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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
Form 10-Q
________________________
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2024
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __ to __
Commission File Number: 001-34814
Capitol Federal Financial, Inc.
(Exact name of registrant as specified in its charter)
Maryland27-2631712
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
700 South Kansas Avenue,Topeka,Kansas66603
(Address of principal executive offices)(Zip Code)

(785) 235-1341
(Registrant's telephone number, including area code)
_____________________________________
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareCFFNThe NASDAQ Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒            Accelerated filer ☐        Non-accelerated filer ☐
Smaller reporting company ☐        Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of February 3, 2025, there were 132,786,365 shares of Capitol Federal Financial, Inc. common stock outstanding.

PART I - FINANCIAL INFORMATIONPage Number
Item 1.
Item 2.
Item 3.
Item 4.
PART II - OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.


PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements


CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands, except per share amounts)
December 31, September 30,
20242024
ASSETS:
Cash and cash equivalents (includes interest-earning deposits of $140,287 and $192,138)
$170,324 $217,307 
Available-for-sale ("AFS") securities, at estimated fair value (amortized cost of $850,570 and $829,852)
861,501 856,266 
Loans receivable, net (allowance for credit losses ("ACL") of $24,997 and $23,035)
7,953,556 7,907,338 
Federal Home Loan Bank Topeka ("FHLB") stock, at cost100,364 101,175 
Premises and equipment, net90,326 91,463 
Income taxes receivable, net843 359 
Deferred income tax assets, net24,420 21,978 
Other assets336,833 331,722 
TOTAL ASSETS$9,538,167 $9,527,608 
LIABILITIES:
Deposits$6,206,117 $6,129,982 
Borrowings2,163,775 2,179,564 
Advances by borrowers26,088 61,801 
Other liabilities115,248 123,991 
Total liabilities8,511,228 8,495,338 
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 100,000,000 shares authorized, no shares issued or outstanding
— — 
Common stock, $.01 par value; 1,400,000,000 shares authorized, 132,774,365 and 132,735,565 shares issued and outstanding as of December 31, 2024 and September 30, 2024, respectively
1,328 1,327 
Additional paid-in capital1,146,802 1,146,851 
Unearned compensation, Employee Stock Ownership Plan ("ESOP")(26,019)(26,431)
Accumulated deficit(106,734)(111,104)
Accumulated other comprehensive income ("AOCI"), net of tax11,562 21,627 
Total stockholders' equity1,026,939 1,032,270 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$9,538,167 $9,527,608 
See accompanying notes to consolidated financial statements.

3
CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share amounts)
For the Three Months Ended
December 31,
20242023
INTEREST AND DIVIDEND INCOME:
Loans receivable$81,394 $75,941 
Mortgage-backed securities ("MBS")11,024 5,859 
FHLB stock2,352 2,586 
Cash and cash equivalents1,871 4,778 
Investment securities981 2,528 
Total interest and dividend income97,622 91,692 
INTEREST EXPENSE:
Deposits37,345 32,443 
Borrowings18,047 19,656 
Total interest expense55,392 52,099 
NET INTEREST INCOME42,230 39,593 
PROVISION FOR CREDIT LOSSES677 123 
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES41,553 39,470 
NON-INTEREST INCOME:
Deposit service fees2,707 2,575 
Insurance commissions776 863 
Net loss from securities transactions— (13,345)
Other non-interest income1,210 1,013 
Total non-interest income4,693 (8,894)
NON-INTEREST EXPENSE:
Salaries and employee benefits14,232 12,992 
Information technology and related expense4,550 5,369 
Occupancy, net3,333 3,372 
Regulatory and outside services1,113 1,643 
Federal insurance premium1,038 1,860 
Advertising and promotional822 988 
Deposit and loan transaction costs591 542 
Office supplies and related expense399 361 
Other non-interest expense1,070 1,381 
Total non-interest expense27,148 28,508 
INCOME BEFORE INCOME TAX EXPENSE (BENEFIT)19,098 2,068 
INCOME TAX EXPENSE (BENEFIT)3,667 (475)
NET INCOME$15,431 $2,543 
Basic earnings per share ("EPS")$0.12 $0.02 
Diluted EPS$0.12 $0.02 
Basic weighted average common shares129,972,969 132,353,313 
Diluted weighted average common shares129,972,969 132,353,313 
See accompanying notes to consolidated financial statements.
4
CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(Dollars in thousands)
For the Three Months Ended
December 31,
20242023
Net income$15,431 $2,543 
Other comprehensive income, net of tax:
Unrealized (losses) gains on AFS securities arising during the period,
     net of taxes of $3,741 and $(5,350)
(11,742)16,581 
Reclassification adjustment for gross gains on AFS securities included in net income,
     net of taxes of $0 and $383
— (1,188)
Unrealized gains (losses) on cash flow hedges arising during the period,
     net of taxes of $(756) and $967
2,375 (2,998)
Reclassification adjustment for cash flow hedge amounts included in net income,
     net of taxes of $222 and $626
(698)(1,940)
Comprehensive income$5,366 $12,998 
See accompanying notes to consolidated financial statements.

5
CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
(Dollars in thousands, except per share amounts)
For the Three Months Ended December 31, 2024
AdditionalUnearnedTotal
CommonPaid-InCompensationAccumulatedStockholders'
StockCapitalESOPDeficitAOCIEquity
Balance at September 30, 2024$1,327 $1,146,851 $(26,431)$(111,104)$21,627 $1,032,270 
Net income15,431 15,431 
Other comprehensive loss, net of tax(10,065)(10,065)
ESOP activity(149)412 263 
Restricted stock activity, net1 (1)— 
Stock-based compensation101 101 
Cash dividends to stockholders ($0.085 per share)
(11,061)(11,061)
Balance at December 31, 2024$1,328 $1,146,802 $(26,019)$(106,734)$11,562 $1,026,939 

For the Three Months Ended December 31, 2023
AdditionalUnearnedTotal
CommonPaid-InCompensationAccumulatedStockholders'
Stock Capital ESOP Deficit AOCI Equity
Balance at September 30, 2023$1,359 $1,166,643 $(28,083)$(104,565)$8,700 $1,044,054 
Net income2,543 2,543 
Cumulative effect of adopting Accounting Standards Update ("ASU") 2022-02, net of tax(27)(27)
Other comprehensive income, net of tax10,455 10,455 
ESOP activity(190)412 222 
Restricted stock activity, net(6)(6)
Stock-based compensation87 87 
Repurchase of common stock(20)(11,879)(11,899)
Cash dividends to stockholders ($0.085 per share)
(11,308)(11,308)
Balance at December 31, 2023$1,339 $1,154,655 $(27,671)$(113,357)$19,155 $1,034,121 
See accompanying notes to consolidated financial statements.

6
CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)
For the Three Months Ended
December 31,
20242023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$15,431 $2,543 
Adjustments to reconcile net income to net cash provided by operating activities:
FHLB stock dividends(2,352)(2,586)
Provision for credit losses677 123 
Originations of loans receivable held-for-sale ("LHFS")— (425)
Proceeds from sales of LHFS— 433 
Amortization and accretion of premiums and discounts on securities(876)(2,771)
Depreciation and amortization of premises and equipment1,847 2,040 
Amortization of intangible assets137 199 
Amortization of deferred amounts related to FHLB advances, net388 383 
Common stock committed to be released for allocation - ESOP263 222 
Stock-based compensation101 87 
Net loss from securities transactions— 13,345 
Changes in:
Unrestricted cash collateral from derivative counterparties, net2,550 (6,830)
Other assets, net(2,904)461 
Income taxes receivable, net(482)4,584 
Deferred income tax assets, net764 (7,836)
Other liabilities(9,936)(9,306)
Net cash provided by (used in) operating activities5,608 (5,334)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of AFS securities(71,416)(668,310)
Proceeds from calls, maturities and principal reductions of AFS securities51,574 49,604 
Proceeds from sale of AFS securities— 1,272,512 
Proceeds from the redemption of FHLB stock3,163 3,134 
Net change in loans receivable(48,054)22,815 
Purchase of premises and equipment(1,152)(1,261)
Proceeds from sale of other real estate owned ("OREO")110 — 
Net cash (used in) provided by investing activities(65,775)678,494 
(Continued)
7
CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)
For the Three Months Ended
December 31,
20242023
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid(11,061)(11,308)
Net change in deposits76,135 (29,625)
Proceeds from borrowings200,000 175,100 
Repayments on borrowings(216,177)(682,521)
Change in advances by borrowers(35,713)(38,154)
Repurchase of common stock— (11,900)
Net cash provided by (used in) financing activities13,184 (598,408)
NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS(46,983)74,752 
CASH AND CASH EQUIVALENTS:
Beginning of period217,307 245,605 
End of period$170,324 $320,357 
See accompanying notes to consolidated financial statements.(Concluded)
8
Notes to Consolidated Financial Statements (Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation - The consolidated financial statements include the accounts of Capitol Federal Financial, Inc.® (the "Company") and its wholly-owned subsidiary, Capitol Federal Savings Bank (the "Bank"). The Bank has two wholly-owned subsidiaries, Capitol Funds, Inc. and Capital City Investments, Inc. Capitol Funds, Inc. has a wholly-owned subsidiary, Capitol Federal Mortgage Reinsurance Company. Capital City Investments, Inc. is a real estate and investment holding company. All intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024, filed with the Securities and Exchange Commission ("SEC"). Interim results are not necessarily indicative of results for a full year.

Net Presentation of Cash Flows Related to Borrowings - At times, the Bank enters into FHLB advances with contractual maturities of 90 days or less. Cash flows related to these advances are reported on a net basis in the consolidated statements of cash flows.

Recent Accounting Pronouncements - In October 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative. This ASU incorporates a variety of Topics into the FASB Accounting Standards Codification (the "Codification") that are currently included in SEC Regulations S-X and S-K. The ASU is intended to align the accounting standards of GAAP with SEC Regulations S-X and S-K. Each amendment in the ASU will only become effective for the Company if the SEC removes the related disclosure or presentation requirement from its existing regulations by June 30, 2027. This may result in disclosures currently presented outside of the Company's financial statements being relocated to the Company's financial statements. The amendments will be applied prospectively by the Company. The ASU is not expected to have a material impact on the Company's disclosures as the Company is currently subject to SEC Regulations S-X and S-K.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures. This ASU requires enhanced disclosures of segment information for all public entities, including those that have a single reportable segment, primarily in the area of segment revenues and expenses. Entities that have a single reportable segment, like the Company, will be required to provide all the disclosures required by this ASU and all existing segment disclosures required by Accounting Standards Codification ("ASC") 280, Segment Reporting. This ASU is effective for fiscal years beginning after December 15, 2023, which is the fiscal year ending September 30, 2025 for the Company, and interim periods within fiscal years beginning after December 15, 2024, which is the quarter ending December 31, 2025 for the Company. The Company is currently evaluating the effect this ASU will have on the Company's segment disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. This ASU requires public entities to provide additional annual disclosures regarding specific categories of the income tax rate reconciliation and additional information for reconciling items within the income tax rate reconciliation that meet a certain quantitative threshold. This ASU is effective for the Company on October 1, 2025, starting with its December 31, 2025 Form 10-Q. The Company is currently evaluating the effect this ASU will have on the Company's income tax disclosures.

In March 2024, the FASB issued ASU 2024-02, Codification Improvements - Amendments to Remove References to the Concepts Statements. This ASU removes references to various Concept Statements to simplify the Codification and provide a distinction between authoritative and nonauthoritative literature. This ASU is effective for the Company on October 1, 2025, starting with its September 30, 2026 Form 10-K. The Company is currently evaluating this ASU, but it is not expected to have a significant impact on the Company's consolidated financial condition or results of operation or the Company's disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures. This ASU requires additional expense disclosures by public entities in the notes to the financial statements. The ASU outlines the specific costs that are required to be disclosed, which include costs such as: purchases of inventory, employee compensation, depreciation, intangible asset amortization, selling costs, and depreciation, depletion, and amortization related to oil and gas production. It also requires qualitative descriptions of the amounts remaining in the relevant expense income statement captions that are not separately disaggregated quantitatively in the notes to the financial statements and the entity's definition of selling expenses. The disclosures are required for each interim and annual reporting period. The ASU is effective for fiscal years beginning after December 15, 2026, which is the fiscal year ending September 30, 2028 for the Company. In January 2025, the FASB issued ASU 2025-1, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures: Clarifying the Effective
9
Date. The FASB clarified the interim date reporting when an entity adopts ASU 2024-03. Per ASU 2025-01, ASU 2024-03 is effective for interim periods within fiscal years beginning after December 15, 2027, which is the quarter ending December 31, 2028 for the Company. The Company is currently evaluating the effect this ASU will have on the Company's expense disclosures in the notes to the consolidated financial statements.

2. EARNINGS PER SHARE
Shares acquired by the ESOP are not included in basic average shares outstanding until the shares are committed for allocation or vested to an employee's individual account. Unvested shares awarded pursuant to the Company's restricted stock benefit plans are treated as participating securities in the computation of EPS pursuant to the two-class method as they contain nonforfeitable rights to dividends. The two-class method is an earnings allocation that determines EPS for each class of common stock and participating security.
For the Three Months Ended
December 31,
20242023
(Dollars in thousands, except per share amounts)
Net income$15,431 $2,543 
Income allocated to participating securities(18)(2)
Net income available to common stockholders$15,413 $2,541 
Total basic average common shares outstanding129,972,969 132,353,313 
Effect of dilutive stock options— — 
Total diluted average common shares outstanding129,972,969 132,353,313 
Net EPS:
Basic$0.12 $0.02 
Diluted$0.12 $0.02 
Antidilutive stock options, excluded from the diluted average
common shares outstanding calculation312,841 335,461 
10
3. SECURITIES
The following tables reflect the amortized cost, estimated fair value, and gross unrealized gains and losses of AFS securities at the dates presented. The majority of our AFS securities at both dates were government guaranteed or issued by a Government Sponsored Enterprise ("GSE").
December 31, 2024
GrossGrossEstimated
AmortizedUnrealizedUnrealizedFair
CostGainsLossesValue
(Dollars in thousands)
MBS$774,655 $13,444 $1,814 $786,285 
GSE debentures71,915 30 247 71,698 
Corporate bonds4,000 — 482 3,518 
$850,570 $13,474 $2,543 $861,501 
September 30, 2024
GrossGrossEstimated
AmortizedUnrealizedUnrealizedFair
CostGainsLossesValue
(Dollars in thousands)
MBS$756,775 $26,885 $87 $783,573 
GSE debentures69,077 228 — 69,305 
Corporate bonds4,000 — 612 3,388 
$829,852 $27,113 $699 $856,266 

At December 31, 2024, AFS securities included $717.4 million of residential MBS and $68.9 million of commercial MBS. At September 30, 2024, AFS securities included $713.3 million of residential MBS and $70.2 million of commercial MBS.

The following tables summarize the estimated fair value and gross unrealized losses of those AFS securities on which an unrealized loss at the dates presented was reported and the continuous unrealized loss position for less than 12 months and equal to or greater than 12 months as of the dates presented.
December 31, 2024
Less Than 12 MonthsEqual to or Greater Than 12 Months
EstimatedUnrealizedEstimatedUnrealized
Fair ValueLossesFair ValueLosses
(Dollars in thousands)
MBS$144,221 $1,749 $2,382 $65 
GSE debentures24,753 247 — — 
Corporate bonds— — 3,518 482 
$168,974 $1,996 $5,900 $547 
September 30, 2024
Less Than 12 MonthsEqual to or Greater Than 12 Months
EstimatedUnrealizedEstimatedUnrealized
Fair ValueLossesFair ValueLosses
(Dollars in thousands)
MBS$10,997 $44 $2,919 $43 
Corporate bonds— — 3,388 612 
$10,997 $44 $6,307 $655 
11
The unrealized losses at December 31, 2024 were a result of an increase in market yields from the time the securities were purchased. In general, as market yields rise, the fair value of securities will decrease; as market yields fall, the fair value of securities will increase. Management did not record an ACL on securities in an unrealized loss position at December 31, 2024 as management did not believe any of the securities were impaired due to credit quality reasons. The issuers of these securities continue to make scheduled and timely principal and interest payments, as applicable, under the contractual term of the securities so management believes the entire principal balance will be collected as scheduled. Additionally, management does not have the intent to sell any of the securities, and believes that it is more likely than not that the Company will not be required to sell the securities before the recovery of the remaining amortized cost, which could be at maturity. The fair value is expected to recover as the securities approach their maturity date, if not before, or if market yields decline.

The amortized cost and estimated fair value of AFS debt securities as of December 31, 2024, by contractual maturity, are shown below.  Actual principal repayments may differ from contractual maturities due to prepayment or early call privileges by the issuer. In the case of MBS, borrowers on the underlying loans generally have the right to prepay their loans without penalty. For this reason, MBS are not included in the maturity category in the table below.
AmortizedEstimated
CostFair Value
(Dollars in thousands)
Five years through ten years$75,915 $75,216 
75,915 75,216 
MBS774,655 786,285 
$850,570 $861,501 

The following table presents the taxable and non-taxable components of interest income on investment securities for the periods presented.
For the Three Months Ended
December 31,
20242023
(Dollars in thousands)
Taxable$981 $2,526 
Non-taxable— 2 
$981 $2,528 

The following table summarizes the carrying value of securities pledged as collateral for the obligations indicated below as of the dates presented.
 December 31, 2024September 30, 2024
(Dollars in thousands)
Federal Reserve Bank of Kansas City ("FRB of Kansas City") borrowings$102,590 $111,281 
Public unit deposits80,858 108,748 
$183,448 $220,029 
.

The Bank sold $1.30 billion of AFS securities during the prior fiscal year quarter. The Bank received gross proceeds of $1.27 billion from the sale and realized gross losses of $14.9 million and gross gains of $1.6 million, resulting in a net loss of $13.3 million on the sale during the quarter ended December 31, 2023. All other dispositions of securities during the current year quarter and prior year quarter were the result of principal repayments, calls, or maturities.
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4. LOANS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES
Loans receivable, net at the dates presented is summarized as follows:
December 31, 2024September 30, 2024
(Dollars in thousands)
One- to four-family:
Originated$3,907,809 $3,941,952 
Correspondent purchased2,163,847 2,212,587 
Bulk purchased123,029 127,161 
Construction19,165 22,970 
Total6,213,850 6,304,670 
Commercial:
Commercial real estate1,353,482 1,191,624 
Commercial and industrial 131,267 129,678 
Construction161,744 187,676 
Total1,646,493 1,508,978 
Consumer:
Home equity103,006 99,988 
Other9,680 9,615 
Total112,686 109,603 
Total loans receivable7,973,029 7,923,251 
Less:
ACL24,997 23,035 
Deferred loan fees/discounts30,973 30,336 
Premiums/deferred costs(36,497)(37,458)
$7,953,556 $7,907,338 

Lending Practices and Underwriting Standards - Originating one- to four-family loans is the Bank's primary lending business. The Bank also originates consumer loans primarily secured by one- to four-family residential properties and originates and participates in commercial loans. The Bank has historically also purchased one- to four-family loans from correspondent lenders, but during the prior fiscal year, the Bank suspended its one- to four-family correspondent lending channels for the foreseeable future. The Bank has a loan concentration in one- to four-family loans and a geographic concentration of these loans in Kansas and Missouri.

One- to four-family loans - Full documentation to support an applicant's credit and income, and sufficient funds to cover all applicable fees and reserves at closing, are required on all loans. Properties securing one- to four-family loans are appraised by either staff appraisers or fee appraisers, both of which are independent of the loan origination function.

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

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

Commercial loans - The Bank's commercial loan portfolio includes loans originated by the Bank or in participation with a lead bank. For commercial participation loans, the Bank performs the same underwriting procedures as if the loan was originated by the Bank.

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The Bank's commercial loan portfolio has a concentration in commercial real estate and commercial construction loans and a geographic concentration in Kansas, Texas, and Missouri. When underwriting a commercial real estate or commercial construction loan, several factors are considered, such as the income producing potential of the property, cash equity provided by the borrower, the financial strength of the borrower, managerial expertise of the borrower or tenant, feasibility studies, lending experience with the borrower and the marketability of the property. At the time of origination, loan-to-value ("LTV") ratios on commercial real estate loans generally do not exceed 85% of the appraised value of the property securing the loans and the minimum debt service coverage ratio ("DSCR") is generally 1.15x. The Bank generally requires a guaranty on all commercial real estate loans, but for an experienced borrower with a strong DSCR and low LTV ratio, the Bank may allow the guaranty percentage to be reduced or phased out, or the Bank may originate the loan as a non-recourse loan.

For commercial construction loans, LTV ratios generally do not exceed 80% of the projected appraised value of the property securing the loans and the minimum DSCR is generally 1.15x, but it applies to the projected cash flows, and the borrower must have successful experience with the construction and operation of properties similar to the subject property. Appraisals on properties securing these loans are performed by independent state certified fee appraisers. For construction loans, guaranties are typically required during the period of construction. After construction is complete, for select experienced borrowers that have a strong DSCR and low LTV ratio, the guaranty may be reduced or phased out when the property meets certain performance metrics. Additionally, the Bank generally requires the borrower to contribute equity at the start of a project and prior to any Bank funding.

The Bank's commercial and industrial loans are generally made to borrowers and secured by assets located in the Bank's market areas and are underwritten on the basis of the borrower's ability to service the debt from income. Working capital loans are primarily collateralized by short-term assets whereas term loans are primarily collateralized by longer-term assets. In general, commercial and industrial loans involve different types of credit risk than commercial real estate loans due to the nature of the loans and the type of collateral securing the loans. As a result of these complexities, variables and risks, commercial and industrial loans generally require evaluation of different metrics and factors before origination and require more monitoring and servicing after origination than other types of loans.

