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What changed in Capitol Federal Financial, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Capitol Federal Financial, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+537 added−474 removedSource: 10-K (2025-11-26) vs 10-K (2024-11-27)

Top changes in Capitol Federal Financial, Inc.'s 2025 10-K

537 paragraphs added · 474 removed · 354 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

63 edited+23 added−13 removed42 unchanged
Biggest changeWe strive to provide stockholder value while maintaining a strong capital position. We continue to generate returns to stockholders through dividend payments and share repurchases. Total dividends declared and paid during fiscal year 2024 were $44.5 million. The Company repurchased 3,280,110 shares for $19.3 million during fiscal year 2024, which all occurred in the first half of the year.
Biggest changeWe believe that maintaining a strong capital position safeguards the long-term interests of the Bank, the Company, and our stockholders. Stockholder Value. We strive to provide long-term, sustainable stockholder value while maintaining a strong capital position. We continue to generate returns to stockholders through dividend payments and share repurchases.
We attract deposits primarily from the general public and from businesses, and invest those funds primarily in permanent loans secured by first mortgages on owner-occupied, one- to four-family residences and in commercial loans, either secured by real estate or for commercial and industrial purposes.
We attract deposits primarily from the general public and from businesses, and invest those funds primarily in commercial loans, either secured by real estate or for commercial and industrial purposes, and in permanent loans secured by first mortgages on owner-occupied, one- to four-family residences.
The Bank is a member of one of 11 regional Federal Home Loan Banks, each of which serves as a reserve, or central bank, for its members within its assigned region and is funded primarily from proceeds derived from the sale of consolidated obligations of the Federal Home Loan Bank System.
Federal Home Loan Bank System. The Bank is a member of one of 11 regional Federal Home Loan Banks, each of which serves as a reserve, or central bank, for its members within its assigned region and is funded primarily from proceeds derived from the sale of consolidated obligations of the Federal Home Loan Bank System.
The HOLA prohibits a savings and loan holding company (directly or indirectly, or through one or more subsidiaries) from acquiring another savings association, or holding company thereof, without prior written approval from the FRB; acquiring or retaining, with certain exceptions, more than 5% of a non-subsidiary savings association, a non-subsidiary holding company, or a non-subsidiary company engaged in activities other 7 than those permitted by the HOLA; or acquiring or retaining control of a depository institution that is not federally insured.
The HOLA prohibits a savings and loan holding company (directly or indirectly, or through one or more subsidiaries) from acquiring another savings association, or holding company thereof, without prior written approval from the FRB; acquiring or retaining, with certain exceptions, more than 5% of a non-subsidiary savings association, a non-subsidiary holding company, or a non-subsidiary company engaged in activities other than those permitted by the HOLA; or acquiring or retaining control of a depository institution that is not federally insured.
The federal banking regulators take into account the institution's record of performance under the CRA when considering applications for mergers, acquisitions, and branches. Under the CRA, institutions are assigned a rating of outstanding, satisfactory, needs to improve, or substantial non-compliance. The Bank received a satisfactory rating in its most recently completed CRA evaluation. Bank Secrecy Act /Anti-Money Laundering Laws.
The federal banking regulators take into account the institution's record of performance under the CRA when considering applications for mergers, acquisitions, and branches. Under the CRA, institutions are assigned a rating of outstanding, satisfactory, needs to improve, or substantial non-compliance. The Bank received a satisfactory rating in its most recently completed CRA evaluation. 7 Bank Secrecy Act /Anti-Money Laundering Laws.
The FRB has long set forth in its regulations its "source of strength" policy, which requires bank holding companies to act as a source of strength to their subsidiary depository institutions by providing capital, liquidity and other support in times of financial stress. This policy now also applies to savings and loan holding companies. Transactions with Affiliates.
The FRB has long set forth in its regulations its "source of strength" policy, which requires bank holding companies to act as a source of strength to their subsidiary depository institutions by providing capital, liquidity and other support in times of financial stress. This policy also applies to savings and loan holding companies. Transactions with Affiliates.
In order to maintain what we believe to be acceptable levels of net interest income in varying interest rate environments, we actively manage our interest rate risk and assume a moderate amount of interest rate risk consistent with policies approved by the Board of Directors. Market Area and Competition Our corporate office is located in Topeka, Kansas.
To maintain what we believe to be acceptable levels of net interest income in varying interest rate environments, we actively manage our interest rate risk and assume a moderate amount of interest rate risk consistent with policies approved by the Board of Directors. Market Area and Competition Our corporate office is located in Topeka, Kansas.
