Financial Performance - Total assets reached $9.78 billion, stockholders' equity at $1.05 billion, and net income of $68.0 million for fiscal year 2025, reflecting growth from the previous year[2]. - Net income for the fourth quarter was $18.8 million, up from $18.4 million in the prior quarter, with basic and diluted earnings per share of $0.14[6][15]. - Net income for the year ended September 30, 2025, was $68.0 million, or $0.52 per share, compared to $38.0 million, or $0.29 per share, for the prior year, reflecting a significant increase in profitability[28]. - Net income for 2025 was $68,025,000, a 79.0% increase from $38,010,000 in 2024[43]. - Net income for the three months ended September 30, 2025, was $18,813 thousand, slightly higher than $18,382 thousand in the previous quarter, showing a growth of 2.3%[69]. Asset and Loan Growth - Total assets grew to $9,778,701,000 as of September 30, 2025, a 3.5% increase from $9,692,739,000 on June 30, 2025[47]. - The commercial loan portfolio grew by $607.0 million, or 40.2%, during fiscal year 2025, with commercial loans now comprising 26% of the overall loan portfolio[6][9]. - Total loans receivable increased to $8,126,806 thousand for the three months ended September 30, 2025, from $7,996,493 thousand in the previous quarter, reflecting a growth of 1.6%[70]. - Total commercial loans increased to $1,780,034 thousand in 2025, up from $1,378,421 thousand in 2024, with a yield increase from 5.57% to 5.77%[71]. - The total amount of commercial loans for the year ended September 30, 2025, was $901,897, with a weighted average rate of 6.95%[82]. Income and Expense Management - Cash dividends declared for fiscal year 2025 totaled $44.3 million, with a cash dividend of $0.085 per share announced for payment on November 21, 2025[12][14]. - Salaries and employee benefits rose by 4.3% to $15,936,000, contributing to a total non-interest expense increase of 4.9% to $31,018,000[24]. - Total non-interest income increased to $20,725,000 in 2025 from $5,244,000 in 2024, representing a 295.2% increase[38]. - Total non-interest expense for the year ended September 30, 2025, was $117,270 thousand, compared to $111,943 thousand for the previous year, representing an increase of 4.7%[69]. Efficiency and Ratios - The efficiency ratio improved to 56.84% in the fourth quarter, down from 58.26% in the prior quarter, indicating enhanced operational efficiency[6]. - The efficiency ratio improved to 58.33% in 2025 from 66.91% in 2024, reflecting higher net interest income[41]. - Return on average assets improved to 0.71% in 2025 from 0.40% in 2024, while return on average equity increased from 3.69 to 6.54[72]. Credit Quality and Losses - The provision for credit losses decreased to $745,000 from $1.3 million in the prior year, reflecting improved credit quality[36]. - Non-performing assets totaled $48,260,000, accounting for 0.49% of total assets as of September 30, 2025[101]. - The allowance for credit losses is estimated using a discounted cash flow model, with qualitative factors applied to account for large dollar commercial real estate loan concentrations[108]. - The total net charge-offs for the current fiscal year amounted to $198 thousand, with the majority related to a single-family bulk purchased loan[115]. Deposits and Funding - Deposits increased by $461,500,000 from September 30, 2024, primarily due to the high yield savings account offering[51]. - The deposit portfolio totaled $6.59 billion as of September 30, 2025, with a weighted average rate of 2.26%[124]. - Total retail deposits amounted to $5,961,370 thousand, with an average rate of 2.25%, representing 90.5% of total deposits[127]. - The total amount of certificates of deposit was $3,012,680 thousand, with an average rate of 3.74%, representing 45.7% of total deposits[126]. Securities and Investments - The company sold $1.30 billion of securities, representing 94% of its securities portfolio, and recognized an impairment loss of $192.6 million[30]. - The securities portfolio at amortized cost was $867.2 million as of September 30, 2025, with fixed-rate securities comprising 91% of the portfolio[120]. - The weighted average yield on the securities portfolio was 5.45% as of September 30, 2025, with a weighted average life of 4.8 years[120]. Future Outlook and Strategy - A new suite of private banking products is set to launch in fiscal year 2026, targeting high-net-worth individuals with personal relationships of $5 million or more[12][13]. - The company is committed to ongoing digital transformation, with enhancements to digital banking expected to be implemented in the second quarter of fiscal year 2026[11]. - Management anticipates a 9% increase in salary and employee benefit expenses for fiscal year 2026 due to hiring and merit increases[45]. - The Bank expects to fund approximately $76 million of undisbursed amounts on existing commercial real estate loans during the December 31, 2025 quarter[47].

Core Points - Capitol Federal Financial, Inc. has announced the date for its annual stockholders meeting [1] Company Information - The annual stockholders meeting is a significant event for Capitol Federal Financial, Inc. as it allows shareholders to discuss company performance and future strategies [1]

Group 1 - Capitol Federal Financial (NASDAQ: CFFN) is identified as a small financial institution with a market capitalization of $782.6 million, indicating potential for growth due to its undervalued shares [1] - The focus of Crude Value Insights is on cash flow and companies in the oil and natural gas sector, highlighting the importance of financial health in investment decisions [1] - The service offers subscribers access to a 50+ stock model account and in-depth cash flow analyses of exploration and production (E&P) firms, which can aid in identifying investment opportunities [2] Group 2 - The platform encourages engagement through live chat discussions about the oil and gas sector, fostering a community for investors to share insights and strategies [2] - A promotional offer is available for a two-week free trial, allowing potential subscribers to explore the services provided by Crude Value Insights [3]

PART I - FINANCIAL INFORMATION This section presents the Company's unaudited consolidated financial statements and management's discussion and analysis of financial condition and operating results [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the Company's unaudited consolidated financial statements, including balance sheets, statements of income, comprehensive income, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, earnings per share, securities, loans receivable, allowance for credit losses, borrowed funds, income taxes, fair value measurements, and accumulated other comprehensive income [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets%20at%20June%2030%2C%202025%20and%20September%2030%2C%202024) This section provides a snapshot of the Company's financial position, detailing assets, liabilities, and equity at specific reporting dates Consolidated Balance Sheet Highlights (Dollars in thousands) | Metric | June 30, 2025 (Thousands) | September 30, 2024 (Thousands) | | :------------------------------------------------ | :------------ | :----------------- | | Total Assets | $9,692,739 | $9,527,608 | | Loans receivable, net | $8,023,554 | $7,907,338 | | Deposits | $6,431,137 | $6,129,982 | | Borrowings | $2,071,585 | $2,179,564 | | Total Stockholders' Equity | $1,046,158 | $1,032,270 | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income%20for%20the%20three%20and%20nine%20months%20ended%20June%2030%2C%202025%20and%202024) This section outlines the Company's financial performance over specified periods, presenting revenues, expenses, and net income Consolidated Statements of Income Highlights (Dollars in thousands, except per share amounts) | Metric | 3 Months Ended June 30, 2025 (Thousands) | 3 Months Ended June 30, 2024 (Thousands) | 9 Months Ended June 30, 2025 (Thousands) | 9 Months Ended June 30, 2024 (Thousands) | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total interest and dividend income | $99,678 | $94,995 | $295,475 | $279,976 | | Total interest expense | $54,220 | $54,671 | $163,947 | $158,739 | | Net interest income | $45,458 | $40,324 | $131,528 | $121,237 | | Provision for credit losses | $(451) | $1,472 | $226 | $1,896 | | Total non-interest income | $5,288 | $4,709 | $14,934 | $458 | | Total non-interest expense | $29,564 | $27,950 | $86,252 | $84,903 | | Net income | $18,382 | $9,648 | $49,212 | $25,953 | | Basic earnings per share ("EPS") | $0.14 | $0.07 | $0.38 | $0.20 | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20for%20the%20three%20and%20nine%20months%20ended%20June%2030%2C%202025%20and%202024) This section details changes in equity from non-owner sources, including net income and other comprehensive income components Consolidated Statements of Comprehensive Income Highlights (Dollars in thousands) | Metric | 3 Months Ended June 30, 2025 (Thousands) | 3 Months Ended June 30, 2024 (Thousands) | 9 Months Ended June 30, 2025 (Thousands) | 9 Months Ended June 30, 2024 (Thousands) | | :------------------------------------------------------------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $18,382 | $9,648 | $49,212 | $25,953 | | Unrealized (losses) gains on AFS securities arising during the period, net of taxes | $2,303 | $(2,412) | $(2,689) | $8,698 | | Unrealized gains (losses) on cash flow hedges arising during the period, net of taxes | $(345) | $829 | $1,324 | $352 | | Comprehensive income | $19,783 | $6,504 | $46,038 | $28,636 | [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity%20for%20the%20three%20and%20nine%20months%20ended%20June%2030%2C%202025%20and%202024) This section tracks changes in the Company's equity accounts, reflecting net income, dividends, and other comprehensive income Stockholders' Equity Changes (Dollars in thousands) | Metric | Balance at September 30, 2024 (Thousands) | Net Income (9M 2025) (Thousands) | Other Comprehensive Income (9M 2025) (Thousands) | Cash Dividends (9M 2025) (Thousands) | Balance at June 30, 2025 (Thousands) | | :-------------------------------- | :---------------------------- | :------------------- | :----------------------------------- | :----------------------- | :----------------------- | | Total Stockholders' Equity | $1,032,270 | $49,212 | $(3,174) | $(33,186) | $1,046,158 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20nine%20months%20ended%20June%2030%2C%202025%20and%202024) This section reports cash inflows and outflows from operating, investing, and financing activities over specified periods Consolidated Statements of Cash Flows Highlights (Dollars in thousands) | Cash Flow Activity | 9 Months Ended June 30, 2025 (Thousands) | 9 Months Ended June 30, 2024 (Thousands) | | :------------------------------------ | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $33,517 | $34,275 | | Net cash (used in) provided by investing activities | $(211,802) | $630,335 | | Net cash provided by (used in) financing activities | $135,943 | $(592,394) | | Net (decrease) / increase in cash and cash equivalents | $(42,342) | $72,216 | | Cash and cash equivalents, End of period | $174,965 | $317,821 | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the consolidated financial statements [1. Summary of Significant Accounting Policies](index=10&type=section&id=1.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines the key accounting principles and methods used in preparing the financial statements - The consolidated financial statements are prepared in accordance with GAAP for interim financial information[20](index=20&type=chunk) - ASU 2023-07 (Segment Reporting) is **effective** for the Company's fiscal year ending September 30, 2025, requiring enhanced disclosures for single reportable segments[22](index=22&type=chunk) - ASU 2023-09 (Income Taxes) is **effective** for annual periods beginning after December 15, 2024 (fiscal year ending September 30, 2026), requiring additional annual income tax disclosures[23](index=23&type=chunk) - ASU 2024-03 (Expense Disaggregation) is **effective** for fiscal years beginning after December 15, 2026 (fiscal year ending September 30, 2028), requiring additional expense disclosures in the notes[25](index=25&type=chunk)[26](index=26&type=chunk) [2. Earnings Per Share](index=11&type=section&id=2.%20EARNINGS%20PER%20SHARE) This section details the calculation of basic and diluted earnings per share for common stockholders Earnings Per Share (Dollars in thousands, except per share amounts) | Metric | 3 Months Ended June 30, 2025 (Thousands) | 3 Months Ended June 30, 2024 (Thousands) | 9 Months Ended June 30, 2025 (Thousands) | 9 Months Ended June 30, 2024 (Thousands) | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income available to common stockholders | $18,360 | $9,638 | $49,154 | $25,932 | | Basic EPS | $0.14 | $0.07 | $0.38 | $0.20 | | Diluted EPS | $0.14 | $0.07 | $0.38 | $0.20 | [3. Securities](index=12&type=section&id=3.