Management regularly monitors the level of risk in the entire commercial loan portfolio, including concentrations in factors such as geographic locations, collateral types, tenant brand name, borrowing relationships, and, in the case of participation loans, lending relationships, among other factors. Annual reviews are performed for larger loans and lending relationships. The annual reviews include evaluating updated financials, as well as performing stress tests to measure the ability of the loans to withstand certain stress scenarios such as interest rate increases, revenue decreases and expense increases.

Consumer loans - The Bank offers a variety of consumer loans, the majority of which are home equity loans and lines of credit for which the Bank also has the first mortgage or the first lien position.

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

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

14
Loan Classification - In accordance with the Bank's asset classification policy, management regularly reviews the problem loans in the Bank's portfolio to determine whether any require classification. Loan classifications are defined as follows:

•Special mention - These loans are performing loans on which known information about the collateral pledged or the possible credit problems of the borrower(s) have caused management to have doubts as to the ability of the borrower(s) to comply with present loan repayment terms and which may result in the future inclusion of such loans in the nonaccrual loan categories.
•Substandard - A loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard loans include those characterized by the distinct possibility the Bank will sustain some loss if the deficiencies are not corrected.
•Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses present make collection or liquidation in full on the basis of currently existing facts and conditions and values highly questionable and improbable.
•Loss - Loans classified as loss are considered uncollectible and of such little value that their continuance as assets on the books is not warranted.

15
The following tables set forth, as of the dates indicated, the amortized cost of loans by class of financing receivable, year of origination or most recent credit decision, and loan classification. Amortized cost is the amount of unpaid principal, net of undisbursed loan funds, unamortized premiums and discounts, and deferred fees and costs. All revolving lines of credit and revolving lines of credit converted to term loans are presented separately, regardless of origination year. Loans classified as doubtful or loss are individually evaluated for loss. At December 31, 2024 and September 30, 2024, there were no loans classified as doubtful, and all loans classified as loss were fully charged-off.
December 31, 2024
Revolving
Line of
CurrentFiscalFiscalFiscalFiscalRevolvingCredit
FiscalYearYearYearYearPriorLine ofConverted
Year2024202320222021YearsCreditto TermTotal
(Dollars in thousands)
One- to four-family:
Originated
Pass$65,851 $238,219 $320,185 $566,865 $790,632 $1,908,902 $— $— $3,890,654 
Special Mention— — 294 878 1,217 7,490 — — 9,879 
Substandard— — 655 — 215 10,917 — — 11,787 
Correspondent purchased
Pass— 792 319,111 472,497 563,020 824,327 — — 2,179,747 
Special Mention— — 989 — 651 962 — — 2,602 
Substandard— — — 1,821 265 5,169 — — 7,255 
Bulk purchased
Pass— — — — — 120,229 — — 120,229 
Special Mention— — — — — — — — — 
Substandard— — — — — 3,213 — — 3,213 
65,851 239,011 641,234 1,042,061 1,356,000 2,881,209 — — 6,225,366 
Commercial:
Commercial real estate
Pass171,333 319,944 392,963 283,997 122,490 153,445 7,418 — 1,451,590 
Special Mention— 12,373 2,524 — — 174 35 — 15,106 
Substandard— 142 39,922 — 3 2,132 50 — 42,249 
Commercial and industrial
Pass8,969 40,005 30,227 16,161 6,995 2,789 23,893 — 129,039 
Special Mention— 396 — 65 296 3 1,035 — 1,795 
Substandard— 227 — 125 — 82 1 — 435 
180,302 373,087 465,636 300,348 129,784 158,625 32,432 — 1,640,214 
Consumer:
Home equity
Pass1,739 6,886 4,219 4,356 1,391 2,698 75,500 5,896 102,685 
Special Mention— — 20 — — — — 199 219 
Substandard— — — — — 81 246 62 389 
Other
Pass1,859 3,187 2,245 1,377 336 127 426 — 9,557 
Special Mention— — — — — — — — — 
Substandard— 46 18 56 — 2 1 — 123 
3,598 10,119 6,502 5,789 1,727 2,908 76,173 6,157 112,973 
Total$249,751 $622,217 $1,113,372 $1,348,198 $1,487,511 $3,042,742 $108,605 $6,157 $7,978,553 

16
September 30, 2024
Revolving
Line of
FiscalFiscalFiscalFiscalFiscalRevolvingCredit
YearYearYearYearYearPriorLine ofConverted
20242023202220212020YearsCreditto TermTotal
(Dollars in thousands)
One- to four-family:
Originated
Pass$241,765 $325,492 $578,275 $809,643 $521,647 $1,447,237 $— $— $3,924,059 
Special Mention— 295 1,229 1,982 772 9,565 — — 13,843 
Substandard— 658 49 468 1,398 9,571 — — 12,144 
Correspondent purchased
Pass798 325,384 482,103 570,970 225,650 623,496 — — 2,228,401 
Special Mention— 993 659 658 398 977 — — 3,685 
Substandard— — 1,662 265 — 5,130 — — 7,057 
Bulk purchased
Pass— — — — — 124,076 — — 124,076 
Special Mention— — — — — — — — — 
Substandard— — — — — 3,514 — — 3,514 
242,563 652,822 1,063,977 1,383,986 749,865 2,223,566 — — 6,316,779 
Commercial:
Commercial real estate
Pass326,158 400,649 284,493 135,935 74,174 110,309 23,865 — 1,355,583 
Special Mention12,440 2,543 — — 92 1,094 — — 16,169 
Substandard142 827 — — 647 636 50 — 2,302 
Commercial and industrial
Pass46,335 32,112 18,131 8,075 1,350 2,051 20,876 — 128,930 
Special Mention401 — — — — — 12 — 413 
Substandard227 — — — — 82 26 — 335 
385,703 436,131 302,624 144,010 76,263 114,172 44,829 — 1,503,732 
Consumer:
Home equity
Pass7,331 4,377 4,575 1,437 814 2,127 73,020 5,895 99,576 
Special Mention— — — — — — 45 281 326 
Substandard— 20 — — — 24 120 181 345 
Other
Pass4,112 2,737 1,697 385 101 95 346 — 9,473 
Special Mention— — — — — — — — — 
Substandard80 14 44 — 4 — — — 142 
11,523 7,148 6,316 1,822 919 2,246 73,531 6,357 109,862 
Total$639,789 $1,096,101 $1,372,917 $1,529,818 $827,047 $2,339,984 $118,360 $6,357 $7,930,373 

17
Delinquency Status - The following tables set forth, as of the dates indicated, the amortized cost of current loans, loans 30 to 89 days delinquent, and loans 90 or more days delinquent or in foreclosure ("90+/FC"), by class of financing receivable and year of origination or most recent credit decision as of the dates indicated. All revolving lines of credit and revolving lines of credit converted to term loans are presented separately, regardless of origination year.
December 31, 2024
Revolving
Line of
CurrentFiscalFiscalFiscalFiscalRevolvingCredit
FiscalYearYearYearYearPriorLine ofConverted
Year2024202320222021YearsCreditto TermTotal
(Dollars in thousands)
One- to four-family:
Originated
Current$65,851 $238,219 $320,964 $566,714 $791,549 $1,916,943 $— $— $3,900,240 
30-89— — — 1,029 515 8,202 — — 9,746 
90+/FC— — 170 — — 2,164 — — 2,334 
Correspondent purchased
Current— 792 319,825 472,738 563,043 826,288 — — 2,182,686 
30-89— — 275 — 628 2,109 — — 3,012 
90+/FC— — — 1,580 265 2,061 — — 3,906 
Bulk purchased
Current— — — — — 122,148 — — 122,148 
30-89— — — — — 33 — — 33 
90+/FC— — — — — 1,261 — — 1,261 
65,851 239,011 641,234 1,042,061 1,356,000 2,881,209 — — 6,225,366 
Commercial:
Commercial real estate
Current171,333 332,317 434,444 268,598 122,383 152,079 7,453 — 1,488,607 
30-89— — 158 15,399 110 2,632 — — 18,299 
90+/FC— 142 807 — — 1,040 50 — 2,039 
Commercial and industrial
Current8,969 40,402 30,227 16,226 7,291 2,792 24,929 — 130,836 
30-89— — — 125 — — — — 125 
90+/FC— 226 — — — 82 — — 308 
180,302 373,087 465,636 300,348 129,784 158,625 32,432 — 1,640,214 
Consumer:
Home equity
Current1,739 6,886 4,239 4,322 1,391 2,631 75,236 6,000 102,444 
30-89— — — 34 — 73 354 114 575 
90+/FC— — — — — 75 156 43 274 
Other
Current1,821 3,189 2,245 1,408 278 126 426 — 9,493 
30-8938 — — 8 58 1 — — 105 
90+/FC— 44 18 17 — 2 1 — 82 
3,598 10,119 6,502 5,789 1,727 2,908 76,173 6,157 112,973 
Total$249,751 $622,217 $1,113,372 $1,348,198 $1,487,511 $3,042,742 $108,605 $6,157 $7,978,553 

18
September 30, 2024
Revolving
Line of
FiscalFiscalFiscalFiscalFiscalRevolvingCredit
YearYearYearYearYearPriorLine ofConverted
20242023202220212020YearsCreditto TermTotal
(Dollars in thousands)
One- to four-family:
Originated
Current$241,765 $326,211 $578,430 $811,455 $521,550 $1,459,500 $— $— $3,938,911 
30-89— 64 1,074 638 1,666 5,422 — — 8,864 
90+/FC— 170 49 — 601 1,451 — — 2,271 
Correspondent purchased
Current798 326,377 482,598 571,182 226,048 624,961 — — 2,231,964 
30-89— — 164 446 — 2,479 — — 3,089 
90+/FC— — 1,662 265 — 2,163 — — 4,090 
Bulk purchased
Current— — — — — 125,982 — — 125,982 
30-89— — — — — 69 — — 69 
90+/FC— — — — — 1,539 — — 1,539 
242,563 652,822 1,063,977 1,383,986 749,865 2,223,566 — — 6,316,779 
Commercial:
Commercial real estate
Current338,511 403,193 284,493 135,932 74,266 110,448 23,055 — 1,369,898 
30-89229 807 — 3 — 1,094 860 — 2,993 
90+/FC— 19 — — 647 497 — — 1,163 
Commercial and industrial
Current46,736 32,112 17,990 8,052 1,350 2,051 20,914 — 129,205 
30-89227 — 141 23 — — — — 391 
90+/FC— — — — — 82 — — 82 
385,703 436,131 302,624 144,010 76,263 114,172 44,829 — 1,503,732 
Consumer:
Home equity
Current7,331 4,378 4,540 1,437 814 2,133 72,721 6,084 99,438 
30-89— — 35 — — — 349 87 471 
90+/FC— 19 — — — 18 115 186 338 
Other
Current4,109 2,728 1,641 327 101 95 344 — 9,345 
30-893 9 100 58 — — 2 — 172 
90+/FC80 14 — — 4 — — — 98 
11,523 7,148 6,316 1,822 919 2,246 73,531 6,357 109,862 
Total$639,789 $1,096,101 $1,372,917 $1,529,818 $827,047 $2,339,984 $118,360 $6,357 $7,930,373 



19
Gross Charge-Offs - The following tables present gross charge-offs, for the periods indicated, by class of financing receivable for the year of origination or most recent credit decision.
For the Three Months Ended December 31, 2024
Revolving
Lines
CurrentFiscalFiscalFiscalFiscalRevolvingof Credit
FiscalYearYearYearYearPriorLines ofConverted to
Year2024202320222021YearsCreditTermTotal
(Dollars in thousands)
One- to four-family:
Originated$— $— $— $— $— $— $— $— $— 
Correspondent purchased— — — — — — — — — 
Bulk purchased— — — — — — — — — 
— — — — — — — — — 
Commercial:
Commercial real estate— — — — — — — — — 
Commercial and Industrial— — — — — — — — — 
— — — — — — — — — 
Consumer:
Home Equity5 11 — — — — — — 16 
Other— 1 — — — — — — 1 
5 12 — — — — — — 17 
Total$5 $12 $— $— $— $— $— $— $17 

For the Three Months Ended December 31, 2023
Revolving
Lines
FiscalFiscalFiscalFiscalFiscalRevolvingof Credit
YearYearYearYearYearPriorLines ofConverted to
20242023202220212020YearsCreditTermTotal
(Dollars in thousands)
One- to four-family:
Originated$— $— $— $— $— $— $— $— $— 
Correspondent purchased— — — — — — — — — 
Bulk purchased— — — — — — — — — 
— — — — — — — — — 
Commercial:
Commercial real estate— — — — — — — — — 
Commercial and Industrial— — — — — — — — — 
— — — — — — — — — 
Consumer:
Home Equity1 1 — — — — — — 2 
Other— 5 — — — — — — 5 
1 6 — — — — — — 7 
Total$1 $6 $— $— $— $— $— $— $7 
20
Delinquent and Nonaccrual Loans - The following tables present the amortized cost, at the dates indicated, by class, of loans 30 to 89 days delinquent, loans 90 or more days delinquent or in foreclosure, total delinquent loans, current loans, and total loans. At December 31, 2024 and September 30, 2024, all loans 90 or more days delinquent were on nonaccrual status. The increase in the 30 to 89 days delinquent commercial real estate loan balance from September 30, 2024 was due primarily to one Community Reinvestment Act loan. The borrower is in the process of obtaining tax credit funding, which will service the loan until the project is stabilized. The tax credit funding is anticipated to be received by the borrower during the quarter ended March 31, 2025.
December 31, 2024
90 or More DaysTotalTotal
30 to 89 DaysDelinquent orDelinquentCurrentAmortized
Delinquentin ForeclosureLoansLoansCost
(Dollars in thousands)
One- to four-family:
Originated$9,746 $2,334 $12,080 $3,900,240 $3,912,320 
Correspondent purchased3,012 3,906 6,918 2,182,686 2,189,604 
Bulk purchased33 1,261 1,294 122,148 123,442 
Commercial:
Commercial real estate18,299 2,039 20,338 1,488,607 1,508,945 
Commercial and industrial 125 308 433 130,836 131,269 
Consumer:
Home equity575 274 849 102,444 103,293 
Other105 82 187 9,493 9,680 
$31,895 $10,204 $42,099 $7,936,454 $7,978,553 
September 30, 2024
90 or More DaysTotalTotal
30 to 89 DaysDelinquent orDelinquentCurrentAmortized
Delinquentin ForeclosureLoansLoansCost
(Dollars in thousands)
One- to four-family:
Originated$8,864 $2,271 $11,135 $3,938,911 $3,950,046 
Correspondent purchased3,089 4,090 7,179 2,231,964 2,239,143 
Bulk purchased69 1,539 1,608 125,982 127,590 
Commercial:
Commercial real estate2,993 1,163 4,156 1,369,898 1,374,054 
Commercial and industrial 391 82 473 129,205 129,678 
Consumer:
Home equity471 338 809 99,438 100,247 
Other172 98 270 9,345 9,615 
$16,049 $9,581 $25,630 $7,904,743 $7,930,373 

The amortized cost of mortgage loans secured by residential real estate for which formal foreclosure proceedings were in process as of December 31, 2024 and September 30, 2024 was $1.9 million and $1.6 million, respectively, which are included in loans 90 or more days delinquent or in foreclosure in the tables above. The carrying value of residential OREO held as a result of obtaining physical possession upon completion of a foreclosure or through completion of a deed in lieu of foreclosure was $55 thousand at September 30, 2024. There was no residential OREO held at December 31, 2024.

21
The following table presents the amortized cost at December 31, 2024 and September 30, 2024, by class, of loans classified as nonaccrual. Nonaccrual loans with no ACL were individually evaluated for loss and any losses have been charged off.
December 31, 2024September 30, 2024
Nonaccrual LoansNonaccrual Loans with No ACLNonaccrual LoansNonaccrual Loans with No ACL
(Dollars in thousands)
One- to four-family:
Originated$2,334 $1,232 $2,271 $764 
Correspondent purchased3,906 243 4,090 182 
Bulk purchased1,261 807 1,539 812 
Commercial:
Commercial real estate3,134 2,540 1,495 901 
Commercial and industrial 435 435 335 335 
Consumer:
Home equity274 — 338 — 
Other82 14 98 16 
$11,426 $5,271 $10,166 $3,010 

Loan Modifications - The following tables present the amortized cost basis of loans, as of the dates indicated, that were both experiencing financial difficulties and modified during the periods noted, by class of financing receivable and by type of modification. Also presented in the tables is the percentage of the amortized cost basis of loans, at the dates indicated, that were modified to borrowers experiencing financial difficulties as compared to the amortized cost basis of each class of financing receivable during the periods noted. During the three months ended December 31, 2024 and 2023, there were no charge-offs related to loans modified during those periods. The Company has not committed to lend additional amounts to borrowers included in these tables.
For the Three Months Ended December 31, 2024
Term
ExtensionTotal
andClass of
PaymentTermPaymentFinancing
DelayExtensionDelayTotalReceivable
(Dollars in thousands)
One- to four-family:
Originated$342 $917 $166 $1,425 0.04 %
Correspondent— — — — — 
Bulk purchased— — — — — 
342 917 166 1,425 0.02 
Commercial:
Commercial real estate55 35 — 90 0.01 
Commercial and industrial— 19 — 19 0.01 
55 54 — 109 0.01 
Consumer loans:
Home equity20 — — 20 0.02 
Other— — — — — 
20 — — 20 0.02 
Total$417 $971 $166 $1,554 0.02 

22
For the Three Months Ended December 31, 2023
Term
ExtensionTotal
andClass of
PaymentFinancing
DelayTotalReceivable
(Dollars in thousands)
One- to four-family:
Originated$4,405 $4,405 0.11 %
Correspondent1,247 1,247 0.05 
Bulk purchased— — — 
5,652 5,652 0.09 
Commercial:
Commercial real estate— — — 
Commercial and industrial— — — 
— — — 
Consumer loans:
Home equity— — — 
Other— — — 
— — — 
Total$5,652 $5,652 0.07 

Financial effect of loan modifications - The table below presents the financial effects of loan modifications during the three months ended December 31, 2024 and 2023, including the weighted average payment delay and weighted average term extension.
For the Three Months Ended
December 31, 2024December 31, 2023
PaymentTermPaymentTerm
DelayExtensionDelayExtension
One- to four-family:
Originated8 months15 months4 months23 months
CorrespondentN/AN/A4 months12 months
Bulk purchasedN/AN/AN/AN/A
Commercial:
Commercial real estate6 months3 monthsN/AN/A
Commercial and industrialN/A6 monthsN/AN/A
Consumer:
Consumer home equity7 monthsN/AN/AN/A
Consumer otherN/AN/AN/AN/A

23
Performance of loan modifications - The following tables provide information about the subsequent performance of loans modified for borrowers experiencing financial difficulty during the periods noted.
For the Three Months Ended December 31, 2024
30 to 89 Days
Delinquent		90 or More Days
Delinquent or in Foreclosure		Total
Delinquent Loans		Current
Loans		Total
Amortized Cost
(Dollars in thousands)
One- to four-family:
  Originated$719 $— $719 $706 $1,425 
  Correspondent— — — — — 
Bulk purchased— — — — — 
Commercial:
Commercial real estate— — — 90 90 
Commercial & industrial— — — 19 19 
Consumer loans:
Home equity— — — 20 20 
Other— — — — — 
$719 $— $719 $835 $1,554 

For the Three Months Ended December 31, 2023
30 to 89 Days
Delinquent		90 or More Days
Delinquent or in Foreclosure		Total
Delinquent Loans		Current
Loans		Total
Amortized Cost
(Dollars in thousands)
One- to four-family:
  Originated$231 $— $231 $4,174 $4,405 
  Correspondent— — — 1,247 1,247 
Bulk purchased— — — — — 
Commercial:
Commercial real estate— — — — — 
Commercial & industrial— — — — — 
Consumer loans:
Home equity— — — — — 
Other— — — — — 
$231 $— $231 $5,421 $5,652 



24
Allowance for Credit Losses - The following tables summarizes ACL activity, by loan portfolio segment, for the periods presented.
For the Three Months Ended December 31, 2024
One- to Four-Family
CorrespondentBulk
OriginatedPurchasedPurchasedTotalCommercialConsumerTotal
(Dollars in thousands)
Beginning balance$1,666 $1,861 $146 $3,673 $19,154 $208 $23,035 
Charge-offs— — — — — (17)(17)
Recoveries3 — — 3 20 1 24 
Provision for credit losses374 (278)(15)81 1,825 49 1,955 
Ending balance$2,043 $1,583 $131 $3,757 $20,999 $241 $24,997 

For the Three Months Ended December 31, 2023
One- to Four-Family
CorrespondentBulk
OriginatedPurchasedPurchasedTotalCommercialConsumerTotal
(Dollars in thousands)
Beginning balance$2,149 $2,972 $207 $5,328 $18,180 $251 $23,759 
Adoption of ASU 2022-023 1 14 18 2 — 20 
Balance at October 1, 20232,152 2,973 221 5,346 18,182 251 23,779 
Charge-offs— — — — — (7)(7)
Recoveries5 — — 5 1 — 6 
Provision for credit losses(63)(25)(15)(103)495 8 400 
Ending balance$2,094 $2,948 $206 $5,248 $18,678 $252 $24,178 

The key assumptions in the Company's ACL model include the economic forecast, the forecast and reversion to mean time periods, and prepayment and curtailment assumptions. Management also considered certain qualitative factors when evaluating the adequacy of the ACL at December 31, 2024. The key assumptions utilized in estimating the Company's ACL at December 31, 2024 are discussed below.
•Economic Forecast - Management considered several economic forecasts provided by a third party and selected an economic forecast that was the most appropriate considering the facts and circumstances at December 31, 2024. The forecasted economic indices applied to the model at December 31, 2024 were the national unemployment rate, changes in commercial real estate price index, changes in home values, and changes in the U.S. gross domestic product. The economic index most impactful to all loan pools within the model at December 31, 2024 was the national unemployment rate. The forecasted national unemployment rate in the economic scenario selected by management at December 31, 2024 had the national unemployment rate remaining at 4.1% through December 31, 2025, which was the end of our four-quarter forecast time period.
•Forecast and reversion to mean time periods - The forecasted time period and the reversion to mean time period were each four quarters for all of the economic indices at December 31, 2024.
•Prepayment and curtailment assumptions - The assumptions used at December 31, 2024 were generally based on actual historical prepayment and curtailment speeds, adjusted by management as deemed necessary. The prepayment and curtailment assumptions vary for each respective loan pool in the model.
•Qualitative factors - Management applied qualitative factors at December 31, 2024 to account for large dollar commercial loan concentrations and potential risk of loss in market value for newer one- to four-family loans. These qualitative factors were applied to account for credit risks not fully reflected in the discounted cash flow model.
◦The Company's commercial real estate and construction loans generally have low LTV ratios and strong DSCRs which serve as indicators that losses in the commercial real estate and construction loan portfolios might be unlikely; however, because there is uncertainty surrounding the nature, timing and amount of expected losses, management believes that in the event of a realized loss within the large dollar commercial loan pools, the magnitude of such a loss is likely to be significant. The large dollar commercial loan concentration qualitative factor addresses the risk associated with a large dollar relationship deteriorating due to a loss event. As part of its analysis, management considered external data including historical loss information for the industry and commercial real estate price index trending information from a variety of reputable sources to help determine the amount of this qualitative factor.
◦For one- to four-family loans, management believes there is potential risk of loss in market value for newer originations and developed a qualitative factor to account for this risk. To determine the appropriate amount of the one- to four-family loan qualitative factor as of December 31, 2024, management considered external historical home price index
25
trending information, along with the Bank's recent origination/purchase activity, historical loan loss experience and the current trend of this portfolio balance, the one-to four-family loan portfolio composition with regard to loan size, and management's knowledge of the Bank's loan portfolio and the one- to four-family lending industry.