With respect to federal consumer protection laws, regulations are generally promulgated by the Consumer Financial Protection Bureau ("CFPB"), but the OCC, rather than the CFPB, currently 6 examines the Bank for compliance with such laws and regulations because the Bank's regulatory assets have yet to exceed $10 billion for four consecutive quarter-ends.
With respect to federal consumer protection laws, regulations are generally promulgated by the Consumer Financial Protection Bureau ("CFPB"), but the OCC, rather than the CFPB, currently examines the Bank for compliance with such laws and regulations because the Bank's regulatory assets have yet to exceed $10 billion for four consecutive quarter-ends.
The Bank may not lend to any affiliate engaged in activities not permissible for a bank holding company or purchase or invest in the securities of affiliates. In addition, transactions with affiliates must be consistent with safe and sound banking practices and not involve the purchase of low-quality assets. Taxation Federal Taxation.
The Bank may not lend to any affiliate engaged in activities not permissible for a bank holding company or purchase or invest in the securities of affiliates. In addition, transactions with affiliates must be consistent with safe and sound banking practices and not involve the purchase of low-quality assets. 8 Taxation Federal Taxation.
Any such institution must submit a capital restoration plan for OCC approval and may be restricted in, among 5 other things, increasing its assets, acquiring another institution, establishing a branch or engaging in any new activities, and may not make capital distributions.
Any such institution must submit a capital restoration plan for OCC approval and may be restricted in, among other things, increasing its assets, acquiring another institution, establishing a branch or engaging in any new activities, and may not make capital distributions.
Set forth below is a description of certain laws and regulations that are applicable to the Company and the Bank. This description is intended as a brief summary of selected features of such laws and regulations and is qualified in its entirety by reference to the laws and regulations applicable to the Company and the Bank. 4 General.
Set forth below is a description of certain laws and regulations that are applicable to the Company and the Bank. This description is intended as a brief summary of selected features of such laws and regulations and is qualified in its entirety by reference to the laws and regulations applicable to the Company and the Bank. General.
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.
A savings institution that is a 6 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.
Since 1977, at least one woman has served as a director of the Bank and, since its inception in 1999, at least one woman has served on the Board of Directors of the Company. In addition, since 2012, at least one underrepresented minority has served as a director of the Company and the Bank.
Since 1977, at least one woman has served as a director of the Bank and, since its inception in 1999, at least one woman has served on the Board of Directors of the Company. In addition, since 2012, at least one underrepresented minority has served as a director of the 9 Company and the Bank.
An institution that fails to do so is immediately subject to restrictions on its operations, including a prohibition against capital distributions, except with the prior approval of both the OCC and the FRB. Failure to meet this qualification is a statutory violation subject to enforcement action. As of September 30, 2024, the Bank met the qualification.
An institution that fails to do so is immediately subject to restrictions on its operations, including a prohibition against capital distributions, except with the prior approval of both the OCC and the FRB. Failure to meet this qualification is a statutory violation subject to enforcement action. As of September 30, 2025, the Bank met the qualification.
The Bank is authorized to borrow from the Federal Reserve Bank "discount window." An eligible institution need not exhaust other sources of funds before going to the discount window, nor are there restrictions on the purposes for which the institution can use primary credit. At September 30, 2024, the Bank had no outstanding borrowings from the discount window.
The Bank is authorized to borrow from the Federal Reserve Bank "discount window." An eligible institution need not exhaust other sources of funds before going to the discount window, nor are there restrictions on the purposes for which the institution can use primary credit. At September 30, 2025, the Bank had no outstanding borrowings from the discount window.
Institutions that are deemed by the OCC to be "critically undercapitalized" are subject to the appointment of a conservator or receiver. As of September 30, 2024, the Bank and the Company met all capital adequacy requirements to which they are subject. Limitations on Dividends and Other Capital Distributions.
Institutions that are deemed by the OCC to be "critically undercapitalized" are subject to the appointment of a conservator or receiver. As of September 30, 2025, the Bank and the Company met all capital adequacy requirements to which they are subject. Limitations on Dividends and Other Capital Distributions.
In response to the Coronavirus Disease 2019 ("COVID-19") pandemic, the FRB reduced reserve requirement ratios to zero percent effective March 26, 2020, to support lending to households and businesses. At September 30, 2024, the reserve requirement of zero percent was still in place.
In response to the Coronavirus Disease 2019 ("COVID-19") pandemic, the FRB reduced reserve requirement ratios to zero percent effective March 26, 2020, to support lending to households and businesses. At September 30, 2025, the reserve requirement of zero percent was still in place.