%20SECURITIES) This section provides information on the Company's investment securities, including available-for-sale portfolios and fair value measurements Available-for-Sale (AFS) Securities (Dollars in thousands) | Metric | June 30, 2025 (Thousands) | September 30, 2024 (Thousands) | | :-------------------------------- | :------------ | :----------------- | | Amortized Cost | $933,360 | $829,852 | | Estimated Fair Value | $956,229 | $856,266 | | Gross Unrealized Gains | $23,531 | $27,113 | | Gross Unrealized Losses | $662 | $699 | - The majority of AFS securities are government guaranteed or issued by Government Sponsored Enterprises (GSE)[29](index=29&type=chunk) - Unrealized losses at June 30, 2025, were due to **increased** market yields; management does not believe any securities are credit-impaired and does not intend to sell them[33](index=33&type=chunk) - The Bank sold **$1.30 billion** of AFS securities during fiscal year 2024, realizing a net loss of **$13.3 million**[37](index=37&type=chunk) [4. Loans Receivable and Allowance for Credit Losses](index=14&type=section&id=4.%20LOANS%20RECEIVABLE%20AND%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) This section details the composition of the loan portfolio and the methodology and balances of the allowance for credit losses Loans Receivable, Net (Dollars in thousands) | Loan Type | June 30, 2025 (Thousands) | September 30, 2024 (Thousands) | | :------------------------ | :------------ | :----------------- | | One- to four-family | $6,018,486 | $6,304,670 | | Commercial | $1,911,841 | $1,508,978 | | Consumer | $112,673 | $109,603 | | Total loans receivable | $8,043,000 | $7,923,251 | | Less: ACL | $22,808 | $23,035 | | Total loans receivable, net | $8,023,554 | $7,907,338 | - The Bank suspended its one- to four-family correspondent lending channels during the prior fiscal year[38](index=38&type=chunk) Nonaccrual Loans (Dollars in thousands) | Loan Type | June 30, 2025 (Thousands) | September 30, 2024 (Thousands) | | :------------------------ | :------------ | :----------------- | | One- to four-family | $4,066 | $7,900 | | Commercial | $43,951 | $1,830 | | Consumer | $177 | $436 | | Total Nonaccrual Loans | $48,194 | $10,166 | - The **increase** in nonaccrual commercial real estate loans at June 30, 2025, was primarily due to two loans in the same borrowing relationship, totaling **$40.2 million**, which were classified as substandard and nonaccrual due to a payment delay agreement[53](index=53&type=chunk)[63](index=63&type=chunk)[175](index=175&type=chunk) Allowance for Credit Losses (ACL) Activity (Dollars in thousands) | Metric | 9 Months Ended June 30, 2025 (Thousands) | 9 Months Ended June 30, 2024 (Thousands) | | :------------------------------------ | :--------------------------- | :--------------------------- | | Balance at beginning of period | $23,035 | $23,759 | | Net (charge-offs) recoveries | $(132) | $(58) | | Provision for credit losses | $(95) | $2,133 | | Balance at end of period | $22,808 | $25,854 | - Management applied qualitative factors to the ACL for large dollar commercial real estate loan concentrations and potential risk of loss in market value for newer one- to four-family loans[75](index=75&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) [5. Borrowed Funds](index=29&type=section&id=5.%20BORROWED%20FUNDS) This section describes the Company's various borrowing arrangements and related hedging activities - The Bank held interest rate swap agreements with a total notional amount of **$200.0 million** to hedge variable cash flows from adjustable-rate FHLB advances[79](index=79&type=chunk) - During the three months ended June 30, 2025, the Bank prepaid **$200.0 million** of fixed-rate FHLB advances (**4.70%** weighted average rate) and replaced them with new fixed-rate FHLB advances (**3.83%** weighted average rate), incurring **$547 thousand** in prepayment penalties[80](index=80&type=chunk) [6. Income Taxes](index=30&type=section&id=6.%20INCOME%20TAXES) This section provides details on the Company's income tax provisions, deferred tax assets, and the impact of tax law changes Deferred Income Tax Assets (Dollars in thousands) | Metric | June 30, 2025 (Thousands) | September 30, 2024 (Thousands) | | :------------------------------------ | :------------ | :----------------- | | Net operating loss deferred income tax asset | $19,900 | $30,500 | | Deferred tax asset related to low income housing tax credits | $19,600 | $12,800 | | Valuation allowance | $33 | $27 | - A change in Kansas tax law, **effective** October 1, 2027, is expected to **decrease** income apportioned to Kansas, resulting in an **$857 thousand** reduction in net state income tax expense for the current quarter[83](index=83&type=chunk) - The H.R. 1 - One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025, with significant tax provisions that the Company is currently evaluating[84](index=84&type=chunk) [7. Fair Value of Financial Instruments](index=31&type=section&id=7.%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) This section explains the fair value measurement of financial instruments, categorizing them by input levels - AFS securities and interest rate swaps are measured at fair value on a recurring basis, primarily using Level 2 inputs (observable market data)[88](index=88&type=chunk)[89](index=89&type=chunk)[93](index=93&type=chunk) - Loans receivable and OREO are measured at fair value on a non-recurring basis, classified as Level 3, due to significant unobservable inputs like appraisals and marketability adjustments[94](index=94&type=chunk)[99](index=99&type=chunk) - For commercial loans individually evaluated for loss, downward adjustments to book value for lack of marketability ranged from **10% to 99%** (weighted average **22%**) during the nine months ended June 30, 2025[96](index=96&type=chunk) [8. Accumulated Other Comprehensive Income](index=34&type=section&id=8.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20INCOME) This section details the components and changes in accumulated other comprehensive income, net of taxes Changes in Accumulated Other Comprehensive Income (AOCI) (Dollars in thousands) | Metric | 9 Months Ended June 30, 2025 (Thousands) | 9 Months Ended June 30, 2024 (Thousands) | | :------------------------------------------------------------------------------------------------ | :--------------------------- | :--------------------------- | | Beginning balance | $21,627 | $8,700 | | Other comprehensive income (loss), before reclassifications | $(1,365) | $9,050 | | Amount reclassified from AOCI, net of taxes | $(1,809) | $(5,179) | | Reclassification adjustment for gross gains on AFS securities included in net income, net of taxes | — | $(1,188) | | Ending balance | $18,453 | $11,383 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a comprehensive analysis of the Company's financial condition, results of operations, liquidity, and capital resources. It highlights significant improvements in net income and net interest margin, driven by a strategic shift towards commercial banking and the absence of prior year's securities sale losses. The discussion also covers asset quality, liabilities, stockholders' equity, and detailed comparisons of operating results across different periods [Executive Summary](index=36&type=section&id=Executive%20Summary) This section provides an overview of key financial performance metrics and strategic initiatives Key Financial Performance (9 Months Ended June 30) | Metric | 2025 (Thousands) | 2024 (Thousands) | | :---------------- | :----- | :----- | | Net Income | $49.2M | $26.0M | | EPS | $0.38 | $0.20 | | Net Interest Margin | 1.92% | 1.77% | | Efficiency Ratio | 58.89% | 69.77% | - The **increase** in net income and EPS was primarily due to higher net interest income and the absence of net losses from securities transactions in the prior year[116](index=116&type=chunk) - Total assets **increased** to **$9.69 billion** at June 30, 2025, up **$165.1 million** from September 30, 2024, mainly due to **increases** in loans and securities funded by operating cash and deposit growth[121](index=121&type=chunk) - Loans receivable grew by **$116.2 million** to **$8.02 billion**, driven by a **$402.9 million** **increase** in commercial loans, partially offset by a **$286.2 million** **decrease** in one- to four-family loans[122](index=122&type=chunk) - Total deposits **increased** by **$301.2 million** to **$6.43 billion**, primarily from a **$311.8 million** **increase** in high yield savings accounts and a **$98.3 million** (**37.8%**) **increase** in commercial non-maturity deposits[123](index=123&type=chunk) - The Bank continues to strategically grow commercial banking through technology, people, products, and services, including new small business checking products and digital onboarding[119](index=119&type=chunk)[131](index=131&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) [Financial Condition - Loans Receivable](index=39&type=section&id=Financial%20Condition%20-%20Loans%20Receivable) This section details the composition and changes in the Company's loan portfolio, emphasizing the shift towards commercial loans - Loans receivable, net, **increased** **$147.6 million** (**7.5%** annualized) during the current quarter, with the loan portfolio mix continuing to shift from one- to four-family loans to commercial loans[138](index=138&type=chunk) Loan Portfolio Balance and Weighted Average Rate (Dollars in thousands) | Loan Type | June 30, 2025 Amount (Thousands) | June 30, 2025 Rate (%) | March 31, 2025 Amount (Thousands) | March 31, 2025 Rate (%) | September 30, 2024 Amount (Thousands) | September 30, 2024 Rate (%) | | :------------------------ | :------------------- | :----------------- | :-------------------- | :------------------ | :------------------------ | :------------------ | | One- to four-family | $6,018,486 | 3.65% | $6,117,810 | 3.61% | $6,304,670 | 3.55% | | Commercial | $1,911,841 | 5.93% | $1,668,327 | 5.67% | $1,508,978 | 5.65% | | Consumer | $112,673 | 7.99% | $108,483 | 7.93% | $109,603 | 8.62% | | Total loans receivable | $8,043,000 | 4.25% | $7,894,620 | 4.10% | $7,923,251 | 4.02% | - Commercial real estate and commercial construction loans by type of primary collateral at June 30, 2025, include Hotel (**$585.1 million**), Senior Housing (**$357.6 million**), and Multi-family (**$356.3 million**)[155](index=155&type=chunk) - Commercial and industrial gross loan amount **increased** **$96.6 million** (**52%**) during the current quarter, with **58%** (**$164.5 million**) having a gross loan balance of **$5.0 million** or more[163](index=163&type=chunk) [Financial Condition - Asset Quality](index=46&type=section&id=Financial%20Condition%20-%20Asset%20Quality) This section assesses the quality of the Company's assets, including loan delinquency and allowance for credit losses Loan Delinquency Ratios | Metric | June 30, 2025 (%) | March 31, 2025 (%) | September 30, 2024 (%) | | :------------------------------------------------ | :------------ | :------------- | :----------------- | | Loans 30 to 89 days delinquent to total loans receivable, net | 0.20% | 0.18% | 0.20% | | Loans 90 or more days delinquent or in foreclosure as a percentage of total loans | 0.10% | 0.12% | 0.12% | - Nonaccrual commercial real estate loans significantly **increased** to **$40.3 million** at June 30, 2025, from **$1.1 million** at March 31, 2025, primarily due to two participation loans related to the same borrowing relationship[169](index=169&type=chunk)[170](index=170&type=chunk)[175](index=175&type=chunk) - These nonaccrual commercial real estate loans are recourse loans with personal guaranties and strong LTVs (**45%** and **47%**), with no specific valuation allowance set aside[175](index=175&type=chunk) Allowance for Credit Losses (ACL) Ratios | Metric | June 30, 2025 (%) | March 31, 2025 (%) | September 30, 2024 (%) | | :------------------------------------ | :------------ | :------------- | :----------------- | | ACL to loans receivable, net at end of period | 0.28% | 0.30% | 0.29% | | ACL to nonaccrual loans at end of period | 47.07% | 221.26% | 300.52% | - Net charge-offs (NCOs) for the nine months ended June 30, 2025, totaled **$132 thousand**, primarily from one single-family bulk purchased loan[182](index=182&type=chunk)[184](index=184&type=chunk)[186](index=186&type=chunk) [Financial Condition - Liabilities](index=53&type=section&id=Financial%20Condition%20-%20Liabilities) This section analyzes the Company's liabilities, focusing on deposit growth and borrowing trends - Total liabilities **increased** to **$8.65 billion** at June 30, 2025, from **$8.50 billion** at September 30, 2024, driven by a **$301.2 million** **increase** in deposits, partially offset by a **$108.0 million** **decrease** in borrowings[190](index=190&type=chunk) Deposit Portfolio Composition (Dollars in thousands) | Deposit Type | June 30, 2025 Amount (Thousands) | June 30, 2025 Rate (%) | September 30, 2024 Amount (Thousands) | September 30, 2024 Rate (%) | | :------------------------ | :------------------- | :----------------- | :------------------------ | :------------------ | | Non-interest bearing checking | $579,595 | —% | $549,596 | —% | | High yield savings | $408,018 | 3.88% | $96,241 | 4.09% | | Money market | $1,203,917 | 1.22% | $1,226,962 | 1.46% | | Certificates of deposit | $2,921,581 | 3.81% | $2,965,310 | 4.25% | | Total deposits | $6,431,137 | 2.24% | $6,129,982 | 2.45% | - Total deposits **increased** **$301.2 million** (**4.9%**) from September 30, 2024, primarily due to a **$246.6 million** (**8.5%**) **increase** in retail non-maturity deposits (mainly high yield savings) and a **$98.3 million** (**37.8%**) **increase** in commercial non-maturity deposits[193](index=193&type=chunk) - Approximately **$899.4 million** (**14%**) of the Bank's Call Report deposit balance was uninsured at June 30, 2025[195](index=195&type=chunk) - Total borrowings **decreased** **$108.0 million** to **$2.07 billion** at June 30, 2025, mainly due to principal payments on amortizing FHLB advances and matured borrowings not replaced[190](index=190&type=chunk)[196](index=196&type=chunk) [Financial Condition - Stockholders' Equity](index=58&type=section&id=Financial%20Condition%20-%20Stockholders'%20Equity) This section reviews changes in stockholders' equity and capital adequacy ratios - Stockholders' equity totaled **$1.05 billion** at June 30, 2025, an **increase** of **$13.9 million** from September 30, 2024[125](index=125&type=chunk)[204](index=204&type=chunk) - The Bank's Community Bank Leverage Ratio (CBLR) was **9.7%** at June 30, 2025, exceeding well-capitalized requirements[125](index=125&type=chunk)[204](index=204&type=chunk) - The Company paid regular quarterly cash dividends totaling **$33.2 million** (**$0.255 per share**) during the nine months ended June 30, 2025[205](index=205&type=chunk) - A **$75.0 million** stock repurchase plan is authorized, but no shares were repurchased during the current year period due to limited cash at the holding company level[208](index=208&type=chunk) [Operating Results](index=59&type=section&id=Operating%20Results) This section presents a summary of the Company's quarterly operating performance Selected Income Statement and Other Information (Dollars in thousands, except per share data) | Metric | Q2 2025 (Thousands) | Q1 2025 (Thousands) | Q4 2024 (Thousands) | Q3 2024 (Thousands) | Q2 2024 (Thousands) | | :------------------------------------ | :------ | :------ | :------ | :------ | :------ | | Net interest income | $45,458 | $43,840 | $42,230 | $40,824 | $40,324 | | Net income | $18,382 | $15,399 | $15,431 | $12,057 | $9,648 | | Efficiency ratio | 58.26% | 60.54% | 57.86% | 59.29% | 62.07% | | Basic EPS | $0.14 | $0.12 | $0.12 | $0.09 | $0.07 | [Comparison of Operating Results (QoQ)](index=59&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20three%20months%20ended%20June%2030%2C%202025%20and%20March%2031%2C%202025) This section compares the Company's operating results for the three months ended June 30, 2025, and March 31, 2025 - Net income **increased** to **$18.4 million** (**$0.14 EPS**) for Q2 2025 from **$15.4 million** (**$0.12 EPS**) for Q1 2025, primarily due to higher net interest income and lower tax expense[213](index=213&type=chunk) - Net interest margin **increased** **6 basis points** to **1.98%** for Q2 2025, mainly due to an **increase** in the average balance of higher-yielding commercial loans[213](index=213&type=chunk) Interest and Dividend Income Changes (QoQ, Dollars in thousands) | Component | Change in Dollars (Thousands) | Change in Percent (%) | | :------------------------ | :---------------- | :---------------- | | Loans receivable | $2,047 | 2.5% | | MBS | $899 | 8.0% | | Cash and cash equivalents | $(1,109) | (40.6%) | | Total interest and dividend income | $1,503 | 1.5% | - A release of provision for credit losses of **$451 thousand** was recorded in Q2 2025, comprising a **$1.1 million** **decrease** in ACL for loans (due to commercial loan growth and model updates) partially offset by a **$686 thousand** **increase** in off-balance sheet credit exposures[218](index=218&type=chunk) - Income tax expense **decreased** by **$603 thousand** (**15.6%**) due to an **$857 thousand** reduction in net state income tax expense resulting from a Kansas tax law change[225](index=225&type=chunk) [Comparison of Operating Results (YoY, 9 Months)](index=66&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20nine%20months%20ended%20June%2030%2C%202025%20and%202024) This section compares the Company's operating results for the nine months ended June 30, 2025, and 2024 - Net income for the nine months ended June 30, 2025, **increased** to **$49.2 million** (**$0.38 EPS**) from **$26.0 million** (**$0.20 EPS**) in the prior year, primarily due to higher net interest income and the absence of prior year's **$13.3 million** net loss from securities transactions[232](index=232&type=chunk) - Net interest margin **increased** **15 basis points** to **1.92%** for the current year period, mainly due to higher yields on the loan portfolio (shift to commercial loans) outpacing the **increase** in deposit costs[233](index=233&type=chunk) Interest and Dividend Income Changes (YoY, 9 Months, Dollars in thousands) | Component | Change in Dollars (Thousands) | Change in Percent (%) | | :------------------------ | :---------------- | :---------------- | | Loans receivable | $16,309 | 7.1% | | MBS | $11,213 | 48.3% | | Cash and cash equivalents | $(6,946) | (52.8%) | | Investment securities | $(4,320) | (60.7%) | | Total interest and dividend income | $15,499 | 5.5% | - Interest expense on deposits **increased** by **$6.967 million** (**6.8%**) due to higher weighted average rates on savings accounts (high yield savings) and retail certificates of deposit[237](index=237&type=chunk) - Salaries and employee benefits **increased** by **$5.261 million** (**13.4%**) due to **increased** headcount, merit **increases**, and higher incentive compensation accrual[245](index=245&type=chunk) - The efficiency ratio improved to **58.89%** from **69.77%** (**62.87%** excluding securities strategy impact) due to higher net interest income[246](index=246&type=chunk) [Comparison of Operating Results (YoY, 3 Months)](index=73&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20three%20months%20ended%20June%2030%2C%202025%20and%202024) This section compares the Company's operating results for the three months ended June 30, 2025, and 2024 - Net income for Q2 2025 **increased** to **$18.4 million** (**$0.14 EPS**) from **$9.6 million** (**$0.07 EPS**) for Q2 2024, driven by higher net interest income and lower income tax expense[255](index=255&type=chunk) - Net interest margin **increased** **21 basis points** to **1.98%** for Q2 2025, primarily due to an **increase** in the average balance of higher-yielding commercial loans[255](index=255&type=chunk) Interest and Dividend Income Changes (YoY, 3 Months, Dollars in thousands) | Component | Change in Dollars (Thousands) | Change in Percent (%) | | :------------------------ | :---------------- | :---------------- | | Loans receivable | $6,111 | 8.0% | | MBS | $2,578 | 26.9% | | Cash and cash equivalents | $(2,255) | (58.2%) | | Investment securities | $(1,471) | (65.2%) | | Total interest and dividend income | $4,683 | 4.9% | - Income tax expense **decreased** by **$2.712 million** (**45.5%**) due to the prior year's income tax associated with pre-1988 bad debt recapture and the current quarter's Kansas tax law change[267](index=267&type=chunk) - Salaries and employee benefits **increased** by **$1.970 million** (**14.8%**) due to raises, higher incentive compensation, and **increased** headcount[264](index=264&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=79&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the Company's management of interest rate risk, including liquidity management, asset and liability management policies, and the impact of hypothetical interest rate changes on net interest income and the market value of portfolio equity (MVPE). It highlights an improved one-year interest rate gap and stable MVPE, driven by a strategic shift in the loan portfolio and liability management [Asset and Liability Management and Market Risk](index=79&type=section&id=Asset%20and%20Liability%20Management%20and%20Market%20Risk) This section describes the Company's strategies for managing liquidity and interest rate risk - The Bank manages liquidity through daily and long-term forecasting, monthly liquidity stress tests, and monitoring key liquidity statistics[276](index=276&type=chunk) - At June 30, 2025, the Bank had **$2.97 billion** in available liquidity based on its FHLB blanket collateral agreement and unencumbered securities[278](index=278&type=chunk) - Total borrowings were **$2.07 billion** (approximately **21%** of total assets) at June 30, 2025, well below the internal policy limit of **55%** of total assets[278](index=278&type=chunk) - The Bank had **$798.6 million** of eligible but unused securities as collateral for borrowing or other liquidity needs at June 30, 2025[280](index=280&type=chunk) [Qualitative Disclosure about Market Risk](index=81&type=section&id=Qualitative%20Disclosure%20about%20Market%20Risk) This section provides qualitative insights into the Company's exposure to market risk, including interest rate sensitivity - The Bank's one-year interest rate gap improved to **$(963.3) million**, or **(9.9%)** of total assets, at June 30, 2025, compared to **$(1.51) billion**, or **(15.8%)** of total assets, at September 30, 2024[294](index=294&type=chunk) - The improvement in the one-year gap was primarily due to an **increase** in projected asset cash flows (adjustable-rate commercial loans) and a **decrease** in projected liability cash flows (FHLB advances and certificates of deposit)[294](index=294&type=chunk)[295](index=295&type=chunk) Estimated Change in Net Interest Income (Dollars in thousands) | Change in Interest Rates (bp) | June 30, 2025 Change (%) | June 30, 2025 Amount ($) | September 30, 2024 Change (%) | September 30, 2024 Amount ($) | | :---------------------------- | :----------------------- | :----------------------- | :---------------------------- | :------------------------ | | -300 | (4.2)% | $(8,467) | 6.6% | $11,696 | | -200 | (3.0)% | $(6,061) | 4.0% | $7,143 | | -100 | (1.3)% | $(2,575) | 2.4% | $4,310 | | 000 | — | — | — | — | | +100 | 0.7% | $1,444 | (3.1)% | $(5,404) | | +200 | 0.7% | $1,376 | (6.3)% | $(11,204) | | +300 | 0.4% | $828 | (10.1)% | $(17,868) | - The Bank's MVPE remained largely unchanged at **$1.11 billion** at June 30, 2025, compared to **$1.10 billion** at September 30, 2024, as compositional changes in the balance sheet (shift to commercial loans) offset the impact of **increased** market interest rates[303](index=303&type=chunk) [Item 4. Controls and Procedures](index=85&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025. No material changes to internal control over financial reporting occurred during the quarter - Disclosure controls and procedures were **effective** as of June 30, 2025[308](index=308&type=chunk) - **No material changes** in internal control over financial reporting occurred during the quarter ended June 30, 2025[309](index=309&type=chunk) PART II - OTHER INFORMATION This section provides additional disclosures including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=86&type=section&id=Item%201.