Reserve for Off-Balance Sheet Credit Exposures - At December 31, 2024 and September 30, 2024, the Bank's off-balance sheet credit exposures totaled $723.3 million and $826.5 million, respectively.

The following table summarizes the change in reserve for off-balance sheet credit exposures during the periods indicated. The provision release for the three months ended December 31, 2024 was due primarily to a decrease in the balance of commercial off-balance sheet credit exposures during the quarter. The increase in the reserve for off-balance sheet credit exposures as of December 31, 2024 compared to December 31, 2023 was due to an increase in the ACL to loan ratio, specifically for commercial construction loans, partially offset by a decrease in the balance of commercial off-balance sheet credit exposures.
For the Three Months Ended
December 31, 2024December 31, 2023
(Dollars in thousands)
Beginning balance$6,003 $4,095 
Adoption of ASU 2022-02— 16 
Provision for credit losses(1,278)(277)
Ending balance$4,725 $3,834 

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5. BORROWED FUNDS
FHLB Borrowings and Interest Rate Swaps - As of December 31, 2024 and September 30, 2024, the Bank held interest rate swap agreements with a total notional amount of $200.0 million in order to hedge the variable cash flows associated with $200.0 million of adjustable-rate FHLB advances. At December 31, 2024 and September 30, 2024, the interest rate swap agreements had an average remaining term to maturity of 2.0 years and 2.3 years, respectively. The interest rate swaps were designated as cash flow hedges and involved the receipt of variable amounts from a counterparty in exchange for the Bank making fixed-rate payments over the life of the interest rate swap agreements. At December 31, 2024 and September 30, 2024, the interest rate swaps were in a gain position with a total fair value of $4.3 million and $2.1 million, respectively, which was reported in other assets on the consolidated balance sheet. During the three months ended December 31, 2024 and December 31, 2023, $698 thousand and $1.9 million, respectively, was reclassified from AOCI as a decrease to interest expense. At December 31, 2024, the Company estimated that $2.1 million of interest expense associated with the interest rate swaps would be reclassified from AOCI as a decrease to interest expense on FHLB borrowings during the next 12 months. The Bank has minimum collateral posting thresholds with its derivative counterparties and posts collateral on a daily basis. The Bank held cash collateral of $4.7 million and $2.1 million at December 31, 2024 and September 30, 2024, respectively.

6. INCOME TAXES
At December 31, 2024 and September 30, 2024, the Company had a net operating loss deferred income tax asset of $26.4 million and $30.5 million, respectively. The gross federal and state net operating loss amount at December 31, 2024 was $109.0 million and will carry forward indefinitely. Additionally, the Company had a $15.5 million and $12.8 million deferred tax asset related to the Bank's low income housing tax credits as of December 31, 2024 and September 30, 2024, respectively, as the credits are not currently able to be utilized due to income tax return income limitations. Federal tax credits carryforward for 20 years.

The Company assesses the available positive and negative evidence surrounding the recoverability of its deferred tax assets and applies its judgment in estimating the amount of the valuation allowance necessary under the circumstances. At December 31, 2024 and September 30, 2024, the Company had a valuation allowance of $33 thousand and $27 thousand, respectively, related to the net operating losses generated by the Company's consolidated Kansas corporate income tax return as management believes there will not be sufficient taxable income to fully utilize these deferred tax assets before they begin to expire in 2028 and thereafter. For this reason, a valuation allowance was recorded for the related amounts at December 31, 2024 and September 30, 2024. No additional valuation allowances were recorded for the Company's other deferred tax assets as management believes it is more likely than not that these amounts will be realized through the reversal of the Company's existing taxable temporary differences and projected future taxable income.

7. FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair Value Measurements - The Company uses fair value measurements to record fair value adjustments to certain financial instruments and to determine fair value disclosures in accordance with ASC 820 and ASC 825. The Company's AFS securities and interest rate swaps are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other financial instruments on a non-recurring basis, such as OREO and loans individually evaluated for impairment. These non-recurring fair value adjustments involve the application of lower of cost or fair value accounting or write-downs of individual financial instruments.

The Company groups its financial instruments at fair value in three levels based on the markets in which the financial instruments are traded and the reliability of the assumptions used to determine fair value. These levels are:

•Level 1 - Valuation is based upon quoted prices for identical instruments traded in active markets.
•Level 2 - Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
•Level 3 - Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect the Company's own estimates of assumptions that market participants would use in pricing the financial instrument. Valuation techniques include the use of option pricing models, discounted cash flow models, and similar techniques. The results cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the financial instrument.

The Company bases the fair value of its financial instruments on the price that would be received from the sale of an instrument in an orderly transaction between market participants at the measurement date under current market conditions. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.
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The following is a description of valuation methodologies used for financial instruments measured at fair value on a recurring basis.

AFS Securities - The Company's AFS securities portfolio is carried at estimated fair value. The Company primarily uses prices obtained from third-party pricing services to determine the fair value of its securities. On a quarterly basis, management corroborates a sample of prices obtained from the third-party pricing service for Level 2 securities by comparing them to an independent source. If the price provided by the independent source varies by more than a predetermined percentage from the price received from the third-party pricing service, then the variance is researched by management. The Company did not have to adjust prices obtained from the third-party pricing service when determining the fair value of its securities during the three months ended December 31, 2024 or during fiscal year 2024. The Company's major security types, based on the nature and risks of the securities, are:

•MBS - The majority of these securities are issued by GSEs. Estimated fair values are based on a discounted cash flow method. Cash flows are determined based on prepayment projections of the underlying mortgages and are discounted using current market yields for benchmark securities. (Level 2)
•GSE debentures - Estimated fair values are based on a discounted cash flow method. Cash flows are determined by taking any embedded options into consideration and are discounted using current market yields for similar securities. (Level 2)
•Corporate Bonds and Municipal Bonds - Estimated fair values are based on a discounted cash flow method. Cash flows are determined by taking any embedded options into consideration and are discounted using current market yields for securities with similar credit profiles. (Level 2)

Interest Rate Swaps - The Company's interest rate swaps are designated as cash flow hedges and are reported at fair value in other assets on the consolidated balance sheet if in a gain position and in other liabilities if in a loss position, with any unrealized gains and losses, net of taxes, reported as AOCI in stockholders' equity. See "Note 5. Borrowed Funds" for additional information. The estimated fair values of the interest rates swaps are obtained from the counterparty and are determined by a discounted cash flow analysis using observable market-based inputs. On a quarterly basis, management corroborates the estimated fair values by internally calculating the estimated fair value using a discounted cash flow analysis with independent observable market-based inputs from a third party. No adjustments were made to the estimated fair values obtained from the counterparty during the three months ended December 31, 2024 or during fiscal year 2024. (Level 2)

The following tables provide the level of valuation assumption used to determine the carrying value of the Company's financial instruments measured at fair value on a recurring basis at the dates presented. The Company did not have any Level 3 financial instruments measured at fair value on a recurring basis at December 31, 2024 or September 30, 2024.
December 31, 2024
Quoted Prices Significant Significant
in Active MarketsOther ObservableUnobservable
Carryingfor Identical Assets InputsInputs
Value(Level 1)(Level 2)(Level 3)
(Dollars in thousands)
Assets:
AFS Securities:
MBS$786,285 $— $786,285 $— 
GSE debentures71,698 — 71,698 — 
Corporate bonds3,518 — 3,518 — 
861,501 — 861,501 — 
Interest rate swaps4,314 — 4,314 — 
$865,815 $— $865,815 $— 

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September 30, 2024
Quoted Prices Significant Significant
in Active MarketsOther ObservableUnobservable
Carryingfor Identical Assets InputsInputs
Value(Level 1)(Level 2)(Level 3)
(Dollars in thousands)
Assets:
AFS Securities:
MBS$783,573 $— $783,573 $— 
GSE debentures69,305 — 69,305 — 
Corporate bonds3,388 — 3,388 — 
856,266 — 856,266 — 
Interest rate swaps2,103 — 2,103 — 
$858,369 $— $858,369 $— 

The following is a description of valuation methodologies used for significant financial instruments measured at fair value on a non-recurring basis. The significant unobservable inputs used in the determination of the fair value of assets classified as Level 3 have an inherent measurement uncertainty that, if changed, could result in higher or lower fair value measurements of these assets as of the reporting date.

Loans Receivable - Collateral dependent assets are assets evaluated on an individual basis. Those collateral dependent assets that are evaluated on an individual basis are considered financial assets measured at fair value on a non-recurring basis. The fair value of collateral dependent loans/loans individually evaluated for loss on a non-recurring basis during the three months ended December 31, 2024 and 2023 that were still held in the portfolio as of December 31, 2024 and 2023 was $43.6 million and $1.1 million, respectively. Fair values of collateral dependent loans/loans individually evaluated for loss cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the loan and, as such, are classified as Level 3.

The one- to four-family loans included in this amount were individually evaluated to determine if the carrying value of the loan was in excess of the fair value of the collateral, less estimated selling costs of 10%. Fair values were estimated through current appraisals. Management does not adjust or apply a discount to the appraised value of one- to four-family loans, except for the estimated sales cost noted above, and the primary unobservable input for these loans was the appraisal.

For commercial loans, if the most recent appraisal or book value of the collateral does not reflect current market conditions due to the passage of time and/or other factors, management will adjust the existing appraised or book value based on knowledge of local market conditions, recent transactions, and estimated selling costs, if applicable. Adjustments to appraised or book values are generally based on assumptions not observable in the marketplace. The primary significant unobservable inputs for commercial loans individually evaluated during the three months ended December 31, 2024 and December 31, 2023 were downward adjustments to the book value of the collateral for lack of marketability. During the three months ended December 31, 2024, the adjustments ranged from 10% to 99%, with a weighted average of 21%. During the three months ended December 31, 2023, the adjustments ranged from 5% to 100%, with a weighted average of 17%. The basis utilized in calculating the weighted averages for these adjustments was the original unadjusted value of each collateral item.

OREO - OREO primarily represents real estate acquired as a result of foreclosure or by deed in lieu of foreclosure and is carried at the lower of cost or fair value. The fair value for one- to four-family OREO is estimated through current appraisals or listing prices, less estimated selling costs of 10%. Management does not adjust or apply a discount to the appraised value or listing price, except for the estimated sales costs noted above. The primary significant unobservable input for one- to four-family OREO was the appraisal or listing price. There was no one- to four-family OREO measured on a non-recurring basis during the three months ended December 31, 2024. The fair value of one- to four-family OREO measured on a non-recurring basis during the three months ended December 31, 2023 was $219 thousand. The carrying value of the properties equaled the fair value of the properties at December 31, 2023.

For commercial OREO, if the most recent appraisal or book value of the collateral does not reflect current market conditions due to the passage of time and/or other factors, management will adjust the existing appraised or book value based on knowledge of local market conditions, recent transactions, and estimated selling costs, if applicable. Adjustments to appraised or book values are generally based on assumptions not observable in the marketplace. The primary significant unobservable input for commercial OREO is downward adjustments to book value of the collateral for lack of marketability. Fair values of foreclosed property cannot be determined with precision and may not be realized in an actual sale of the property and, as such, are classified as Level 3. There was no commercial OREO measured on a non-recurring basis during the three months ended December 31, 2024 and 2023.
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Fair Value Disclosures - The Company estimated fair value amounts using available market information and a variety of valuation methodologies as of the dates presented. Considerable judgment is required to interpret market data to develop the estimates of fair value. The estimates presented are not necessarily indicative of amounts the Company would realize from a current market exchange at subsequent dates.

The carrying amounts and estimated fair values of the Company's financial instruments by fair value hierarchy, at the dates presented, were as follows:
December 31, 2024
CarryingEstimated Fair Value
AmountTotalLevel 1Level 2Level 3
(Dollars in thousands)
Assets:
Cash and cash equivalents$170,324 $170,324 $170,324 $— $— 
AFS securities861,501 861,501 — 861,501 — 
Loans receivable7,953,556 7,523,405 — — 7,523,405 
FHLB stock100,364 100,364 100,364 — — 
Interest rate swaps4,314 4,314 — 4,314 — 
Liabilities:
Deposits6,206,117 6,200,957 3,291,653 2,909,304 — 
Borrowings2,163,775 2,140,222 — 2,140,222 — 
September 30, 2024
CarryingEstimated Fair Value
AmountTotalLevel 1Level 2Level 3
(Dollars in thousands)
Assets:
Cash and cash equivalents$217,307 $217,307 $217,307 $— $— 
AFS securities856,266 856,266 — 856,266 — 
Loans receivable7,907,338 7,660,535 — — 7,660,535 
FHLB stock101,175 101,175 101,175 — — 
Interest rate swaps2,103 2,103 — 2,103 — 
Liabilities:
Deposits6,129,982 6,135,652 3,164,672 2,970,980 — 
Borrowings2,179,564 2,169,403 — 2,169,403 — 

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8. ACCUMULATED OTHER COMPREHENSIVE INCOME
The following tables present the changes in the components of AOCI, net of tax, for the periods indicated.
For the Three Months Ended December 31, 2024
UnrealizedUnrealized
Gains (Losses)Gains (Losses)
on AFSon Cash FlowTotal
SecuritiesHedgesAOCI
(Dollars in thousands)
Beginning balance20,032 1,595 21,627 
Other comprehensive income (loss), before reclassifications(11,742)2,375 (9,367)
Amount reclassified from AOCI, net of taxes of $222
— (698)(698)
Other comprehensive income (loss)(11,742)1,677 (10,065)
Ending balance8,290 3,272 11,562 
For the Three Months Ended December 31, 2023
 UnrealizedUnrealized
Gains (Losses)Gains (Losses)
on AFSon Cash FlowTotal
SecuritiesHedgesAOCI
(Dollars in thousands)
Beginning balance$(1,142)$9,842 $8,700 
Other comprehensive income (loss), before reclassifications16,581 (2,998)13,583 
Amount reclassified from AOCI, net of taxes of $626
— (1,940)(1,940)
Reclassification adjustment for gross gains on AFS securities included in net income, net of taxes of $383
(1,188)— (1,188)
Other comprehensive income (loss)15,393 (4,938)10,455 
Ending balance$14,251 $4,904 $19,155 

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The Company and the Bank may from time to time make written or oral "forward-looking statements," including statements contained in documents filed or furnished by the Company with the SEC. These forward-looking statements may be included in this Quarterly Report on Form 10-Q and the exhibits attached to it, in the Company's reports to stockholders, in the Company's press releases, and in other communications by the Company, which are made in good faith pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements include statements about our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, which are subject to significant risks and uncertainties, and are subject to change based on various factors, some of which are beyond our control. The words "may," "could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan" and similar expressions are intended to identify forward-looking statements. The following factors, among others, could cause our future results to differ materially from the beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions expressed in the forward-looking statements:
•our ability to maintain overhead costs at reasonable levels;
•our ability to generate a sufficient volume of loans in order to maintain the balance of the portfolio at a level desired by management;
•our ability to invest funds in wholesale or secondary markets at favorable yields;
•our ability to access cost-effective funding and maintain sufficient liquidity;
•our ability to extend our commercial banking and trust asset management expertise across our market areas;
•fluctuations in deposit flows;
•transactions or activities that would result in the recapture of base-year, tax basis bad debt reserves;
•the future earnings and capital levels of the Bank, the impact of the pre-1988 bad debt recapture and the continued non-objection by our primary federal banking regulators, to the extent required, to distribute capital from the Bank to the Company, which could affect the Company's income tax expense and the Company's ability to pay dividends in accordance with its dividend policy and/or repurchase shares;
•the strength of the U.S. economy in general and the strength and/or the availability of labor in the local economies in which we conduct operations, including areas where we have purchased large amounts of correspondent loans, originated commercial loans, and entered into commercial loan participations;
•changes in real estate values, unemployment levels, general economic trends, and the level and direction of loan delinquencies and charge-offs may require changes in the estimates of the adequacy of the ACL and may adversely affect our business;
•increases in classified and/or non-performing assets, which may require the Bank to increase the ACL, charge-off loans and incur elevated collection and carrying costs related to such non-performing assets;
•results of examinations of the Bank and the Company by their respective primary federal banking regulators, including the possibility that the regulators may, among other things, require us to increase our ACL;
•changes in accounting principles, policies, or guidelines;
•the effects of, and changes in, monetary and interest rate policies of the Board of Governors of the Federal Reserve System ("FRB");
•the effects of, and changes in, trade and fiscal policies and laws of the United States government;
•the effects of, and changes in, foreign and military policies of the United States government;
•inflation, interest rate, market, monetary, and currency fluctuations and the effects of a potential economic recession or slower economic growth;
•the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor or depositor sentiment;
•the timely development and acceptance of new products and services and the perceived overall value of these products and services by users, including the features, pricing, and quality compared to competitors' products and services;
•the willingness of users to substitute competitors' products and services for our products and services;
•our success in gaining regulatory approval of our products and services and branching locations, when required;
•the impact of interpretations of, and changes in, financial services laws and regulations, including laws concerning taxes, banking, securities, consumer protection, trust and insurance and the impact of other governmental initiatives affecting the financial services industry;
•the ability to attract and retain skilled employees;
•implementing business initiatives may be more difficult or expensive than anticipated;
•significant litigation;
•technological changes;
•our ability to maintain the security of our financial, accounting, technology, and other operating systems and facilities, including the ability to withstand cyberattacks;
•changes in consumer spending, borrowing and saving habits; and
•our success at managing the risks involved in our business.
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This list of factors is not all inclusive. For a discussion of risks and uncertainties related to our business that could adversely impact our operations and/or financial results, see "Part I, Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024 and Part II, Item 1A. Risk Factors within this Quarterly Report on Form 10-Q. We do not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company or the Bank.

As used in this Form 10-Q, unless we specify or the context indicates otherwise, "the Company," "we," "us," and "our" refer to Capitol Federal Financial, Inc. a Maryland corporation, and its subsidiaries. "Capitol Federal Savings," and "the Bank," refer to Capitol Federal Savings Bank, a federal savings bank and the wholly-owned subsidiary of Capitol Federal Financial, Inc.

The following discussion and analysis is intended to assist in understanding the financial condition, results of operations, liquidity, and capital resources of the Company. The Bank comprises almost all of the consolidated assets and liabilities of the Company and the Company is dependent primarily upon the performance of the Bank for the results of its operations. Because of this relationship, references to management actions, strategies and results of actions apply to both the Bank and the Company except where the context indicates otherwise. This discussion and analysis should be read in conjunction with Management's Discussion and Analysis included in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024, filed with the SEC.


Available Information
Financial and other Company information, including press releases, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports can be obtained free of charge from our investor relations website, https://ir.capfed.com. SEC filings are available on our website immediately after they are electronically filed with or furnished to the SEC, and are also available on the SEC's website at www.sec.gov.


Critical Accounting Estimates
Our most critical accounting estimate is our methodology used to determine the ACL and reserve for off-balance sheet credit exposures. This estimate is important to the presentation of our financial condition and results of operations, involves a high degree of complexity, and requires management to make difficult and subjective judgments that may require assumptions about highly uncertain matters. The use of different judgments, assumptions, and estimates could affect reported results materially. This critical accounting estimate and its application is reviewed at least annually by the audit committee of our Board of Directors. For a full discussion of our critical accounting estimates, see "Part II, Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024.


