     (53,811)                          (174,416)
Repayments                                        (1,337,034)               

(2,215,585)

Principal recoveries/(charge-offs), net                  186                               (478)
Other                                                   (791)                              (139)
Ending balance                             $       7,471,670       3.33       $       7,096,073       3.21



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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 $52.7 million of one- to four-family loans, reducing the average
rate on those loans by 75 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, 2022                                September 30, 2021
                                 Amount            Rate       % of Total           Amount            Rate       % of Total
                                                                (Dollars in thousands)
Fixed-rate:
One- to four-family        $        926,274       3.41  %         52.5  %    $      1,615,165       2.66  %         71.4  %
One- to four-family
construction                        120,615       3.19             6.8                125,309       2.77             5.5
Commercial:
Real estate                          50,620       4.08             2.9                 28,944       3.85             1.3
Commercial and industrial            23,846       4.14             1.3                 49,857       2.45             2.2
Construction                         86,023       3.47             4.9                 42,505       3.65             1.9
Home equity                           6,771       5.76             0.4                  3,491       5.42             0.2
Other                                 3,923       5.66             0.2                  2,994       5.48             0.1
Total fixed-rate                  1,218,072       3.45            69.0              1,868,265       2.71            82.6

Adjustable-rate:
One- to four-family                 230,640       3.51            13.0                 59,813       2.52             2.6
One- to four-family
construction                         26,080       3.31             1.5                 11,069       2.64             0.5
Commercial:
Real estate                         137,150       4.21             7.8                120,202       3.70             5.3
Commercial and industrial            32,430       3.87             1.8                 18,581       3.97             0.8
Construction                         58,080       4.94             3.3                126,155       4.08             5.6
Home equity                          62,832       4.97             3.5                 55,740       4.42             2.5
Other                                 1,763       3.03             0.1                  1,870       3.34             0.1
Total adjustable-rate               548,975       4.01            31.0                393,430       3.73            17.4

Total originated,
refinanced and purchased   $      1,767,047       3.63           100.0  %    $      2,261,695       2.89           100.0  %

Purchased and participation loans included
above:
Fixed-rate:
Correspondent purchased -
one- to four-family        $        452,093       3.35                       $        671,077       2.65

Purchases and
participations -
commercial                           87,365       3.47                                 40,314       3.66

Total fixed-rate
purchased/participations            539,458       3.37                                711,391       2.70

Adjustable-rate:
Correspondent purchased -
one- to four-family                 129,216       3.49                                 18,450       2.45

Purchases and
participations -
commercial                           33,000       4.87                                 94,400       4.36

Total adjustable-rate
purchased/participations            162,216       3.77                                112,850       4.05
Total
purchased/participation
loans                      $        701,674       3.46                       $        824,241       2.89



                                       25
--------------------------------------------------------------------------------
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, 2022. Credit scores are updated at
least annually, with the latest update in September 2022, 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                 $ 3,988,469        62.9  %     3.20  %     771         61  %    $    158
Correspondent purchased      2,201,886        34.8        3.10        766         64            416
Bulk purchased                 147,939         2.3        1.24        770         57            287
                           $ 6,338,294       100.0  %     3.12        770         62            205



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                 $   722,300       3.42  %     72  %     766
Correspondent purchased        581,309       3.38        74        769

                           $ 1,303,609       3.40        73        767



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, 2022, along with associated weighted average
rates. 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     $        135,765                4.51  %
Correspondent                     85,576                4.39
                        $        221,341                4.46



Commercial Loans - During fiscal year 2022, the Bank originated $267.8 million
of commercial loans and entered into commercial loan participations totaling
$120.4 million. The Bank processed commercial loan disbursements, excluding
lines of credit, of approximately $342.7 million at a weighted average rate of
4.26%.

As of September 30, 2022 and September 30, 2021, the Bank’s commercial and
industrial gross loan amounts (unpaid principal plus undisbursed amounts)
totaled $100.4 million and $90.7 million, respectively, and commitments totaled
$458 thousand and $16.9 million, respectively.

                                       26
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The following table presents the Bank's commercial real estate and commercial
construction loans by type of primary collateral as of the dates indicated. As
of September 30, 2022, the Bank had 25 commercial real estate and commercial
construction loan commitments totaling $98.7 million, at a weighted average rate
of 4.78%, which are not included in the table below. 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. Of the
total commercial undisbursed amounts and commitments outstanding as of
September 30, 2022, management anticipates approximately $90 million will be
funded during the December 2022 quarter, $60 million during the March 2023
quarter, $50 million during the June 2023 quarter, and $46 million during the
September 2023 quarter.
                                            September 30, 2022                         September 30, 2021
                                       Unpaid        Undisbursed       Gross Loan          Gross Loan
                         Count       Principal         Amount            Amount              Amount
                                                            (Dollars in thousands)
Senior housing            35        $ 255,075       $   73,184       $   328,259       $        265,284
Retail building          138          199,223           30,930           230,153                208,539
Hotel                     10          152,332           29,214           181,546                194,665
Multi-family              36           80,538           42,197           122,735                 66,199
Office building           84           68,114           41,539           109,653                109,987
One- to four-family
property                 368           62,072            6,835            68,907                 69,174
Single use building       24           21,272           20,636            41,908                 47,028
Other                    103           47,737            5,317            53,054                 36,167
                         798        $ 886,363       $  249,852       $ 1,136,215       $        997,043

Weighted average rate                    4.46  %          4.90  %           4.56  %                4.01  %


The following table summarizes the Bank’s commercial real estate and commercial
construction loans by state as of the dates indicated.

