Loans Receivable And Allowance For Credit Losses

6 Months Ended

Mar. 31, 2021

Loans and Leases Receivable Disclosure [Abstract]

Loans Receivable And Allowance For Credit Losses

LOANS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES

Loans receivable, net at the dates presented is summarized as follows:

	March 31, 2021		September 30, 2020
	(Dollars in thousands)
One- to four-family:
Originated	$	3,967,008	$	3,937,310
Correspondent purchased	1,915,027		2,101,082
Bulk purchased	188,733		208,427
Construction	28,582		34,593
Total	6,099,350		6,281,412
Commercial:
Commercial real estate	664,533		626,588
Commercial and industrial	77,210		97,614
Construction	53,271		105,458
Total	795,014		829,660
Consumer:
Home equity	90,052		103,838
Other	8,743		10,086
Total	98,795		113,924
Total loans receivable	6,993,159		7,224,996
Less:
ACL	23,397		31,527
Discounts/unearned loan fees	30,295		29,190
Premiums/deferred costs	(34,069)		(38,572)
	$	6,973,536	$	7,202,851

Lending Practices and Underwriting Standards - Originating and purchasing one- to four-family loans is the Bank's primary lending business. The Bank also originates consumer loans primarily secured by one- to four-family residential properties and originates and participates in commercial loans. The Bank has a loan concentration in one- to four-family loans and a geographic concentration of these loans in Kansas and Missouri.

One- to four-family loans - Full documentation to support an applicant's credit and income, and sufficient funds to cover all applicable fees and reserves at closing, are required on all loans. Generally, loans are underwritten according to the "ability to repay" and "qualified mortgage" standards, as issued by the Consumer Financial Protection Bureau ("CFPB"). Properties securing one- to four-family loans are appraised by either staff appraisers or fee appraisers, both of which are independent of the loan origination function.

The underwriting standards for loans purchased from correspondent lenders are generally similar to the Bank's internal underwriting standards. The underwriting of loans purchased from correspondent lenders on a loan-by-loan basis is performed by the Bank's underwriters.

The Bank also originates owner-occupied construction-to-permanent loans secured by one- to four-family residential real estate. Construction draw requests and the supporting documentation are reviewed and approved by designated personnel. The Bank also performs regular documented inspections of the construction project to ensure the funds are being used for the intended purpose and the project is being completed according to the plans and specifications provided.

Commercial loans - The Bank's commercial real estate and commercial construction loans are originated by the Bank or are in participation with a lead bank. When underwriting a commercial real estate or commercial construction loan, several factors are considered, such as the income producing potential of the property, cash equity provided by the borrower, the financial strength of the borrower, managerial expertise of the borrower or tenant, feasibility studies, lending experience with the borrower and the marketability of the property. For commercial real estate and commercial construction participation loans, the Bank performs the same underwriting procedures as if the loan was being originated by the Bank. At the time of origination, LTV ratios on commercial

real estate loans generally do not exceed 85% of the appraised value of the property securing the loans and the minimum debt service coverage ratio is generally 1.15. For commercial construction loans, LTV ratios generally do not exceed 80% of the projected appraised value of the property securing the loans and the minimum debt service coverage ratio is generally 1.15, but it applies to the projected cash flows, and the borrower must have successful experience with the construction and operation of properties similar to the subject property. Appraisals on properties securing these loans are performed by independent state certified fee appraisers.

The Bank's commercial and industrial loans are generally made in the Bank's market areas and are underwritten on the basis of the borrower's ability to service the debt from income. With the exception of Paycheck Protection Program ("PPP") loans, working capital loans are primarily collateralized by short-term assets whereas term loans are primarily collateralized by long-term assets. In general, commercial and industrial loans involve more credit risk than commercial real estate loans due to the type of collateral securing these loans. As a result of these additional complexities, variables and risks, these loans require more thorough underwriting and servicing than other types of loans.

Consumer loans - 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 deposits. The Bank also originates a very limited amount of unsecured loans. The majority of the consumer loan portfolio is comprised of home equity lines of credit for which the Bank also has the first mortgage or the home equity line of credit is in the first lien position.