Executive Summary
The following summary should be read in conjunction with the Management's Discussion and Analysis of Financial Condition and Results of Operations section in its entirety.

The Company recognized net income of $15.4 million, or $0.12 per share, for the current year quarter, compared to net income of $2.5 million, or $0.02 per share, for the prior year quarter. The lower net income in the prior year quarter was primarily a result of the impairment loss on the securities associated with the securities strategy. See additional discussion regarding the securities strategy in the "Securities Strategy to Improve Earnings" section below. Excluding the effects of the net loss associated with the securities strategy, EPS would have been $0.10 for the prior year quarter. The increase in EPS excluding the effects of the net loss associated with the securities strategy was due primarily to higher net interest income in the current year quarter.

The net interest margin increased 15 basis points, from 1.71% for the prior year quarter to 1.86% for the current year quarter, due mainly to higher yields on loans and securities, which outpaced the increase in the cost of deposits, largely in retail certificates of deposit, along with the continued shift of loan balances from the one- to four-family loan portfolio to the higher yielding commercial loan portfolio.

The Company's efficiency ratio was 57.86% for the current year quarter compared to 92.86% for the prior year quarter. Excluding the net losses from the securities strategy, the efficiency ratio would have been 64.73% for the prior year quarter. The improvement in the efficiency ratio, excluding the net losses from the securities strategy, was due primarily to higher net interest income and lower non-interest expense in the current year quarter compared to the prior year quarter. The Company's operating expense ratio (annualized) for the current year quarter was 1.14% compared to 1.18% for the prior year quarter, due mainly to lower non-interest expense in the current year quarter.
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The loan portfolio was $7.95 billion at December 31, 2024, a $46.2 million increase from September 30, 2024. The loan portfolio mix continued to shift from one- to four-family loans to commercial loans during the current year quarter. During the current year quarter the commercial portfolio grew by 36.5% on an annualized basis. Management does not expect that rate of commercial loan growth to continue, but does expect continued growth during the current fiscal year.

Total deposits were $6.21 billion at December 31, 2024, a $76.1 million increase from September 30, 2024. The increase was primarily in retail savings accounts due to the Bank's high-yield savings account offering, along with an increase in retail checking accounts, partially offset by a decrease in retail certificates of deposit. Management continued to focus on retaining and growing deposits through its high-yield savings account offering.

Total borrowings were $2.16 billion at December 31, 2024, a $15.8 million decrease from September 30, 2024. The decrease was due to principal payments made on the Bank's amortizing FHLB advances. Management estimates that the Bank had $2.91 billion in additional liquidity available at December 31, 2024 based on the Bank's blanket collateral agreement with FHLB and unencumbered securities.

Stockholders' equity totaled $1.03 billion at December 31, 2024, a decrease of $5.3 million from September 30, 2024. As of December 31, 2024, the Bank's capital ratios exceeded the well-capitalized requirements. The Bank's community bank leverage ratio ("CBLR") as of December 31, 2024 was 9.4%.

The Bank's asset quality remains strong, reflected in the continued low level of loan delinquency and charge-off ratios. At December 31, 2024, loans 30 to 89 days delinquent were 0.40% of total loans receivable, net, and loans 90 or more days delinquent or in foreclosure were 0.13% of total loans receivable, net. See "Asset Quality - Delinquent and nonaccrual loans and OREO" below for additional discussion. During the current year quarter, net recoveries were $7 thousand.

At December 31, 2024, the gap between the Bank's amount of interest-earning assets and interest-bearing liabilities projected to reprice within one year was $(1.58) billion, or (16.6)% of total assets, compared to $(1.51) billion, or (15.8)% of total assets, at September 30, 2024. As of December 31, 2024, the Bank exceeded internal policy thresholds for sensitivity to changes in interest rates. See additional discussion in "Part I, Item 3. Quantitative and Qualitative Disclosures About Market Risk."

Securities Strategy to Improve Earnings
In October 2023, the Company initiated a securities strategy (the "securities strategy") by selling $1.30 billion of securities, representing 94% of its securities portfolio. Since the Company did not have the intent to hold the $1.30 billion of securities to maturity at September 30, 2023, the Company recognized an impairment loss on those securities of $192.6 million which was reflected in the Company's financial statements for the quarter and fiscal year ended September 30, 2023. The securities strategy allowed the Company to improve its earnings stream going forward, beginning in the quarter ended December 31, 2023, by redeploying most of the proceeds into then current market rate securities and to provide liquidity to deleverage the balance sheet utilizing the remaining proceeds. During the quarter ended December 31, 2023, the Company completed the sale of securities and recognized $13.3 million ($10.0 million net of tax), or $0.08 per share, of additional loss related to the sale of the securities. See additional information regarding the impact of the securities strategy on our financial measurements in "Average Balance Sheets" below. The $1.30 billion of securities sold had a weighted average yield of 1.22% and an average duration of 3.6 years. With the proceeds from the sale of the securities, the Company purchased $632.0 million of securities yielding 5.75%, paid down $500.0 million of borrowings with a weighted average cost of 4.70%, and held the remaining cash at the FRB of Kansas City earning interest at the reserve balance rate until such time as it could be used to fund commercial activity or for other Bank operations.

34
Strategic Banking Initiatives

Management continues to focus on strategically growing commercial banking through the alignment of technology, people, products and services. We believe we will be successful in this initiative as we are focusing on the financial needs of growing companies and small and middle-market businesses and pairing these companies with experienced relationship managers who offer a broad range of customized services, digital platforms and sophisticated cash management tools tailored to their businesses. Leveraging our new technology and organizational structure to quickly respond to customer needs in the sales pipeline is central to our growth strategy for commercial deposits. Commercial loan growth will continue to be driven by prospecting, maintaining and expanding current relationships. Strong credit quality remains a priority for the Bank as it grows commercial lending.

During the second quarter of fiscal year 2025, we intend to implement and begin utilizing commercial loan pricing and profitability software which is expected to provide consistent pricing and profitability based on the full customer banking relationship. The software is also expected to provide market insight regarding competitor pricing to assist loan officers when preparing a loan offering for a customer.

We continue to see small business banking as an opportunity for deposit and loan growth. In the second quarter of fiscal year 2025, we plan to launch new checking products and digital banking services for small businesses. Additionally, we have hired a team of bankers focused on the deposit and loan needs of small businesses in our area.

In retail banking, the Bank continues investing in digital banking as part of our strategy to attract and retain deposits, including a new deposit account onboarding platform implemented in November 2024 and digital banking enhancements for debit cardholders projected to be implemented in the fourth quarter of fiscal year 2025.

35
Financial Condition
The following table summarizes the Company's financial condition at the dates indicated.
Annualized
December 31, September 30, Percent
20242024Change
(Dollars and shares in thousands)
Total assets$9,538,167 $9,527,608 0.4 %
AFS securities861,501 856,266 2.4 
Loans receivable, net7,953,556 7,907,338 2.3 
Deposits6,206,117 6,129,982 5.0 
Borrowings2,163,775 2,179,564 (2.9)
Stockholders' equity1,026,939 1,032,270 (2.1)
Equity to total assets at end of period10.8 %10.8 %
Average number of basic shares outstanding129,973 129,918 0.2 
Average number of diluted shares outstanding129,973 129,918 0.2 

Loans receivable, net increased $46.2 million during the current year quarter. The loan portfolio mix continued to shift from one- to four-family loans to commercial loans during the current year quarter, with $137.5 million in commercial loan growth, partially offset by a $90.8 million reduction in one- to four-family loans due primarily to decreases of $48.7 million and $34.1 million in one- to four-family correspondent loans and one- to four-family originated loans, respectively.

As a result of continued high interest rates and lack of housing inventory which has reduced housing market transactions, our single-family origination and refinance activity has slowed considerably, and there has been a reduction in one- to four-family loan balances through scheduled repayments and loan payoffs. Additionally, the Bank suspended its one- to four-family correspondent lending channels during fiscal year 2024 for the foreseeable future. Management expects the Bank's one- to four-family originated loan portfolio will decrease as the affordability of housing remains challenging and there is limited supply of homes for sale. Cash flows generated from the one- to four-family portfolio are currently being used to fund commercial loan growth.

Deposits increased $76.1 million during the current quarter, primarily in retail savings accounts due to the Bank's high-yield savings account offering and retail checking accounts, partially offset by a decrease in retail certificates of deposit. Management has continued to focus on retaining and growing deposits through its high-yield savings account, which had an annual percentage yield of 4.30% for balances over $10 thousand as of December 31, 2024. The high-yield savings account balance was $171.7 million as of December 31, 2024 compared to $96.2 million and $520 thousand as of September 30, 2024 and December 31, 2023, respectively.
36
Loans Receivable. The following table presents the balance and weighted average rate of our loan portfolio as of the dates indicated.
December 31, 2024September 30, 2024December 31, 2023
AmountRateAmount RateAmountRate
(Dollars in thousands)
One- to four-family:
Originated$3,907,809 3.64 %$3,941,952 3.60 %$3,986,479 3.44 %
Correspondent purchased2,163,847 3.48 2,212,587 3.48 2,360,843 3.45 
Bulk purchased123,029 2.97 127,161 2.80 134,504 2.10 
Construction19,165 6.35 22,970 6.05 43,631 4.47 
Total6,213,850 3.58 6,304,670 3.55 6,525,457 3.42 
Commercial:
Commercial real estate1,353,482 5.48 1,191,624 5.43 1,019,431 5.27 
Commercial and industrial 131,267 6.66 129,678 6.66 113,686 6.46 
Construction161,744 6.14 187,676 6.40 196,493 5.41 
Total1,646,493 5.64 1,508,978 5.65 1,329,610 5.39 
Consumer loans:
Home equity103,006 8.31 99,988 8.90 96,952 8.84 
Other9,680 5.77 9,615 5.72 9,670 5.32 
Total112,686 8.09 109,603 8.62 106,622 8.52 
Total loans receivable7,973,029 4.07 7,923,251 4.02 7,961,689 3.82 
Less:
ACL24,997 23,035 24,178 
Deferred loan fees/discounts30,973 30,336 30,653 
Premiums/deferred costs(36,497)(37,458)(40,652)
Total loans receivable, net$7,953,556 $7,907,338 $7,947,510 

Loan Activity - The following table summarizes activity in the loan portfolio, along with weighted average rates where applicable, for the periods indicated, excluding changes in ACL, deferred loan fees/discounts, and premiums/deferred costs. Loans that were paid off as a result of refinances are included in repayments. Loan endorsements are not included in the activity in the following table because a new loan is not generated at the time of the endorsement. The endorsed balance and rate are included in the ending loan portfolio balance and rate. Commercial loan renewals are not included in the activity presented in the following table unless new funds are disbursed at the time of renewal. The renewal balance and rate are included in the ending loan portfolio balance and rate.
For the Three Months Ended
December 31, 2024December 31, 2023
AmountRateAmountRate
(Dollars in thousands)
Beginning balance $7,923,251 4.02 %$7,984,381 3.76 %
Originated and refinanced265,731 6.76 101,402 7.00 
Purchased and participations69,790 7.21 3,497 5.91 
Change in undisbursed loan funds(36,990)83,246 
Repayments(248,760)(210,611)
Principal recoveries/ (charge-offs), net7 (1)
Other— (225)
Ending balance$7,973,029 4.07 $7,961,689 3.82 
37
The following table presents loan origination, refinance, and purchase/participation activity for the periods indicated, excluding endorsement activity, along with associated weighted average rates and percent of total. Commercial loan renewals are not included in the activity in the following table except to the extent new funds are disbursed at the time of renewal. Loan originations, purchases/participations, and refinances are reported together.
For the Three Months Ended
December 31, 2024December 31, 2023
AmountRate% of TotalAmountRate% of Total
(Dollars in thousands)
Fixed-rate:
One- to four-family$64,912 5.90 %19.4 %$37,167 6.89 %35.5 %
One- to four-family construction10,824 5.96 3.2 9,308 6.84 8.9 
Commercial:
Real estate28,494 7.03 8.5 747 7.76 0.7 
Commercial and industrial16,875 7.49 5.0 2,605 7.06 2.5 
Construction1,135 8.00 0.3 132 9.00 0.1 
Home equity1,744 8.42 0.5 2,630 9.01 2.5 
Consumer other400 7.48 0.1 1,084 6.83 1.0 
Total fixed-rate 124,384 6.44 37.0 53,673 7.01 51.2 
Adjustable-rate:
One- to four-family2,928 6.38 0.9 18,486 6.65 17.6 
One- to four-family construction2,881 6.63 0.9 8,040 6.60 7.7 
Commercial:
Real estate119,055 6.79 35.5 9,350 5.00 8.9 
Commercial and industrial9,811 7.28 2.9 3,555 7.88 3.4 
Construction65,906 7.47 19.6 3,947 8.41 3.8 
Home equity8,979 8.67 2.7 7,179 9.39 6.8 
Consumer other1,577 6.07 0.5 669 4.65 0.6 
Total adjustable-rate211,137 7.09 63.0 51,226 6.92 48.8 
Total originated, refinanced and purchased/participations$335,521 6.85 100.0 %$104,899 6.96 100.0 %
Purchased and participation loans included above:
Fixed-rate:
Correspondent purchased - one- to four-family$— — $2,978 6.43 
Participations and purchases - commercial24,500 7.00 — — 
Total fixed-rate purchased/participations24,500 7.00 2,978 6.43 
Adjustable-rate:
Correspondent purchased - one- to four-family— — 519 2.93 
Participations and purchases - commercial45,290 7.32 — — 
Total adjustable-rate purchased/participations45,290 7.32 519 2.93 
Total purchased/participation loans$69,790 7.21 $3,497 5.91 

38
One- to Four-Family Loans - The following table presents, for our portfolio of one- to four-family loans, the amount, percent of total, weighted average rate, weighted average credit score, weighted average LTV ratio, and average balance per loan as of December 31, 2024. Credit scores were updated in September 2024 from a nationally recognized consumer rating agency. The LTV ratios were based on the current loan balance and either the lesser of the purchase price or original appraisal, or the most recent Bank appraisal, if available. In most cases, the most recent appraisal was obtained at the time of origination.
% ofCredit Average
AmountTotalRateScoreLTVBalance
(Dollars in thousands)
Originated$3,907,809 62.9 %3.64 %771 58 %$169 
Correspondent purchased2,163,847 34.8 3.48 767 62 401 
Bulk purchased123,029 2.0 2.97 773 53 279 
Construction19,165 0.3 6.35 780 46 355 
$6,213,850 100.0 %3.58 770 60 214 
The following table presents origination activity in our one- to four-family loan portfolio, excluding endorsement activity, along with the weighted average rate, weighted average LTV and weighted average credit score for the three months ended December 31, 2024.
Credit
AmountRateLTVScore
(Dollars in thousands)
$81,545 5.95 %73 %766 

The following table presents the amount and weighted average rate of one- to four-family loan origination and refinance commitments as of December 31, 2024.
AmountRate
(Dollars in thousands)
$42,023 6.47 %


Commercial Loans - The table below presents commercial loan origination and purchase activity during the three months ended December 31, 2024.
OriginatedParticipationTotal
AmountRateAmountRateAmountRate
(Dollars in thousands)
Commercial real estate$120,745 6.79 %$26,804 7.04 %$147,549 6.84 %
Commercial and industrial26,686 7.41 — — 26,686 7.41 
Commercial construction24,055 7.77 42,986 7.31 67,041 7.47 
$171,486 7.02 $69,790 7.21 $241,276 7.08 

The following table presents commercial loan disbursements, excluding lines of credit, during the three months ended December 31, 2024.
AmountRate
(Dollars in thousands)
Commercial real estate$147,268 6.61 %
Commercial and industrial10,200 7.33 
Commercial construction46,968 6.24 
$204,436 6.56 



39
The following table presents the Bank's commercial real estate and commercial construction loans by type of primary collateral as of the dates indicated. As of December 31, 2024, the Bank had five commercial real estate and commercial construction loan commitments, totaling $53.7 million, at a weighted average rate of 7.32%. We anticipate fully funding the majority of the undisbursed amounts as most are not cancellable by the Bank. Of the total commercial real estate and commercial construction undisbursed amounts and commitments outstanding as of December 31, 2024, management anticipates funding approximately $87.5 million during the March 2025 quarter, $91.4 million during the June 2025 quarter, $73.8 million during the September 2025 quarter, and $94.3 million during the December 2025 quarter or later. At December 31, 2024, the unpaid principal balance of non-owner occupied commercial real estate loans was $1.02 billion and the unpaid principal balance of owner occupied commercial real estate loans was $166.1 million, which are included in the table below.
December 31, 2024September 30, 2024December 31, 2023
UnpaidUndisbursedGross LoanGross LoanGross Loan
CountPrincipalAmountAmountAmountAmount
(Dollars in thousands)
Hotel23 $387,305 $45,342 $432,647 $323,396 $231,987 
Multi-family37 206,681 179,660 386,341 359,707 302,908 
Senior housing37 342,049 3,763 345,812 332,334 330,077 
Retail building134 273,496 62,639 336,135 316,261 349,028 
Office building78 127,738 672 128,410 127,961 129,348 
One- to four-family property315 59,480 4,399 63,879 63,416 65,583 
Single use building31 39,799 262 40,061 43,438 43,815 
Warehouse/manufacturing48 34,272 297 34,569 34,656 36,056 
Other66 44,406 1,319 45,725 62,013 52,193 
769 $1,515,226 $298,353 $1,813,579 $1,663,182 $1,540,995 
Weighted average rate5.55 %6.77 %5.75 %5.77 %5.44 %

The following table summarizes the Bank's commercial real estate and commercial construction loans by state as of the dates indicated.
December 31, 2024September 30, 2024December 31, 2023
UnpaidUndisbursedGross LoanGross LoanGross Loan
CountPrincipalAmountAmountAmountAmount
(Dollars in thousands)
Kansas566 $590,691 $118,471 $709,162 $713,437 $662,756 
Texas20 289,521 40,762 330,283 348,066 347,825 
Missouri132 259,886 45,949 305,835 313,146 326,593 
California3 80,569 882 81,451 15,040 — 
Colorado10 46,060 14,745 60,805 50,017 49,428 
New York1 60,000 — 60,000 60,000 — 
Nebraska8 32,262 27,144 59,406 32,422 37,799 
Tennessee3 37,840 2,942 40,782 35,973 39,569 
Other26 118,397 47,458 165,855 95,081 77,025 
769 $1,515,226 $298,353 $1,813,579 $1,663,182 $1,540,995 
40
The following table presents the Bank's commercial real estate and commercial construction loans by unpaid principal balance, aggregated by type of primary collateral and state, along with weighted average LTV ratio and weighted average DSCR as of December 31, 2024. The LTV ratio is calculated using the gross loan amount (composed of unpaid principal and undisbursed amounts) as of December 31, 2024 and the most current collateral value available, which is most often the value at origination/purchase. For existing real estate, the "as is" value is used. If the property is to be constructed, the "as completed" value of the collateral is utilized. The DSCR is calculated based on historical borrower performance, or projected borrower performance for newly formed entities with no performance history. The DSCR presented in the table below is based on the DSCR at the time of origination unless an updated DSCR has been calculated at the time of subsequent loan renewals or reviews of borrower financials.
WeightedWeighted
KansasTexasMissouriCaliforniaOtherTotalLTVDSCR
(Dollars in thousands)
Hotel$42,272$140,576$9,596$77,601$117,260$387,30554.8 %1.58x
Senior housing176,266—109,431—56,352342,04970.8 1.48
Retail building86,88469,65149,011—67,950273,49663.0 1.91
Multi-family122,64717,92645,481—20,627206,68164.3 1.24
Office building58,07960,4678,844—348127,73852.0 2.69
Other104,54390137,5232,96832,022177,95759.0 2.99
$590,691$289,521$259,886$80,569$294,559$1,515,22661.4 1.83
Weighted LTV64.3 %55.1 %66.6 %48.6 %61.0 %61.4 %
Weighted DSCR1.96x1.51x2.10x2.08x1.58x1.83x

The following table presents the Bank's commercial loan portfolio and outstanding loan commitments, categorized by aggregate gross loan amount (unpaid principal plus undisbursed amounts) or outstanding loan commitment amount and average loan amount, as of December 31, 2024. For loans and commitments over $50.0 million, $181.8 million related to hotels in California, New York, and Texas, $143.1 million related to multi-family properties located in Kansas, and $60.0 million related to an office building in Texas.
AverageWeightedWeighted
CountAmountAmountLTVDSCR
(Dollars in thousands)
Greater than $50 million6 $384,910 $64,152 55.9 %1.49x
>$30 to $50 million6 210,870 35,145 65.9 1.41
>$20 to $30 million17 413,149 24,303 68.2 1.34
>$15 to $20 million8 134,805 16,851 62.6 1.67
>$10 to $15 million11 128,264 11,660 66.5 1.61
>$5 to $10 million29 205,966 7,102 64.4 1.84
$1 to $5 million113 262,671 2,325 60.1 2.13
Less than $1 million584 126,693 217 53.9 3.80
774 $1,867,328 $2,413 62.3 1.75

41
The following table summarizes the Bank's commercial and industrial loans by loan purpose as of the dates indicated. As of December 31, 2024, the Bank also had two commercial and industrial loan commitments totaling $981 thousand, at a weighted average rate of 7.95%.
December 31, 2024September 30,
2024		December 31,
2023
UnpaidUndisbursedGross LoanGross LoanGross Loan
CountPrincipalAmountAmountAmountAmount
(Dollars in thousands)
Working capital164$47,978 $38,208 $86,186 $74,097 $75,461 
Purchase/refinance business assets5741,562 504 42,066 37,950 39,418 
Finance/lease vehicle25226,655 — 26,655 28,318 21,180 
Purchase equipment708,998 14,474 23,472 15,457 13,167 
Other216,074 2,069 8,143 7,735 8,000 
564$131,267 $55,255 $186,522 $163,557 $157,226 
6.66 %7.23 %6.83 %6.89 %6.90 %