Under these rules, assessment rates for an institution with total assets of less than $10 billion are determined by capital adequacy, asset quality, management, earnings, liquidity, and sensitivity (CAMELS) composite ratings and certain financial ratios, and range from 2.5 to 32.0 basis points, subject to certain adjustments.
Under these rules, assessment rates for an institution with total assets of less than $10 billion are determined by CAMELS composite rating (capital adequacy, asset quality, management, earnings, liquidity, and sensitivity to market rates) and certain financial ratios, and range from 2.5 to 32.0 basis points, subject to certain adjustments.
The full-time equivalent of our total employees at September 30, 2024 was 636, an increase from 632 at September 30, 2023. Our employees are not represented by any collective bargaining group. Management considers its employee relations to be good. We believe our ability to attract and retain employees is a key to our success.
The full-time equivalent of our total employees at September 30, 2025 was 655, an increase from 636 at September 30, 2024. Our employees are not represented by any collective bargaining group. Management considers its employee relations to be good. We believe our ability to attract and retain employees is a key to our success.
The Company's cash dividend payout policy is reviewed quarterly by management and the Board of Directors, and the ability to pay dividends under the policy depends 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, and the amount of cash at the holding company level.
The Company's cash dividend payout policy is reviewed quarterly by management and the Board of Directors, and the ability to pay dividends under the policy depends 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 current tax earnings and accumulated earnings and profits, and the amount of cash at the holding company level.
The minimum required FHLB stock amount is generally 4.5% of the Bank's FHLB advances and outstanding balance against the FHLB line of credit, and 2% of the outstanding principal balance of loans sold into the Mortgage Partnership Finance Program. At September 30, 2024, the Bank had $101.2 million in FHLB stock, which was in compliance with the FHLB's stock requirement.
The minimum required FHLB stock amount is generally 4.5% of the Bank's FHLB advances and outstanding balance against the FHLB line of credit, and 2% of the outstanding principal balance of loans sold into the Mortgage Partnership Finance Program. At September 30, 2025, the Bank had $90.7 million in FHLB stock, which was in compliance with the FHLB's stock requirement.
The Bank had $75.9 million in pre-1988 bad debt reserves at September 30, 2024, which equates to an unrecorded deferred tax liability of $15.9 million. See additional discussion regarding the Bank's pre-1988 bad debt recapture in "Part IA. Risk Factors - Other Risks", "Part II. Item 7.
The Bank had $75.9 million in pre-1988 bad debt reserves at September 30, 2025, which equates to an unrecorded deferred tax liability of $15.9 million. See additional discussion regarding the Bank's pre-1988 bad debt recapture in "Part IA. Risk Factors - Other Risks" and "Part II, Item 8.
We serve a broad range of customers through relatively few branch locations. Our average deposit base per traditional branch at September 30, 2024 was approximately $128.7 million. This large average deposit base per branch helps to control costs.
We serve a broad range of customers through relatively few branch locations. Our average deposit base per traditional branch at September 30, 2025 was approximately $128.5 million. This large average deposit base per branch helps to control costs.
The Bank is subject to a statutory lending limit on aggregate loans to one person or a group of related persons. The general limit is 15% of the Bank's unimpaired capital and surplus, plus an additional 10% for loans fully secured by readily marketable collateral. At September 30, 2024, the Bank's lending limit under this restriction was $135.5 million.
The Bank is subject to a statutory lending limit on aggregate loans to one person or a group of related persons. The general limit is 15% of the Bank's unimpaired capital and surplus, plus an additional 10% for loans fully secured by readily marketable collateral. At September 30, 2025, the Bank's lending limit under this restriction was $144.7 million.
These include the Equal Credit Opportunity Act, the Truth-in-Lending Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 ("SAFE Act"), and the Community Reinvestment Act ("CRA").
These include the Equal Credit Opportunity Act, the Truth-in-Lending Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 ("SAFE Act"), Service Members Civil Relief Act, and the Community Reinvestment Act ("CRA").
The Bank has consistently been one of the top originators of residential one- to four-family loans in the state of Kansas. This has been achieved through strong relationships with real estate agents and targeted marketing campaigns which emphasize the strength of Capitol Federal's brand, competitive pricing, and the Bank's history as a portfolio lender.
As noted above, the Bank has consistently been one of the top originators of residential one- to four-family loans in the state of Kansas. This has been achieved through strong relationships with real estate agents and marketing which emphasizes the strength of Capitol Federal's brand, competitive pricing, and the Bank's history as a portfolio lender.
In these states and cities, the Bank has either established a nexus under an economic nexus theory or has exceeded enumerated nexus thresholds based on the amount of interest income derived from loans within the state. 8 Employees and Human Capital Resources At September 30, 2024, we had a total of 659 employees, including 76 part-time employees.
