Capitol Federal Financial(CFFN) - 2025 Q3 - Quarterly Report

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) 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 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 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 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 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 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 This section provides detailed explanations and additional information supporting the consolidated financial statements 1. Summary of Significant Accounting Policies 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] - 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] - 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] - 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][26] 2. Earnings Per Share 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 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] - 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] - The Bank sold $1.30 billion of AFS securities during fiscal year 2024, realizing a net loss of $13.3 million[37] 4. Loans Receivable and Allowance for Credit Losses 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] 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][63][175] 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][178][179] 5. Borrowed Funds 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] - 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] 6. Income Taxes 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] - 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] 7. Fair Value of Financial Instruments 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][89][93] - 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][99] - 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] 8. Accumulated Other Comprehensive Income 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 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 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] - 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] - 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] - 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] - The Bank continues to strategically grow commercial banking through technology, people, products, and services, including new small business checking products and digital onboarding[119][131][133][134] Financial Condition - Loans Receivable 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] 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] - 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] Financial Condition - Asset Quality 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][170][175] - 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] 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][184][186] Financial Condition - Liabilities 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] 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] - Approximately $899.4 million (14%) of the Bank's Call Report deposit balance was uninsured at June 30, 2025[195] - 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][196] Financial Condition - Stockholders' Equity 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][204] - The Bank's Community Bank Leverage Ratio (CBLR) was 9.7% at June 30, 2025, exceeding well-capitalized requirements[125][204] - The Company paid regular quarterly cash dividends totaling $33.2 million ($0.255 per share) during the nine months ended June 30, 2025[205] - 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] Operating Results 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) 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] - 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] 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] - 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] Comparison of Operating Results (YoY, 9 Months) 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] - 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] 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] - Salaries and employee benefits increased by $5.261 million (13.4%) due to increased headcount, merit increases, and higher incentive compensation accrual[245] - The efficiency ratio improved to 58.89% from 69.77% (62.87% excluding securities strategy impact) due to higher net interest income[246] Comparison of Operating Results (YoY, 3 Months) 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] - 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] 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] - Salaries and employee benefits increased by $1.970 million (14.8%) due to raises, higher incentive compensation, and increased headcount[264] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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 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] - At June 30, 2025, the Bank had $2.97 billion in available liquidity based on its FHLB blanket collateral agreement and unencumbered securities[278] - 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] - The Bank had $798.6 million of eligible but unused securities as collateral for borrowing or other liquidity needs at June 30, 2025[280] Qualitative Disclosure about Market Risk 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 $(1.51) billion, or (15.8%) of total assets, at September 30, 2024[294] - The improvement in the one-year gap was primarily due to an increase in projected asset cash flows (adjustable-rate commercial loans) and a decrease in projected liability cash flows (FHLB advances and certificates of deposit)[294][295] Estimated Change in Net Interest Income (Dollars in thousands) | Change in Interest Rates (bp) | June 30, 2025 Change (%) | June 30, 2025 Amount ($) | 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] Item 4. Controls and Procedures 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] - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[309] PART II - OTHER INFORMATION This section provides additional disclosures including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings 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] - The lawsuit is currently on appeal to the Kansas Supreme Court[311] - 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] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] - No shares were repurchased during the three months ended June 30, 2025[316] - Repurchases are not expected until the holding company has a sufficient cash balance[208] Item 3. Defaults Upon Senior Securities This item is not applicable to the Company for the reporting period - Not applicable[317] Item 4. Mine Safety Disclosures This item is not applicable to the Company for the reporting period - Not applicable[318] Item 5. Other Information 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] Item 6. Exhibits 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 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] 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] - The signing date was August 8, 2025[326]