%20Legal%20Proceedings) The Company is involved in routine legal actions and a putative class action lawsuit regarding overdraft fees. Management believes it is unlikely that any pending legal actions will have a material adverse effect on the Company's financial condition, results of operations, or liquidity - The Bank is a party to a putative class action lawsuit (Jennifer Harding, et al. vs. Capitol Federal Savings Bank) alleging improper overdraft fees[311](index=311&type=chunk) - The lawsuit is currently on appeal to the Kansas Supreme Court[311](index=311&type=chunk) - Management believes it is **unlikely** that any pending legal actions will have a material adverse effect on the Company's financial condition, results of operations, or liquidity[310](index=310&type=chunk) [Item 1A. Risk Factors](index=86&type=page&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024 - **No material changes** to the risk factors disclosed in the Annual Report on Form 10-K for the fiscal year ended September 30, 2024[313](index=313&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=86&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company has a $75.0 million stock repurchase plan authorized, with FRB approval through February 2026. However, no shares were repurchased during the three months ended June 30, 2025, due to limited holding company cash - The Company has a **$75.0 million** authorized stock repurchase plan, with FRB approval extending through February 2026[315](index=315&type=chunk) - **No shares** were repurchased during the three months ended June 30, 2025[316](index=316&type=chunk) - Repurchases are not expected until the holding company has a sufficient cash balance[208](index=208&type=chunk) [Item 3. Defaults Upon Senior Securities](index=87&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the Company for the reporting period - **Not applicable**[317](index=317&type=chunk) [Item 4. Mine Safety Disclosures](index=87&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company for the reporting period - **Not applicable**[318](index=318&type=chunk) [Item 5. Other Information](index=87&type=section&id=Item%205.%20Other%20Information) No director or executive officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025 - **No director or executive officer** adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[319](index=319&type=chunk) [Item 6. Exhibits](index=87&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the 10-Q report, including organizational documents, compensation plans, certifications, and XBRL-formatted financial data [Index to Exhibits](index=88&type=section&id=INDEX%20TO%20EXHIBITS) This section lists all exhibits filed as part of the 10-Q report, including organizational documents, compensation plans, certifications, and XBRL-formatted financial data - The report includes various exhibits such as the Company's Charter and Bylaws, Change of Control Agreements, Stock Option and Incentive Plans, Deferred Incentive Bonus Plan, Short-term Performance Plan, Equity Incentive Plan, Sarbanes-Oxley Act certifications (Sections 302 and 906), and XBRL formatted financial data[322](index=322&type=chunk) [Signatures](index=89&type=section&id=SIGNATURES) The report is duly signed on behalf of Capitol Federal Financial, Inc. by John B. Dicus, Chairman, President and Chief Executive Officer, and Kent G. Townsend, Executive Vice President, Chief Financial Officer and Treasurer, on August 8, 2025 - The report was signed by John B. Dicus, Chairman, President and Chief Executive Officer, and Kent G. Townsend, Executive Vice President, Chief Financial Officer and Treasurer[326](index=326&type=chunk) - The signing date was August 8, 2025[326](index=326&type=chunk)

[News Release & Highlights](index=1&type=section&id=News%20Release%20%26%20Highlights) Capitol Federal Financial, Inc. is strategically expanding its commercial banking operations by integrating technology, people, products, and services, and reported strong quarterly financial results [Strategic Banking Initiatives](index=1&type=section&id=Strategic%20Banking%20Initiatives) The Company is strategically expanding its commercial banking operations by integrating technology, people, products, and services to meet diverse financial needs - The Company is strategically growing commercial banking by aligning technology, people, products, and services, focusing on meeting financial needs of growing and established companies and small businesses[2](index=2&type=chunk) - Implementation of commercial loan pricing and profitability software is ongoing, with additional modules planned for market insight on competitor pricing[3](index=3&type=chunk) - Efforts are underway to grow non-interest bearing deposits and diversify fee-based revenue through treasury management, trust, wealth management, and small business banking services, including new digital checking products and planned digital onboarding for small businesses[4](index=4&type=chunk) - A seamless digital banking experience is being created for all customers, including a new deposit account onboarding platform (Nov 2024) and digital debit card enhancements (Q4 FY2025)[5](index=5&type=chunk) - The Bank is building a suite of private banking products and services, having hired seasoned wealth management professionals to manage initial relationships and transform the trust and wealth management business[6](index=6&type=chunk) [Quarterly Financial Highlights](index=1&type=section&id=Quarterly%20Financial%20Highlights) For the quarter ended June 30, 2025, the Company reported **net income of $18.4 million** and **EPS of $0.14**, with an improved **net interest margin of 1.98%** Quarterly Financial Metrics | Metric | Value | | :----------------------- | :---------- | | Net Income | $18.4 million | | Basic & Diluted EPS | $0.14 | | Net Interest Margin (NIM) | 1.98% | | Cash Dividend per Share | $0.085 | - Net interest margin increased by **six basis points** from the prior quarter, reaching **1.98%**[7](index=7&type=chunk) - A cash dividend of **$0.085 per share** was announced on July 22, 2025, payable on August 15, 2025[7](index=7&type=chunk) [Comparison of Operating Results (QoQ)](index=2&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%20March%2031%2C%202025) This section compares the Company's operating results for the three months ended June 30, 2025, against the prior quarter [Overall Performance](index=2&type=section&id=Overall%20Performance%20(QoQ)) Net income increased to **$18.4 million** (or **$0.14 per share**) from **$15.4 million** (or **$0.12 per share**) in the prior quarter, driven by higher net interest income and lower tax expense Overall Performance Metrics (QoQ) | Metric | Q3 FY2025 (June 30, 2025) (in millions) | Q2 FY2025 (March 31, 2025) (in millions) | Change (QoQ) (in millions) | | :----------------------- | :------------------------ | :----------------------- | :----------- | | Net Income | $18.4 | $15.4 | +$3.0 | | EPS | $0.14 | $0.12 | +$0.02 | | Net Interest Margin (NIM) | 1.98% | 1.92% | +6 bps | - The increase in net income was primarily due to higher net interest income and lower tax expense[8](index=8&type=chunk) - Net interest margin increased by **six basis points**, mainly attributed to an increase in the average balance of commercial loans as the loan portfolio continued to remix[8](index=8&type=chunk) [Interest and Dividend Income](index=2&type=section&id=Interest%20and%20Dividend%20Income%20(QoQ)) Total interest and dividend income increased by **$1.5 million (1.5%)** quarter-over-quarter to **$99.7 million**, primarily from loans receivable and mortgage-backed securities Interest and Dividend Income Breakdown (QoQ) | Component | Q3 FY2025 (June 30, 2025) (in thousands) | Q2 FY2025 (March 31, 2025) (in thousands) | Change (in thousands) | Change (Percent) | | :---------------------------- | :------------------------ | :----------------------- | :--------------- | :--------------- | | Loans receivable | $82,914 | $80,867 | $2,047 | 2.5% | | Mortgage-backed securities (MBS) | $12,163 | $11,264 | $899 | 8.0% | | Federal Home Loan Bank (FHLB) stock | $2,197 | $2,285 | ($88) | (3.9%) | | Cash and cash equivalents | $1,620 | $2,729 | ($1,109) | (40.6%) | | Investment securities | $784 | $1,030 | ($246) | (23.9%) | | **Total** | **$99,678** | **$98,175** | **$1,503** | **1.5%** | - Increase in interest income on loans receivable was mainly due to an increase in the average balance of the commercial loan portfolio[10](index=10&type=chunk) - Decrease in interest income on cash and cash equivalents was due to a decrease in the average balance as operating cash was utilized for commercial loan activities and to repay borrowings[10](index=10&type=chunk) [Interest Expense](index=2&type=section&id=Interest%20Expense%20(QoQ)) Total interest expense slightly decreased by **$115 thousand (0.2%)** to **$54.2 million**, as growth in high-yield savings was offset by lower costs in retail certificates of deposit Interest Expense Breakdown (QoQ) | Component | Q3 FY2025 (June 30, 2025) (in thousands) | Q2 FY2025 (March 31, 2025) (in thousands) | Change (in thousands) | Change (Percent) | | :---------------- | :------------------------ | :----------------------- | :--------------- | :--------------- | | Deposits | $35,860 | $35,853 | $7 | —% | | Borrowings | $18,360 | $18,482 | ($122) | (0.7%) | | **Total** | **$54,220** | **$54,335** | **($115)** | **(0.2%)** | - Increased interest expense from high yield savings accounts was almost entirely offset by a decrease in the cost of retail certificates of deposits[12](index=12&type=chunk) [Provision for Credit Losses](index=3&type=section&id=Provision%20for%20Credit%20Losses%20(QoQ)) The Company recorded a **release of provision for credit losses of $451 thousand**, primarily due to a **$1.1 million decrease** in the allowance for credit losses for loans - Release of provision for credit losses: **$451 thousand**[13](index=13&type=chunk) - Decrease in ACL for loans: **$1.1 million**, mainly related to the commercial loan portfolio due to an update to the ACL model's regression analyses[13](index=13&type=chunk) - Increase in reserve for off-balance sheet credit exposures: **$686 thousand**, primarily due to an increase in commercial and industrial off-balance sheet credit exposures[13](index=13&type=chunk) [Non-Interest Income](index=3&type=section&id=Non-Interest%20Income%20(QoQ)) Total non-interest income increased by **$335 thousand (6.8%)** to **$5.3 million**, mainly driven by higher deposit service fees from increased debit card usage Non-Interest Income Breakdown (QoQ) | Component | Q3 FY2025 (June 30, 2025) (in thousands) | Q2 FY2025 (March 31, 2025) (in thousands) | Change (in thousands) | Change (Percent) | | :---------------------- | :------------------------ | :----------------------- | :--------------- | :--------------- | | Deposit service fees | $2,867 | $2,596 | $271 | 10.4% | | Insurance commissions | $884 | $927 | ($43) | (4.6%) | | Other non-interest income | $1,537 | $1,430 | $107 | 7.5% | | **Total** | **$5,288** | **$4,953** | **$335** | **6.8%** | - The increase in deposit service fees was primarily due to an increase in debit card usage, generating additional interchange and service charge income[15](index=15&type=chunk) [Non-Interest Expense](index=3&type=section&id=Non-Interest%20Expense%20(QoQ)) Total non-interest expense remained stable at **$29.6 million**, with increased advertising offset by lower customer fraud losses, improving the efficiency ratio to **58.26%** Non-Interest Expense Breakdown (QoQ) | Component | Q3 FY2025 (June 30, 2025) (in thousands) | Q2 FY2025 (March 31, 2025) (in thousands) | Change (in thousands) | Change (Percent) | | :------------------------------ | :------------------------ | :----------------------- | :--------------- | :--------------- | | Salaries and employee benefits | $15,277 | $14,938 | $339 | 2.3% | | Information technology and related expense | $5,163 | $4,924 | $239 | 4.9% | | Occupancy, net | $3,270 | $3,502 | ($232) | (6.6%) | | Regulatory and outside services | $1,261 | $1,469 | ($208) | (14.2%) | | Federal insurance premium | $1,072 | $1,095 | ($23) | (2.1%) | | Advertising and promotional | $1,453 | $760 | $693 | 91.2% | | Deposit and loan transaction costs | $715 | $879 | ($164) | (18.7%) | | Office supplies and related expense | $370 | $437 | ($67) | (15.3%) | | Other non-interest expense | $983 | $1,536 | ($553) | (36.0%) | | **Total** | **$29,564** | **$29,540** | **$24** | **0.1%** | - The increase in advertising and promotional expense was primarily due to the timing of seasonal sponsorships and campaigns[17](index=17&type=chunk) - The efficiency ratio improved to **58.26%** from **60.54%** in the prior quarter, driven by higher net interest income[18](index=18&type=chunk) [Income Tax Expense](index=4&type=section&id=Income%20Tax%20Expense%20(QoQ)) Income tax expense decreased by **$603 thousand (15.6%)** to **$3.3 million**, resulting in a lower effective tax rate of **15.0%** due to a change in Kansas tax law Income Tax Expense and Net Income (QoQ) | Metric | Q3 FY2025 (June 30, 2025) (in thousands) | Q2 FY2025 (March 31, 2025) (in thousands) | Change (in thousands) | Change (Percent) | | :------------------------- | :------------------------ | :----------------------- | :--------------- | :--------------- | | Income before income tax expense | $21,633 | $19,253 | $2,380 | 12.4% | | Income tax expense | $3,251 | $3,854 | ($603) | (15.6%) | | Net income | $18,382 | $15,399 | $2,983 | 19.4% | | Effective Tax Rate | 15.0% | 20.0% | | | - The primary reason for the lower effective tax rate and income tax expense was an **$857 thousand reduction** in net state income tax expense due to a change