In these states and cities, the Bank has either established a nexus under an economic nexus theory or has exceeded enumerated nexus thresholds based on the amount of interest income derived from loans within the state. Employees and Human Capital Resources At September 30, 2025, we had a total of 678 employees, including 74 part-time employees.
As of September 30, 2024, we had a network of 48 branches (44 traditional branches and four in-store branches) located in nine counties throughout Kansas and three counties in Missouri. We primarily serve the metropolitan areas of Topeka, Wichita, Lawrence, Manhattan, Emporia, and Salina, Kansas and a portion of the metropolitan area of greater Kansas City.
As of September 30, 2025, we had a network of 46 branches (44 traditional branches and two in-store branches) located in nine counties throughout Kansas and three counties in Missouri. We primarily serve the metropolitan areas of Topeka, Wichita, Lawrence, Manhattan, Emporia, and Salina, Kansas and a portion of the metropolitan area of greater Kansas City.
The increased assessment rate will remain in effect unless and until the reserve ratio meets or exceeds 2%, absent further action by the FDIC's Board of Directors. For the fiscal year ended September 30, 2024, the Bank paid $6.1 million in FDIC premiums.
The increased assessment rate will remain in effect unless and until the reserve ratio meets or exceeds 2%, absent further action by the FDIC's Board of Directors. For the fiscal year ended September 30, 2025, the Bank paid $4.3 million in FDIC premiums.
The Bank has no loans or loan relationships in excess of its lending limit. Loan commitments and loans outstanding to the Bank's largest borrowing relationship totaled $113.0 million at September 30, 2024, all of which was current according to its terms.
The Bank has no loans or loan relationships in excess of its lending limit. Loan commitments and loans outstanding to the Bank's largest borrowing relationship totaled $103.2 million at September 30, 2025, all of which was current according to its terms.
The Federal Home Loan Banks make loans, called advances, to members and provide access to a line of credit in accordance with policies and procedures established by the Board of Directors of FHLB, which are subject to the oversight of the Federal Housing Finance Agency. At September 30, 2024, the Bank had $2.18 billion of FHLB advances, at par.
The Federal Home Loan Banks make loans, known as advances, to members and provide access to a line of credit in accordance with policies and procedures established by the Board of Directors of FHLB, which are subject to the oversight of the Federal Housing Finance Agency. At September 30, 2025, the Bank had $1.95 billion of FHLB advances, at par.
Our employees, together with the Capitol Federal Foundation, contribute to programs that promote educational opportunities in all communities as well as housing in low-and-moderate income communities, including scholarships specifically for diverse candidates.
Our employees, together with the Capitol Federal Foundation, contribute to programs that promote educational opportunities in all communities as well as housing in low-and-moderate income communities.
Leadership development is supported through our Leadership Forum services, on a biannual basis, for mid-level leaders within the organization. Education for this program is currently provided by Banktastic. Annual employee educational requirements include targeted diversity, equity and inclusion training for all managers. All employees receive annual training on providing fair, high-quality service and understanding the causes of discrimination.
Leadership development is supported through our Leadership Forum services, on a biannual basis, for mid-level leaders within the organization. Education for this program is currently provided by Banktastic. Annual employee educational requirements include respectful treatment of all other employees and customers. All employees receive annual training on providing fair, high-quality service and understanding the causes of legal ramifications of discrimination.
See "Part II, Item 8. Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 13. Regulatory Capital Requirements" for additional regulatory capital information. At September 30, 2024, the Bank was considered well capitalized under OCC regulations.
Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 13. Regulatory Capital Requirements" for additional regulatory capital information. At September 30, 2025, the Bank was considered well capitalized under OCC regulations.
The Board of Directors annually reviews the Company's diversity recruitment efforts and employment statistics. To assist in expanding diversity, the Company recruits employees through sources and organizations targeted at diverse communities. The Company also provides multiple opportunities for professional development and growth, including continuing education when applicable and specialty education within banking.
The Board of Directors annually reviews the Company's recruitment efforts and employment statistics. The Company recruits employees through sources and organizations across a variety of networks and communities. The Company also provides multiple opportunities for professional development and growth, including continuing education when applicable and specialty education within banking.
Our one- to four-family lending strategy and our effective management of credit risk allow us to service a large portfolio of loans at efficient levels because it costs less to service a portfolio of performing loans.
Our prudent underwriting requirements and our effective management of credit risk allow us to service a large portfolio of loans at efficient levels because it costs less to service a portfolio of performing loans. Asset Quality.