The underwriting standards for consumer loans include a determination of an applicant's payment history on other debts and an assessment of an applicant's ability to meet existing obligations and payments on the proposed loan. Although creditworthiness of an applicant is a primary consideration, the underwriting process also includes a comparison of the value of the security in relation to the proposed loan amount.

Credit Quality Indicators - Based on the Bank's lending emphasis and underwriting standards, management has segmented the loan portfolio into three segments: (1) one- to four-family; (2) consumer; and (3) commercial. See discussion regarding the credit risks for these loan segments in Note 1. Summary of Significant Accounting Policies - Allowance for Credit Losses. These segments are further divided into classes for purposes of providing disaggregated credit quality information about the loan portfolio. The classes are: one- to four-family - originated, one- to four-family - correspondent purchased, one- to four-family - bulk purchased, consumer - home equity, consumer - other, commercial - commercial real estate, and commercial - commercial and industrial. One- to four-family construction loans are included in either the originated class or correspondent purchased class, and commercial construction loans are included in the commercial real estate class. As part of the on-going monitoring of the credit quality of the Company's loan portfolio, management tracks certain credit quality indicators including trends related to loan classification and delinquency status.

Loan Classification - In accordance with the Bank's asset classification policy, management regularly reviews the problem loans in the Bank's portfolio to determine whether any loans require classification. Loan classifications are defined as follows:

•Special mention - These loans are performing loans on which known information about the collateral pledged or the possible credit problems of the borrower(s) have caused management to have doubts as to the ability of the borrower(s) to comply with present loan repayment terms and which may result in the future inclusion of such loans in the non-performing loan categories.

•Substandard - A loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard loans include those characterized by the distinct possibility the Bank will sustain some loss if the deficiencies are not corrected.

•Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses present make collection or liquidation in full on the basis of currently existing facts and conditions and values highly questionable and improbable.

•Loss - Loans classified as loss are considered uncollectible and of such little value that their continuance as assets on the books is not warranted.

The following table sets forth, as of March 31, 2021, the amortized cost of loans by class of financing receivable, year of origination or most recent credit decision, and loan classification. All revolving lines of credit are presented separately, regardless of origination year. Loans classified as doubtful or loss are individually evaluated for loss. At March 31, 2021, there were no loans classified as doubtful, and all loans classified as loss were fully charged-off. In the table below, certain loans are presented in the "Current Fiscal Year" column and are reported as special mention or substandard. These loans were generally first originated in prior years but were renewed or modified in the current year.

	March 31, 2021
	Current		Fiscal		Fiscal		Fiscal		Fiscal				Revolving
	Fiscal		Year		Year		Year		Year		Prior		Line of
	Year		2020		2019		2018		2017		Years		Credit		Total
	(Dollars in thousands)
One- to four-family:
Originated
Pass	$	546,777	$	765,513	$	378,070	$	288,036	$	324,016	$	1,652,657	$	—	$	3,955,069
Special Mention	241		671		247		348		640		8,129		—		10,276
Substandard	—		991		901		52		260		12,752		—		14,956
Correspondent purchased
Pass	219,320		383,770		103,658		174,282		212,244		834,709		—		1,927,983
Special Mention	—		—		359		—		—		3,564		—		3,923
Substandard	—		—		—		—		—		5,864		—		5,864
Bulk purchased
Pass	—		—		—		—		—		183,816		—		183,816
Special Mention	—		—		—		—		—		95		—		95
Substandard	—		—		—		—		—		5,619		—		5,619
	766,338		1,150,945		483,235		462,718		537,160		2,707,205		—		6,107,601
Commercial:
Commercial real estate
Pass	171,301		151,602		103,851		93,911		43,492		41,108		5,670		610,935
Special Mention	50,000		—		—		—		—		50,640		—		100,640
Substandard	1,288		674		227		688		28		—		—		2,905
Commercial and industrial
Pass	31,810		18,361		8,487		3,475		1,948		785		9,593		74,459
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		91		51		—		1,450		1,592
	254,399		170,637		112,565		98,165		45,519		92,533		16,713		790,531
Consumer:
Home equity
Pass	917		3,113		2,118		1,886		697		3,214		77,132		89,077
Special Mention	—		—		38		13		—		8		189		248
Substandard	—		60		—		—		—		16		671		747
Other
Pass	1,843		2,880		1,654		1,244		622		233		235		8,711
Special Mention	—		—		2		—		—		—		—		2
Substandard	—		—		9		3		4		—		—		16
	2,760		6,053		3,821		3,146		1,323		3,471		78,227		98,801
Total	$	1,023,497	$	1,327,635	$	599,621	$	564,029	$	584,002	$	2,803,209	$	94,940	$	6,996,933