in Kansas tax law, effective October 1, 2027[21](index=21&type=chunk) - Management anticipates the effective tax rate for fiscal year 2025 will be **18% to 19%**, lower than originally expected due to the Kansas law change[21](index=21&type=chunk) [Comparison of Operating Results (YTD)](index=4&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Nine%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section compares the Company's operating results for the nine months ended June 30, 2025, against the prior year period [Overall Performance & Securities Strategy Impact](index=4&type=section&id=Overall%20Performance%20%26%20Securities%20Strategy%20Impact%20(YTD)) Net income significantly increased to **$49.2 million** (or **$0.38 per share**) from **$26.0 million** (or **$0.20 per share**) in the prior year, largely due to the absence of securities strategy losses Overall Performance Metrics (YTD) | Metric | YTD FY2025 (June 30, 2025) (in millions) | YTD FY2024 (June 30, 2024) (in millions) | Change (YTD) (in millions) | | :----------------------- | :------------------------- | :------------------------- | :----------- | | Net Income | $49.2 | $26.0 | +$23.2 | | EPS | $0.38 | $0.20 | +$0.18 | | Net Interest Margin (NIM) | 1.92% | 1.77% | +15 bps | - The lower net income in the prior year period was primarily a result of **$13.3 million ($10.0 million net of tax)** of net losses on the sale of securities associated with the securities strategy[22](index=22&type=chunk) - Excluding the effects of the net loss associated with the securities strategy, earnings per share would have been **$0.28** for the prior year period[22](index=22&type=chunk) - The net interest margin increased **15 basis points**, from **1.77%** for the prior year period to **1.92%** for the current year period, mainly due to higher yields on the loan portfolio[23](index=23&type=chunk) [Securities Strategy to Improve Earnings](index=4&type=section&id=Securities%20Strategy%20to%20Improve%20Earnings%20(YTD)) In October 2023, the Company executed a securities strategy by selling **$1.30 billion** of securities, incurring **$192.6 million** in impairment losses, to reinvest in higher-yielding assets and reduce borrowings - In October 2023, the Company sold **$1.30 billion** of securities (**94%** of its portfolio) as part of a strategy to improve earnings[24](index=24&type=chunk) - The strategy resulted in a **$192.6 million impairment loss** (FY2023) and an additional **$13.3 million ($10.0 million net of tax) loss** in Q1 FY2024[24](index=24&type=chunk) - Proceeds were used to purchase **$632.0 million** of securities yielding **5.75%** (compared to **1.22%** for sold securities), pay down **$500.0 million** of borrowings (**4.70% cost**), and hold remaining cash for liquidity[24](index=24&type=chunk) [Interest and Dividend Income](index=5&type=section&id=Interest%20and%20Dividend%20Income%20(YTD)) Total interest and dividend income for the nine months ended June 30, 2025, increased by **$15.5 million (5.5%)** to **$295.5 million**, driven by higher income from loans and MBS Interest and Dividend Income Breakdown (YTD) | Component | YTD FY2025 (June 30, 2025) (in thousands) | YTD FY2024 (June 30, 2024) (in thousands) | Change (in thousands) | Change (Percent) | | :---------------------------- | :------------------------- | :------------------------- | :--------------- | :--------------- | | Loans receivable | $245,175 | $228,866 | $16,309 | 7.1% | | Mortgage-backed securities (MBS) | $34,451 | $23,238 | $11,213 | 48.3% | | Federal Home Loan Bank (FHLB) stock | $6,834 | $7,591 | ($757) | (10.0%) | | Cash and cash equivalents | $6,220 | $13,166 | ($6,946) | (52.8%) | | Investment securities | $2,795 | $7,115 | ($4,320) | (60.7%) | | **Total** | **$295,475** | **$279,976** | **$15,499** | **5.5%** | - Increase in interest income on loans receivable was primarily due to the continued shift from one- to four-family loans to higher yielding commercial loans[26](index=26&type=chunk) - Increase in interest income on MBS was due to an increase in average balance and weighted average yield, largely influenced by the securities strategy reinvestment into higher yielding securities[26](index=26&type=chunk) [Interest Expense](index=5&type=section&id=Interest%20Expense%20(YTD)) Total interest expense for the nine months ended June 30, 2025, increased by **$5.2 million (3.3%)** to **$163.9 million**, mainly due to higher deposit costs, partially offset by lower borrowing balances Interest Expense Breakdown (YTD) | Component | YTD FY2025 (June 30, 2025) (in thousands) | YTD FY2024 (June 30, 2024) (in thousands) | Change (in thousands) | Change (Percent) | | :---------------- | :------------------------- | :------------------------- | :--------------- | :--------------- | | Deposits | $109,058 | $102,091 | $6,967 | 6.8% | | Borrowings | $54,889 | $56,648 | ($1,759) | (3.1%) | | **Total** | **$163,947** | **$158,739** | **$5,208** | **3.3%** | - The increase in interest expense on deposits was primarily due to an increase in the weighted average rate paid on savings accounts (specifically high yield savings) and retail certificates of deposit[28](index=28&type=chunk) - The decrease in interest expense on borrowings was mainly due to a decrease in the average balance, as FHLB borrowings matured and were not renewed, and BTFP borrowings were repaid using proceeds from the securities strategy[29](index=29&type=chunk) [Provision for Credit Losses](index=6&type=section&id=Provision%20for%20Credit%20Losses%20(YTD)) For the nine months ended June 30, 2025, the Company recorded a provision for credit losses of **$226 thousand**, a significant decrease from **$1.9 million** in the prior year period Provision for Credit Losses (YTD) | Metric | YTD FY2025 (June 30, 2025) | YTD FY2024 (June 30, 2024) | | :-------------------------- | :------------------------- | :------------------------- | | Provision for Credit Losses | $226 thousand | $1.9 million | - The current year's provision was comprised of a **$321 thousand increase** in the reserve for off-balance sheet credit exposures, partially offset by a **$95 thousand decrease** in the ACL for loans[30](index=30&type=chunk) [Non-Interest Income](index=6&type=section&id=Non-Interest%20Income%20(YTD)) Total non-interest income dramatically increased to **$14.9 million** from **$458 thousand** in the prior year, primarily due to the absence of **$13.3 million** in securities transaction losses Non-Interest Income Breakdown (YTD) | Component | YTD FY2025 (June 30, 2025) (in thousands) | YTD FY2024 (June 30, 2024) (in thousands) | Change (in thousands) | Change (Percent) | | :------------------------------ | :------------------------- | :------------------------- | :--------------- | :--------------- | | Deposit service fees | $8,170 | $7,732 | $438 | 5.7% | | Insurance commissions | $2,587 | $2,503 | $84 | 3.4% | | Net loss from securities transactions | — | ($13,345) | $13,345 | 100.0% | | Other non-interest income | $4,177 | $3,568 | $609 | 17.1% | | **Total** | **$14,934** | **$458** | **$14,476** | **3,160.7%** | - The significant increase in total non-interest income was primarily due to the absence of the **$13.3 million net loss** from securities transactions recorded in the prior year period[32](index=32&type=chunk) - Deposit service fees increased mainly due to growth in treasury management service fees, along with modest increases in interchange revenue and retail service fees[32](index=32&type=chunk) [Non-Interest Expense](index=6&type=section&id=Non-Interest%20Expense%20(YTD)) Total non-interest expense increased by **$1.3 million (1.6%)** to **$86.3 million**, driven by higher salaries and employee benefits, with the efficiency ratio improving to **58.89%** Non-Interest Expense Breakdown (YTD) | Component | YTD FY2025 (June 30, 2025) (in thousands) | YTD FY2024 (June 30, 2024) (in thousands) | Change (in thousands) | Change (Percent) | | :------------------------------ | :------------------------- | :------------------------- | :--------------- | :--------------- | | Salaries and employee benefits | $44,447 | $39,186 | $5,261 | 13.4% | | Information technology and related expense | $14,637 | $15,687 | ($1,050) | (6.7%) | | Occupancy, net | $10,105 | $10,116 | ($11) | (0.1%) | | Regulatory and outside services | $3,843 | $4,345 | ($502) | (11.6%) | | Federal insurance premium | $3,205 | $4,939 | ($1,734) | (35.1%) | | Advertising and promotional | $3,035 | $3,210 | ($175) | (5.5%) | | Deposit and loan transaction costs | $2,185 | $2,135 | $50 | 2.3% | | Office supplies and related expense | $1,206 | $1,185 | $21 | 1.8% | | Other non-interest expense | $3,589 | $4,100 | ($511) | (12.5%) | | **Total** | **$86,252** | **$84,903** | **$1,349** | **1.6%** | - The increase in salaries and employee benefits was mainly attributable to an increase in the number of employees, merit increases, salary adjustments, and higher incentive compensation accrual[34](index=34&type=chunk) - The efficiency ratio improved to **58.89%** for the current year period compared to **69.77%** for the prior year period (**62.87%** excluding securities strategy losses), primarily due to higher net interest income[36](index=36&type=chunk) [Income Tax Expense](index=7&type=section&id=Income%20Tax%20Expense%20(YTD)) Income tax expense for the nine months ended June 30, 2025, increased by **$1.8 million (20.5%)** to **$10.8 million**, reflecting higher pretax income, with the effective tax rate decreasing to **18.0%** Income Tax Expense and Net Income (YTD) | Metric | YTD FY2025 (June 30, 2025) (in thousands) | YTD FY2024 (June 30, 2024) (in thousands) | Change (in thousands) | Change (Percent) | | :------------------------- | :------------------------- | :------------------------- | :--------------- | :--------------- | | Income before income tax expense | $59,984 | $34,896 | $25,088 | 71.9% | | Income tax expense | $10,772 | $8,943 | $1,829 | 20.5% | | Net income | $49,212 | $25,953 | $23,259 | 89.6% | | Effective Tax Rate | 18.0% | 25.6% | | | - Income tax expense was higher in the current year period due to higher pretax income[38](index=38&type=chunk) - The effective tax rate was higher in the prior year period due mainly to the income tax associated with the pre-1988 bad debt recapture[38](index=38&type=chunk) [Financial Condition](index=8&type=section&id=Financial%20Condition%20as%20of%20June%2030%2C%202025) This section provides an overview of the Company's financial position as of June 30, 2025, including balance sheet, loan portfolio, equity, and capital management [Balance Sheet Summary](index=8&type=section&id=Balance%20Sheet%20Summary) Total assets were **$9.69 billion**, with loans receivable increasing by **$147.6 million** QoQ, deposits growing by **$58.6 million** QoQ, and stockholders' equity reaching **$1.05 billion** Consolidated Balance Sheet Summary (in thousands) | Metric | June 30, 2025 | March 31, 2025 | September 30, 2024 | | :---------------------- | :------------ | :------------- | :----------------- | | Total assets | $9,692,739 | $9,718,184 | $9,527,608 | | Loans receivable, net | $8,023,554 | $7,875,905 | $7,907,338 | | Deposits | $6,431,137 | $6,372,545 | $6,129,982 | | Borrowings | $2,071,585 | $2,142,956 | $2,179,564 | | Stockholders' equity | $1,046,158 | $1,037,110 | $1,032,270 | | Equity to total assets | 10.8% | 10.7% | 10.8% | - The loan portfolio increased **$147.6 million** during the current quarter, with a **$243.5 million increase** in commercial loans offsetting a **$99.3 million decrease** in one- to four-family loans[40](index=40&type=chunk) - Deposits increased **$58.6 million** during the current quarter, mainly due to a **$123.9 million increase** in the Bank's high yield savings account offering[42](index=42&type=chunk) - Borrowings decreased **$71.4 million (13.3% annualized)** due to a **$50.0 million** matured borrowing not replaced and principal payments on FHLB advances[42](index=42&type=chunk) [Loan Portfolio Composition and Activity](index=8&type=section&id=Loan%20Portfolio%20Composition%20and%20Activity) The loan portfolio continued its strategic shift, with commercial loans growing significantly while one- to four-family loans decreased, and **$445.2 million** in total originations and purchases for the quarter Loan Portfolio Composition (QoQ) (in thousands) | Loan Type (QoQ) | June 30, 2025 | March 31, 2025 | Change (Dollars) | | :---------------- | :------------ | :------------- | :--------------- | | One- to four-family | $6,018,486 | $6,117,810 | ($99,324) | | Commercial | $1,911,841 | $1,668,327 | $243,514 | | Consumer | $112,673 | $108,483 | $4,190 | | **Total Loans** | **$8,043,000**| **$7,894,620** | **$148,380** | Loan Activity (QoQ) (in thousands) | Loan Activity (QoQ) | Amount (Q3 FY2025) | Rate (Q3 