Lending activities are influenced by the demand for housing and business activity levels, our loan underwriting guidelines compared to those of our competitors, as well as the interest rate environment and interest rate pricing competition from other lending institutions.
Lending activities are influenced by the demand for business and housing activity levels, our loan underwriting guidelines compared to those of our competitors, as well as the interest rate environment and interest rate pricing competition from other lending institutions. Management Strategy We seek to offer a comprehensive suite of commercial and consumer banking products and services to our customers.
Therefore, fluctuations in interest rates have a significant impact not only upon our net income but also upon the cash flows related to those assets and liabilities and the market value of our assets and liabilities.
Changes in interest rates are our primary market risk as our balance sheet is almost entirely comprised of interest-earning assets and interest-bearing liabilities. Therefore, fluctuations in interest rates have a significant impact not only upon our net income but also upon the cash flows related to those assets and liabilities and the market value of our assets and liabilities.
In general, these enforcement actions may be initiated for violations of laws and regulations and unsafe or unsound practices. Other actions or inactions may provide the basis for enforcement action, including misleading or untimely filed reports. Except under certain circumstances, public disclosure of final enforcement actions by the OCC or the FRB is required by law.
In general, these enforcement actions may be initiated for violations of laws and regulations and unsafe or unsound practices. Other actions or inactions may provide the basis for enforcement action, including misleading or untimely filed reports.
The Bank offers a diversified retail deposit product line, and trust and brokerage services. Management considers our well-established banking network and our reputation for financial strength and customer service to be major factors in our success at attracting and retaining customers in our market areas.
Management considers our well-established banking network and our reputation for financial strength and customer service to be major factors in our success at attracting and retaining customers in our market areas.
As a federally chartered savings bank, the Bank is required to maintain a significant portion of its assets in residential housing-related loans and investments in at least nine months of the most recent 12-month period.
Except under certain circumstances, public disclosure of final enforcement actions by the OCC or the FRB is required by law. 5 As a federally chartered savings bank, the Bank is required to maintain a significant portion of its assets in residential housing-related loans and investments in at least nine months of the most recent 12-month period.
These reports are available on our website as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. These reports are also available on the SEC's website at http://www.sec.gov.
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.
The Company is significantly affected by prevailing economic conditions, including federal monetary and fiscal policies and federal regulation of financial institutions. Deposit balances are influenced by a number of factors, including interest rates paid on competing investment products, the level of personal income, and the personal rate of savings within our market 2 areas.
Deposit balances are influenced by a number of factors, including interest rates paid on competing investment products, the level of personal income, and the personal rate of savings within our market areas.
The Bank offers a suite of treasury management services designed to support business customers in managing their financial operations efficiently and securely. Our treasury management solutions include cash flow optimization, fraud prevention tools, and payment services tailored to meet the needs of commercial clients.
We offer a competitive suite of treasury management services to meet the needs of our commercial customers. Our treasury management solutions include services such as cash flow optimization, fraud prevention tools, and payment services tailored to our commercial customers.
While we provide competitive interest rates on both deposit and lending products, we believe that we can compete most successfully by focusing on the financial needs of growing companies and small and middle-market businesses, pairing these companies with experienced relationship managers who can offer a broad range of customized services, digital platforms and sophisticated cash management tools tailored to their business through our Treasury Management solutions.
We provide competitive interest rates on both deposit and lending products and offer a full suite of treasury management services to 4 commercial customers. Through our treasury management services, we pair our commercial customers with experienced relationship managers who offer a broad range of customized services, digital platforms and sophisticated cash management tools tailored to their business.
During these examinations, the examiners may require the Bank to increase its ACL, change the classification of loans, and/or recognize additional charge-offs based on their judgments, which can impact our capital and earnings. Regulatory Capital Requirements. The Bank and the Company are required to maintain specified levels of regulatory capital under regulations of the OCC and FRB, respectively.
During these examinations, the examiners may require the Bank to increase its ACL, change the classification of loans, and/or recognize additional charge-offs based on their judgments, which can impact our capital and earnings. In October 2025, the OCC announced several regulatory changes aimed at reducing burdens and tailoring oversight for community banks.
Our deposit services are provided through our network of traditional branches and retail in-store locations, our call center (which operates on extended hours), mobile banking, telephone banking, and online banking and bill payment services. • Cost Control. We generally are effective at controlling our costs of operations. We centralize our loan servicing and deposit support functions for efficient processing.
Our deposit product offerings include checking, savings, money market, certificates of deposit, and retirement accounts. Deposit services are provided through our network of traditional branches and retail in-store locations, our call center (which operates on extended hours), mobile banking, telephone banking, and online banking and bill payment services.