Asset Quality

Delinquent and nonaccrual loans and OREO. The following table presents the Company's 30 to 89 day delinquent loans at the dates indicated. The amounts in the table represent the unpaid principal balance of the loans less related charge-offs, if any. Of the loans 30 to 89 days delinquent at December 31, 2024, 81% were 59 days or less delinquent. The increase in 30-89 day delinquent commercial real estate loans as of December 31, 2024 was due primarily to a $15.5 million Community Reinvestment Act loan. The borrower is in the process of obtaining tax credit funding which will service the loan until the project is stabilized. The tax credit funding is anticipated to be received by the borrower during the quarter ended March 31, 2025.
Loans Delinquent for 30 to 89 Days at:
December 31, September 30,
20242024
NumberAmountNumberAmount
(Dollars in thousands)
One- to four-family:
Originated79$9,768 69$8,884 
Correspondent purchased112,988 123,049 
Bulk purchased132 268 
Commercial:
Commercial real estate718,373 112,996 
Commercial and industrial1125 4391 
Consumer35679 35642 
134$31,965 133$16,030 
Loans 30 to 89 days delinquent
to total loans receivable, net0.40 %0.20 %

42
The following table presents the Company's nonaccrual loans and OREO at the dates indicated. The amounts in the table represent the unpaid principal balance of the loans less related charge-offs, if any. Nonaccrual loans are loans that are 90 or more days delinquent or in foreclosure and other loans required to be reported as nonaccrual pursuant to accounting and/or regulatory reporting requirements and/or internal policies, even if the loans are current. At all dates presented, there were no loans 90 or more days delinquent that were still accruing interest. Non-performing assets include nonaccrual loans and OREO.
Nonaccrual Loans and OREO at:
December 31, September 30,
20242024
NumberAmountNumberAmount
(Dollars in thousands)
Loans 90 or More Days Delinquent or in Foreclosure:
One- to four-family:
Originated26 $2,338 29 $2,274 
Correspondent purchased8 3,843 8 4,024 
Bulk purchased4 1,256 5 1,535 
Commercial:
Commercial real estate7 2,038 7 1,163 
Commercial and industrial3 309 2 82 
Consumer22 356 20 436 
70 10,140 71 9,514 
Loans 90 or more days delinquent or in foreclosure
 as a percentage of total loans0.13 %0.12 %
Nonaccrual loans less than 90 Days Delinquent:(1)
Commercial:
Commercial real estate6 $1,096 3 $326 
Commercial and industrial1 125 2 252 
7 1,221 5 578 
Total nonaccrual loans77 11,361 76 10,092 
Nonaccrual loans as a percentage of total loans0.14 %0.13 %
OREO:
One- to four-family:
Originated(2)
— $— 1 $55 
— — 1 55 
Total non-performing assets77 $11,361 77 $10,147 
Non-performing assets as a percentage of total assets0.12 %0.11 %

(1)Includes loans required to be reported as nonaccrual pursuant to internal policies, even if the loans are current.
(2)Real estate-related consumer loans where we also hold the first mortgage are included in the one- to four-family category as the underlying collateral is one- to four-family property.


43
The following table presents the states where the properties securing ten percent or more of the total amount of our one- to four-family loans are located and the corresponding balance of loans 30 to 89 days delinquent, 90 or more days delinquent or in foreclosure, and weighted average LTV ratios for loans 90 or more days delinquent or in foreclosure at December 31, 2024. The LTV ratios were based on the current loan balance and either the lesser of the purchase price or original appraisal, or the most recent Bank appraisal, if available. At December 31, 2024, potential losses, after taking into consideration anticipated private mortgage insurance proceeds and estimated selling costs, have been charged-off.
Loans 30 to 89Loans 90 or More Days Delinquent
One- to Four-FamilyDays Delinquentor in Foreclosure
StateAmount% of TotalAmount% of TotalAmount% of TotalLTV
(Dollars in thousands)
Kansas$3,449,689 55.5 %$8,593 67.2 %$2,265 30.5 %54 %
Missouri1,069,498 17.2 2,515 19.7 572 7.7 65 
Other states1,694,663 27.3 1,680 13.1 4,600 61.8 56 
$6,213,850 100.0 %$12,788 100.0 %$7,437 100.0 %56 

Classified loans. The following table presents the amortized cost of loans classified as special mention or substandard at the dates presented. Included in the commercial real estate substandard loans at December 31, 2024 is a participation loan for $39.1 million related to a hotel in Texas. The property is taking longer than projected to stabilize and the borrower is not meeting the debt service coverage loan covenant required by the loan agreement. The LTV ratio on this loan was 47.5% as of December 31, 2024. As the hotel continues to increase occupancy and interest rates decrease on this adjustable-rate loan, it is expected that cash flows from the operation of the hotel will improve sufficiently to allow the debt service coverage to be sufficient to meet the DSCR covenant within the loan agreement without additional support. The loan was not delinquent as of December 31, 2024.
December 31, 2024September 30, 2024
Special MentionSubstandardSpecial MentionSubstandard
(Dollars in thousands)
One- to four-family$12,481 $22,255 $17,528 $22,715 
Commercial:
Commercial real estate15,106 42,249 16,169 2,302 
Commercial and industrial1,795 435 413 335 
Consumer219 512 326 487 
$29,601 $65,451 $34,436 $25,839 


44
Allowance for Credit Losses. The Bank utilizes a discounted cash flow approach for estimating expected credit losses for pooled loans and loan commitments. Management applied qualitative factors at December 31, 2024 to account for large dollar commercial loan concentrations and potential risk of loss in market value for newer one- to four-family loans. These qualitative factors were applied to account for credit risks not fully reflected in the discounted cash flow model. See "Part II, Item 8. Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 1. Summary of Significant Accounting Policies" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024 and "Part 1, Item 1. Note 4. Loans Receivable and Allowance for Credit Losses" within this Quarterly Report on Form 10-Q for additional information related to the key assumptions used in the discounted cash flow model and the qualitative factors.

The distribution of our ACL and the ratio of ACL to loans receivable, by loan type, at the dates indicated is summarized below. The increase in the ratio of the ACL to total loans as of December 31, 2024 from September 30, 2024 was primarily the result of commercial loan growth during the quarter. The ratio of ACL to loans receivable has been generally consistent over the past two quarters and, given the economic outlook at December 31, 2024, management expects it to remain relatively consistent through the remainder of this fiscal year.
Distribution of ACLRatio of ACL to Loans Receivable
December 31, September 30, December 31, September 30,
2024202420242024
(Dollars in thousands)
One- to four-family:
Originated$2,028 $1,650 0.05 %0.04 %
Correspondent purchased1,583 1,861 0.07 0.08 
Bulk purchased131 146 0.11 0.11 
Construction15 16 0.08 0.07 
Total 3,757 3,673 0.06 0.06 
Commercial:
Real estate17,812 15,719 1.32 1.32 
Commercial and industrial 1,209 1,186 0.92 0.91 
Construction1,978 2,249 1.22 1.20 
Total 20,999 19,154 1.28 1.27 
Consumer241 208 0.21 0.19 
Total $24,997 $23,035 0.31 0.29 
Historically, the Bank has maintained very low delinquency ratios and net charge-off ("NCO") rates. Over the past two years, the Bank's highest ratio of commercial loans 90 days or more delinquent to total commercial loans at a quarter end was 0.17%. The highest such ratio for one- to four-family originated and correspondent loans, combined, was 0.12%. The amount of total net recoveries during the current quarter was $7 thousand. During the 10-year period ended December 31, 2024, the Bank recognized $1.2 million of total NCOs. As of December 31, 2024, the ACL balance was $25.0 million and the reserve for off-balance sheet credit exposures totaled $4.7 million. Management believes that this level of ACL and reserve for off-balance sheet credit exposures is adequate for the risk characteristics in our loan portfolio as of December 31, 2024.

The Bank's commercial real estate ACL ratios in aggregate, continue to be higher than those of our peers. The following tables present the average and median commercial real estate ACL ratios for the Bank and two of the Bank's peer groups for the periods noted. The Office of the Comptroller of the Currency ("OCC") peer group consists of all savings banks greater than $1 billion in assets and the asset size peer group consists of all banks between $5 billion and $15 billion in asset size. The peer group information is sourced from the respective peers' Call Reports.
AverageDecember
2022		March
2023		June
2023		September
2023		December
2023		March
2024		June
2024		September
2024		December
2024
Bank1.30 %1.28 %1.45 %1.57 %1.58 %1.60 %1.57 %1.32 %1.32 %
OCC0.92 %1.21 %1.22 %1.21 %1.14 %1.10 %1.11 %1.10 %N/A
Asset Size1.19 %1.17 %1.19 %1.23 %1.16 %1.16 %1.16 %1.18 %N/A
MedianDecember
2022		March
2023		June
2023		September
2023		December
2023		March
2024		June
2024		September
2024		December
2024
Bank1.30 %1.28 %1.45 %1.57 %1.58 %1.60 %1.57 %1.32 %1.32 %
OCC0.84 %1.00 %0.98 %1.06 %1.02 %0.98 %1.02 %0.99 %N/A
Asset Size1.16 %1.13 %1.12 %1.12 %1.10 %1.14 %1.08 %1.09 %N/A
45
The following table presents ACL activity and related ratios at the dates and for the periods indicated. On October 1, 2023, the Bank adopted ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures ("ASU 2022-02"), which eliminated the accounting guidance for troubled debt restructurings by creditors. The Company applied a modified retrospective approach when adopting ASU 2022-02, resulting in a cumulative-effect adjustment which is reflected in the table below ("ASU 2022-02 Adoption").

At or For the Three Months Ended
December 31, 2024December 31, 2023
(Dollars in thousands)
Balance at beginning of period$23,035 $23,759 
ASU 2022-02 Adoption20 
Charge-offs(17)(7)
Recoveries24 6 
Net (charge-offs) recoveries7 (1)
Provision for credit losses1,955 400 
Balance at end of period$24,997 $24,178 
Ratio of NCOs during the period
to average non-performing assets(0.07)%0.01 %
ACL to nonaccrual loans at end of period220.02 237.34 
ACL to loans receivable, net at end of period0.31 0.30 
ACL at end of period to NCOs during the period (annualized)
N/M(1)
6,474x

(1)This ratio is not presented due to loan recoveries exceeding loan charge-offs during the period.

The ratio of NCOs to average non-performing assets was a negative percentage in the current year quarter compared to a positive percentage in the prior year quarter, due primarily to a net recovery in the current year quarter and a NCO in the prior year quarter. The ratio of ACL to nonaccrual loans was lower at the end of the current year quarter compared to the end of the prior year quarter due mainly to a higher balance of nonaccrual loans compared to the prior year quarter, partially offset by a higher ACL balance at December 31, 2024. The ratio of ACL to loans receivable, net was higher at the end of the current year quarter compared to the end of the prior year quarter due primarily to changes in the loan portfolio mix, specifically commercial loan growth. See "Note 4. Loans Receivable and Allowance for Credit Losses" for additional information related to ACL activity by specific loan categories.

46
The following table presents NCOs, average loans, and NCOs as a percentage of average loans, by loan type, for the periods indicated.
For the Three Months Ended
December 31, 2024December 31, 2023
NCOsAverage Loans% of Average LoansNCOsAverage Loans% of Average Loans
(Dollars in thousands)
One- to four-family:
Originated$(3)$3,905,333 — %$(5)$3,985,425 — %
Correspondent— 2,212,300 — — 2,413,900 — 
Bulk purchased— 126,095 — — 136,609 — 
Construction— 20,094 — — 40,114 — 
Total(3)6,263,822 — (5)6,576,048 — 
Commercial:
Real estate(19)1,304,100 — — 1,015,756 — 
Commercial and industrial (1)131,021 — (1)114,561 — 
Construction— 171,627 — — 176,600 — 
Total(20)1,606,748 — (1)1,306,917 — 
Consumer:
Home equity15 101,335 0.01 2 96,315 — 
Other1 9,326 0.01 5 9,643 0.05 
Total16 110,661 0.01 7 105,958 0.01 
$(7)$7,981,231 — $1 $7,988,923 — 
While management utilizes its best judgment and information available, the adequacy of the ACL and reserve for off-balance sheet credit exposures is determined by certain factors outside of the Company's control, such as the performance of our loan portfolio, changes in the economic environment including economic uncertainty, changes in interest rates, and the view of regulatory authorities toward classification of assets and the level of ACL and reserve for off-balance sheet credit exposures. Additionally, the level of ACL and reserve for off-balance sheet credit exposures may fluctuate based on the balance and mix of the loan portfolio and off-balance sheet credit exposures. If actual results differ significantly from our assumptions, our ACL and reserve for off-balance sheet credit exposures may not be sufficient to cover inherent losses in our loan portfolio, resulting in additions to our ACL and an increase in the provision for credit losses.

Securities. The following table presents the distribution of our securities portfolio, at amortized cost, at the dates indicated. The majority of our securities are government guaranteed or issued by GSEs. Overall, fixed-rate securities comprised 95% of our securities portfolio at December 31, 2024. The weighted average life ("WAL") is the estimated remaining maturity (in years) after three month historical prepayment speeds and projected call option assumptions have been applied. Weighted average yields on tax-exempt securities are not calculated on a fully tax-equivalent basis.
December 31, 2024September 30, 2024
AmountYieldWALAmountYieldWAL
(Dollars in thousands)
MBS$774,655 5.64 %4.9 $756,775 5.63 %5.7 
GSE debentures71,915 5.37 2.6 69,077 5.63 0.4 
Corporate bonds4,000 5.12 7.4 4,000 5.12 7.6 
$850,570 5.62 %4.8 $829,852 5.63 %5.2 

47
The following table summarizes the activity in our securities portfolio for the periods presented. The weighted average yields for the beginning and ending balances are as of the first and last days of the periods presented and are generally derived from recent prepayment activity on the securities in the portfolio. The beginning and ending WALs are the estimated remaining principal repayment terms (in years) after three month historical prepayment speeds and projected call option assumptions have been applied.
For the Three Months Ended
December 31, 2024December 31, 2023
AmountYieldWALAmountYieldWAL
(Dollars in thousands)
Beginning balance - carrying value$856,266 5.63 %5.2$1,384,482 1.35 %3.8
Maturities and repayments(51,574)(49,604)
Proceeds from sale— (1,272,512)
Net amortization of (premiums)/discounts876 2,771 
Purchases71,416 4.89 6.7668,310 5.72 3.8
Net loss from securities sales— (13,345)
Change in valuation on AFS securities(15,483)20,360 
Ending balance - carrying value$861,501 5.62 4.8$740,462 5.67 3.9

Liabilities. Total liabilities were $8.51 billion at December 31, 2024, compared to $8.50 billion at September 30, 2024. The increase was due primarily to a $76.1 million increase in deposits, partially offset by a $35.7 million decrease in advances by borrowers due to the payment of property taxes during the current quarter, and a $15.8 million decrease in borrowings due to principal payments made on the Bank's amortizing advances.

Deposits. The following table presents the amount, weighted average rate and percent of total for the components of our deposit portfolio at the dates presented. The increase in the deposit portfolio balance at December 31, 2024 compared to September 30, 2024 was primarily in the Bank's high-yield savings account offering and retail checking accounts, partially offset by a decrease in retail certificates of deposit. The decrease in the deposit portfolio rate at December 31, 2024 compared to September 30, 2024 was due mainly to lower rates on retail certificates of deposit and retail money market accounts.
December 31, 2024September 30, 2024December 31, 2023
% of% of% of
AmountRate TotalAmountRate TotalAmountRate Total
(Dollars in thousands)
Non-interest-bearing checking$556,515 — %9.0 %$549,596 — %9.0 %$555,382 — %9.2 %
Interest-bearing checking888,287 0.22 14.3 847,542 0.23 13.8 895,665 0.17 14.9 
Savings611,063 1.21 9.9 540,572 0.82 8.8 471,372 0.12 7.8 
Money market 1,235,788 1.19 19.9 1,226,962 1.46 20.0 1,360,349 1.96 22.6 
Certificates of deposit2,914,464 4.15 46.9 2,965,310 4.25 48.4 2,738,827 3.79 45.5 
$6,206,117 2.34 100.0 %$6,129,982 2.45 100.0 %$6,021,595 2.20 100.0 %

The following table presents the amount, weighted average rate, and percent of total for the components of our deposit portfolio, split between retail non-maturity deposits, commercial non-maturity deposits, and certificates of deposit at the dates presented.
48
December 31, 2024September 30, 2024December 31, 2023
% of% of% of
AmountRate TotalAmountRate TotalAmountRate Total
(Dollars in thousands)
Retail non-maturity deposits:
   Non-interest-bearing checking$434,432 — %7.0 %$418,790 — %6.8 %$428,368 — %7.1 %
   Interest-bearing checking819,644 0.09 13.2 799,407 0.10 13.0 841,350 0.08 14.0 
   Savings607,803 1.22 9.8 537,506 0.83 8.8 468,003 0.12 7.8 
   Money market 1,145,615 1.09 18.5 1,149,212 1.37 18.7 1,296,977 1.92 21.5 
      Total 3,007,494 0.69 48.5 2,904,915 0.73 47.4 3,034,698 0.86 50.4 
Commercial non-maturity deposits:
   Non-interest-bearing checking122,083 — 2.0 130,806 — 2.1 127,014 — 2.1 
   Interest-bearing checking68,643 1.75 1.1 48,135 2.40 0.8 54,316 1.63 0.9 
   Savings3,260 0.05 0.1 3,066 0.05 0.1 3,370 0.05 0.1 
   Money market 90,173 2.50 1.5 77,750 2.72 1.3 63,370 2.70 1.1 
      Total 284,159 1.22 4.6 259,757 1.26 4.2 248,070 1.05 4.1 
Certificates of deposit:
   Retail certificates of deposit2,799,418 4.14 45.1 2,830,579 4.23 46.2 2,569,391 3.75 42.7 
   Commercial certificates of deposit56,564 4.27 0.9 58,236 4.40 1.0 49,152 3.80 0.8 
   Public unit certificates of deposit58,482 4.48 0.9 76,495 4.62 1.2 120,284 4.54 2.0 
      Total2,914,464 4.15 47.0 2,965,310 4.25 48.4 2,738,827 3.79 45.5 
$6,206,117 2.34 100.0 %$6,129,982 2.45 100.0 %$6,021,595 2.20 100.0 %

The following table presents the amount, weighted average rate, and percent of total for total retail deposits, commercial deposits, and public unit certificates of deposit for the periods noted.
December 31, 2024September 30, 2024December 31, 2023
% of% of% of
AmountRate TotalAmountRate TotalAmountRate Total
(Dollars in thousands)
Total retail deposits$5,806,912 2.35 %93.6 %$5,735,494 2.46 %93.6 %$5,604,089 2.19 %93.1 %
Total commercial deposits340,723 1.72 5.5 317,993 1.84 5.2 297,222 1.50 4.9 
Public unit certificates of deposit58,482 4.48 0.9 76,495 4.62 1.2 120,284 4.54 2.0 
$6,206,117 2.34 100.0 %$6,129,982 2.45 100.0 %$6,021,595 2.20 100.0 %

As of December 31, 2024, approximately $757.8 million (or approximately 12%) of the Bank's Call Report deposit balance was uninsured, of which approximately $461.5 million related to commercial and retail deposit accounts and with the remainder mainly comprised of fully collateralized public unit deposits and intercompany accounts. The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank's regulatory reporting requirements.

49
Borrowings. Total borrowings at December 31, 2024 were $2.16 billion, which was comprised of $1.96 billion in fixed-rate FHLB advances, $200.0 million in FHLB variable-rate advances tied to interest rate swaps, and $1.1 million in finance leases.
The following table presents the maturity of term borrowings, which consist of FHLB advances, along with associated weighted average contractual and effective rates as of December 31, 2024. Amortizing FHLB advances are presented based on their maturity dates versus their quarterly scheduled repayment dates.
Maturity byContractualEffective
Fiscal YearAmountRate
Rate(1)
(Dollars in thousands)
2025$450,000 3.07 %2.76 %
2026575,000 2.81 2.95 
2027525,000 3.25 3.35 
2028355,738 4.59 4.16 
2029158,750 4.45 4.45 
2030100,000 4.20 4.20 
$2,164,488 3.45 3.37 

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

The following table presents borrowing activity for the periods shown. The borrowings presented in the table have original contractual terms of one year or longer or are tied to interest rate swaps with original contractual terms of one year or longer. Line of credit borrowings and finance leases are excluded from the table. The effective rate is shown as a weighted average and includes the impact of interest rate swaps and the amortization of deferred prepayment penalties resulting from FHLB advances previously prepaid. The weighted average maturity ("WAM") is the remaining weighted average contractual term in years. The beginning and ending WAMs represent the remaining maturity at each date presented. During the prior year quarter, Federal Reserve's Bank Term Funding Program ("BTFP") borrowings were paid off with the proceeds received from the securities strategy.