The following table sets forth the recorded investment in loans classified as special mention or substandard, by class, at September 30, 2020 (prior to the adoption of CECL). At that date, there were no loans classified as doubtful, and all loans classified as loss were fully charged-off.

	September 30, 2020
	Special Mention		Substandard
	(Dollars in thousands)
One- to four-family:
Originated	$	9,249	$	15,729
Correspondent purchased	2,076		4,512
Bulk purchased	—		5,319
Commercial:
Commercial real estate	50,957		3,541
Commercial and industrial	1,040		1,368
Consumer:
Home equity	331		581
Other	—		8
	$	63,653	$	31,058

Delinquency Status - The following table sets forth, as of March 31, 2021, the amortized cost of current loans, loans 30 to 89 days delinquent, and loans 90 or more days delinquent or in foreclosure ("90+/FC"), by class of financing receivable and year of origination or most recent credit decision. All revolving lines of credit are presented separately, regardless of origination year.

	March 31, 2021
	Current		Fiscal		Fiscal		Fiscal		Fiscal				Revolving
	Fiscal		Year		Year		Year		Year		Prior		Line of
	Year		2020		2019		2018		2017		Years		Credit		Total
	(Dollars in thousands)
One- to four-family:
Originated
Current	$	547,018	$	767,175	$	379,030	$	288,247	$	324,464	$	1,665,823	$	—	$	3,971,757
30-89	—		—		—		137		192		3,798		—		4,127
90+/FC	—		—		188		52		260		3,917		—		4,417
Correspondent purchased
Current	219,320		383,770		103,847		173,572		211,843		838,669		—		1,931,021
30-89	—		—		170		710		401		1,671		—		2,952
90+/FC	—		—		—		—		—		3,797		—		3,797
Bulk purchased
Current	—		—		—		—		—		185,979		—		185,979
30-89	—		—		—		—		—		356		—		356
90+/FC	—		—		—		—		—		3,195		—		3,195
	766,338		1,150,945		483,235		462,718		537,160		2,707,205		—		6,107,601
Commercial:
Commercial real estate
Current	222,234		151,603		103,851		94,336		43,520		91,562		5,670		712,776
30-89	355		—		—		233		—		186		—		774
90+/FC	—		673		227		30		—		—		—		930
Commercial and industrial
Current	31,810		18,361		8,487		3,475		1,948		785		11,010		75,876
30-89	—		—		—		—		—		—		33		33
90+/FC	—		—		—		91		51		—		—		142
	254,399		170,637		112,565		98,165		45,519		92,533		16,713		790,531
Consumer:
Home equity
Current	917		3,113		2,156		1,899		697		3,197		77,326		89,305
30-89	—		—		—		—		—		36		217		253
90+/FC	—		60		—		—		—		5		449		514
Other
Current	1,843		2,876		1,651		1,244		616		215		234		8,679
30-89	—		4		5		—		6		18		1		34
90+/FC	—		—		9		3		4		—		—		16
	2,760		6,053		3,821		3,146		1,323		3,471		78,227		98,801
Total	$	1,023,497	$	1,327,635	$	599,621	$	564,029	$	584,002	$	2,803,209	$	94,940	$	6,996,933

Delinquent and Nonaccrual Loans - The following tables present the amortized cost at March 31, 2021 and, prior to the adoption of CECL, the recorded investment, which is identical to amortized cost, at September 30, 2020, by class, of loans 30 to 89 days delinquent, loans 90 or more days delinquent or in foreclosure, total delinquent loans, current loans, and total. At March 31, 2021 and September 30, 2020, all loans 90 or more days delinquent were on nonaccrual status.