                               September 30, 2022                         September 30, 2021
                         Unpaid        Undisbursed       Gross Loan           Gross Loan
            Count       Principal         Amount           Amount               Amount
                                               (Dollars in thousands)
Kansas      602        $ 368,816      $     54,981      $   423,797      $          348,835
Missouri    160          232,655            63,788          296,443                 232,041
Texas        12          180,278           100,562          280,840                 273,124
Colorado      6           20,867            13,510           34,377                  36,099
Arkansas      3           21,796            11,618           33,414                  33,763
Nebraska      6           32,988                 4           32,992                  33,468
Other         9           28,963             5,389           34,352                  39,713
            798        $ 886,363      $    249,852      $ 1,136,215      $          997,043



                                       27

——————————————————————————–

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, 2022.
                              Count               Amount
                                (Dollars in thousands)
Greater than $30 million        6              $   245,873
>$15 to $30 million            19                  398,089
>$10 to $15 million             8                   97,141
>$5 to $10 million             21                  146,359
$1 to $5 million              115                  259,906
Less than $1 million        1,241                  188,419
                            1,410              $ 1,335,787




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. 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, 2022 and 2021, approximately 73% and 61%,
respectively, were 59 days or less delinquent.

                                      Loans Delinquent for 30 to 89 Days at September 30,
                                                 2022                                    2021
                                         Number                     Amount       Number       Amount
                                                     (Dollars in thousands)
One- to four-family:
Originated                                              48        $ 4,134         48        $ 4,156
Correspondent purchased                                  7          1,104          7          2,590
Bulk purchased                                           3            913          4            541
Commercial                                               -              -          2             37

Consumer                                                24            345         25            498

                                                        82        $ 6,496         86        $ 7,822

Loans 30 to 89 days delinquent
to total loans receivable, net                                       0.09  %                   0.11  %



                                       28
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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.
                                                                       September 30,
                                                              2022                      2021
                                                      Number       Amount       Number       Amount
                                                                  (Dollars in thousands)
Loans 90 or More Days Delinquent or in Foreclosure:
One- to four-family:
Originated                                             29        $ 2,919         50        $  3,693
Correspondent purchased                                12          3,737         10           3,210
Bulk purchased                                          3          1,148          9           2,974
Commercial                                              8          1,167          6           1,214
Consumer                                                9            154         21             498
                                                       61          9,125         96          11,589

Loans 90 or more days delinquent or in foreclosure

 as a percentage of total loans                                     0.12  %                    0.16  %

Nonaccrual loans less than 90 Days Delinquent:(1)
One- to four-family:
Originated                                              3        $   222          7        $  1,288
Correspondent purchased                                 -              -          -               -
Bulk purchased                                          -              -          1             131
Commercial                                              1             77          4             419
Consumer                                                1             19          1               9
                                                        5            318         13           1,847
Total nonaccrual loans                                 66          9,443        109          13,436

Nonaccrual loans as a percentage of total loans                     0.13  %                    0.19  %

OREO:
One- to four-family:
Originated(2)                                           4        $   307          3        $    170

Consumer                                                1             21          -               -

                                                        5            328          3             170
Total non-performing assets                            71        $ 9,771        112        $ 13,606

Non-performing assets as a percentage of total assets               0.10  %                    0.14  %


(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.

                                       29
--------------------------------------------------------------------------------
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, 2022. 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, 2022, 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            $  3,560,887           56.2  %    $        4,340           70.6  %    $    2,382           30.5  %     48  %
Missouri             1,081,666           17.1                  898           14.6            1,641           21.0        62
Texas                  576,213            9.1                    -              -            1,746           22.4        37
Other states         1,119,528           17.6                  913           14.8            2,035           26.1        53

                  $  6,338,294          100.0  %    $        6,151          100.0  %    $    7,804          100.0  %     50



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 decrease in
commercial special mention loans at September 30, 2022 compared to September 30,
2021 was due mainly to three commercial loans moving to the pass classification
during the year as the underlying economic conditions being monitored by
management improved to levels deemed appropriate by the Company.
                                September 30, 2022                     

September 30, 2021

                         Special Mention      Substandard       Special Mention      Substandard
                                                  (Dollars in thousands)
One- to four-family     $        12,950      $     19,953      $        14,332      $     23,458
Commercial                          565             2,733               99,729             3,259
Consumer                            306               354                  135               718
                        $        13,821      $     23,040      $       114,196      $     27,435



                                       30

——————————————————————————–

Allowance for Credit Losses. The distribution of our ACL at the dates indicated
is summarized below.
                                    September 30, 2022                    September 30, 2021
                                                     % of                                  % of
                                 Amount            Loans to            Amount            Loans to
                                 of ACL           Total Loans          of ACL           Total Loans
                                                     (Dollars in thousands)
One- to four-family:
Originated                  $       2,012              53.4  %    $       1,590              55.8  %
Correspondent purchased             2,734              29.5               2,062              28.2
Bulk purchased                        206               2.0                 304               2.4
Construction                           54               0.9                  22               0.6
Total                               5,006              85.8               3,978              87.0
Commercial:
Real estate                         8,729              10.0              13,706               9.6
Commercial and industrial             490               1.0                 344               0.9
Construction                        1,901               1.9               1,602               1.2
Total                              11,120              12.9              15,652              11.7
Consumer loans:
Home equity                           136               1.2                 126               1.2
Other consumer                        109               0.1                  67               0.1
Total consumer loans                  245               1.3                 193               1.3
                            $      16,371             100.0  %    $      19,823             100.0  %



The ratio of ACL to loans receivable, by loan type, at the dates indicated is
summarized below. The reduction in the ratio of ACL to loans receivable for
commercial real estate loans and commercial construction loans from September
30, 2021 to September 30, 2022 was due to a reduction in commercial loan
qualitative factors.
                             September 30,      September 30,
                                 2022               2021
One- to four-family:
Originated                          0.05  %            0.04  %
Correspondent purchased             0.12               0.10
Bulk purchased                      0.14               0.18
Construction                        0.08               0.06
Total                               0.08               0.06
Commercial:
Commercial real estate              1.17               2.02
Commercial and industrial           0.61               0.52
Construction                        1.35               1.86
Total                               1.15               1.89
Consumer                            0.24               0.20
Total                               0.22               0.28



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.