For the Three Months Ended
December 31, 2024December 31, 2023
Effective Effective
AmountRateWAMAmountRateWAM
(Dollars in thousands)
Beginning balance$2,180,656 3.29 %1.6 $2,882,828 3.34 %1.8 
Maturities and repayments(216,168)3.42 (157,418)3.46 
New FHLB borrowings200,000 4.27 3.7150,000 4.66 3.7
BTFP, net— — — (500,000)4.70 — 
Ending balance $2,164,488 3.37 1.6 $2,375,410 3.13 2.0 

50
Maturities of Interest-Bearing Liabilities. The following table presents the maturity and weighted average repricing rate, which is also the weighted average effective rate, of certificates of deposit, split between retail/commercial and public unit amounts, and non-amortizing FHLB advances for the next four quarters as of December 31, 2024.
March 31,June 30,September 30,December 31,
2025202520252025Total
(Dollars in thousands)
Retail/Commercial Certificates:
Amount$631,527 $675,472 $373,511 $447,877 $2,128,387 
Repricing Rate4.54 %4.60 %4.27 %3.95 %4.39 %
Public Unit Certificates:
Amount$17,856 $8,341 $9,961 $9,735 $45,893 
Repricing Rate4.90 %4.51 %4.46 %3.92 %4.53 %
Term Borrowings:
Amount$150,000 $200,000 $100,000 $200,000 $650,000 
Repricing Rate1.93 %3.27 %2.97 %2.89 %2.80 %
Total
Amount$799,383 $883,813 $483,472 $657,612 $2,824,280 
Repricing Rate4.06 %4.30 %4.01 %3.63 %4.03 %


The following table sets forth the WAM information for our certificates of deposit, in years, as of December 31, 2024.
Retail certificates of deposit0.8 
Commercial certificates of deposit0.6 
Public unit certificates of deposit0.6 
Total certificates of deposit0.8 

51
Stockholders' Equity. Stockholders' equity totaled $1.03 billion at December 31, 2024 a decrease of $5.3 million from September 30, 2024 due primarily to a decrease in AOCI, net of tax, partially offset by a decrease in accumulated deficit. The decrease in AOCI, net of tax, was due to a decrease in unrealized gains on AFS securities as a result of an increase in market interest rates during the current quarter.

Consistent with our goal to operate a sound and profitable financial organization, we actively seek to maintain a well-capitalized status for the Bank in accordance with regulatory standards. As of December 31, 2024, the Bank's capital ratios exceeded the well-capitalized requirements and the Bank exceeded internal policy thresholds for sensitivity to changes in interest rates. See "Liquidity and Capital Resources" below for additional information regarding the Bank's regulatory capital requirements. As of December 31, 2024, the Bank's CBLR was 9.4%.
The Company currently has $75.0 million authorized for repurchase under an existing stock repurchase plan. The FRB's current approval for the Company to repurchase shares up to the $75.0 million authorization expires in February 2025. The Company has notified the FRB of its intent to extend the stock repurchase plan another year, through February 2026. Shares may be repurchased from time to time based upon market conditions, available liquidity and other factors. There were no share repurchases during the current quarter.
During the quarter ended December 31, 2024, the Company paid regular quarterly cash dividends totaling $11.1 million, or $0.085 per share. On January 28, 2025 the Company announced a regular quarterly cash dividend of $0.085 per share, or approximately $11.1 million, payable on February 21, 2025 to stockholders of record as of the close of business on February 7, 2025.
At December 31, 2024, Capitol Federal Financial, Inc., at the holding company level, had $39.1 million in cash on deposit at the Bank. Given the amount of cash at the holding company level, and in an effort to limit the tax associated with the pre-1988 bad debt recapture, it is currently the intention of management and the Board of Directors to not distribute earnings from the Bank to the Company during fiscal year 2025. See additional information regarding the pre-1988 bad debt recapture in "Comparison of Operating Results for the Three Months Ended December 31, 2024 and September 30, 2024 - Income Tax Expense" below. It is currently anticipated that the Bank will have sufficient taxable income during fiscal year 2025 to replenish tax accumulated earnings and profits to a positive level, allowing the Bank to make earnings distributions to the Company during fiscal year 2026 and not be taxed on those distributions.
For fiscal year 2025, it is the intention of the Company's Board of Directors to pay out the regular quarterly cash dividend of $0.085 per share, totaling $0.34 per share for the year. To the extent that earnings in fiscal year 2025 exceed $0.34 per share, the Board of Directors may consider the payment of additional dividends. Dividend payments depend upon a number of factors, including the Company's financial condition and results of operations, regulatory capital requirements, regulatory limitations on the Bank's ability to make capital distributions to the Company, the Bank's taxable current earnings and accumulated earnings and profits, and the amount of cash at the holding company level.

The following table presents regular quarterly cash dividends and special cash dividends paid in calendar years 2025, 2024, and 2023. The amounts represent cash dividends paid during each period. For the quarter ended March 31, 2025, the amount presented represents the dividend payable on February 21, 2025 to stockholders of record as of the close of business on February 7, 2025.
Calendar Year
202520242023
AmountPer ShareAmountPer ShareAmountPer Share
(Dollars in thousands, except per share amounts)
Regular quarterly dividends paid
Quarter ended March 31$11,062 $0.085 $11,127 $0.085 $11,319 $0.085 
Quarter ended June 30— — 11,044 0.085 11,321 0.085 
Quarter ended September 30— — 11,043 0.085 11,323 0.085 
Quarter ended December 31— — 11,061 0.085 11,308 0.085 
Calendar year-to-date dividends paid$11,062 $0.085 $44,275 $0.340 $45,271 $0.340 
52
Operating Results
The following table presents selected income statement and other information for the quarters indicated.
For the Three Months Ended
December 31, September 30, June 30, March 31, December 31,
20242024202420242023
(Dollars in thousands, except per share data)
Interest and dividend income:
Loans receivable$81,394 $79,841 $76,803 $76,122 $75,941 
MBS11,024 10,412 9,585 7,794 5,859 
FHLB stock2,352 2,418 2,477 2,528 2,586 
Cash and cash equivalents1,871 2,562 3,875 4,513 4,778 
Investment securities981 1,634 2,255 2,332 2,528 
Total interest and dividend income97,622 96,867 94,995 93,289 91,692 
Interest expense:
Borrowings18,047 18,585 18,438 18,554 19,656 
Deposits37,345 37,458 36,233 33,415 32,443 
Total interest expense55,392 56,043 54,671 51,969 52,099 
Net interest income42,230 40,824 40,324 41,320 39,593 
Provision for credit losses677 (637)1,472 301 123 
Net interest income
(after provision for credit losses)41,553 41,461 38,852 41,019 39,470 
Non-interest income4,693 4,786 4,709 4,643 (8,894)
Non-interest expense27,148 27,040 27,950 28,445 28,508 
Income tax (benefit) expense 3,667 7,150 5,963 3,455 (475)
Net income $15,431 $12,057 $9,648 $13,762 $2,543 
Efficiency ratio57.86 %59.29 %62.07 %61.89 %92.86 %
Operating expense ratio (annualized)1.14 %1.13 %1.17 %1.19 %1.18 %
Basic EPS$0.12 $0.09 $0.07 $0.11 $0.02 
Diluted EPS0.12 0.09 0.07 0.11 0.02 

Average Balance Sheets
The following table presents the average balances of our assets, liabilities, and stockholders' equity, and the related annualized weighted average yields and rates on our interest-earning assets and interest-bearing liabilities for the periods indicated, as well as selected performance ratios and other information for the periods shown. Weighted average yields are derived by dividing annualized income by the average balance of the related assets, and weighted average rates are derived by dividing annualized expense by the average balance of the related liabilities, for the periods shown. Average outstanding balances are derived from average daily balances. The weighted average yields and rates include amortization of fees, costs, premiums and discounts, which are considered adjustments to yields/rates. Weighted average yields on tax-exempt securities are not calculated on a fully taxable equivalent basis.
53
For the Three Months Ended
December 31, 2024September 30, 2024December 31, 2023
AverageInterest AverageInterest AverageInterest
OutstandingEarned/Yield/OutstandingEarned/Yield/OutstandingEarned/Yield/
AmountPaidRateAmountPaidRateAmountPaidRate
Assets:(Dollars in thousands)
Interest-earning assets:
One- to four-family loans:
Originated$3,925,427 $36,375 3.71 %$3,956,014 $36,188 3.66 %$4,025,539 $35,060 3.48 %
Correspondent purchased2,212,300 18,089 3.27 2,262,838 18,705 3.31 2,413,900 19,660 3.26 
Bulk purchased126,095 895 2.84 128,520 839 2.61 136,609 694 2.03 
Total one- to four-family loans6,263,822 55,359 3.54 6,347,372 55,732 3.51 6,576,048 55,414 3.37 
Commercial loans1,606,748 23,756 5.79 1,483,197 21,756 5.74 1,306,917 18,267 5.47 
Consumer loans110,661 2,279 8.19 109,404 2,353 8.56 105,958 2,260 8.46 
Total loans receivable(1)
7,981,231 81,394 4.05 7,939,973 79,841 4.00 7,988,923 75,941 3.78 
MBS(2)781,252 11,024 5.64 736,695 10,412 5.65 526,733 5,859 4.45 
Investment securities(2)(3)
72,561 981 5.41 115,856 1,634 5.64 266,873 2,528 3.79 
FHLB stock99,151 2,352 9.41 101,942 2,418 9.44 108,648 2,586 9.44 
Cash and cash equivalents154,752 1,871 4.73 187,484 2,562 5.35 346,220 4,778 5.40 
Total interest-earning assets9,088,947 97,622 4.27 9,081,950 96,867 4.24 9,237,397 91,692 3.95 
Other non-interest-earning assets463,322 458,253 466,084 
Total assets$9,552,269 $9,540,203 $9,703,481 
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Checking $865,738 531 0.24 $853,921 590 0.27 $886,530 445 0.20 
Savings567,533 1,422 0.99 531,579 972 0.73 472,819 138 0.12 
Money market 1,245,714 4,212 1.34 1,243,150 4,630 1.48 1,364,565 6,737 1.96 
Retail certificates2,812,034 29,755 4.20 2,789,666 29,601 4.22 2,555,375 23,199 3.60 
Commercial certificates57,859 636 4.36 59,020 651 4.39 49,558 463 3.70 
Wholesale certificates69,487 789 4.50 87,259 1,014 4.62 130,857 1,461 4.43 
Total deposits5,618,365 37,345 2.64 5,564,595 37,458 2.68 5,459,704 32,443 2.36 
Borrowings2,171,476 18,047 3.30 2,227,278 18,585 3.31 2,467,410 19,656 3.15 
Total interest-bearing liabilities7,789,841 55,392 2.82 7,791,873 56,043 2.86 7,927,114 52,099 2.61 
Non-interest-bearing deposits544,548 534,912 537,144 
Other non-interest-bearing liabilities186,227 184,320 202,743 
Stockholders' equity1,031,653 1,029,098 1,036,480 
Total liabilities and stockholders' equity$9,552,269 $9,540,203 $9,703,481 
Net interest income(4)
$42,230 $40,824 $39,593 
Net interest-earning assets$1,299,106 $1,290,077 $1,310,283 
Net interest margin(5)
1.86 1.80 1.71 
Ratio of interest-earning assets to interest-bearing liabilities1.17x1.17x1.17x
Selected performance ratios:
Return on average assets (annualized)(6)(10)
0.65 %0.51 %0.10 %
Return on average equity (annualized)(7)(10)
5.98 4.69 0.98 
Average equity to average assets10.80 10.79 10.68 
Operating expense ratio(8)
1.14 1.13 1.18 
Efficiency ratio(9)(10)
57.86 59.29 92.86 
54
(1)Balances are adjusted for unearned loan fees and deferred costs.  Loans that are 90 or more days delinquent are included in the loans receivable average balance with a yield of zero percent.
(2)AFS securities are adjusted for unamortized purchase premiums or discounts.
(3)There were no nontaxable securities in the average balance securities for the quarters ended December 31, 2024 or September 30, 2024. The average balance of investment securities includes an average balance of nontaxable securities of $201 thousand for the quarter ended December 31, 2023.
(4)Net interest income represents the difference between interest income earned on interest-earning assets and interest paid on interest-bearing liabilities. Net interest income depends on the average balance of interest-earning assets and interest-bearing liabilities, and the interest rates earned or paid on them.
(5)Net interest margin represents annualized net interest income as a percentage of average interest-earning assets. Management believes the net interest margin is important to investors as it is a profitability measure for financial institutions.
(6)Return on average assets represents annualized net income as a percentage of total average assets. Management believes that the return on average assets is important to investors as it shows the Company's profitability in relation to the Company's average assets.
(7)Return on average equity represents annualized net income as a percentage of total average equity. Management believes that the return on average equity is important to investors as it shows the Company's profitability in relation to the Company's average equity.
(8)The operating expense ratio represents annualized non-interest expense as a percentage of average assets. Management believes the operating expense ratio is important to investors as it provides insight into how efficiently the Company is managing its expenses in relation to its assets. It is a financial measurement ratio that does not take into consideration changes in interest rates.
(9)The efficiency ratio represents non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. Management believes the efficiency ratio is important to investors as it is a measure of a financial institution's total non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. A higher value generally indicates that it is costing the financial institution more money to generate revenue, related to its net interest margin and non-interest income.
(10)The table below provides a reconciliation between performance measures presented in accordance with GAAP and the same performance measures absent the impact of the net loss on the securities transactions associated with the securities strategy, which are not presented in accordance with GAAP. The securities strategy was non-recurring in nature; therefore, management believes it is meaningful to investors to present certain financial measures without the securities strategy to better evaluate the Company's core operations. See information regarding the securities strategy in the "Executive Summary" discussion above.
For the Three Months Ended
December 31, 2023
Without
Securities
ActualSecuritiesStrategy
(GAAP)Strategy(Non-GAAP)
Return on average assets0.10 %(0.42 %)0.52 %
Return on average equity0.98 (3.89)4.87 
Efficiency Ratio92.86 28.13 64.73 
EPS(11)
$0.02 $(0.08)$0.10 
(11)EPS is calculated as net income divided by average shares outstanding. Management believes EPS is an important measure to investors as it shows the Company's earnings in relation to the Company's outstanding shares.

55
Rate/Volume Analysis
The table below presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities, comparing the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (1) changes in volume, which are changes in the average balance multiplied by the previous period's average rate, and (2) changes in rate, which are changes in the average rate multiplied by the average balance from the previous period. The net changes attributable to the combined impact of both rate and volume have been allocated proportionately to the changes due to volume and the changes due to rate.
For the Three Months Ended
December 31, 2024 vs. September 30, 2024December 31, 2024 vs. December 31, 2023
Increase (Decrease) Due toIncrease (Decrease) Due to
VolumeRateTotalVolumeRateTotal
(Dollars in thousands)
Interest-earning assets:
Loans receivable$1,112 $441 $1,553 $1,693 $3,760 $5,453 
MBS629 (17)612 3,320 1,845 5,165 
Investment securities(588)(65)(653)(2,337)790 (1,547)
FHLB stock(66)— (66)(225)(9)(234)
Cash and cash equivalents (416)(275)(691)(2,375)(532)(2,907)
Total interest-earning assets671 84 755 76 5,854 5,930 
Interest-bearing liabilities:
Checking 69 381 450 (11)97 86 
Savings8 (67)(59)33 1,251 1,284 
Money market10 (428)(418)(547)(1,978)(2,525)
Certificates of deposit37 (123)(86)1,964 4,093 6,057 
Borrowings(456)(82)(538)(2,768)1,159 (1,609)
Total interest-bearing liabilities(332)(319)(651)(1,329)4,622 3,293 
Net change in net interest income$1,003 $403 $1,406 $1,405 $1,232 $2,637 


56
Comparison of Operating Results for the Three Months Ended December 31, 2024 and September 30, 2024

For the quarter ended December 31, 2024, the Company recognized net income of $15.4 million, or $0.12 per share, compared to net income of $12.1 million, or $0.09 per share, for the quarter ended September 30, 2024. The higher net income in the current quarter was due primarily to lower income tax expense compared to the prior quarter due mainly to income tax expense associated with the pre-1988 bad debt recapture during the prior quarter. There was no similar tax expense in the current quarter. See additional discussion regarding the pre-1988 bad debt recapture in the "Income Tax Expense" section below. The net interest margin increased six basis points, from 1.80% for the prior quarter to 1.86% for the current quarter due mainly to growth in the higher yielding commercial loan portfolio.

Interest and Dividend Income
The following table presents the components of interest and dividend income for the time periods presented, along with the change measured in dollars and percent.
For the Three Months Ended
December 31, September 30, Change Expressed in:
20242024DollarsPercent
(Dollars in thousands)
INTEREST AND DIVIDEND INCOME:
Loans receivable$81,394 $79,841 $1,553 1.9 %
MBS11,024 10,412 612 5.9 
FHLB stock2,352 2,418 (66)(2.7)
Cash and cash equivalents1,871 2,562 (691)(27.0)
Investment securities981 1,634 (653)(40.0)
Total interest and dividend income$97,622 $96,867 $755 0.8 

The increase in interest income on loans receivable was due mainly to an increase in the average balance of the commercial loan portfolio, along with an increase in the weighted average yield on the overall loan portfolio. See additional discussion regarding the composition of the loan portfolio in the "Executive Summary" section above. The increase in interest income on MBS was due to an increase in average balance primarily as a result of purchases made early in the current quarter using excess cash. The decrease in interest income on cash and cash equivalents was due mainly to a decrease in the average balance as excess operating cash was used to fund MBS purchases and commercial loan activities and to pay semi-annual escrow payments for customers during the current quarter. The decrease in interest income on investment securities was due primarily to a decrease in the average balance as a result of certain called securities not being replaced in their entirety.

Interest Expense
The following table presents the components of interest expense for the time periods presented, along with the change measured in dollars and percent.
For the Three Months Ended
December 31, September 30, Change Expressed in:
20242024DollarsPercent
(Dollars in thousands)
INTEREST EXPENSE:
Deposits$37,345 $37,458 $(113)(0.3)%
Borrowings18,047 18,585 (538)(2.9)
Total interest expense$55,392 $56,043 $(651)(1.2)

The decrease in interest expense on deposits was due to a decrease in the weighted average rate on money market accounts, retail certificates of deposit and checking accounts, which was almost entirely offset by an increase in the weighted average rate on savings accounts due to growth in the Bank's high-yield savings account. The decrease in borrowings expense was due primarily to the maturity of a $50.0 million advance late in the prior quarter that was not renewed, as well as to a reduction in borrowings outstanding during the current quarter as a result of principal payments made on the Bank's amortizing advances.

57
Provision for Credit Losses
For the quarter ended December 31, 2024, the Bank recorded a provision for credit losses of $677 thousand, compared to a provision release of $637 thousand for the prior quarter. The provision in the current quarter was comprised of a $2.0 million increase in the ACL for loans, partially offset by a $1.3 million decrease in the reserve for off-balance sheet credit exposures. The increase in ACL was due mainly to commercial loan growth during the current quarter. The decrease in the reserve for off-balance sheet credit exposures was due primarily to a decrease in the balance of commercial off-balance sheet credit exposures between quarters due mainly to the funding of commercial commitments during the current quarter.

Non-Interest Income
The following table presents the components of non-interest income for the time periods presented, along with the change measured in dollars and percent.
For the Three Months Ended
December 31, September 30, Change Expressed in:
20242024DollarsPercent
(Dollars in thousands)
NON-INTEREST INCOME:
Deposit service fees$2,707 $2,830 $(123)(4.3)%
Insurance commissions776 754 22 2.9 
Other non-interest income1,210 1,202 8 0.7 
Total non-interest income$4,693 $4,786 $(93)(1.9)

Non-Interest Expense
The following table presents the components of non-interest expense for the time periods presented, along with the change measured in dollars and percent.
For the Three Months Ended
December 31, September 30, Change Expressed in:
20242024DollarsPercent
(Dollars in thousands)
NON-INTEREST EXPENSE:
Salaries and employee benefits$14,232 $13,086 $1,146 8.8 %
Information technology and related expense4,550 4,637 (87)(1.9)
Occupancy, net3,333 3,442 (109)(3.2)
Regulatory and outside services1,113 1,398 (285)(20.4)
Federal insurance premium1,038 1,113 (75)(6.7)
Advertising and promotional822 1,054 (232)(22.0)
Deposit and loan transaction costs591 584 7 1.2 
Office supplies and related expense399 506 (107)(21.1)
Other non-interest expense1,070 1,220 (150)(12.3)
Total non-interest expense$27,148 $27,040 $108 0.4 

The increase in salaries and employee benefits was due primarily to the accrual of incentive compensation during the current quarter related to the Bank's short-term performance plan. The prior quarter included a reduction in incentive compensation due to the Company's financial results for fiscal year 2024 being lower than projected. The decrease in regulatory and outside services was due primarily to the timing of audit and other outside services. More services were provided during the prior quarter compared to the current quarter. The decrease in advertising and promotional expense was due mainly to the timing of campaigns and sponsorships compared to the prior quarter. Overall, management is expecting a 4.0% increase in non-interest expenses for fiscal year 2025 compared to fiscal year 2024.

The Company's efficiency ratio was 57.86% for the current quarter compared to 59.29% for the prior quarter. The improvement in the efficiency ratio was due to higher net interest income during the current quarter. The efficiency ratio is a measure of a financial institution's total non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. A lower value generally indicates that it is costing the financial institution less money to generate revenue.
58
Income Tax Expense
The following table presents pretax income, income tax expense, and net income for the time periods presented, along with the change measured in dollars and percent and the effective tax rate.
For the Three Months Ended
December 31, September 30, Change Expressed in:
20242024DollarsPercent
(Dollars in thousands)
Income before income tax expense$19,098 $19,207 $(109)(0.6)%
Income tax expense3,667 7,150 (3,483)(48.7)
Net income$15,431 $12,057 $3,374 28.0 
Effective Tax Rate19.2 %37.2 %

Income tax expense was higher in the prior quarter due primarily to recording $2.0 million of federal income tax expense associated with the Bank's pre-1988 bad debt recapture during the quarter, along with higher state income tax expense mainly related to the tax treatment of the bad debt recapture. The income tax expense associated with the pre-1988 bad debt recapture negatively impacted earnings by $0.02 per share in the prior quarter.