	March 31, 2021
			90 or More Days		Total				Total
	30 to 89 Days		Delinquent or		Delinquent		Current		Amortized
	Delinquent		in Foreclosure		Loans		Loans		Cost
	(Dollars in thousands)
One- to four-family:
Originated	$	4,127	$	4,417	$	8,544	$	3,971,757	$	3,980,301
Correspondent purchased	2,952		3,797		6,749		1,931,021		1,937,770
Bulk purchased	356		3,195		3,551		185,979		189,530
Commercial:
Commercial real estate	774		930		1,704		712,776		714,480
Commercial and industrial	33		142		175		75,876		76,051
Consumer:
Home equity	253		514		767		89,305		90,072
Other	34		16		50		8,679		8,729
	$	8,529	$	13,011	$	21,540	$	6,975,393	$	6,996,933

	September 30, 2020
			90 or More Days		Total				Total
	30 to 89 Days		Delinquent or		Delinquent		Current		Recorded
	Delinquent		in Foreclosure		Loans		Loans		Investment
	(Dollars in thousands)
One- to four-family:
Originated	$	3,001	$	4,347	$	7,348	$	3,950,387	$	3,957,735
Correspondent purchased	3,170		2,433		5,603		2,122,085		2,127,688
Bulk purchased	2,558		2,938		5,496		203,844		209,340
Commercial:
Commercial real estate	40		1,206		1,246		728,191		729,437
Commercial and industrial	5		157		162		96,124		96,286
Consumer:
Home equity	323		296		619		103,210		103,829
Other	75		8		83		9,980		10,063
	$	9,172	$	11,385	$	20,557	$	7,213,821	$	7,234,378

The amortized cost of mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process as of March 31, 2021 and September 30, 2020 was $910 thousand and $1.5 million, respectively, which is included in loans 90 or more days delinquent or in foreclosure in the tables above. The carrying value of residential OREO held as a result of obtaining physical possession upon completion of a foreclosure or through completion of a deed in lieu of foreclosure was $105 thousand at March 31, 2021 and $183 thousand at September 30, 2020.

The following table presents the amortized cost at March 31, 2021 and, prior to the adoption of CECL, the recorded investment at September 30, 2020, by class, of loans classified as nonaccrual. Additionally, the amortized cost of nonaccrual loans that had no related ACL is presented as of March 31, 2021, all of which were individually evaluated for loss and any identified losses have been charged off.

	March 31, 2021				September 30, 2020
	Nonaccrual Loans		Nonaccrual Loans with No ACL		Nonaccrual Loans
	(Dollars in thousands)
One- to four-family:
Originated	$	6,062	$	3,040	$	5,037
Correspondent purchased	3,796		307		2,433
Bulk purchased	3,195		1,086		2,938
Commercial:
Commercial real estate	1,566		534		1,663
Commercial and industrial	142		91		157
Consumer:
Home equity	514		84		305
Other	16		—		8
	$	15,291	$	5,142	$	12,541

Troubled Debt Restructurings - The following tables present the amortized cost for the current period and, prior to the adoption of CECL, the recorded investment for the prior period, prior to restructuring and immediately after restructuring in all loans restructured during the periods presented. These tables do not reflect the amortized cost at the end of the periods indicated. Any increase in the amortized cost at the time of the restructuring was generally due to the capitalization of delinquent interest and/or escrow balances.