                                       31
--------------------------------------------------------------------------------
The following tables present ACL activity and related ratios at the dates and
for the periods indicated. On October 1, 2020, the Bank adopted ASU 2016-13,
Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial
Instruments ("CECL"). The current year net recovery was due primarily to
recoveries on one- to four-family originated loans and commercial real estate
loans. The ratio of NCOs during the current year to average non-performing
assets was lower than the prior year due to a net recovery in the current year
compared to a net charge-off in the prior year. The ratio of ACL to nonaccrual
loans was higher in the current year compared to the prior year due mainly to a
lower balance of nonaccrual loans compared to the prior year period, partially
offset by lower ACL at September 30, 2022. The ratio of ACL to loans receivable,
net was lower in the current year compared to the prior year due primarily to a
reduction in ACL.
                                                  At or For the Year Ended September 30,
                                                 2022                   2021           2020
                                                          (Dollars in thousands)
Balance at beginning of period             $     19,823              $ 31,527       $  9,226
Adoption of CECL                                      -                (4,761)             -
Charge-offs                                         (70)                 (715)          (443)
Recoveries                                          256                   237            444
Net recoveries (charge-offs)                        186                  (478)             1
Provision for credit losses                      (3,638)               (6,465)        22,300
Balance at end of period                   $     16,371              $ 19,823       $ 31,527

Ratio of NCOs during the period
to average non-performing assets                  (1.59)  %              3.63  %       (0.01) %
ACL to nonaccrual loans at end of period         173.37                147.54         252.42
ACL to loans receivable, net at end of
period                                             0.22                  0.28           0.44
ACL to NCOs                                          N/M(1)                41.5x         N/M(1)


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

                                       32

——————————————————————————–

The following table presents NCOs, average loans, and NCOs as a percentage of
average loans, by loan type, for the periods indicated.

                                                                For the Year Ended September 30,
                                  2022                                         2021                                        2020
                                                  % 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      $ (129)     $    3,937,188           -  %    $  20      $    3,936,166           -  %    $  23      $    3,916,716           -  %
Correspondent        -           2,072,677           -           -           2,010,823           -           -           2,348,120           -
Bulk purchased       -             159,152           -          21             191,029        0.01        (265)            230,720       (0.11)
Construction         -              48,079           -           -              29,893           -           -              33,709           -
Total             (129)          6,217,096           -          41           6,167,911           -        (242)          6,529,265           -
Commercial:
Real estate       (101)            692,115       (0.01)        465             637,712        0.07         215             602,482        0.04
Commercial and      40              74,133        0.05           -              75,219           -          24              76,473        0.03
industrial
Construction         -             117,878           -           -              75,771           -           -             106,172           -
Total              (61)            884,126       (0.01)        465             788,702        0.06         239             785,127        0.03
Consumer:
Home equity          1              85,514           -         (26)             92,495       (0.03)        (13)            112,939       (0.01)
Other                3               8,030        0.04          (2)              8,782       (0.02)         15              10,395        0.14
Total                4              93,544           -         (28)            101,277       (0.03)          2             123,334           -
                $ (186)     $    7,194,766           -       $ 478      $    7,057,890        0.01       $  (1)     $    7,437,726           -



Securities. The following table presents the distribution of our securities
portfolio, at amortized cost, at the dates indicated. Overall, fixed-rate
securities comprised 95% of our securities portfolio at September 30, 2022.
Weighted average yields on tax-exempt securities are not calculated on a fully
tax-equivalent basis. The balance of securities decreased during the current
fiscal year as cash flows from the securities portfolio were generally used to
fund loan portfolio growth. The increase in the yield during the current year
was due to purchases at yields higher than the overall portfolio and upward
repricing of the adjustable-rate portion of the portfolio as a result of higher
market interest rates. The increase in the WAL in the current year was also due
primarily to higher market interest rates which lengthened the life of the
securities by decreasing the amount of prepayments.
                                    September 30, 2022                             September 30, 2021
                              Amount            Yield       WAL(1)           Amount            Yield       WAL(1)
                                                          (Dollars in thousands)
MBS                     $       1,243,270       1.57  %     4.7        $       1,484,211       1.35  %     3.5
Government-sponsored
enterprises ("GSE")
debentures                        519,977       0.61        2.9                  519,971       0.61        3.7
Corporate bonds                     4,000       5.12        9.6                        -          -          -
Municipal bonds                     1,243       2.63        6.5                    4,274       1.81        0.3
                        $       1,768,490       1.29        4.2        $       2,008,456       1.16        3.5



(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.

                                       33
--------------------------------------------------------------------------------
The composition and maturities of the securities portfolio at September 30, 2022
is 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               $       2,374       1.75  %    $    51,691       2.38  %    $   218,963       1.81  %    $     815,596       1.46  %    $      1,088,624       1.57  %
GSE debentures                -          -           469,827       0.61                 -          -                   -          -                469,827       0.61
Corporate bonds               -          -                 -          -             3,695       5.12                   -          -                  3,695       5.12
Municipal bonds             210       3.00                 -          -               951       2.55                   -          -                  1,161       2.63
                  $       2,584       1.85       $   521,518       0.78       $   223,609       1.86       $     815,596       1.46       $      1,563,307       1.29



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 and ending balances are as of the first and last days of the
periods presented and are generally derived from recent prepayment activity on
the securities in the portfolio. The beginning and ending WALs are the estimated
remaining principal repayment terms (in years) after three-month historical
prepayment speeds and projected call option assumptions have been applied.
                                                          For the Year Ended
                                   September 30, 2022                            September 30, 2021
                             Amount            Yield        WAL            Amount            Yield        WAL
                                                        (Dollars in thousands)
Beginning balance -
carrying value         $       2,014,608       1.16  %     3.5       $       1,560,950       1.63  %     3.1
Maturities and
repayments                      (323,025)                                     (594,294)
Net amortization of
(premiums)/discounts              (4,967)                                       (6,206)
Purchases                         88,026       2.56        4.3               1,079,351       1.01        5.0
Change in valuation on
AFS securities                  (211,335)                                      (25,193)
Ending balance -
carrying value         $       1,563,307       1.29        4.2       $       2,014,608       1.16        3.5



                                       34

——————————————————————————–

Liabilities. Total liabilities were $8.53 billion at September 30, 2022,
compared to $8.39 billion at September 30, 2021. The increase in liabilities
between September 30, 2021 and September 30, 2022 was due primarily to an
increase in FHLB borrowings to fund deposit outflows and loan growth.