FY2025) | | :-------------------- | :----------------- | :--------------- | | Originated & Refinanced | $422,501 | 6.99% | | Purchased & Participations | $22,689 | 6.91% | | Repayments | ($268,493) | | | **Ending Balance** | **$8,043,000** | **4.25%** | - As of June 30, 2025, the Bank had **$146.2 million** of commercial real estate loan commitments expected to fund during the September 30, 2025 quarter, mainly in July 2025[40](index=40&type=chunk) - One- to four-family origination and refinance activity has slowed due to continued high interest rates and a lack of housing inventory; the Bank suspended correspondent lending channels in FY2024[41](index=41&type=chunk) [One- to Four-Family Loans](index=17&type=section&id=One-%20to%20Four-Family%20Loans) The one- to four-family loan portfolio totaled **$6.02 billion**, representing **74.8%** of total loans, with a weighted average rate of **3.65%** and strong credit quality One- to Four-Family Loan Portfolio Details (in thousands) | Category | Amount (June 30, 2025) | % of Total | Rate | Credit Score | LTV | Average Balance per Loan (in thousands) | | :-------------------- | :--------------------- | :--------- | :---- | :----------- | :---- | :----------------------- | | Originated | $3,828,171 | 63.6% | 3.74% | 771 | 58% | $170 | | Correspondent purchased | $2,058,749 | 34.2% | 3.49% | 767 | 61% | $394 | | Bulk purchased | $116,706 | 2.0% | 3.30% | 773 | 53% | $275 | | Construction | $14,860 | 0.2% | 6.27% | 773 | 39% | $270 | | **Total** | **$6,018,486** | **100.0%** | **3.65%** | **770** | **59%** | **$213** | One- to Four-Family Loan Activity (QoQ) (in thousands) | Activity (QoQ) | Amount (Q3 FY2025) | Rate | LTV | Credit Score | | :--------------- | :----------------- | :---- | :---- | :----------- | | Origination & Refinance | $86,769 | 6.23% | 75% | 767 | [Commercial Loans](index=17&type=section&id=Commercial%20Loans) The commercial loan portfolio grew to **$1.91 billion**, comprising **23.8%** of total loans, with a weighted average rate of **5.93%**, driven by significant commercial real estate and industrial growth Commercial Loan Portfolio Details (in thousands) | Commercial Loan Type | Amount (June 30, 2025) | % of Total | Rate | | :------------------- | :--------------------- | :--------- | :---- | | Commercial real estate | $1,561,691 | 19.4% | 5.76% | | Commercial and industrial | $184,390 | 2.3% | 6.94% | | Construction | $165,760 | 2.1% | 6.39% | | **Total** | **$1,911,841** | **23.8%** | **5.93%** | Commercial Loan Origination & Participation (QoQ) (in thousands) | Commercial Origination & Participation (QoQ) | Amount (Q3 FY2025) | Rate | LTV | DSCR | | :------------------------------------------- | :----------------- | :---- | :---- | :---- | | Commercial real estate | $169,496 | 7.00% | 51.2% | 1.55x |\ | Commercial and industrial | $113,289 | 7.32% | N/A | 1.73 |\ | Commercial construction | $57,214 | 7.00% | 77.1% | 1.34 |\ | **Total** | **$339,999** | **7.11%** | **57.7%** | **1.58** | - The commercial and industrial gross loan amount increased **$96.6 million**, or **52%**, during the current quarter, with three loans to two borrower relationships accounting for **$85.3 million** of this increase[86](index=86&type=chunk) - The largest commercial and industrial lending relationship at June 30, 2025, had a gross loan balance of **$81.8 million**, representing **29%** of the portfolio[86](index=86&type=chunk) [Stockholders' Equity & Dividends](index=9&type=section&id=Stockholders'%20Equity%20%26%20Dividends) Stockholders' equity reached **$1.05 billion**, with the Bank maintaining a well-capitalized status and the Board intending to pay **$0.34 per share** in regular quarterly cash dividends for FY2025 - Stockholders' equity totaled **$1.05 billion** at June 30, 2025, an increase of **$13.9 million** from September 30, 2024[47](index=47&type=chunk) - The Bank's capital ratios exceeded well-capitalized requirements, and its community bank leverage ratio was **9.7%** as of June 30, 2025[47](index=47&type=chunk) - During the nine months ended June 30, 2025, the Company paid regular quarterly cash dividends totaling **$33.2 million**, or **$0.255 per share**[48](index=48&type=chunk) - The Board of Directors intends to pay a regular quarterly cash dividend of **$0.085 per share** for FY2025, totaling **$0.34 per share** for the year, with consideration for additional dividends if earnings exceed this amount[49](index=49&type=chunk) - No distributions are expected from the Bank to the Company in FY2025 to limit tax associated with pre-1988 bad debt recapture, with distributions anticipated in FY2026[50](index=50&type=chunk) [Stock Repurchase Plan](index=9&type=section&id=Stock%20Repurchase%20Plan) The Company has a **$75.0 million** authorized stock repurchase plan, but no shares were repurchased in the current year, and future repurchases are contingent on rebuilding the holding company's cash balance - The Company has **$75.0 million** authorized under an existing stock repurchase plan, with FRB approval expiring in February 2026[51](index=51&type=chunk) - There were no share repurchases during the current year period[51](index=51&type=chunk) - Repurchases are not expected until a sufficient cash balance is rebuilt at the holding company level due to limited cash based on the capital management plan[51](index=51&type=chunk) [Supplemental Financial Information](index=11&type=section&id=Supplemental%20Financial%20Information) This section provides detailed financial statements and supplementary data, including balance sheets, income statements, and asset quality metrics [Consolidated Balance Sheets](index=11&type=section&id=Consolidated%20Balance%20Sheets) Total assets were **$9.69 billion** at June 30, 2025, with net loans receivable at **$8.02 billion**, deposits at **$6.43 billion**, and stockholders' equity at **$1.05 billion** Consolidated Balance Sheets (in thousands) | ASSETS (in thousands) | June 30, 2025 | March 31, 2025 | September 30, 2024 | | :-------------------- | :------------ | :------------- | :----------------- | | Cash and cash equivalents | $174,965 | $340,389 | $217,307 | | AFS securities | $956,229 | $961,417 | $856,266 | | Loans receivable, net | $8,023,554 | $7,875,905 | $7,907,338 | | FHLB stock | $98,225 | $99,334 | $101,175 | | TOTAL ASSETS | **$9,692,739**| **$9,718,184** | **$9,527,608** | | LIABILITIES (in thousands) | | | | | Deposits | $6,431,137 | $6,372,545 | $6,129,982 | | Borrowings | $2,071,585 | $2,142,956 | $2,179,564 | | Total liabilities | **$8,646,581**| **$8,681,074** | **$8,495,338** | | STOCKHOLDERS' EQUITY (in thousands) | | | | | Total stockholders' equity | **$1,046,158**| **$1,037,110** | **$1,032,270** | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | **$9,692,739**| **$9,718,184** | **$9,527,608** | [Consolidated Statements of Income](index=12&type=section&id=Consolidated%20Statements%20of%20Income) Net income for Q3 FY2025 was **$18.4 million**, and YTD FY2025 net income was **$49.2 million**, significantly higher than the prior year due to increased net interest income and the absence of securities losses Consolidated Statements of Income (in thousands) | (Dollars in thousands) | Q3 FY2025 (June 30, 2025) | Q2 FY2025 (March 31, 2025) | YTD FY2025 (June 30, 2025) | YTD FY2024 (June 30, 2024) | | :--------------------- | :------------------------ | :----------------------- | :------------------------- | :------------------------- | | Total interest and dividend income | $99,678 | $98,175 | $295,475 | $279,976 | | Total interest expense | $54,220 | $54,335 | $163,947 | $158,739 | | NET INTEREST INCOME | $45,458 | $43,840 | $131,528 | $121,237 | | PROVISION FOR CREDIT LOSSES | ($451) | — | $226 | $1,896 | | Total non-interest income | $5,288 | $4,953 | $14,934 | $458 | | Total non-interest expense | $29,564 | $29,540 | $86,252 | $84,903 | | INCOME BEFORE INCOME TAX EXPENSE | $21,633 | $19,253 | $59,984 | $34,896 | | INCOME TAX EXPENSE | $3,251 | $3,854 | $10,772 | $8,943 | | NET INCOME | $18,382 | $15,399 | $49,212 | $25,953 | [Average Balance Sheets and Yields/Rates](index=13&type=section&id=Average%20Balance%20Sheets%20and%20Yields%2FRates) The net interest margin improved to **1.98%** QoQ and **1.92%** YTD, with enhanced ROAA and ROAE reflecting improved profitability and efficiency, especially when excluding prior year's securities strategy impact Selected Performance Ratios (Annualized) | Selected Performance Ratios (Annualized) | Q3 FY2025 (June 30, 2025) | Q2 FY2025 (March 31, 2025) | YTD FY2025 (June 30, 2025) | YTD FY2024 (June 30, 2024) | | :--------------------------------------- | :------------------------ | :----------------------- | :------------------------- | :------------------------- | | Net interest margin | 1.98% | 1.92% | 1.92% | 1.77% | | Return on average assets | 0.76% | 0.64% | 0.68% | 0.36% | | Return on average equity | 7.05% | 5.96% | 6.33% | 3.35% | | Efficiency ratio | 58.26% | 60.54% | 58.89% | 69.77% | YTD FY2024 Performance (Excluding Securities Strategy) | YTD FY2024 Performance (Excluding Securities Strategy) | Actual (GAAP) | Securities Strategy Impact | Excluding Securities Strategy (Non-GAAP) | | :----------------------------------------------------- | :------------ | :------------------------- | :--------------------------------------- | | Return on average assets | 0.36% | (0.14%) | 0.50% | | Return on average equity | 3.35% | (1.31%) | 4.66% | | Efficiency Ratio | 69.77% | 6.90 | 62.87% | | Earnings per share | $0.20 | ($0.08) | $0.28 | - Management believes presenting certain financial measures excluding the securities strategy is meaningful to investors to better evaluate the Company's core operations, as the strategy was non-recurring[66](index=66&type=chunk) [Asset Quality](index=21&type=section&id=Asset%20Quality) Asset quality shows a slight increase in delinquent loans and a significant rise in nonaccrual commercial real estate loans, but management deems the **$22.8 million ACL** and **$6.3 million off-balance sheet reserve** adequate Delinquency Status (in thousands) | Delinquency Status (Dollars in thousands) | June 30, 2025 | March 31, 2025 | September 30, 2024 | | :---------------------------------------- | :------------ | :------------- | :----------------- | | Loans 30 to 89 Days Delinquent | $16,029 | $14,440 | $16,030 | | Nonaccrual loans | $48,453 | $10,833 | $10,092 | | Non-performing assets | $48,545 | $10,833 | $10,147 | | Non-performing assets as % of total assets | 0.50% | 0.11% | 0.11% | - The increase in nonaccrual commercial real estate loans was primarily due to two participation loans related to the same borrowing relationship (**$40.3 million**) that were moved to substandard during the period[88](index=88&type=chunk)[90](index=90&type=chunk) - The **$1.1 million decrease** in the ACL for loans was mainly related to the commercial loan portfolio, as an increase due to growth was more than offset by an update to the ACL model's regression analyses[13](index=13&type=chunk) - As of June 30, 2025, the ACL balance was **$22.8 million** and the reserve for off-balance sheet credit exposures totaled **$6.3 million**, which management believes is adequate for the credit risk characteristics in the loan portfolio[99](index=99&type=chunk)[102](index=102&type=chunk) [Delinquent and Non-Performing Loans](index=21&type=section&id=Delinquent%20and%20Non-Performing%20Loans) Loans **30 to 89 days delinquent** increased slightly to **$16.0 million**, while nonaccrual loans significantly rose to **$48.5 million**, primarily due to two commercial real estate participation loans moved to substandard status Delinquent Loans (30-89 Days) (in thousands) | Loan Type (30-89 Days Delinquent) | June 30, 2025 (Amount) | March 31, 2025 (Amount) | | :-------------------------------- | :--------------------- | :---------------------- | | One- to four-family | $12,575 | $11,179 | | Commercial | $2,820 | $2,820 | | Consumer | $634 | $441 | | **Total** | **$16,029** | **$14,440** | Non-Performing Loans and Assets (in thousands) | Non-Performing Loans (Dollars in thousands) | June 30, 2025 | March 31, 2025 | | :------------------------------------------ | :------------ | :------------- | | Loans 90 or More Days Delinquent or in Foreclosure | $8,018 | $9,563 | | Nonaccrual loans less than 90 Days Delinquent | $40,435 | $1,270 | | **Total Nonaccrual Loans** | **$48,453** | **$10,833** | | OREO | $92 | — | | **Total Non-Performing Assets** | **$48,545** | **$10,833** | - The increase in nonaccrual commercial real estate loans was due primarily to two participation loans related to the same borrowing relationship that were moved to substandard during the period[88](index=88&type=chunk) [Classified Loans (Special Mention/Substandard)](index=23&type=section&id=Classified%20Loans%20(Special%20Mention%2FSubstandard)) Substandard loans significantly