	For the Three Months Ended					For the Six Months Ended
	March 31, 2021					March 31, 2021
	Number	Pre-		Post-		Number	Pre-		Post-
	of	Restructured		Restructured		of	Restructured		Restructured
	Contracts	Outstanding		Outstanding		Contracts	Outstanding		Outstanding
	(Dollars in thousands)
One- to four-family:
Originated	2	$	871	$	762	6	$	1,518	$	1,407
Correspondent purchased	—	—		—		—	—		—
Bulk purchased	—	—		—		—	—		—
Commercial:
Commercial real estate	—	—		—		—	—		—
Commercial and industrial	—	—		—		—	—		—
Consumer:
Home equity	—	—		—		—	—		—
Other	—	—		—		—	—		—
	2	$	871	$	762	6	$	1,518	$	1,407

	For the Three Months Ended					For the Six Months Ended
	March 31, 2020					March 31, 2020
	Number	Pre-		Post-		Number	Pre-		Post-
	of	Restructured		Restructured		of	Restructured		Restructured
	Contracts	Outstanding		Outstanding		Contracts	Outstanding		Outstanding
	(Dollars in thousands)
One- to four-family:
Originated	3	$	138	$	140	5	$	241	$	242
Correspondent purchased	1	192		191		1	192		191
Bulk purchased	—	—		—		1	75		134
Commercial:
Commercial real estate	1	837		837		1	837		837
Commercial and industrial	—	—		—		—	—		—
Consumer:
Home equity	2	45		44		2	45		44
Other	—	—		—		—	—		—
	7	$	1,212	$	1,212	10	$	1,390	$	1,448

The following table provides information on TDRs that became delinquent during the periods presented within 12 months after being restructured.

	For the Three Months Ended						For the Six Months Ended
	March 31, 2021			March 31, 2020			March 31, 2021			March 31, 2020
	Number of	Amortized		Number of	Recorded		Number of	Amortized		Number of	Recorded
	Contracts	Cost		Contracts	Investment		Contracts	Cost		Contracts	Investment
	(Dollars in thousands)
One- to four-family:
Originated	—	$	—	—	$	—	—	$	—	1	$	38
Correspondent purchased	—	—		—	—		—	—		—	—
Bulk purchased	—	—		—	—		—	—		1	134
Commercial:
Commercial real estate	—	—		—	—		—	—		—	—
Commercial and industrial	—	—		—	—		—	—		—	—
Consumer:
Home equity	—	—		1	9		—	—		1	9
Other	—	—		—	—		—	—		—	—
	—	$	—	1	$	9	—	$	—	3	$	181

Impaired Loans - The following information pertains to impaired loans, by class, as of the date and for the period presented (prior to the adoption of CECL). Prior to the adoption of CECL, a loan was considered impaired when, based on current information and events, it was probable that the Bank would be unable to collect all amounts due, including principal and interest, according to the original contractual terms of the loan agreement.

							For the Three Months Ended				For the Six Months Ended
	September 30, 2020						March 31, 2020				March 31, 2020
			Unpaid				Average		Interest		Average		Interest
	Recorded		Principal		Related		Recorded		Income		Recorded		Income
	Investment		Balance		ACL		Investment		Recognized		Investment		Recognized
With no related allowance recorded
One- to four-family:
Originated	$	12,385	$	12,813	$	—	$	14,441	$	161	$	14,526	$	322
Correspondent purchased	1,955		2,058		—		1,854		19		1,814		37
Bulk purchased	3,843		4,302		—		4,965		50		4,965		102
Commercial:
Commercial real estate	1,052		1,379		—		547		4		312		4
Commercial and industrial	99		244		—		—		—		19		—
Consumer:
Home equity	280		360		—		332		5		335		11
Other	—		45		—		—		—		—		—
	19,614		21,201		—		22,139		239		21,971		476
With an allowance recorded
One- to four-family:
Originated	—		—		—		—		—		—		—
Correspondent purchased	—		—		—		—		—		—		—
Bulk purchased	—		—		—		—		—		—		—
Commercial:
Commercial real estate	660		660		83		—		—		—		—
Commercial and industrial	1,269		1,268		240		2,244		42		1,282		54
Consumer:
Home equity	—		—		—		—		—		—		—
Other	—		—		—		—		—		—		—
	1,929		1,928		323		2,244		42		1,282		54
Total
One- to four-family:
Originated	12,385		12,813		—		14,441		161		14,526		322
Correspondent purchased	1,955		2,058		—		1,854		19		1,814		37
Bulk purchased	3,843		4,302		—		4,965		50		4,965		102
Commercial:
Commercial real estate	1,712		2,039		83		547		4		312		4
Commercial and industrial	1,368		1,512		240		2,244		42		1,301		54
Consumer:
Home equity	280		360		—		332		5		335		11
Other	—		45		—		—		—		—		—
	$	21,543	$	23,129	$	323	$	24,383	$	281	$	23,253	$	530

Allowance for Credit Losses - The following is a summary of ACL activity, by loan portfolio segment, for the periods presented. Activity during the three and six months ended March 31, 2020 occurred prior to the adoption of CECL.