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.
                                                                    At September 30,
                                                   2022                                          2021
                                                                 % of                                          % of
                                   Amount          Rate          Total           Amount          Rate          Total
                                                                 (Dollars in thousands)
Non-interest-bearing checking   $   591,387          -  %           9.5  %    $   543,849          -  %           8.2  %
Interest-bearing checking         1,027,222       0.07             16.6         1,037,362       0.07             15.7
Savings                             552,743       0.06              8.9           519,069       0.05              7.9
Money market                      1,819,761       0.47             29.4         1,753,525       0.19             26.6
Retail certificates of deposit    2,073,542       1.34             33.5         2,341,531       1.41             35.5
Commercial certificates of
deposit                              36,275       0.97              0.6           190,215       0.66              2.9
Public unit certificates of
deposit                              93,936       1.61              1.5           211,845       0.21              3.2
                                $ 6,194,866       0.63            100.0  %    $ 6,597,396       0.59            100.0  %



Deposits decreased $402.5 million during the current year. The decrease was
primarily in the certificate of deposit portfolio, partially offset by an
increase in retail checking, savings and money market accounts. Retail
certificates of deposit decreased $268.0 million, with the decrease occurring in
the medium-term and long-term categories. Commercial certificates of deposit
decreased $153.9 million, which was primarily related to one commercial customer
for which the reduction in the current year was anticipated.

During the third quarter of the current year, the Bank began increasing rates
offered on retail certificates of deposit and money market accounts. Even with
the increase in offered rates, management anticipates continued retail deposit
outflows in future periods, primarily in transaction accounts, due to strong
consumer spending, along with competition from other financial institutions
and/or brokerage firms that may offer alternative higher yielding investment
options.

As of September 30, 2022 and 2021, approximately $721.8 million and $866.0
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 sets forth the portion of the Bank’s time deposits, by
account, that are in excess of the FDIC insurance limit, by remaining time until
maturity, as of September 30, 2022 (dollars in thousands).
3 months or less

           $  93,136
Over 3 through 6 months       48,776
Over 6 through 12 months      66,990
Over 12 months               125,350
                           $ 334,252



Borrowings. Total borrowings at September 30, 2022 were $2.13 billion, an
increase of $549.3 million from September 30, 2021. The $2.13 billion was
composed of $1.70 billion in fixed-rate FHLB advances, $365.0 million in
variable-rate advances tied to interest rate swaps, and $75.0 million on the
FHLB line of credit. The increase in borrowings was a result of deposit
outflows, loan growth and a slow-down in loan prepayment speeds due to an
increase in market interest rates. If deposit outflows continue, the Bank will
likely enter into additional FHLB borrowings.

During the current year, the Bank reimplemented the leverage strategy, as
discussed in the “Executive Summary” section above. These borrowings were repaid
prior to September 30, 2022. If the Bank enters into additional FHLB borrowings

                                       35

——————————————————————————–

during fiscal year 2023 to provide sufficient liquidity for operations, the
amount of the leverage strategy transaction may decrease compared to the fiscal
year 2022 amount due to borrowing and collateral capacity levels.


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 presents the maturity of non-amortizing term borrowings,
which consist entirely of FHLB advances, along with associated weighted average
contractual and effective rates as of September 30, 2022. In addition to the
borrowings in the table below, there were two straight-line amortizing FHLB
advances outstanding at September 30, 2022, including a $47.5 million advance at
a rate of 3.50% with quarterly payments of $2.5 million through June 2027 and a
$100.0 million advance at a rate of 4.45% with quarterly payments of $4.9
million through October 2027.
 Maturity by                        Contractual      Effective
 Fiscal Year         Amount            Rate           Rate(1)
                             (Dollars in thousands)
     2023         $   300,000            1.70  %        1.81  %
     2024             490,000            3.10           2.85
     2025             450,000            2.21           2.24
     2026             375,000            1.86           2.07
     2027             200,000            1.56           1.80
     2028             100,000            3.47           3.42

                  $ 1,915,000            2.29           2.31


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


The following table presents borrowing activity for the periods shown. The
borrowings presented in the table have original contractual terms of one year or
longer or are tied to interest rate swaps with original contractual terms of one
year or longer. The effective rate is shown as a weighted average and includes
the impact of interest rate swaps and the amortization of deferred prepayment
penalties resulting from FHLB advances previously prepaid. The weighted average
maturity ("WAM") is the remaining weighted average contractual term in years.
The beginning and ending WAMs represent the remaining maturity at each date
presented. For new borrowings, the WAMs presented are as of the date of issue.
                                                   For the Year Ended September 30,
                                            2022                                         2021
                                               Effective                                  Effective
                              Amount             Rate          WAM         Amount           Rate          WAM
                                                        (Dollars in thousands)
Beginning balance       $      1,590,000          1.88  %     3.3       $ 1,790,000          2.31  %     3.0
Maturities and
prepayments                     (177,500)         1.94          -        (1,305,000)         2.18          -
New FHLB borrowings              650,000          3.68        3.7         1,105,000          1.96        3.7
Ending balance          $      2,062,500          2.44        2.5       $ 1,590,000          1.88        3.3