The income tax on the earnings distribution from the Bank to the Company during the prior quarter was due to the recapture of a portion of the Bank's bad debt reserves which were established prior to September 30, 1988, and are included in the Bank's retained earnings ("pre-1988 bad debt reserves"). A taxable net loss was reported on the Company's September 30, 2024 federal tax return due to net losses associated with the securities strategy (defined in the "Executive Summary - Securities Strategy to Improve Earnings" section above), which resulted in the Bank and Company having a negative current and accumulated earnings and profit tax position. This required the Bank to draw upon the pre-1988 bad debt reserves for distributions from the Bank to the Company and to pay taxes on the reduction to the pre-1988 bad debt reserves at the current corporate tax rate as of time of such distribution ("pre-1988 bad debt recapture"). It is the intention of management and the Board of Directors to not make distributions from the Bank to the Company during fiscal year 2025 to limit the tax associated with the pre-1988 bad debt recapture. It is currently anticipated that the Bank will have sufficient taxable income during fiscal year 2025 to replenish the Bank's tax accumulated earnings and profits to a positive level allowing the Bank to make earnings distributions to the Company beginning in fiscal year 2026 and not have those distributions subject to the pre-1988 bad debt recapture tax.

Comparison of Operating Results for the Three Months Ended December 31, 2024 and 2023

The Company recognized net income of $15.4 million, or $0.12 per share, for the current quarter, compared to net income of $2.5 million, or $0.02 per share, for the prior year quarter. The lower net income in the prior year quarter was primarily a result of the impairment loss on the securities associated with the securities strategy. See additional discussion regarding the securities strategy in the "Executive Summary - Securities Strategy to Improve Earnings" section above. The securities associated with the securities strategy were sold in the prior year quarter, and in that quarter the Company incurred $13.3 million ($10.0 million net of tax) of net losses related to the sale of those securities. Excluding the effects of the net loss associated with the securities strategy, EPS would have been $0.10 for the prior year quarter. The increase in EPS excluding the effects of the net loss associated with the securities strategy was due primarily to higher net interest income in the current quarter.

The net interest margin increased 15 basis points, from 1.71% for the prior year quarter to 1.86% for the current quarter. The increase was due mainly to higher yields on loans and securities, which outpaced the increase in the cost of deposits, largely in retail certificates of deposit, along with the continued shift of loan balances from the one- to four-family loan portfolio to the higher yielding commercial loan portfolio.



59
Interest and Dividend Income
The following table presents the components of interest and dividend income for the time periods presented, along with the change measured in dollars and percent.
For the Three Months Ended
December 31, Change Expressed in:
20242023DollarsPercent
(Dollars in thousands)
INTEREST AND DIVIDEND INCOME:
Loans receivable$81,394 $75,941 $5,453 7.2 %
MBS11,024 5,859 5,165 88.2
FHLB stock2,352 2,586 (234)(9.0)
Cash and cash equivalents1,871 4,778 (2,907)(60.8)
Investment securities981 2,528 (1,547)(61.2)
Total interest and dividend income$97,622 $91,692 $5,930 6.5 

The increase in interest income on loans receivable was due largely to an increase in the weighted average yield, along with an increase in the average balance of the portfolio primarily as a result of growth in the commercial loan portfolio as the loan portfolio mix continued to shift from one- to four-family loans to commercial loans. The increase in the weighted average yield was due primarily to originations at higher market rates between periods, as well as disbursements on commercial real estate and commercial construction loans at rates higher than the overall portfolio rate. The increase in interest income on MBS securities was due mainly to an increase in the average balance of the portfolio, along with an increase in the weighted average yield compared to the prior year quarter. The increase in the average balance was due mainly to securities purchases between periods. The higher weighted average yield was due mainly to the securities strategy, as the proceeds from the sale of securities during the prior year quarter were reinvested into higher yielding securities, and due to additional securities purchases between periods at higher yields than the prior year quarter. Interest income on cash and cash equivalents decreased due largely to a decrease in the average balance of cash and cash equivalents, as a result of cash balances being drawn down during the prior fiscal year to fund loans and other operational needs. The decrease in interest income on investment securities was due primarily to a decrease in average balance, partially offset by an increase in the weighted average yield, both due to the securities strategy. Additionally, the investment securities purchased with the proceeds from the securities strategy were invested into shorter term securities which were largely called or matured during fiscal year 2024.

Interest Expense
The following table presents the components of interest expense for the time periods presented, along with the change measured in dollars and percent.
For the Three Months Ended
December 31, Change Expressed in:
20242023DollarsPercent
(Dollars in thousands)
INTEREST EXPENSE:
Deposits$37,345 $32,443 $4,902 15.1 %
Borrowings18,047 19,656 (1,609)(8.2)
Total interest expense$55,392 $52,099 $3,293 6.3 

The increase in interest expense on deposits was due primarily to an increase in the weighted average rate paid on deposits, specifically retail certificates of deposit and savings accounts, partially offset by a decrease in the weighted average rate paid on money market accounts. To a lesser extent, an increase in the average balance of retail certificates of deposit also increased interest expense on deposits.

The decrease in interest expense on borrowings was due to a decrease in the average balance, which was partially offset by higher interest rates on the borrowings that were replaced during fiscal year 2024. The decrease in the average balance of borrowings was due to a decrease in borrowings under the BTFP, which were repaid during the prior year quarter using some of the proceeds resulting from the securities strategy, along with some FHLB borrowings that matured between periods and were not replaced.

60
Provision for Credit Losses
The Company recorded a provision for credit losses of $677 thousand during the current quarter, compared to a provision for credit losses of $123 thousand for the prior year quarter. See "Comparison of Operating Results for the Three Months Ended December 31, 2024 and September 30, 2024" above for additional information regarding the provision for credit losses during the current quarter.

Non-Interest Income
The following table presents the components of non-interest income for the time periods presented, along with the change measured in dollars and percent.
For the Three Months Ended
December 31, Change Expressed in:
20242023DollarsPercent
(Dollars in thousands)
NON-INTEREST INCOME:
Deposit service fees$2,707 $2,575 $132 5.1 %
Insurance commissions776 863 (87)(10.1)
Net loss from securities transactions— (13,345)13,345 100.0
Other non-interest income1,210 1,013 197 19.4 
Total non-interest income$4,693 $(8,894)$13,587 152.8 

The net loss from securities transactions in the prior year quarter related to the securities strategy. The increase in other non-interest income was due mainly to a net loss on financial derivatives related to a lending relationship in the prior year quarter, largely driven by changes in market interest rates. The financial derivatives related to the lending relationship matured during the fourth quarter of fiscal year 2024 so there was no such activity in the current quarter.
Non-Interest Expense
The following table presents the components of non-interest expense for the time periods presented, along with the change measured in dollars and percent.
For the Three Months Ended
December 31, Change Expressed in:
 20242023DollarsPercent
(Dollars in thousands)
NON-INTEREST EXPENSE:
Salaries and employee benefits$14,232 $12,992 $1,240 9.5 %
Information technology and related expense4,550 5,369 (819)(15.3)
Occupancy, net3,333 3,372 (39)(1.2)
Regulatory and outside services1,113 1,643 (530)(32.3)
Federal insurance premium1,038 1,860 (822)(44.2)
Advertising and promotional822 988 (166)(16.8)
Deposit and loan transaction costs591 542 49 9.0 
Office supplies and related expense399 361 38 10.5 
Other non-interest expense1,070 1,381 (311)(22.5)
Total non-interest expense$27,148 $28,508 $(1,360)(4.8)

The increase in salaries and employee benefits was mainly attributable to salary adjustments between periods to remain market competitive. The decrease in information technology and related expense was due mainly to lower third-party project management expenses due to the Bank's new core system and ancillary systems ("digital transformation") project during the prior year quarter, along with lower software licensing expenses. The decrease in regulatory and outside services was due to the prior year quarter including expenses related to the digital transformation project, along with a reduction in rates and usage related to certain outside services during the current year quarter. The decrease in the federal insurance premium was due primarily to a decrease in the Federal Deposit Insurance Corporation ("FDIC") assessment rate as a result of the way the assessment rate was adjusted in fiscal year 2024 for the occurrence of the Bank's net loss during the quarter ended September 30, 2023. The decrease in advertising and promotional expense was due mainly to the timing of campaigns and sponsorships compared to the prior year quarter. The decrease in other non-
61
interest expense was due mainly to the maturity of an interest rate swap agreement during the current quarter which reduced the expense associated with the collateral held in relation to the interest rate swap and due to decreases in other miscellaneous expenses.

The Company's efficiency ratio was 57.86% for the current quarter compared to 92.86% for the prior year quarter. Excluding the net losses from the securities strategy, the efficiency ratio would have been 64.73% for the prior year quarter. The improvement in the efficiency ratio, excluding the net losses from the securities strategy, was due primarily to higher net interest income and lower non-interest expense in the current quarter compared to the prior year quarter.

Income Tax Expense
The following table presents pretax income, income tax expense, and net income for the time periods presented, along with the change measured in dollars and percent and effective tax rate.
For the Three Months Ended
December 31, Change Expressed in:
20242023DollarsPercent
(Dollars in thousands)
Income before income tax expense (benefit)$19,098 $2,068 $17,030 823.5 %
Income tax expense (benefit)3,667 (475)4,142 872.0 
Net income$15,431 $2,543 $12,888 506.8 
Effective Tax Rate19.2 %(23.0 %)

In the prior year quarter, absent the income tax benefit associated with the net loss on the securities strategy, the effective tax rate would have been 18.0% and income tax expense would have been $2.8 million. Income tax expense was higher in the current quarter compared to the prior year quarter, excluding the income tax benefit associated with the net losses on the securities strategy, due to higher pretax income in the current quarter, along with a slightly higher effective tax rate in the current quarter.

62
Liquidity and Capital Resources

Liquidity refers to our ability to generate sufficient cash to fund ongoing operations, to repay maturing certificates of deposit and other deposit withdrawals, to repay maturing borrowings, and to fund loan commitments. Liquidity management is both a daily and long-term function of our business management. The Company's most available liquid assets are represented by cash and cash equivalents and AFS securities. The Bank's primary sources of funds are deposits, FHLB borrowings, repayments and maturities of outstanding loans and MBS and other short-term investments, and funds provided by operations. The Bank's long-term borrowings primarily have been used to manage long-term liquidity needs and the Bank's interest rate risk with the intention to improve the earnings of the Bank while maintaining capital ratios that meet or exceed the regulatory standards for well-capitalized financial institutions. In addition, the Bank's focus on managing risk has provided additional liquidity capacity by maintaining a balance of MBS and investment securities available as collateral for borrowings.

We generally intend to manage cash reserves sufficient to meet short-term liquidity needs, which are routinely forecasted for 10, 30, and 365 days. Additionally, on a monthly basis, we perform a liquidity stress test in accordance with the Interagency Policy Statement on Funding and Liquidity Risk Management. The liquidity stress test incorporates both short-term and long-term liquidity scenarios in order to identify and to quantify liquidity risk. Management also monitors key liquidity statistics related to items such as wholesale funding gaps, borrowings capacity, and available unpledged collateral, as well as various liquidity ratios.

In the event short-term liquidity needs exceed available cash, the Bank has access to a line of credit at the FHLB, in addition to the FRB of Kansas City's discount window. Per FHLB's lending guidelines, total FHLB borrowings cannot exceed 40% of Bank Call Report total assets without the pre-approval of FHLB senior management. The Bank's FHLB borrowing limit was 45% of Bank Call Report total assets as of December 31, 2024, as approved by FHLB senior management. FHLB borrowings are secured by certain qualifying loans pursuant to a blanket collateral agreement with FHLB. The amount that can be borrowed from the FRB of Kansas City's discount window is based upon the fair value of securities pledged as collateral. At December 31, 2024, the amount of securities pledged for the discount window was $102.6 million. At December 31, 2024, there were no borrowings from the FRB of Kansas City's discount window. Management tests the Bank's access to the FRB of Kansas City's discount window annually with a nominal overnight borrowing.

If management observes unusual trends in the amount and frequency of line of credit utilization and/or short-term borrowings that is not in conjunction with a planned strategy the Bank will likely utilize long-term wholesale borrowing sources such as FHLB advances and/or repurchase agreements to provide long-term, fixed-rate funding. The maturities of these long-term borrowings are generally staggered in order to mitigate the risk of a highly negative cash flow position at maturity. Recently, the Bank started entering into fully-amortizing FHLB advances that require periodic payments of principal over the term of the advance. This type of advance allows the Bank the opportunity to start repricing its liability cash flows sooner in a down-rate environment and generally provides for favorable pricing when compared to similar long-term bullet advances with comparable average lives as a result of the current term structure of interest rates. The Bank's internal policy limits total borrowings to 55% of total assets. At December 31, 2024, the Bank had total borrowings, at par, of $2.16 billion, or approximately 23% of total assets. The borrowings balance was composed primarily of FHLB advances, of which, $734.7 million is scheduled to be repaid (amortizing advances) or mature in the next 12 months. Management estimated that the Bank had $2.91 billion in additional liquidity available at December 31, 2024 based on the Bank's blanket collateral agreement with FHLB and unencumbered securities.

At December 31, 2024, the Bank had no repurchase agreements. The Bank may enter into repurchase agreements as management deems appropriate, not to exceed 15% of total assets, and subject to the total borrowings internal policy limit of 55% as discussed above.

The Bank has the ability to utilize the repayment and maturity of outstanding loans, MBS, and other investments for liquidity needs rather than reinvesting such funds into the related portfolios. At December 31, 2024, the Bank had $777.6 million of securities that were eligible but unused as collateral for borrowing or other liquidity needs. The Bank also has access to other sources of funds for liquidity purposes, such as brokered and public unit certificates of deposit. As of December 31, 2024, the Bank's policy allowed for combined brokered and public unit certificates of deposit up to 15% of total deposits. At December 31, 2024, the Bank did not have any brokered certificates of deposit, and public unit certificates of deposit were approximately 1% of total deposits. The Bank had pledged securities with an estimated fair value of $80.9 million as collateral for public unit certificates of deposit at December 31, 2024. The securities pledged as collateral for public unit certificates of deposit are held under joint custody with FHLB and generally will be released upon deposit maturity.

At December 31, 2024, $2.17 billion of the Bank's certificate of deposit portfolio was scheduled to mature within the next 12 months, including $45.9 million of public unit certificates of deposit and $47.6 million of commercial certificates of deposit. Based on our deposit retention experience and our current pricing strategy, we anticipate the majority of the maturing retail certificates of deposit will renew or transfer to other deposit products of the Bank at prevailing rates, although no assurance can be given in this regard.  Due
63
to the nature of public unit certificates of deposit and commercial certificates of deposit, retention rates are not as predictable as for retail certificates of deposit.

While scheduled payments from the amortization of loans and MBS and payments on short-term investments are relatively predictable sources of funds, deposit flows, prepayments on loans and MBS, and calls of investment securities are greatly influenced by general interest rates, economic conditions, and competition, and are less predictable sources of funds. To the extent possible, the Bank manages the cash flows of its loan and deposit portfolios by the rates it offers customers. We anticipate we will continue to have sufficient funds, through the repayments and maturities of loans and securities, deposits and borrowings, to meet our current commitments.

Limitations on Dividends and Other Capital Distributions

OCC regulations impose restrictions on savings institutions with respect to their ability to make distributions of capital, which include dividends and other transactions charged to the capital account. Under FRB and OCC safe harbor regulations, savings institutions generally may make capital distributions during any calendar year equal to earnings of the previous two calendar years and current year-to-date earnings (to the extent not previously distributed). A savings institution that is a subsidiary of a savings and loan holding company, such as the Company, that proposes to make a capital distribution must submit written notice to the OCC and FRB 30 days prior to such distribution. The OCC and FRB may object to the distribution during that 30-day period based on safety and soundness or other concerns. Savings institutions that desire to make a larger capital distribution, are under special restrictions, or are not, or would not be, sufficiently capitalized following a proposed capital distribution must obtain regulatory non-objection prior to making such a distribution.

The long-term ability of the Company to pay dividends to its stockholders is based primarily upon the ability of the Bank to make capital distributions to the Company.  So long as the Bank remains well capitalized after each capital distribution (as evidenced by maintaining regulatory capital ratios greater than the required percentages) and operates in a safe and sound manner, it is management's belief that the OCC and FRB will continue to allow the Bank to distribute its earnings to the Company, although no assurance can be given in this regard. Management continues to evaluate the timing and amount of capital distributions to be made from the Bank to the holding company during the remainder of the current fiscal year and in future periods in connection with the tax issues associated with the Bank's pre-1988 bad debt recapture. See additional discussion regarding the Bank's pre-1988 bad debt recapture in "Comparison of Operating Results for the Three Months Ended December 31, 2024 and September 30, 2024".

Regulatory Capital

Consistent with our goal to operate a sound and profitable financial organization, we actively seek to maintain a well-capitalized status for the Bank per the regulatory framework for prompt corrective action ("PCA"). Qualifying institutions that elect to use the CBLR framework, such as the Bank and the Company, that maintain the required minimum leverage ratio of 9.0% will be considered to have satisfied the generally applicable risk-based and leverage capital requirements in the regulatory agencies' capital rules, and to have met the capital requirements for the well-capitalized category under the agencies' PCA framework. As of December 31, 2024, the Bank's CBLR was 9.4% and the Company's CBLR was 10.1%, which exceeded the minimum requirements. The Bank's risk-based tier 1 capital ratio at December 31, 2024 was 16.1%.

64
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Asset and Liability Management and Market Risk
For a complete discussion of the Bank's asset and liability management policies, as well as the potential impact of interest rate changes upon the market value of the Bank's portfolios, see "Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024. The analysis presented in the tables below reflects the level of market risk at the Bank, including the cash the holding company has on deposit at the Bank.

The rates of interest the Bank earns on its assets and pays on its liabilities are generally established contractually for a period of time. Fluctuations in interest rates have a significant impact not only upon our net income, but also upon the cash flows and market values of our assets and liabilities. Our results of operations, like those of other financial institutions, are impacted by changes in interest rates and the interest rate sensitivity of our interest-earning assets and interest-bearing liabilities. Risk associated with changes in interest rates on the earnings of the Bank and the market value of its financial assets and liabilities is known as interest rate risk. Interest rate risk is our most significant market risk, and our ability to adapt to changes in interest rates is known as interest rate risk management.

The general objective of our interest rate risk management program is to determine and manage an appropriate level of interest rate risk while maximizing net interest income in a manner consistent with our policy to manage, to the extent practicable, the exposure of net interest income to changes in market interest rates. The Board of Directors and Asset and Liability Management Committee ("ALCO") regularly review the Bank's interest rate risk exposure by forecasting the impact of hypothetical, alternative interest rate environments on net interest income and the market value of portfolio equity ("MVPE") at various dates. The MVPE is defined as the net of the present value of cash flows from existing assets, liabilities, and off-balance sheet instruments. The present values are determined based upon market conditions as of the date of the analysis, as well as in alternative interest rate environments providing potential changes in the MVPE under those alternative interest rate environments. Net interest income is projected in the same alternative interest rate environments with both a static balance sheet and one with management strategies considered. The MVPE and net interest income analyses are also conducted to estimate our sensitivity to rates for future time horizons based upon market conditions as of the date of the analysis. The MVPE ratio continues to be an important measurement for management as we consider the changes in market rates, liquidity needs, and portfolio balances. MVPE represents a long-term view of the interest sensitivity of the Bank's balance sheet while our net interest income projections inform management of the short-term impacts of pricing decisions. In addition to the interest rate environments presented below, management also reviews the impact of non-parallel rate shock scenarios on a quarterly basis. These scenarios consist of flattening and steepening the yield curve by changing short-term and long-term interest rates independent of each other, and simulating cash flows and determining valuations as a result of these hypothetical changes in interest rates to identify rate environments that pose the greatest risk to the Bank. This analysis helps management quantify the Bank's exposure to changes in the shape of the yield curve.