	For the Three Months Ended March 31, 2021
	One- to Four-Family
			Correspondent		Bulk
	Originated		Purchased		Purchased		Total		Commercial		Consumer		Total
	(Dollars in thousands)
Beginning balance	$	1,538	$	1,758	$	852	$	4,148	$	21,707	$	270	$	26,125
Charge-offs	(110)		—		(21)		(131)		—		(7)		(138)
Recoveries	57		—		—		57		8		3		68
Provision for credit losses	51		(53)		(84)		(86)		(2,558)		(14)		(2,658)
Ending balance	$	1,536	$	1,705	$	747	$	3,988	$	19,157	$	252	$	23,397

	For the Six Months Ended March 31, 2021
	One- to Four-Family
			Correspondent		Bulk
	Originated		Purchased		Purchased		Total		Commercial		Consumer		Total
	(Dollars in thousands)
Beginning balance	$	6,085	$	2,691	$	467	$	9,243	$	21,800	$	484	$	31,527
Adoption of CECL	(4,452)		(367)		436		(4,383)		(193)		(185)		(4,761)
Balance at October 1, 2020	1,633		2,324		903		4,860		21,607		299		26,766
Charge-offs	(124)		—		(21)		(145)		(515)		(10)		(670)
Recoveries	91		—		—		91		20		25		136
Provision for credit losses	(64)		(619)		(135)		(818)		(1,955)		(62)		(2,835)
Ending balance	$	1,536	$	1,705	$	747	$	3,988	$	19,157	$	252	$	23,397

	For the Three Months Ended March 31, 2020
	One- to Four-Family
			Correspondent		Bulk
	Originated		Purchased		Purchased		Total		Commercial		Consumer		Total
	(Dollars in thousands)
Beginning balance	$	2,047	$	1,200	$	612	$	3,859	$	5,418	$	158	$	9,435
Charge-offs	(46)		—		—		(46)		(325)		(4)		(375)
Recoveries	3		—		—		3		54		4		61
Provision for credit losses	4,463		2,155		(55)		6,563		15,181		331		22,075
Ending balance	$	6,467	$	3,355	$	557	$	10,379	$	20,328	$	489	$	31,196

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

The following is a summary of the loan portfolio and related ACL balances by loan portfolio segment disaggregated by the Company's impairment method as of September 30, 2020 (prior to the adoption of CECL).

	September 30, 2020
	One- to Four-Family
			Correspondent		Bulk
	Originated		Purchased		Purchased		Total		Commercial		Consumer		Total
	(Dollars in thousands)
Recorded investment in loans:
Collectively evaluated for impairment	$	3,945,350	$	2,125,733	$	205,497	$	6,276,580	$	822,643	$	113,612	$	7,212,835
Individually evaluated for impairment	12,385		1,955		3,843		18,183		3,080		280		21,543
	$	3,957,735	$	2,127,688	$	209,340	$	6,294,763	$	825,723	$	113,892	$	7,234,378
ACL for loans:
Collectively evaluated for impairment	$	6,085	$	2,691	$	467	$	9,243	$	21,477	$	484	$	31,204
Individually evaluated for impairment	—		—		—		—		323		—		323
	$	6,085	$	2,691	$	467	$	9,243	$	21,800	$	484	$	31,527

The key assumptions in the Company's ACL model include the economic forecast, the forecast and reversion to mean time periods, and prepayment and curtailment assumptions. Management also considered certain qualitative factors when evaluating the adequacy of the ACL at March 31, 2021. The key assumptions utilized in estimating the Company's ACL at March 31, 2021 are discussed below.