increased to **$107.8 million** from **$67.9 million**, mainly due to **$40.2 million** and **$38.9 million** in commercial real estate participation loans secured by hotels, despite strong LTVs and guaranties Classified Loans by Type (in thousands) | Loan Type (Dollars in thousands) | Special Mention (June 30, 2025) | Substandard (June 30, 2025) | Special Mention (March 31, 2025) | Substandard (March 31, 2025) | | :------------------------------- | :------------------------------ | :-------------------------- | :------------------------------- | :--------------------------- | | One- to four-family | $12,583 | $21,524 | $11,793 | $20,340 | | Commercial real estate | $8,111 | $84,771 | $8,352 | $45,961 | | Commercial and industrial | $882 | $1,201 | $899 | $1,054 | | Consumer | $365 | $323 | $162 | $566 | | **Total** | **$21,941** | **$107,819** | **$21,206** | **$67,921** | - The increase in commercial real estate substandard loans was mainly due to two participation loans (**$40.2 million**) related to the same borrowing relationship and another **$38.9 million** participation loan, both secured by hotels[92](index=92&type=chunk) - These substandard loans have strong LTVs (**45%** and **47%**) and personal guaranties, with no charge-offs or specific valuation allowances set aside as of June 30, 2025[92](index=92&type=chunk) [Allowance for Credit Losses (ACL)](index=23&type=section&id=Allowance%20for%20Credit%20Losses%20(ACL)) The ACL for loans decreased by **$1.1 million** due to a model update, resulting in an ACL to total loans ratio of **0.28%**, which management deems adequate alongside the **$6.3 million** off-balance sheet reserve ACL Distribution by Loan Type (in thousands) | ACL Distribution (Dollars in thousands) | June 30, 2025 | March 31, 2025 | September 30, 2024 | | :-------------------------------------- | :------------ | :------------- | :----------------- | | One- to four-family | $3,532 | $3,562 | $3,673 | | Commercial | $19,039 | $20,176 | $19,154 | | Consumer | $237 | $232 | $208 | | **Total ACL** | **$22,808** | **$23,970** | **$23,035** | | Ratio of ACL to Loans Receivable | 0.28% | 0.30% | 0.29% | ACL Activity Summary (in thousands) | ACL Activity (Dollars in thousands) | Q3 FY2025 (June 30, 2025) | YTD FY2025 (June 30, 2025) | | :---------------------------------- | :------------------------ | :------------------------- | | Balance at beginning of period | $23,970 | $23,035 | | Net (charge-offs) recoveries | ($25) | ($132) | | Provision for credit losses | ($1,137) | ($95) | | **Balance at end of period** | **$22,808** | **$22,808** | | ACL to non-performing loans at end of period | 47.07 | 47.07 | | ACL to loans receivable at end of period | 0.28 | 0.28 | - The decrease in the ratio of the ACL to total loans was primarily due to a decrease in the commercial real estate ACL, resulting from a regression analysis update in the ACL model[98](index=98&type=chunk) - Management applied qualitative factors for large dollar commercial real estate loan concentrations and potential risk of loss in market value for newer one- to four-family loans[95](index=95&type=chunk)[97](index=97&type=chunk) [Securities Portfolio](index=25&type=section&id=Securities%20Portfolio) The securities portfolio, at amortized cost, totaled **$933.4 million** at June 30, 2025, with **92%** in fixed-rate securities, a weighted average yield of **5.47%**, and a weighted average life of **4.6 years** Securities Portfolio Composition (in thousands) | Securities Portfolio (Amortized Cost) | Amount (June 30, 2025) | Yield | WAL (Years) | | :------------------------------------ | :--------------------- | :---- | :---------- | | MBS | $874,360 | 5.49% | 4.5 | | U.S. government-sponsored enterprise debentures | $55,000 | 5.16% | 5.3 | | Corporate bonds | $4,000 | 5.12% | 6.9 | | **Total** | **$933,360** | **5.47%** | **4.6** | - Overall, fixed-rate securities comprised **92%** of the securities portfolio at June 30, 2025[103](index=103&type=chunk) Securities Portfolio Activity (QoQ) (in thousands) | Securities Activity (QoQ) | Amount (Q3 FY2025) | Yield | WAL (Years) | | :------------------------ | :----------------- | :---- | :---------- | | Beginning balance | $961,417 | 5.46% | 5.6 | | Purchases | $38,749 | 5.02% | 5.8 | | Ending balance | $956,229 | 5.47% | 4.6 | [Deposit Portfolio](index=26&type=section&id=Deposit%20Portfolio) The deposit portfolio increased to **$6.43 billion** with a weighted average rate of **2.24%**, driven by high-yield savings growth, while **14%** of deposits were uninsured Deposit Portfolio Composition (in thousands) | Deposit Type (Dollars in thousands) | June 30, 2025 (Amount) | Rate | % of Total | | :---------------------------------- | :--------------------- | :---- | :--------- | | Non-interest-bearing checking | $579,595 | —% | 9.0% | | Interest-bearing checking | $884,838 | 0.24% | 13.8% | | High yield savings | $408,018 | 3.88% | 6.4% | | Other savings | $433,188 | 0.07% | 6.7% | | Money market | $1,203,917 | 1.22% | 18.7% | | Certificates of deposit | $2,921,581 | 3.81% | 45.4% | | **Total** | **$6,431,137** | **2.24%** | **100.0%** | - The decrease in the deposit portfolio rate at June 30, 2025, compared to prior periods was mainly due to lower rates on retail certificates of deposit[107](index=107&type=chunk) - Approximately **$899.4 million (14%)** of the Bank's deposit balance was uninsured, with **$509.4 million (8%)** related to commercial and retail deposit accounts[111](index=111&type=chunk) [Borrowings](index=28&type=section&id=Borrowings) Term borrowings totaled **$2.07 billion** with a weighted average contractual rate of **3.60%**, as the Bank prepaid **$200 million** of FHLB advances and replaced them with new, lower-rate, longer-term advances Borrowings Maturity Schedule (in thousands) | Maturity by Fiscal Year | Amount (June 30, 2025) | Contractual Rate | Effective Rate | | :---------------------- | :--------------------- | :--------------- | :------------- | | 2025 | $100,000 | 4.69% | 3.03% | | 2026 | $425,000 | 2.11% | 2.30% | | 2027 | $745,000 | 3.49% | 3.56% | | 2028 | $570,902 | 4.37% | 4.14% | | 2029 | $141,250 | 4.45% | 4.45% | | 2030 | $90,000 | 4.20% | 4.20% | | **Total** | **$2,072,152** | **3.60%** | **3.52%** | - During the current quarter, the Bank prepaid **$200.0 million** of fixed-rate FHLB advances (**4.70% rate**, **0.6-year term**) and replaced them with **$200.0 million** of new fixed-rate FHLB advances (**3.83% rate**, **2.5-year term**)[115](index=115&type=chunk) Borrowing Activity (QoQ) (in thousands) | Borrowing Activity (QoQ) | Amount (Q3 FY2025) | Effective Rate | WAM (Years) | | :----------------------- | :----------------- | :------------- | :---------- | | Beginning balance | $2,143,320 | 3.54% | 1.6 | | Maturities and repayments | ($371,168) | 3.93% | | | New FHLB borrowings | $300,000 | 3.93% | 2.5 | | **Ending balance** | **$2,072,152** | **3.52%** | **1.7** | [Maturities of Interest-Bearing Liabilities](index=29&type=section&id=Maturities%20of%20Interest-Bearing%20Liabilities) **$2.41 billion** in certificates of deposit and non-amortizing FHLB advances are maturing over the next four quarters, with a weighted average repricing rate of **3.61%** and a WAM of **0.9 years** for total certificates of deposit Maturities of Interest-Bearing Liabilities (in thousands) | Maturity Period (Dollars in thousands) | September 30, 2025 | December 31, 2025 | March 31, 2026 | June 30, 2026 | Total | | :------------------------------------- | :----------------- | :---------------- | :------------- | :------------ | :---- | | Retail/Commercial Certificates (Amount) | $453,811 | $618,835 | $302,603 | $556,155 | $1,931,404 | | Public Unit Certificates (Amount) | $10,983 | $14,329 | $43,110 | $9,001 | $77,423 | | Non-Amortizing FHLB Advances (Amount) | $100,000 | $100,000 | $100,000 | $100,000 | $400,000 | | **Total Amount** | **$564,794** | **$733,164** | **$445,713** | **$665,156** | **$2,408,827** | | **Total Repricing Rate** | **4.00%** | **3.56%** | **3.19%** | **3.63%** | **3.61%** | Certificates of Deposit Weighted Average Maturity (Years) | Certificates of Deposit | WAM (Years) | | :---------------------- | :---------- | | Retail certificates of deposit | 0.9 | | Commercial certificates of deposit | 0.7 | | Public unit certificates of deposit | 0.9 | | **Total certificates of deposit** | **0.9** | [Average Rates and Lives (Interest Rate Sensitivity)](index=30&type=section&id=Average%20Rates%20and%20Lives%20(Interest%20Rate%20Sensitivity)) The one-year interest rate sensitivity gap improved to **$(963.3) million (9.9% of total assets)**, primarily due to decreased projected interest-bearing liability cash flows from FHLB advance management - The one-year gap between interest-earning assets and interest-bearing liabilities projected to reprice improved to **$(963.3) million**, or **(9.9)% of total assets**, at June 30, 2025, from **$(1.11) billion**, or **(11.4)% of total assets**, at March 31, 2025[120](index=120&type=chunk) - The change in the one-year gap was primarily due to a decrease in the amount of projected interest-bearing liability cash flows, related to the prepayment and replacement of **$200.0 million** of fixed-rate FHLB advances[120](index=120&type=chunk) Interest-Earning Assets and Liabilities Overview (June 30, 2025) | Interest-Earning Assets (June 30, 2025) | Amount (Thousands) | Yield/Rate | WAL (Years) | % of Total | | :-------------------------------------- | :----------------- | :--------- | :---------- | :--------- | | Securities | $956,229 | 5.47% | 3.7 | 10.3% | | Fixed-rate loans | $5,706,971 | 3.71% | 6.4 | 61.5% | | Adjustable-rate loans | $2,336,029 | 5.57% | 3.8 | 25.2% | | FHLB stock | $98,225 | 9.11% | 1.9 | 1.1% | | Cash and cash equivalents | $174,965 | 3.79% | — | 1.9% | | **Total Interest-Earning Assets** | **$9,272,419** | **4.42%** | **5.3** | **100.0%** | | Interest-Bearing Liabilities (June 30, 2025) | | | | | | Non-maturity deposits | $2,929,961 | 1.12% | 5.2 | 37.0% | | Certificates of deposit | $2,921,581 | 3.81% | 0.9 | 36.8% | | Term borrowings | $2,073,225 | 3.52% | 1.7 | 26.2% | | **Total Interest-Bearing Liabilities** | **$7,924,767** | **2.74%** | **2.7** | **100.0%** | [Forward-Looking Statements](index=10&type=section&id=Forward-Looking%20Statements) This section outlines forward-looking statements, which are subject to various risks and uncertainties, and actual results may differ materially from current expectations - Forward-looking statements involve risks and uncertainties, including changes in regulatory policies, interest rates, inflation, potential recession, bank failures, loan demand, future earnings and capital levels, and dividend policies[55](index=55&type=chunk) - Actual results may differ materially from those currently expected, and the Company disclaims any intent or obligation to update these statements[55](index=55&type=chunk) [Contact Information](index=10&type=section&id=Contact%20Information) For further information, investors can contact Kent Townsend, Executive Vice President, Chief Financial Officer and Treasurer, via phone or email - Contact: Kent Townsend, Executive Vice President, Chief Financial Officer and Treasurer[56](index=56&type=chunk) - Phone: (785) 270-6055 (Investor Relations) or (785) 231-6360. Email: investorrelations@capfed.com or ktownsend@capfed.com[56](index=56&type=chunk)

Group 1 - Capitol Federal Financial, Inc. (NASDAQ: CFFN) faced significant downside due to the banking crisis in September 2023 [1] - The analysis indicates a focus on cash flow and companies that generate it, highlighting value and growth prospects in the oil and natural gas sector [1] Group 2 - Crude Value Insights provides an investing service and community centered on oil and natural gas [1] - Subscribers have access to a 50+ stock model account and in-depth cash flow analyses of exploration and production (E&P) firms [2]