We utilize underwriting standards for all of our lending products, including the loans we purchase and participate in, that are designed to limit our exposure to credit risk. We require complete documentation for both originated and purchased loans, and make credit decisions based on our assessment of the borrower's ability to repay the loan in accordance with its terms.
We require complete documentation for both loans originated by the Bank and for commercial participation loans and make credit decisions based on our assessment of the borrower's ability to repay the loan in accordance with its terms. We monitor concentration levels by collateral type, geographic location, and borrowing relationship.
Larger national, regional and local financial institutions, as well as credit unions, farm credit lenders, commercial finance companies, insurance companies, and other non-bank lenders have increased their presence in our market areas, ultimately placing downward pressure on pricing. We also compete with smaller local financial institutions that may have aggressive pricing and unique terms.
We operate in a highly competitive environment for quality commercial banking relationships across the markets we serve. Larger national, regional and local financial institutions, as well as credit unions, farm credit lenders, commercial finance companies, insurance companies, and other non-bank lenders have increased their presence in our market areas thereby increasing competition.
For Kansas privilege tax purposes, the minimum tax rate is 4.5% of earnings during fiscal year 2024, which is calculated based on federal taxable income, subject to certain adjustments. The Bank has not received notification from the state of any potential tax liability for any years still subject to audit.
The Kansas corporate tax rate is 4.0%, plus a surcharge of 3.0% on earnings greater than $50 thousand. The Bank files a Kansas privilege tax return. For Kansas privilege tax purposes, the minimum tax rate was 4.18% of earnings during fiscal year 2025, which is calculated based on federal taxable income, subject to certain adjustments.
The earnings/losses of Capitol Federal Financial, Inc., Capitol Funds, Inc. and Capital City Investments, Inc. are combined for purposes of filing a consolidated Kansas corporate tax return. The Kansas corporate tax rate is 4.0%, plus a surcharge of 3.0% on earnings greater than $50 thousand. The Bank files a Kansas privilege tax return.
Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 9. Income Taxes". State Taxation. The earnings/losses of Capitol Federal Financial, Inc., Capitol Funds, Inc. and Capital City Investments, Inc. are combined for purposes of filing a consolidated Kansas corporate tax return.
The end result of these activities has been capital ratios that meet or exceed the well-capitalized standards set by the Office of the Comptroller of the Currency (the "OCC"). We believe that maintaining a strong capital position safeguards the long-term interests of the Bank, the Company, and our stockholders. • Stockholder Value.
Our policy has always been to protect the safety and soundness of the Bank through credit and operational risk management, balance sheet strength, and sound operations. The end result of these activities has been capital ratios that meet or exceed the well-capitalized standards set by the Office of the Comptroller of the Currency (the "OCC").
The Bank's minimum rate for the Kansas privilege tax return will be reduced to 4.18% of earnings starting in fiscal year 2025. Additionally, the Bank files state tax returns in 16 other states and two cities where it has significant loan balances.
The Bank has not received notification from the state of any potential tax liability for any years still subject to audit. Additionally, the Bank files state tax returns in 16 other states and two cities where it has significant loan balances.
On a weekly basis, management reviews deposit flows, loan demand, cash levels, and changes in several market interest rates to assess all pricing strategies. The Bank's pricing strategy for first mortgage loan products includes setting interest rates based on secondary market prices and competitor pricing for our local lending markets.
The Bank's pricing strategy for commercial loans is generally based on competitor pricing and the credit risk of the borrower, with consideration given to the overall relationship of the borrower. Pricing for first mortgage loan products includes setting interest rates based on secondary market prices and competitor pricing for our local lending 2 markets.
Pricing for commercial loans is generally based on competitor pricing and the credit risk of the borrower with consideration given to the overall relationship of the borrower. Generally, deposit pricing is based upon a survey of competitors in the Bank's market areas, and the need to attract funding and retain maturing deposits.
Generally, deposit pricing is based upon a survey of competitors in the Bank's market areas, and the need to attract funding and retain maturing deposits. The Company is significantly affected by prevailing economic conditions, including federal monetary and fiscal policies and federal regulation of financial institutions.
We also participate with other lenders in commercial loans, and have purchased loans primarily secured by mortgages on one- to four-family residences. The Bank also invests in certain investment securities and mortgage-backed securities ("MBS") using funding from deposits and Federal Home Loan Bank of Topeka ("FHLB") borrowings.
The Bank invests in certain investment securities and mortgage-backed securities ("MBS"). The Bank funds our lending and investing activities from deposits and Federal Home Loan Bank of Topeka ("FHLB") borrowings.