•Economic Forecast - Management considered several economic forecasts provided by a third party and selected the economic forecast believed to be the most appropriate considering the facts and circumstances at March 31, 2021. The forecasted economic indices applied to the model at March 31, 2021 were the national unemployment rate, changes in commercial real estate price index, changes in home values, and changes in the U.S. gross domestic product. The economic index most impactful to all loan pools within the model at March 31, 2021 was the national unemployment rate. The forecast national unemployment rate in the economic scenario selected by management at March 31, 2021 had the national unemployment rate peaking at 6.4% at September 30, 2021 and then a gradual decline to 5.3% at March 31, 2022 which was the end of our four quarter forecast time period.

•Forecast and reversion to mean time period - The forecasted time period for all of the economic indices was four quarters at March 31, 2021. The reversion to mean time period was eight quarters for the national unemployment rate and four quarters for all other economic indices at March 31, 2021.

•Prepayment and curtailment assumptions - The assumptions used at March 31, 2021 were generally based on actual prepayment and curtailment speeds for each respective loan pool in the model.

•Qualitative factors - The qualitative considerations by management at March 31, 2021 included the COVID-19 loan modification programs considering the payment performance of the loans that had exited their deferral periods, the balance and trending of large-dollar special mention commercial loans, and the economic uncertainties related to (1) the job market, specifically the unemployment rate, labor participation rate and the effectiveness of the latest federal stimulus package to the unemployed and the economic stimulus payments to qualifying households, (2) the unevenness of the recovery in certain industries, and (3) the impact to the housing market as a result of the foreclosure moratorium and how the housing market may react when the foreclosure moratorium is eventually lifted. Management determined a qualitative amount was not necessary at March 31, 2021 for the loans in the COVID-19 loan modification program due to the significant decrease in the dollar amount of the loans in the program and the fact that the majority of the loans that have exited the program are current on their payments. See discussion below regarding the qualitative amount at March 31, 2021 for special mention commercial loans and the economic uncertainty.

The decrease in ACL during the current quarter was primarily a result of a negative provision for credit losses of $2.7 million. The negative provision for credit losses was due primarily to a reduction in commercial loan ACL as a result of improvements in the economic forecast used in the model, partially offset by an increase in qualitative factors, primarily the economic uncertainty qualitative factor, along with a change in the mix of the loan portfolio during the current quarter. The balance of the one- to four-family loan portfolio decreased during the quarter, partially offset by an increase in commercial loans. The reduction in ACL related to the decrease in the balance of the one- to four-family loan portfolio during the current quarter was more than offset by the increase in ACL related to an increase in the balance of the commercial loan portfolio.

Reserve for Off-Balance Sheet Credit Exposures - The following is a summary of the changes in reserve for off-balance sheet credit exposures during the periods indicated.

For the Three Months Ended March 31, 2021			For the Six Months Ended March 31, 2021
(Dollars in thousands)
Beginning balance	6,433		Beginning balance	$	—
Provision for credit losses	(306)		Adoption of CECL	7,788
Ending balance	$	6,127	Balance at October 1, 2020	7,788
			Provision for credit losses	(1,661)
			Ending balance	$	6,127

At March 31, 2021, the Company also applied a qualitative factor for economic uncertainty related to the calculation of the reserve for off-balance sheet credit exposures; however, the impact of this qualitative factor was smaller compared to the economic uncertainty factor applied in the calculation of ACL due to consideration of the fact that the majority of off-balance sheet credit exposures are related to credits that have been underwritten during a challenging economic environment and are still meeting/exceeding the Bank's conservative underwriting requirements. The $306 thousand reduction in the reserve during the current quarter, which was recognized as a negative provision for credit losses, was due to an improvement in the economic forecast, along with a change in the mix of off-balance sheet credit exposures. The balance of off-balance sheet credit exposures increased during the current quarter due to an increase in one- to four-family off-balance sheet credit exposures, partially offset by a decrease in commercial off-balance sheet credit exposures. Even though the aggregate amount of off-balance sheet credit exposures increased during the current quarter, the related reserve decreased because one- to four-family off-balance sheet credit exposures have a significantly lower reserve rate than commercial off-balance sheet credit exposures due to differences in credit risk.