Qualitative Disclosure about Market Risk

Gap Table. The following gap table summarizes the anticipated maturities or repricing periods of the Bank's interest-earning assets and interest-bearing liabilities based on the information and assumptions set forth in the notes below. Cash flow projections for mortgage-related assets are calculated based in part on prepayment assumptions at current and projected interest rates. Prepayment projections are subjective in nature, involve uncertainties and assumptions and, therefore, cannot be determined with a high degree of accuracy. Although certain assets and liabilities may have similar maturities or periods to repricing, they may react differently to changes in market interest rates. Assumptions may not reflect how actual yields and costs respond to market interest rate changes. The interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types of assets and liabilities may lag behind changes in market interest rates. Certain assets, such as adjustable-rate loans, have features that restrict changes in interest rates on a short-term basis and over the life of the asset. In the event of a change in interest rates, prepayment rates would likely deviate significantly from those assumed in calculating the gap table below. A positive gap generally means more cash flows from assets are expected to reprice than cash flows from liabilities and suggests that in a rising rate environment earnings should increase. A negative gap generally means more cash flows from liabilities are expected to reprice than cash flows from assets and suggests, in a rising rate environment, that earnings should decrease. For additional information regarding the impact of changes in interest rates, see the following Change in Net Interest Income and Change in MVPE discussions and tables.
65
More ThanMore Than
WithinOne Year toThree YearsOver
One Year Three Years to Five Years Five Years Total
Interest-earning assets:(Dollars in thousands)
Loans receivable(1)
$1,790,078 $1,853,078 $1,349,762 $2,975,431 $7,968,349 
Securities(2)
220,491 181,092 219,228 229,759 850,570 
Other interest-earning assets140,131 — — — 140,131 
Total interest-earning assets2,150,700 2,034,170 1,568,990 3,205,190 8,959,050 
Interest-bearing liabilities:
Non-maturity deposits(3)
830,127 489,314 387,903 1,623,363 3,330,707 
Certificates of deposit2,174,280 666,857 73,128 199 2,914,464 
Borrowings(4)
731,264 1,213,157 228,685 25,186 2,198,292 
Total interest-bearing liabilities3,735,671 2,369,328 689,716 1,648,748 8,443,463 
Excess (deficiency) of interest-earning assets over
interest-bearing liabilities$(1,584,971)$(335,158)$879,274 $1,556,442 $515,587 
Cumulative excess (deficiency) of interest-earning assets over
interest-bearing liabilities$(1,584,971)$(1,920,129)$(1,040,855)$515,587 
Cumulative excess (deficiency) of interest-earning assets over interest-bearing
liabilities as a percent of total Bank assets at:
December 31, 2024(16.6)%(20.1)%(10.9)%5.4 %
September 30, 2024(15.9)
Cumulative one-year gap - interest rates +200 bps at:
December 31, 2024(18.4)
September 30, 2024(17.9)
Cumulative one-year gap - interest rates -200 bps at:
December 31, 2024(12.3)
September 30, 2024(12.5)

(1)Adjustable-rate loans are included in the period in which the rate is next scheduled to adjust or in the period in which repayments are expected to occur, or prepayments are expected to be received, prior to their next rate adjustment, rather than in the period in which the loans are due. Fixed-rate loans are included in the periods in which they are scheduled to be repaid, based on scheduled amortization and prepayment assumptions. Balances are net of undisbursed amounts and deferred fees and exclude loans 90 or more days delinquent or in foreclosure.
(2)MBS reflect projected prepayments at amortized cost. All other securities are presented based on contractual maturities, term to call dates or pre-refunding dates as of December 31, 2024, at amortized cost.
(3)Although the Bank's checking, savings, and money market accounts are subject to immediate withdrawal, management considers a substantial amount of these accounts to be core deposits having significantly longer effective maturities. The decay rates (the assumed rates at which the balances of existing accounts decline) used on these accounts are based on assumptions developed from our actual experiences with these accounts. If all of the Bank's checking, savings, and money market accounts had been assumed to be subject to repricing within one year, interest-bearing liabilities estimated to mature or reprice within one year would have exceeded interest-earning assets with comparable characteristics by $4.09 billion, for a cumulative one-year gap of (42.8)% of total assets.
(4)Borrowings exclude deferred prepayment penalty costs. Included in this line item are $200.0 million of FHLB adjustable-rate advances tied to interest rate swaps. The repricing of these liabilities is projected to occur at the maturity date of each interest rate swap.

At December 31, 2024, the Bank's gap between the amount of interest-earning assets and interest-bearing liabilities projected to reprice within one year was $(1.58) billion, or (16.6)% of total assets, compared to $(1.51) billion, or (15.8)% of total assets, at September 30, 2024. The change in the one-year gap amount was due to an increase in the amount of projected liability cash flows coming due in one year, as of December 31, 2024, partially offset by an increase in the amount of asset cash flows coming due during the same time period, as compared to September 30, 2024. The increase in liability cash flows was due primarily to a net increase in non-maturity deposits between periods. The increase in projected asset cash flows was due primarily to an increase in the balance of adjustable-rate loans, partially offset by a decrease in the balance of cash and a decrease in the projected amount of fixed-rate mortgage-related asset cash flows due to a decrease in projected prepayment speeds from September 30, 2024, as a result of an increase in intermediate and long-term interest and mortgage rates.

66
The amount of interest-bearing liabilities expected to reprice in a given period typically is not significantly impacted by changes in interest rates because the Bank's borrowings and certificate of deposit portfolios have contractual maturities and generally cannot be terminated early without a prepayment penalty. If interest rates were to increase 200 basis points, as of December 31, 2024, the Bank's one-year gap would have been projected to be $(1.75) billion, or (18.4)% of total assets. If interest rates were to decrease 200 basis points, as of December 31, 2024, the Bank's one-year gap would have been projected to be $(1.17) billion, or (12.3)% of total assets. The changes in the gap amounts compared to when there is no change in rates was due to changes in the anticipated net cash flows primarily as a result of projected prepayments on mortgage-related assets in each rate environment. In higher rate environments, prepayments on mortgage-related assets are projected to be lower and, in lower rate environments, prepayments are projected to be higher. This compares to a projected one-year gap of $(1.71) billion, or (17.9)% of total assets, if interest rates were to have increased 200 basis points as of September 30, 2024, and a projected one-year gap of $(1.19) billion, or (12.5)% of total assets, if interest rates were to have decreased 200 basis points as of the same date.

Change in Net Interest Income. For each date presented in the following table, the estimated change in the Bank's net interest income is based on the indicated instantaneous, parallel and permanent change in interest rates. The change in each interest rate environment represents the difference between estimated net interest income in the zero basis point interest rate environment ("base case," assumes the forward market and product interest rates implied by the yield curve are realized) and the estimated net interest income in each alternative interest rate environment (assumes market and product interest rates have a parallel shift in rates across all maturities by the indicated change in rates). Projected cash flows for each scenario are based upon varying prepayment assumptions to model anticipated customer behavior changes as market rates change. Estimations of net interest income used in preparing the table below were based upon the assumptions that the total composition of interest-earning assets and interest-bearing liabilities do not change materially and that any repricing of assets or liabilities occurs at anticipated product and market rates for the alternative rate environments as of the dates presented. The estimation of net interest income does not include any projected gains or losses related to the sale of loans or securities, or income derived from non-interest income sources, but does include the use of different prepayment assumptions in the alternative interest rate environments. It is important to consider that estimated changes in net interest income are for a cumulative four-quarter period. These do not reflect the earnings expectations of management.
ChangeNet Interest Income At
(in Basis Points)December 31, 2024September 30, 2024
in Interest Rates(1)
Amount ($)Change ($)Change (%)Amount ($)Change ($)Change (%)
(Dollars in thousands)
-300 bp$192,673 $8,239 4.5 %$188,322 $11,696 6.6 %
-200 bp191,188 6,754 3.7 183,769 7,143 4.0 
-100 bp188,784 4,350 2.4 180,936 4,310 2.4 
  000 bp184,434 — — 176,626 — — 
+100 bp179,684 (4,750)(2.6)171,222 (5,404)(3.1)
+200 bp173,515 (10,919)(5.9)165,422 (11,204)(6.3)
+300 bp167,343 (17,091)(9.3)158,758 (17,868)(10.1)

(1)Assumes an instantaneous, parallel, and permanent change in interest rates at all maturities.

In general, increases/(decreases) in the Bank's net interest income projections under the various interest rate scenarios presented are due to the degree in which cash flows are realized and the rates projected to be earned on funds received through loan and securities repayments, in each scenario, are greater/(less) than the rates projected to be paid on deposits and borrowings in the next 12 months. The net interest income projection was higher in the base case scenario at December 31, 2024 compared to September 30, 2024, due primarily to a steepening of the yield curve between the two periods. The benchmark U.S. Treasury yield curve dis-inverted during the current quarter and was largely positively sloped as of December 31, 2024. As a result, interest income projections associated with the Bank's interest-earning asset cashflows, primarily the loan portfolio, increased by more than increases in interest expense projections on its interest-bearing liability cashflows.
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Change in MVPE. The following table sets forth the estimated change in the MVPE for each date presented based on the indicated instantaneous, parallel, and permanent change in interest rates. The change in each interest rate environment represents the difference between the MVPE in the base case (assumes the forward market interest rates implied by the yield curve are realized) and the MVPE in each alternative interest rate environment (assumes market interest rates have a parallel shift in rates). Projected cash flows for each scenario are based upon varying prepayment assumptions to model anticipated customer behavior as market rates change. The estimations of the MVPE used in preparing the table below were based upon the assumption that the total composition of interest-earning assets and interest-bearing liabilities do not change, that any repricing of assets or liabilities occurs at current product or market rates for the alternative rate environments as of the dates presented, and that different prepayment rates were used in each alternative interest rate environment. The estimated MVPE results from the valuation of cash flows from financial assets and liabilities over the anticipated lives of each for each interest rate environment. The table below presents the effects of the changes in interest rates on our assets and liabilities as they mature, repay, or reprice, as shown by the change in the MVPE for alternative interest rates.
ChangeMarket Value of Portfolio Equity At
(in Basis Points)December 31, 2024September 30, 2024
in Interest Rates(1)
Amount ($)Change ($)Change (%)Amount ($)Change ($)Change (%)
(Dollars in thousands)
-300 bp$1,378,031 $377,739 37.8 %$1,460,440 $359,922 32.7 %
-200 bp1,248,615 248,323 24.8 1,345,708 245,190 22.3 
-100 bp1,128,689 128,397 12.8 1,218,938 118,420 10.8 
  000 bp1,000,292 — — 1,100,518 — — 
+100 bp833,039 (167,253)(16.7)962,354 (138,164)(12.6)
+200 bp663,504 (336,788)(33.7)797,497 (303,021)(27.5)
+300 bp507,232 (493,060)(49.3)634,145 (466,373)(42.4)

(1)Assumes an instantaneous, parallel, and permanent change in interest rates at all maturities.

The Bank's MVPE decreased from $1.10 billion at September 30, 2024 to $1.00 billion at December 31, 2024. The decrease was due primarily to an increase in market interest rates between the two periods across the intermediate and long-term tenors of the curve as the yield curve steepened. These increases in market interest rates resulted in a decrease in the estimated values of the Bank's interest-earning assets by more than it decreased the estimated values of its interest-bearing liabilities. As interest rates increase, borrowers have less economic incentive to prepay or to refinance their mortgages and agency debt issuers have less economic incentive or opportunity to exercise their call options in order to issue new debt at lower interest rates, resulting in lower projected cash flows on these assets. As interest rates increase in the rising interest rate scenarios, prepayments on mortgage-related assets are more likely to decrease and only be realized through significant changes in borrowers' lives such as divorce, death, job-related relocations, or other major events as there is less economic incentive for borrowers to prepay their debt, resulting in an increase in the average lives of mortgage-related assets. Similarly, call projections for callable agency debentures decrease as interest rates rise, which results in cash flows related to these assets moving closer to their contractual maturity dates. The longer expected average lives of these assets increases the sensitivity of their market value to changes in interest rates. Conversely, as interest rates decrease, borrowers who obtained or issued credit in a higher rate environment have more economic incentive to prepay or to refinance their mortgages, and agency debt issuers have more economic incentive and opportunity to exercise their call options in order to re-issue debt at lower interest rates, resulting in higher projected cash flows on these assets. The then shorter expected average lives of these assets decrease the sensitivity of their market value to changes in interest rates.

In the increasing interest rate scenarios, the sensitivity reflects the negative impacts of rates on the market value of the Bank's loan and securities portfolios more so than on its deposit and borrowing portfolios. In the decreasing interest rate scenarios, the Bank's MVPE increases due to a larger increase in the market value of the Bank's assets than its liabilities. This is because the Bank's mortgage-related assets continue to have longer duration in these rate scenarios, which equates to greater market value sensitivity as interest rates change.

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The following table presents the weighted average yields/rates and WALs (in years), after applying prepayment, call assumptions, and decay rates for our interest-earning assets and interest-bearing liabilities as of December 31, 2024. Yields presented for interest-earning assets include the amortization of fees, costs, premiums and discounts, which are considered adjustments to the yield. The interest rate presented for term borrowings is the effective rate, which includes the impact of interest rate swaps and the amortization of deferred prepayment penalties resulting from FHLB advances previously prepaid. The WAL presented for term borrowings includes the effect of interest rate swaps.
AmountYield/RateWAL% of Category% of Total
(Dollars in thousands)
Securities$861,501 5.62 %3.7 9.5 %
Loans receivable:
Fixed-rate one- to four-family5,303,313 3.44 6.8 66.5 %58.2 
Fixed-rate commercial519,277 4.96 2.8 6.5 5.7 
All other fixed-rate loans37,899 7.06 7.3 0.5 0.4 
Total fixed-rate loans5,860,489 3.60 6.4 73.5 64.3 
Adjustable-rate one- to four-family891,372 4.21 4.5 11.2 9.8 
Adjustable-rate commercial1,127,216 6.03 5.1 14.1 12.4 
All other adjustable-rate loans93,952 8.10 3.1 1.2 1.0 
Total adjustable-rate loans2,112,540 5.35 4.8 26.5 23.2 
Total loans receivable7,973,029 4.06 6.0 100.0 %87.5 
FHLB stock100,364 9.47 1.9 1.1 
Cash and cash equivalents170,324 3.62 — 1.9 
Total interest-earning assets$9,105,218 4.26 5.6 100.0 %
Non-maturity deposits$2,735,138 0.88 5.6 48.4 %35.0 %
Retail certificates of deposit2,799,418 4.14 0.8 49.6 35.8 
Commercial certificates of deposit56,564 4.26 0.6 1.0 0.7 
Public unit certificates of deposit58,482 4.48 0.6 1.0 0.8 
Total interest-bearing deposits5,649,602 2.57 3.1 100.0 %72.3 
Term borrowings2,165,561 3.37 1.6 27.7 
Total interest-bearing liabilities$7,815,163 2.79 2.7 100.0 %

Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, the "Act") as of December 31, 2024. Based upon this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of December 31, 2024, such disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Act is accumulated and communicated to the Company's management (including the Chief Executive Officer and Chief Financial Officer) to allow timely decisions regarding required disclosure, and is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms.

Changes in Internal Control Over Financial Reporting
There have been no changes in the Company's internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Act) that occurred during the Company's quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings
In the normal course of business, the Company and the Bank are involved as parties to various routine legal actions. In our opinion, after consultation with legal counsel, we believe it is unlikely that any such pending legal actions will have a material adverse effect on our financial condition, results of operations or liquidity.

On November 2, 2022, the Bank was served a putative class action lawsuit, captioned Jennifer Harding, et al. vs. Capitol Federal Savings Bank (Case No. 2022-CV-00598), filed in the Third Judicial District Court, Shawnee County, Kansas against the Bank, alleging the Bank improperly charged overdraft fees on (1) debit card transactions that were authorized for payment on sufficient funds but later settled against a negative account balance (commonly known as "authorize positive purportedly settle negative" or "APPSN" transactions) and (2) merchant re-presentments of previously rejected payment requests. The complaint asserts a breach of contract claim (including breach of an implied covenant of good faith and fair dealing) for each practice and seeks restitution for alleged improper fees, alleged actual damages, costs and disbursements, and injunctive relief. On April 5, 2023, the court granted the Bank's motion to dismiss the complaint, with prejudice. The plaintiffs appealed this decision to the Kansas Court of Appeals, which issued an opinion on October 4, 2024 reversing the district court's ruling. In response, the Bank filed a petition for review with the Kansas Supreme Court on November 1, 2024. The review is currently pending.

The Company assesses the liabilities and loss contingencies in connection with pending or threatened legal and regulatory proceedings on at least a quarterly basis and establishes accruals when it is believed to be probable that a loss may be incurred and that the amount of such loss can be reasonably estimated.

Item 1A. Risk Factors
There have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024.


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
See "Liquidity and Capital Resources - Limitations on Dividends and Other Capital Distributions" in "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding OCC restrictions on dividends from the Bank to the Company.

The following table summarizes our stock repurchase activity during the three months ended December 31, 2024 and additional information regarding our stock repurchase program. As of December 31, 2024, the Company was authorized to repurchase up to $75.0 million of its common stock under an existing stock repurchase plan. The plan has no expiration date; however, the FRB's approval for the Company to repurchase shares extends through February 2025. The Company has notified the FRB of its intent to extend the stock repurchase plan another year, through February 2026. Shares may be repurchased from time to time in the open market or in privately negotiated transactions based upon market conditions, available liquidity and other factors. There were no share repurchases during the current quarter.
Total Number ofApproximate Dollar
TotalShares Purchased asValue of Shares
Number of Average Part of Publiclythat May Yet Be
Shares Price PaidAnnounced PlansPurchased Under the
Purchasedper Shareor ProgramsPlans or Programs
October 1, 2024 through
October 31, 2024— $— — $75,000,000 
November 1, 2024 through
November 30, 2024— — — 75,000,000 
December 1, 2024 through
December 31, 2024— — — 75,000,000 
Total— — — 75,000,000 


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Item 3. Defaults Upon Senior Securities
Not applicable.

Item 4. Mine Safety Disclosures
Not applicable.

Item 5. Other Information
Trading Plans
During the quarter ended December 31, 2024, no director or executive officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits
See Index to Exhibits.
71

INDEX TO EXHIBITS
Exhibit
Number		Document
Charter of Capitol Federal Financial, Inc., as filed on May 6, 2010, as Exhibit 3(i) to Capitol Federal Financial, Inc.'s Registration Statement on Form S-1 (File No. 333-166578) and incorporated herein by reference
Bylaws of Capitol Federal Financial, Inc., as amended, filed on March 30, 2020, as Exhibit 3.2 to Form 8-K for Capitol Federal Financial Inc. and incorporated herein by reference
Form of Amended and Restated Change of Control Agreement with each of John B. Dicus, Kent G. Townsend, Rick C. Jackson, Natalie G. Haag, Anthony S. Barry, and William J. Skrobacz filed on November 29, 2023 as Exhibit 10.1 to the Registrant's September 30, 2023 Form 10-K and incorporated herein by reference
Capitol Federal Financial's 2000 Stock Option and Incentive Plan (the "Stock Option Plan") filed on April 13, 2000 as Appendix A to Capitol Federal Financial's Revised Proxy Statement (File No. 000-25391) and incorporated herein by reference
Capitol Federal Financial Deferred Incentive Bonus Plan, as amended, filed on May 8, 2020 as Exhibit 10.3 to the Registrant's March 31, 2020 Form 10-Q and incorporated herein by reference
Form of Incentive Stock Option Agreement under the Stock Option Plan filed on February 4, 2005 as Exhibit 10.5 to the December 31, 2004 Form 10-Q for Capitol Federal Financial and incorporated herein by reference
Form of Non-Qualified Stock Option Agreement under the Stock Option Plan filed on February 4, 2005 as Exhibit 10.6 to the December 31, 2004 Form 10-Q for Capitol Federal Financial and incorporated herein by reference
Description of Director Fee Arrangements, as filed on November 23, 2022 as Exhibit 10.6 to the Registrant's September 30, 2022 Form 10-K and incorporated herein by reference
Short-term Performance Plan, as amended, filed on May 8, 2020 as Exhibit 10.7 to the Registrant's March 31, 2020 Form 10-Q and incorporated herein by reference
Capitol Federal Financial, Inc. 2012 Equity Incentive Plan (the "Equity Incentive Plan") filed on December 22, 2011 as Appendix A to Capitol Federal Financial, Inc.'s Proxy Statement (File No. 001-34814) and incorporated herein by reference
Form of Incentive Stock Option Agreement under the Equity Incentive Plan filed on February 6, 2012 as Exhibit 10.12 to the Registrant's December 31, 2011 Form 10-Q and incorporated herein by reference
Form of Non-Qualified Stock Option Agreement under the Equity Incentive Plan filed on February 6, 2012 as Exhibit 10.13 to the Registrant's December 31, 2011 Form 10-Q and incorporated herein by reference
Form of Stock Appreciation Right Agreement under the Equity Incentive Plan filed on February 6, 2012 as Exhibit 10.14 to the Registrant's December 31, 2011 Form 10-Q and incorporated herein by reference
Form of Restricted Stock Agreement under the Equity Incentive Plan filed on February 6, 2012 as Exhibit 10.15 to the Registrant's December 31, 2011 Form 10-Q and incorporated herein by reference
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 made by John B. Dicus, Chairman, President and Chief Executive Officer
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 made by Kent G. Townsend, Executive Vice President, Chief Financial Officer and Treasurer
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 made by John B. Dicus, Chairman, President and Chief Executive Officer, and Kent G. Townsend, Executive Vice President, Chief Financial Officer and Treasurer
101
The following information from the Company's Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2024, filed with the Securities and Exchange Commission on February 7, 2025, has been formatted in Inline eXtensible Business Reporting Language ("XBRL"): (i) Consolidated Balance Sheets at December 31, 2024 and September 30, 2024, (ii) Consolidated Statements of Income for the three months ended December 31, 2024 and 2023, (iii) Consolidated Statements of Comprehensive Income for the three months ended December 31, 2024 and 2023, (iv) Consolidated Statements of Stockholders' Equity for the three months ended December 31, 2024 and 2023, (v) Consolidated Statements of Cash Flows for the three months ended December 31, 2024 and 2023, and (vi) Notes to the Unaudited Consolidated Financial Statements.
104Cover Page Interactive Data File, formatted in Inline XBRL and included in Exhibit 101
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
CAPITOL FEDERAL FINANCIAL, INC.
Date: February 7, 2025
By:/s/ John B. Dicus
John B. Dicus, Chairman, President and Chief Executive Officer
Date: February 7, 2025
By:/s/ Kent G. Townsend
Kent G. Townsend, Executive Vice President,
Chief Financial Officer and Treasurer

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