Available Information Our website address is www.capfed.com. Our 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 website.
The Bank ranked second in deposit market share, at 6.2%, in the state of Kansas as reported in the June 30, 2025 Federal Deposit Insurance Corporation ("FDIC") "Summary of Deposits - Market Share Report." 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.
For fiscal year 2025, it is the current intention of the Board of Directors to continue the regular quarterly cash dividend of $0.085 per share. 3 • Interest Rate Risk Management. Changes in interest rates are our primary market risk as our balance sheet is almost entirely comprised of interest-earning assets and interest-bearing liabilities.
For fiscal year 2026, it is the intention of the Company's Board of Directors to pay out a regular quarterly cash dividend of $0.085 per share, totaling $0.34 per share for the year, and to seek further opportunities for value-enhancing share repurchases. Interest Rate Risk Management.
Capitol Federal employees recorded over 3,690 hours in volunteer time for local organizations and charities during fiscal year 2024. Our Company respects, values and encourages diversity in our employees and customers.
Capitol Federal employees recorded over 4,976 hours in volunteer time for local organizations and charities during fiscal year 2025. Our Company seeks to recognize and develop the unique contributions each individual brings to our Company, and we are fully committed to maintaining a culture that supports our corporate values.
By leveraging these services, we help businesses streamline their operations, reduce financial risk, and maximize liquidity while helping the Bank gather deposit and fee income. The Company's results of operations are primarily dependent on net interest income, which is the difference between the interest earned on loans, securities, and cash, and the interest paid on deposits and borrowings.
The Company's results of operations are primarily dependent on net interest income, which is the difference between the interest earned on loans, securities, and cash, and the interest paid on deposits and borrowings. On a weekly basis, management reviews deposit flows, loan demand, cash levels, and changes in several market interest rates to assess all pricing strategies.
We maintain strong relationships with local real estate agents to attract loan business. We rely on our marketing efforts and customer service reputation to attract business from walk-in customers, customers that apply online, and existing customers. Our business development efforts help to bring new business relationships to the Bank. • Deposit Services.
We rely on our marketing efforts and customer service reputation to be top of mind for commercial customers and attract business from walk-in customers, customers that apply online, and existing customers. We offer several commercial lending options and participate in commercial loans with other lenders, both locally and outside our market areas.
Management Strategy We seek to provide qualified borrowers the broadest possible access to home ownership through our mortgage lending programs and to offer a complete set of personal and commercial banking products and services to our customers. We strive to enhance stockholder value while maintaining a strong capital position.
We strive to enhance stockholder value while maintaining a sound asset quality position and strong capital position. To achieve these goals, we focus on the following strategies: Lending. We offer both commercial and one- to four-family loan products to our customers.
To achieve these goals, we focus on the following strategies: • Lending. We are one of the leading originators of one- to four-family loans in the state of Kansas. We originate these loans primarily for our own portfolio, and we service the loans we originate.
We originate these loans primarily for our own portfolio, and we generally service the loans we originate. Historically, we purchased one- to four-family loans from correspondent lenders but suspended that activity during fiscal year 2024.
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We have been, and intend to continue to be, a community-oriented financial institution offering a variety of financial services to meet the needs of the communities we serve.
Added
The Bank continues to transition from a retail oriented financial institution to one with an expanded focus on commercial customers by strategically growing all aspects of commercial banking through investment in technology, people, products, and services.
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Historically, we purchased one- to four-family loans from correspondent lenders but recently suspended that activity for balance sheet management purposes. We offer several commercial lending options and participate in commercial loans with other lenders, both locally and outside our market areas. We offer both fixed- and adjustable-rate products with various terms to maturity and pricing options.
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The Bank is active in commercial lending markets even when the lending opportunity is outside of the Bank's local footprint. We also participate with other lenders in commercial loans, and have previously purchased loans from correspondent lenders secured by mortgages on one- to four-family residences but we suspended that line of business in June 2024.
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We offer a wide array of retail and business deposit products and services. These products include checking, savings, money market, certificates of deposit, and retirement accounts. We also offer Treasury Management solutions tailored to meet the needs of our commercial clients.
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We also offer a broad range of banking services, including a full suite of treasury management services designed to support commercial customers in managing their financial operations efficiently and securely. By leveraging treasury management services, we help businesses streamline their operations, reduce financial risk, and maximize liquidity while growing the Bank's non-interest-bearing deposit base and diversifying fee-based income.
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We recognize it is more expensive to offer a full suite of commercial products and services, but we will continue our efforts to control those costs. The Bank continues to invest in its infrastructure, which can increase costs. • Asset Quality.