Financial Performance - The Company reported net income of $30.8 million, or $0.24 per share, for the current six-month period, compared to $16.3 million, or $0.12 per share, for the prior year[111]. - For the quarter ended March 31, 2025, the company reported net income of $15.4 million, or $0.12 per share, unchanged from the prior quarter[202]. - Income before income tax expense surged to $38,351 thousand, up 98.9% from $19,285 thousand in the prior year[234]. - Net income rose to $30,830 thousand, reflecting an increase of $14,525 thousand, or 89.1%[234]. - The effective tax rate increased to 19.6% from 15.5%, influenced by higher pretax income[234]. Asset and Deposit Growth - Total assets reached $9.72 billion, a $190.6 million increase from September 30, 2024, driven by increases in cash and securities[116]. - Total deposits increased by $242.6 million to $6.37 billion, primarily due to high yield savings accounts[117]. - Total assets increased to $9,718,184 thousand, a 7.5% increase from December 31, 2024[132]. - Deposits rose by $166.4 million, or 10.7% annualized, primarily due to the high yield savings account offering[133]. - The deposit portfolio totaled $6,372,545 thousand as of March 31, 2025, with a weighted average rate of 2.28%, down from 2.34% at December 31, 2024[180]. Loan Portfolio and Quality - The Bank's asset quality remained strong, with loans 30 to 89 days delinquent at 0.18% and loans 90 or more days delinquent at 0.12%[120]. - Loans receivable, net decreased by $77.7 million during the current quarter, with a shift from one- to four-family loans to commercial loans[132]. - The one- to four-family loan portfolio decreased by $96.0 million, while commercial loans grew by $21.8 million[132]. - The total amount of one- to four-family loans 30 to 89 days delinquent was $14,440,000, which is 0.18% of total loans receivable[159]. - The total amount of loans 90 or more days delinquent or in foreclosure was $9,563,000, which is 0.12% of total loans[161]. Interest Income and Margin - The net interest margin increased by 13 basis points to 1.89% due to higher yields on loans and a shift towards the commercial loan portfolio[112]. - Total interest and dividend income for the current quarter was $98.175 million, a 0.6% increase from $97.622 million in the prior quarter[204]. - Interest income from loans receivable rose by $10.2 million or 6.7% to $162.3 million, primarily due to a shift from one- to four-family loans to higher yielding commercial loans[223]. - The average rate for total loans receivable was 4.10% as of March 31, 2025, compared to 4.07% as of December 31, 2024[137]. - The net interest margin increased by 10 basis points from 1.82% in the prior year quarter to 1.92% in the current year quarter, driven by higher yields on loans[242]. Non-Interest Income and Expenses - Non-interest income rose to $4.953 million, a 5.5% increase from $4.693 million, driven by higher insurance commissions and other non-interest income[209]. - Total non-interest expenses increased to $29.540 million, an 8.8% rise from $27.148 million, largely due to higher salaries and employee benefits[211]. - The efficiency ratio for the current quarter was 60.54%, up from 57.86% in the prior quarter, indicating increased costs relative to revenue generation[212]. - Total non-interest income increased significantly to $9,646 thousand from a loss of $4,251 thousand, marking a change of $13,897 thousand, or 326.9%[229]. Capital and Borrowings - The Bank's capital ratios exceeded well-capitalized requirements, with stockholders' equity totaling $1.04 billion[119]. - Total liabilities increased to $8.68 billion as of March 31, 2025, up from $8.50 billion at September 30, 2024, primarily due to a $242.6 million increase in deposits[178]. - The weighted average effective rate of total borrowings was 3.54% as of March 31, 2025, down from 3.62%[188]. - The Bank had total borrowings of $2.14 billion, representing approximately 22% of total assets, with $684.7 million scheduled to be repaid or mature in the next 12 months[265]. - The Bank's risk-based tier 1 capital ratio was 16.5% as of March 31, 2025, indicating strong capital adequacy[272]. Future Plans and Strategies - Management plans to launch new checking products and digital banking services for small businesses in June 2025[126]. - The bank plans to enhance its digital banking experience, including a new deposit account onboarding platform set for November 2024[127]. - Management is actively evaluating new services for commercial and small businesses to grow fee revenue streams[128]. - The Company initiated a securities strategy by selling $1.30 billion of securities, resulting in an impairment loss of $192.6 million[122]. - The Company plans to pay out a total of $0.34 per share in dividends for fiscal year 2025, contingent on earnings exceeding this amount[194].

Core Viewpoint - Capitol Federal Financial (CFFN) has been upgraded to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system emphasizes the importance of changing earnings estimates in determining near-term stock price movements, making it a valuable tool for investors [2][4]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling actions that affect stock prices [4]. Company Performance Indicators - The recent upgrade for Capitol Federal indicates a positive outlook for its earnings, which is expected to translate into increased buying pressure and a rise in stock price [3][5]. - For the fiscal year ending September 2025, Capitol Federal is projected to earn $0.49 per share, reflecting a year-over-year increase of 32.4% [8]. Zacks Rank System - The Zacks Rank system classifies stocks based on earnings estimate revisions, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7]. - Capitol Federal's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].

Core Insights - Capitol Federal Financial (CFFN) reported quarterly earnings of $0.12 per share, exceeding the Zacks Consensus Estimate of $0.11 per share, and showing an increase from $0.11 per share a year ago [1][2] - The company achieved revenues of $48.79 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.29% and up from $45.96 million year-over-year [3] Earnings Performance - The earnings surprise for the quarter was 9.09%, with the company having surpassed consensus EPS estimates three times over the last four quarters [2] - The current consensus EPS estimate for the upcoming quarter is $0.11, with expected revenues of $48.59 million, and for the current fiscal year, the estimate is $0.46 on revenues of $192.92 million [8] Stock Performance and Outlook - Capitol Federal shares have declined approximately 8.6% since the beginning of the year, compared to a decline of 10.1% for the S&P 500 [4] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [7] Industry Context - The Financial - Savings and Loan industry, to which Capitol Federal belongs, is currently ranked in the top 32% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [9] - Flushing Financial (FFIC), another company in the same industry, is expected to report quarterly earnings of $0.22 per share, reflecting a year-over-year increase of 57.1% [10]

Financial Performance - The Company reported net income of $15.4 million, or $0.12 per share, for the quarter ended March 31, 2025, unchanged from the prior quarter[2]. - For the six months ended March 31, 2025, net income was $30.8 million, or $0.24 per share, compared to $16.3 million, or $0.12 per share, in the prior year[18]. - Net income for the six months ended March 31, 2025, was $30,830 thousand, an increase of $14,525 thousand or 89.1% from $16,305 thousand in the prior year[33]. - Net income for the three months ended March 31, 2025, was $15,399 thousand, slightly down from $15,431 thousand in the previous quarter[56]. Interest Income and Expense - Total interest and dividend income rose to $98.175 million, a 0.6% increase from the previous quarter[4]. - Interest expense decreased by 1.9% to $54.335 million, primarily due to lower rates on deposits[7]. - Total interest and dividend income increased by $10,816 thousand, or 5.8%, to $195,797 thousand for the six months ended March 31, 2025, compared to $184,981 thousand for the same period in 2024[22]. - Interest expense on deposits rose by $7,340 thousand, or 11.1%, totaling $73,198 thousand for the six months ended March 31, 2025, compared to $65,858 thousand in the prior year[25]. Non-Interest Income and Expense - Non-interest income increased by 5.5% to $4.953 million, driven by higher insurance commissions and other non-interest income[10]. - Non-interest income surged to $9,646 thousand for the six months ended March 31, 2025, compared to a net loss of $4,251 thousand in the prior year, marking a change of $13,897 thousand or 326.9%[28]. - Non-interest expense rose by 8.8% to $29.540 million, with significant increases in salaries and employee benefits, and regulatory services[13]. - Total non-interest expense slightly decreased by $265 thousand, or 0.5%, to $56,688 thousand for the six months ended March 31, 2025, compared to $56,953 thousand in the prior year[31]. Efficiency and Ratios - The Company's efficiency ratio was 60.54%, up from 57.86% in the prior quarter, indicating higher costs relative to revenue generation[14]. - The efficiency ratio improved to 59.23% for the current year period compared to 74.29% for the prior year period, indicating better cost management[32]. - The return on average assets (annualized) was 0.64% for the three months ended March 31, 2025, slightly down from 0.65% in the previous quarter[58]. - Return on average assets improved to 0.64% for the six months ended March 31, 2025, up from 0.34% in the prior year[60]. - Return on average equity increased to 5.97% for the six months ended March 31, 2025, compared to 3.15% for the same period in 2024[60]. Assets and Liabilities - Total assets increased by $180 million, or 7.5%, to $9.72 billion as of March 31, 2025, primarily due to increases in cash and cash equivalents and securities[37]. - Total assets increased to $9,611,340 thousand as of March 31, 2025, from $9,552,269 thousand at the end of the previous quarter[58]. - Total liabilities increased to $8.68 billion as of March 31, 2025, compared to $8.51 billion as of December 31, 2024[54]. - The Bank's stockholders' equity totaled $1.04 billion as of March 31, 2025, reflecting an increase of $4.8 million from September 30, 2024[44]. Deposits - Deposits rose by $166.4 million, or 10.7% annualized, during the current quarter, largely due to the Bank's high yield savings account offering[39]. - Deposits rose by $242.6 million from September 30, 2024, driven by high yield savings accounts and retail checking accounts, while borrowings decreased by $36.6 million[41]. - The deposit portfolio totaled $6.372 billion, with a weighted average rate of 2.28%[104]. - Total retail deposits amounted to $5,937,725 thousand with an average rate of 2.30%, representing 93.2% of total deposits[107]. Loans and Credit Quality - Loan originations for one- to four-family and consumer loans amounted to $64.5 million at a rate of 6.65% for the three months ended March 31, 2025[43]. - Total loans receivable as of March 31, 2025, amounted to $7,894,620 thousand, with a weighted average rate of 4.10%[64]. - The unpaid principal balance of non-owner occupied commercial real estate loans was $1.01 billion as of March 31, 2025[72]. - The total amount of consumer loans was $108,483 thousand, with a weighted average rate of 7.93%[64]. - As of March 31, 2025, the total gross loan amount was $1,802,424,000, a slight decrease from $1,813,579,000 as of December 31, 2024[75]. - The total number of non-accrual loans was 81, with a total amount of $10,833,000 as of March 31, 2025[84]. - The percentage of loans 90 or more days delinquent or in foreclosure was 0.12% as of March 31, 2025, compared to 0.13% on December 31, 2024[84]. Credit Losses and Provisions - The provision for credit losses increased to $677 thousand in the current year period from $424 thousand in the prior year period, driven by commercial loan growth[27]. - The allowance for credit losses (ACL) totaled $23,970,000 as of March 31, 2025, with a ratio of ACL to loans receivable at 0.30%[89]. - The commercial real estate substandard loans increased to $45,961,000 as of March 31, 2025, primarily due to a $39.0 million participation loan related to a hotel in Texas[86]. - The ratio of ACL to commercial real estate loans was 1.27 as of March 31, 2025, slightly down from 1.32 on December 31, 2024[89]. Securities and Investments - The Company initiated a securities strategy in October 2023, selling $1.30 billion of securities to improve earnings and liquidity[20]. - The securities portfolio at amortized cost was $941.585 million, with fixed-rate securities comprising 92% of the portfolio[97]. - The weighted average yield on the securities portfolio was 5.46% as of March 31, 2025[98]. - The weighted average life (WAL) of the securities portfolio was estimated at 5.6 years[98]. Borrowings - The Bank's total borrowings as of March 31, 2025, were $2,143,320 thousand with a weighted average effective rate of 3.54%[112]. - New FHLB borrowings during the three months ended March 31, 2025, amounted to $150,000 thousand at an effective rate of 4.35%[112]. - The weighted average maturity (WAM) of the Bank's borrowings remained at 1.6 years as of March 31, 2025[112]. Future Outlook - The Bank anticipates continued improvement in net interest margin for the remainder of fiscal year 2025, driven by decreasing deposit costs and increasing yields on the loan portfolio[35]. - Management anticipates improved occupancy and cash flow for the hotel project in Texas during 2025, expecting full stabilization in 2026[86].