                                       36
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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 non-amortizing term borrowings for the next four
quarters as of September 30, 2022.
                                     December 31,       March 31,        June 30,       September 30,
                                         2022              2023            2023              2023              Total
                                                                   (Dollars in thousands)
Retail/Commercial Certificates:
Amount                              $    364,431       $ 265,239       $ 196,763       $     282,207       $ 1,108,640
Repricing Rate                              1.11  %         1.22  %         0.82  %             1.44  %           1.17  %
Public Unit Certificates:
Amount                              $     46,907       $  17,519       $   3,674       $      10,002       $    78,102
Repricing Rate                              1.82  %         0.77  %         0.27  %             1.04  %           1.41  %
Term Borrowings:
Amount                              $          -       $ 100,000       $ 100,000       $     100,000       $   300,000
Repricing Rate                                 -  %         1.46  %         1.82  %             2.14  %           1.81  %
Total
Amount                              $    411,338       $ 382,758       $ 300,437       $     392,209       $ 1,486,742
Repricing Rate                              1.19  %         1.26  %         1.15  %             1.61  %           1.31  %



The following table sets forth the WAM information for our certificates of
deposit, in years, as of September 30, 2022.
Retail certificates of deposit         1.4
Commercial certificates of deposit     0.9
Public unit certificates of deposit    0.5
Total certificates of deposit          1.4



Stockholders' Equity. Total stockholders' equity at September 30, 2022 was $1.10
billion, a $145.8 million decrease from September 30, 2021. The decrease was
almost entirely related to a reduction in AOCI as a result of unrealized losses
on AFS securities due to an increase in market interest rates.

During the current year, the Company paid cash dividends totaling $103.1
million. These cash dividends totaled $0.76 per share and consisted of a $0.20
per share True Blue Capitol cash dividend, a $0.22 per share cash true-up
dividend related to fiscal year 2021 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, 2022, this ratio was 9.9%. The
increase in unrealized losses on AFS securities and the related impact on AOCI
reduced the Bank's ratio of equity to total assets by approximately 150 basis
points. For additional information, see "Part II, Item 8. Financial Statements
and Supplementary Data - Notes to Consolidated Financial Statements - Note 15.
Accumulated Other Comprehensive Income."

On October 25, 2022, the Company announced a regular quarterly cash dividend of
$0.085 per share, or approximately $11.6 million, payable on November 18, 2022
to stockholders of record as of the close of business on November 4, 2022. On
October 26, 2022, the Company announced a fiscal year 2022 cash true-up dividend
of $0.28 per share, or approximately $38.0 million, related to fiscal year 2022
earnings. The $0.28 per share cash true-up dividend was determined by taking the
difference between total earnings for fiscal year 2022 and total regular
quarterly cash dividends paid during fiscal year 2022, divided by the number of
shares outstanding. The cash true-up dividend is payable on December 2, 2022 to
stockholders of record as of the close of business on November 18, 2022, 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 2022.

                                       37
--------------------------------------------------------------------------------
At September 30, 2022, Capitol Federal Financial, Inc., at the holding company
level, had $104.0 million in cash on deposit at the Bank. For fiscal year 2023,
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 2023
earnings in excess of the amount paid as regular quarterly cash dividends during
fiscal year 2023. It is anticipated that the fiscal year 2023 cash true-up
dividend will be paid in December 2023. 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 level.

As of September 30, 2022, there was $44.7 million authorized under an existing
stock repurchase plan for purchases of the Company's common stock. This plan has
no expiration date; however, the FRB's existing approval for the Company to
repurchase shares extends through August 2023. On October 27, 2022, the Company
announced its intention to resume repurchasing shares under the existing plan.
The amount and timing of the stock repurchases is dependent on the market price
of the Company's common stock. Subsequent to September 30, 2022 and through
November 17, 2022, the Company repurchased 1,368,805 shares at an average price
of $8.09 per share.

The Company works to find multiple ways to provide stockholder value. This has
primarily been through the payment of cash dividends and stock repurchases. 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 in 2020, the Company elected to defer the True Blue dividend
originally planned for June 2020. In June 2021, the Company paid a True Blue
Capitol cash dividend of $0.40 per share. This 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. In June 2022, the Company paid a True Blue
Capitol cash dividend of $0.20 per share. 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 Capitol dividend.

The following table presents regular quarterly cash dividends and special cash
dividends paid in calendar years 2022, 2021, and 2020. The amounts represent
cash dividends paid during each period. The 2022 true-up dividend amount
presented represents the dividend payable on December 2, 2022 to stockholders of
record as of November 18, 2022.
                                                               Calendar Year
                                     2022                           2021                           2020
                            Amount        Per Share        Amount        Per Share        Amount       Per Share
                                              (Dollars in thousands, except per share amounts)
Regular quarterly dividends paid
Quarter ended March 31    $  11,535      $    0.085      $  11,518      $    0.085      $ 11,733      $    0.085
Quarter ended June 30        11,534           0.085         11,516           0.085        11,733           0.085
Quarter ended September
30                           11,534           0.085         11,518           0.085        11,733           0.085
Quarter ended December 31    11,508           0.085         11,535           0.085        11,514           0.085
True-up dividends paid       37,701           0.280         29,850           0.220        17,614           0.130
True Blue Capitol
dividends paid               27,143           0.200         54,210           0.400             -               -
Calendar year-to-date
dividends paid            $ 110,955      $    0.820      $ 130,147      $    0.960      $ 64,327      $    0.470



                                       38
--------------------------------------------------------------------------------
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 2022 to 2021.
For the comparison of fiscal years 2021 to 2020, 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, 2021. 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,
                                                        2022 vs. 2021
                                                  Increase (Decrease) Due to
                                            Volume(1)              Rate         Total
                                                    (Dollars in thousands)
Interest-earning assets:
Loans receivable                      $     5,333               $ (6,699)     $ (1,366)
MBS                                        (1,338)                  (655)       (1,993)
Investment securities                         246                    197           443
FHLB stock                                  4,530                  1,585         6,115
Cash and cash equivalents                   9,569                  8,591        18,160
Total interest-earning assets              18,340                  3,019    

