Capitol Federal Financial(CFFN) - 2024 Q4 - Annual Report

Financial Performance - The Company reported a net loss for tax purposes for fiscal year 2024 due to the sale of securities in October 2023, resulting in negative current and accumulated earnings and profits[100]. - The Bank's ability to pay dividends and repurchase shares is contingent upon generating sufficient earnings and cash availability at the holding company level[99]. - The increase in commercial loans exposes the Bank to greater lending and credit risks, potentially impacting financial condition and results of operations[77]. Taxation - As of September 30, 2024, the Bank had $75.9 million in pre-1988 bad debt reserves, resulting in an unrecorded deferred tax liability of$15.9 million[58]. - The Kansas privilege tax rate for fiscal year 2024 is set at 4.5% of earnings, which will decrease to 4.18% starting in fiscal year 2025[60]. - Capitol Federal Financial, Inc. files a consolidated Kansas corporate tax return with a corporate tax rate of 4.0% plus a 3.0% surcharge on earnings over $50,000[59]. - The Company intends not to distribute earnings from the Bank to the Company during fiscal year 2025 to minimize tax associated with bad debt recapture[103]. Employee and Community Engagement - The Bank's total employees increased to 659, with a full-time equivalent of 636, up from 632 in the previous year[63]. - The Bank recorded over 3,690 hours of volunteer time by employees for local organizations and charities during fiscal year 2024[64]. - The Company actively promotes diversity and inclusion, with initiatives supported by the Board of Directors and an Inclusion Task Force[67]. Regulatory and Competitive Environment - The Company faces strong competition from local, regional, and national banks, which may limit growth and profitability[92]. - The Company is subject to extensive regulation, which may impose restrictions on operations and increase compliance costs[93]. Risk Management and Cybersecurity - The Company faces increasing information security risks due to evolving technologies and cyber threats, which could adversely affect business operations and reputation[81]. - The Bank has implemented a comprehensive cybersecurity risk management program to protect sensitive information and mitigate threats[116]. - The Bank conducts regular assessments and testing of cybersecurity policies and practices, including audits and vulnerability testing, to ensure effectiveness[119]. - A third-party risk program is in place to manage information security and privacy risks associated with third-party relationships, including assessments during onboarding and throughout the relationship lifecycle[120]. - The Bank faces ongoing malicious cyber activities, including unauthorized access attempts and phishing, which could materially impact operations and financial condition[121]. - The Board of Directors oversees cybersecurity risk management and receives annual comprehensive updates on IT status and cyber incidents from the Chief Information Officer[122]. - As of September 30, 2024, there were no known cybersecurity incidents that materially affected the Bank's business strategies or financial condition[124]. - The Bank's risk management and compliance programs may not effectively mitigate all risks, potentially affecting business performance[105]. - The Company is vulnerable to increasing fraud and financial crimes, which could materially impact results of operations[107]. - The Company relies heavily on technology, and failures in technology initiatives could adversely affect business performance[91].