21,359


Interest-bearing liabilities:
Checking                                       63                    (82)          (19)
Savings                                        31                    (11)           20
Money market                                  606                   (156)          450
Certificates of deposit                    (6,461)                (7,940)      (14,401)
Borrowings                                 19,856                 (2,140)       17,716
Total interest-bearing liabilities         14,095                (10,329)   

3,766


Net change in net interest income     $     4,245               $ 13,348    

$ 17,593




(1)The increases attributable to changes in volume related to FHLB stock, cash
and cash equivalents, and borrowings were due primarily to the leverage strategy
being utilized during the current year and not being utilized during the prior
year.
                                       39
--------------------------------------------------------------------------------
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 2020 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, 2021. 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,
                                             2022                                         2021
                              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                 $  3,985,267      $ 129,392       3.25  %    $ 3,966,059      $ 137,461       3.47  %
Correspondent purchased       2,072,677         55,227       2.66         2,010,823         48,066       2.39
Bulk purchased                  159,152          2,053       1.29           191,029          3,601       1.89
Total one- to four-family
loans                         6,217,096        186,672       3.00         6,167,911        189,128       3.07
Commercial loans                884,126         37,223       4.15           788,702         36,085       4.51
Consumer loans                   93,544          4,636       4.96           101,277          4,684       4.63
Total loans receivable(1)     7,194,766        228,531       3.17         7,057,890        229,897       3.25
MBS(2)                        1,354,080         19,406       1.43         1,446,466         21,399       1.48
Investment
securities(2)(3)                523,170          3,268       0.62           482,641          2,825       0.59
FHLB stock(4)                   149,236         10,031       6.72            77,250          3,916       5.07
Cash and cash
equivalents(5)                1,562,274         18,304       1.16           131,798            144       0.11
Total interest-earning
assets                       10,783,526        279,540       2.59         9,196,045        258,181       2.80
Other non-interest-earning
assets                          343,311                                     443,724
Total assets               $ 11,126,837                                 $ 9,639,769

Liabilities and
stockholders' equity:
Interest-bearing
liabilities:
Checking                   $  1,056,303            752       0.07       $   972,920            772       0.08
Savings                         543,609            299       0.06           487,146            280       0.06
Money market                  1,840,898          4,578       0.25         1,598,838          4,128       0.26
Retail certificates           2,203,452         27,664       1.26         2,491,427         40,475       1.62
Commercial certificates         103,865            666       0.64           197,384          1,559       0.79
Wholesale certificates          150,689            497       0.33           252,623          1,192       0.47
Total deposits                5,898,816         34,456       0.58         6,000,338         48,406       0.81
Borrowings(6)                 3,288,348         52,490       1.58         1,636,399         34,774       2.11
Total interest-bearing
liabilities                   9,187,164         86,946       0.94         7,636,737         83,180       1.09
Non-interest-bearing
deposits                        573,954                                     509,778
Other non-interest-bearing
liabilities                     178,526                                     219,328
Stockholders' equity          1,187,193                                   1,273,926
Total liabilities
and stockholders' equity   $ 11,126,837                                 $ 9,639,769

Net interest income(7)                       $ 192,594                                   $ 175,001
Net interest-earning
assets                     $  1,596,362                                 $ 1,559,308
Net interest margin(8)(9)                                    1.79                                        1.90
Ratio of interest-earning assets to interest-bearing
liabilities                                                    1.17x                                       1.20x




                                       40
--------------------------------------------------------------------------------
(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 $1.7 million and $6.6 million for the years ended
September 30, 2022 and 2021, respectively.
(4)Included in this line, for the year ended September 30, 2022, is FHLB stock
related to the leverage strategy with an average outstanding balance $71.0
million and dividend income of $4.8 million at a weighted average yield of
6.75%, and FHLB stock not related to the leverage strategy with an average
outstanding balance of $78.2 million and dividend income of $5.2 million at a
weighted average yield of 6.69%. There was no FHLB stock related to the leverage
strategy during the year ended September 30, 2021.
(5)The average balance of cash and cash equivalents includes an average balance
of cash related to the leverage strategy of $1.51 billion during the year ended
September 30, 2022. There were no cash and cash equivalents related to the
leverage strategy during the year ended September 30, 2021.
(6)Included in this line, for the year ended September 30, 2022, are FHLB
borrowings related to the leverage strategy with an average outstanding balance
of $1.58 billion and interest paid of $18.5 million, at a weighted average rate
of 1.15%, and FHLB borrowings not related to the leverage strategy with an
average outstanding balance of $1.71 billion and interest paid of $34.0 million,
at a weighted average rate of 1.98%. There were no FHLB borrowings related to
the leverage strategy during the year ended September 30, 2021. 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.
(7)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.
(8)Net interest margin represents net interest income as a percentage of average
interest-earning assets.
(9)The table below provides a reconciliation between certain performance ratios
presented in accordance with accounting principles generally accepted in the
United States of America ("GAAP") and the performance ratios excluding the
effects of the leverage strategy, which are not presented in accordance with
GAAP. Management believes it is important for comparability purposes to provide
the performance ratios without the leverage strategy because of the unique
nature of the leverage strategy. The leverage strategy reduces some of our
performance ratios due to the amount of earnings associated with the transaction
in comparison to the size of the transaction, while increasing our net income.
The pre-tax yield on the leverage strategy was 0.25% for the year ended
September 30, 2022.
                                                      For the Year Ended September 30,
                                              2022                                         2021
                              Actual        Leverage       Adjusted        Actual       Leverage       Adjusted
                              (GAAP)        Strategy      (Non-GAAP)       (GAAP)       Strategy      (Non-GAAP)
Yield on interest-earning
assets                          2.59  %      (0.19) %         2.78  %       2.80  %          -  %         2.80  %
Cost of interest-bearing
liabilities                     0.94          0.04            0.90          1.09             -            1.09

Net interest margin             1.79         (0.25)           2.04          1.90             -            1.90



                                       41

——————————————————————————–

Comparison of Operating Results for the Years Ended September 30, 2022 and 2021


The Company recognized net income of $84.5 million, or $0.62 per share, for the
current year compared to net income of $76.1 million, or $0.56 per share, for
the prior year. The increase in net income was due to an increase in net
interest income, partially offset by higher income tax expense and a lower
negative provision for credit losses. The net interest margin decreased 11 basis
points, from 1.90% for the prior year to 1.79% for the current year. Excluding
the effects of the leverage strategy, the net interest margin would have
increased 14 basis points, from 1.90% for the prior year to 2.04% for the
current year. The increase in net interest margin excluding the effects of the
leverage strategy was due mainly to a reduction in the weighted average cost of
retail certificates of deposit.

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:
                                         2022           2021           Dollars             Percent
                                                (Dollars in thousands)
INTEREST AND DIVIDEND INCOME:
Loans receivable                  $ 228,531      $ 229,897      $            (1,366)          (0.6) %
MBS                                  19,406         21,399                   (1,993)          (9.3)
Cash and cash equivalents            18,304            144                   18,160       12,611.1
FHLB stock                           10,031          3,916                    6,115          156.2
Investment securities                 3,268          2,825                      443           15.7
Total interest and dividend
income                            $ 279,540      $ 258,181      $            21,359            8.3



The decrease in interest income on loans receivable was due to a lower weighted
average rate on the originated and correspondent one- to four-family loan
portfolio during the current year, mostly offset by an increase in the average
balance of the loan portfolio. The lower weighted average rate was due to
endorsements, refinances, originations and purchases at lower market rates at
the time of the transactions in the prior fiscal year, which are being fully
reflected in the current year. Premium amortization related to the one- to
four-family correspondent loan portfolio decreased significantly compared to the
prior year due to the slow-down in prepayments and endorsements resulting from
the increase in market interest rates during the last half of the current fiscal
year, partially offsetting the reduction in interest income related to a lower
weighted average rate on the one- to four-family portfolio mentioned above.

The decrease in interest income on the MBS portfolio was due primarily to a
decrease in the average balance of the portfolio, as repayments were primarily
used to fund loan growth.


The increase in interest income on cash and cash equivalents and the increase in
dividend income on FHLB stock were due mainly to the leverage strategy being
utilized during the current year and not being utilized during the prior year.
Additionally, market interest rates increased during the year resulting in an
increase in the yield on cash, and FHLB increased the dividend rate paid during
the year.

The increase in interest income on investment securities was due primarily to an
increase in the average balance of the portfolio, along with an increase in the
yield due to purchases at higher market yields during the current year.


                                       42
--------------------------------------------------------------------------------
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:
                                 2022          2021           Dollars            Percent
                                       (Dollars in thousands)
INTEREST EXPENSE:
Borrowings               $   52,490      $ 34,774      $            17,716        50.9  %
Deposits                     34,456        48,406                  (13,950)      (28.8)
Total interest expense   $   86,946      $ 83,180      $             3,766         4.5



The increase in interest expense on borrowings was due to the leverage strategy
being utilized during a portion of the current year and not being utilized
during the prior year. Interest expense on borrowings associated with the
leverage strategy totaled $18.5 million during the current year. Interest
expense on FHLB borrowings not associated with the leverage strategy was lower
in the current year due to terminating or not renewing certain interest rate
swap agreements, not replacing some maturing FHLB advances and prepaying certain
advances during fiscal year 2021, partially offset by an increase in the average
balance due to an increase in FHLB borrowings to fund operational needs during
the latter portion of the current year.

The decrease in interest expense on deposits was due mainly to a decrease in the
weighted average rate paid and the average balance of the retail certificate of
deposit portfolio. Retail certificates of deposit repriced downward during the
prior year and first half of the current year as they were renewed or were
replaced at lower offered rates at the time of the renewal, along with some
certificates of deposit not renewing. During the third quarter of fiscal year
2022, management began to increase rates offered on retail certificates of
deposit and money market accounts to help reduce the outflow from these
portfolios.

Provision for Credit Losses
The Bank recorded a negative provision for credit losses during the current year
of $4.6 million, compared to a negative provision for credit losses of $8.5
million during the prior year. The negative provision in the current year was
comprised of a $3.6 million decrease in the ACL for loans and a $992 thousand
decrease in reserves for off-balance sheet credit exposures. The negative
provision for credit losses associated with the ACL in the current year was due
primarily to a reduction in commercial loan qualitative factors, partially
offset by an increase in ACL related to loan growth during the current year and
a less favorable economic forecast compared to the prior year. The negative
provision for credit losses associated with the reserve for off-balance sheet
credit exposures in the current year was due primarily to a reduction in
commercial loan qualitative factors, partially offset by growth in commercial
construction exposures. See additional discussion regarding the Bank's ACL and
reserve for off-balance sheet credit exposures at September 30, 2022 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.

                                       43
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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:

                                            2022          2021           Dollars            Percent
                                                  (Dollars in thousands)
NON-INTEREST INCOME:
Deposit service fees                $   13,798      $ 12,282      $             1,516         12.3  %
Insurance commissions                    2,947         3,030                      (83)        (2.7)
Gain on sale of Visa Class B shares          -         7,386                   (7,386)      (100.0)
Other non-interest income                6,085         5,388                      697         12.9
Total non-interest income           $   22,830      $ 28,086      $            (5,256)       (18.7)



The increase in deposit service fees was due primarily to an increase in debit
card income and service charges as a result of higher transaction and settlement
volume, in addition to an increase in the average transaction amount. During the
prior year, the Bank sold its Visa Class B shares, resulting in a $7.4 million
gain, with no similar transaction during the current year. The increase in other
non-interest income was due primarily to a gain on a loan-related financial
derivative agreement.

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:
                                           2022           2021          Dollars            Percent
                                                  (Dollars in thousands)
NON-INTEREST EXPENSE:
Salaries and employee benefits      $  56,600      $  56,002      $              598          1.1  %
Information technology and related
expense                                18,311         17,922                     389          2.2
Occupancy, net                         14,370         14,045                     325          2.3
Regulatory and outside services         6,192          5,764                     428          7.4
Advertising and promotional             5,178          5,133                      45          0.9
Federal insurance premium               3,020          2,545                     475            18.7
Deposit and loan transaction costs      2,797          2,761                      36          1.3
Office supplies and related expense     1,951          1,715                     236         13.8
Loss on interest rate swap
termination                                 -          4,752                  (4,752)      (100.0)

Other non-interest expense              4,432          4,930                    (498)       (10.1)
Total non-interest expense          $ 112,851      $ 115,569      $           (2,718)        (2.4)



The increase in salaries and employee benefits was due primarily to merit
increases and higher benefits expense, partially offset by a lower employee
count during the current year. The increase in regulatory and outside services
was due to higher consulting expenses related to the Bank's upcoming digital
transformation project. The increase in federal insurance premium expense was
due mainly to an increase in average assets as a result of the leverage strategy
being utilized during the current year. During the prior year, the Bank
terminated $200.0 million of interest rate swaps, resulting in a loss of $4.8
million, with no similar transaction in the current fiscal year. The decrease in
other non-interest expense was due primarily to the write-down during the prior
year of a property that had previously served as one of the Bank's branch
locations, partially offset by higher debit card fraud losses in the current
year.

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The Company’s efficiency ratio was 52.39% for the current year compared to
56.91% for the prior year. The improvement in the efficiency ratio was due
primarily to higher net interest income.


Management anticipates information technology and related expenses will be
approximately $6 million higher in fiscal year 2023 due to the digital
transformation. In addition, it is expected there will be approximately $1
million more of information technology and related expenses in fiscal year 2023
associated with projects outside of the digital transformation and due to
general cost increases. Overall, it is anticipated information technology and
related expenses will be approximately $7 million higher in fiscal year 2023, or
approximately $25 million for the year. Salaries and employee benefits is
expected to be approximately $3.5 million higher in fiscal year 2023 due
primarily to merit increases and salary adjustments. Federal insurance premium
expense is anticipated to be approximately $2 million higher in fiscal year
2023, due to the increase in the assessment rate beginning in January 2023, and
reflecting the anticipation that leverage strategy utilization in fiscal year
2023 will be lower than fiscal year 2022.

In fiscal year 2024, information technology and related expense is expected to
decrease approximately $3 million from fiscal year 2023 levels due to a
reduction in professional service costs.


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 and effective tax rate.
                                        For the Year Ended
                                           September 30,                  Change Expressed in:
                                            2022           2021           Dollars            Percent
                                                   (Dollars in thousands)

Income before income tax expense $ 107,203 $ 96,028 $

    11,175        11.6  %
Income tax expense                     22,750         19,946                     2,804        14.1
Net income                          $  84,453       $ 76,082       $             8,371        11.0

Effective Tax Rate                       21.2  %        20.8  %



The increase in income tax expense was due primarily to higher pretax income in
the current year. Management anticipates the effective tax rate for fiscal year
2023 will be approximately 20% to 21%.

Comparison of Operating Results for the Years Ended September 30, 2021 and 2020


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, 2021 and 2020" in the Company's Annual
Report on   Form 10-K   for the fiscal year ended September 30, 2021.

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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 long-term liquidity needs and the Bank's interest rate risk
with the intention to improve the earnings of the Bank while maintaining capital
ratios that meet the 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 FHLB borrowing limit was 50% of Bank Call Report total assets as of
September 30, 2022, as approved by the president of FHLB. When the leverage
strategy is in place, the Bank maintains the resulting excess cash reserves from
the FHLB borrowings at the FRB of Kansas City, which can be used to meet any
short-term liquidity needs. Additionally, FHLB borrowings may exceed 40% of Bank
Call Report total assets as long as the Bank continues its leverage strategy and
FHLB senior management continues to approve the Bank's borrowing limit being in
excess of 40% of Call Report total assets. All or a portion of the short-term
FHLB borrowings in conjunction with the leverage strategy can be repaid at
maturity, if necessary or desired. 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 that is not in conjunction with
a planned strategy, such as the leverage strategy, the Bank will likely utilize
long-term wholesale borrowing sources such as FHLB advances and/or repurchase
agreements to provide long-term, fixed-rate funding. The maturities of these
long-term borrowings are generally staggered in order to mitigate the risk of a
highly negative cash flow position at maturity. The Bank's internal policy
limits total borrowings to 55% of total assets. At September 30, 2022, the Bank
had total borrowings, at par, of $2.14 billion, or approximately 22% of total
assets, all of which were FHLB borrowings. Of this amount, $329.7 million were
advances scheduled to mature in the next 12 months. FHLB borrowings are secured
by certain qualifying loans pursuant to a blanket collateral agreement with
FHLB. Additionally, the Bank had pledged securities with an estimated fair value
of $572.9 million as collateral for FHLB borrowings at September 30, 2022.

At September 30, 2022, 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, 2022, the Bank had $863.0 million 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, 2022, the
Bank's policy allowed for combined brokered and public unit certificates of
deposit up to 15% of total deposits. At September 30, 2022, the Bank did not
have any brokered certificates of deposit and public unit certificates of
deposit were approximately 2% of total deposits. The Bank had pledged securities
with an estimated fair value
                                       46

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of $125.5 million as collateral for public unit certificates of deposit at
September 30, 2022. The securities pledged as collateral for public unit
certificates of deposit are held under joint custody with FHLB and generally
will be released upon deposit maturity.


At September 30, 2022, $1.19 billion of the Bank's certificate of deposit
portfolio was scheduled to mature within the next 12 months, including $78.1
million of public unit certificates of deposit and $27.0 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.
Due to the nature of commercial certificates of deposit, retention rates are not
as predictable as for retail certificates of deposit.

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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