Added
We also offer tailored banking services for our small business customers and are actively expanding our suite of private banking and trust and wealth management products and services.
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Additionally, we monitor the asset quality of existing loans and strive to work proactively with customers who face challenging financial conditions. • Capital Position. Our policy has always been to protect the safety and soundness of the Bank through credit and operational risk management, balance sheet strength, and sound operations.
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We continue to strategically grow our commercial loan portfolio through prospecting for new relationships and maintaining and expanding existing relationships. We maintain strong relationships with local real estate agents to attract one- to four-family loan business.
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The Bank ranked third in deposit market share, at 6.1%, in the state of Kansas as reported in the June 30, 2024 Federal Deposit Insurance Corporation ("FDIC") "Summary of Deposits - Market Share Report." There is similarly intense competition for quality commercial lending relationships in the areas we serve.
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We offer both fixed- and adjustable-rate products with various terms to maturity and pricing options. We monitor concentration levels such as collateral type, geographic location, tenant brand name, borrowing relationships, and, in the case of participation loans, lending relationships, among other factors. We are one of the leading originators of conventional one- to four-family loans in the state of Kansas.
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We compete in a number of ways including customer service, quality of execution, range of products offered, price and reputation among others.
Added
We also originate 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 is in the first lien position. Deposit Services. We offer a wide array of deposit products and services to our commercial and retail customers.
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In March 2023, the FRB created a Bank Term Funding Program ("BTFP") to make additional funding available to eligible depository institutions. Advances could have been requested under the BTFP until March 11, 2024. The BTFP offered loans up to one year in length that could be prepaid without penalty.
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We listen to the needs of our commercial clients that utilize these services and actively evaluate new technology in order to capture a larger share of their business with additional products and services.
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The amount that could be borrowed under the BTFP was based upon the par value of the securities pledged as collateral to the FRB. At September 30, 2023, the Bank had $500.0 million of BTFP borrowings.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAdditionally, our competitors may offer products and services that we do not or cannot provide, as certain deposit and loan products fall outside of our accepted level of risk. Our profitability depends upon our ability to compete in our local market areas.
Biggest changeWe compete by offering a comprehensive suite of products and services, competitive loan pricing, and we have a strong reputation in the market areas we serve. Our competitors may offer products and services that we do not or cannot provide if the offerings fall outside our accepted level of risk.
The Dodd-Frank Act also weakens the federal preemption rules that have been applicable for national banks and federal savings associations and gives state attorneys general the ability to enforce federal consumer protection laws. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation, interpretation or application, could have an adverse impact on our operations.
The Dodd-Frank Act also weakens the federal preemption rules that have been applicable for national banks and federal savings associations and gives state attorneys general the ability to enforce federal consumer protection laws. 14 Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation, interpretation or application, could have an adverse impact on our operations.
The failure of an external vendor to perform in accordance with the contracted arrangements under service level agreements, because of changes in the vendor's organizational structure, financial condition, support for existing products and services or strategic focus or for any other reason, could be disruptive to our operations, which could have an adverse effect on our business and, in turn, our financial condition and results of operations.
The failure of an external vendor to perform in accordance with the contracted arrangements under service level agreements, because of changes in the vendor's organizational structure, financial condition, support for existing products and services or 13 strategic focus or for any other reason, could be disruptive to our operations, which could have an adverse effect on our business and, in turn, our financial condition and results of operations.
Additionally, if insurance obtained by our 10 borrowers is insufficient to cover any losses sustained to the collateral, the decreases in the value of collateral securing our loans as a result of natural disasters or other related events could adversely impact our financial condition and results of operations.
Additionally, if insurance obtained by our borrowers is insufficient to cover any losses sustained to the collateral, the decreases in the value of collateral securing our loans as a result of natural disasters or other related events could adversely impact our financial condition and results of operations.
If there is a failure in or breach of our information systems, or those of a third-party service provider, the confidential and other information processed and stored in, and transmitted through, such information systems could be jeopardized, or could otherwise cause interruptions or malfunctions in our operations or the operations of our customers, employees, or others.
If there is a failure in or breach of our information systems, or those of a third-party service provider, the confidential and other information 12 processed and stored in, and transmitted through, such information systems could be jeopardized, or could otherwise cause interruptions or malfunctions in our operations or the operations of our customers, employees, or others.
These regulatory authorities exercise broad discretion in connection with their supervisory and enforcement activities, including the ability to 13 impose restrictions on a bank's operations, reclassify assets, determine the adequacy of a bank's ACL, and determine the level of deposit insurance premiums assessed.
These regulatory authorities exercise broad discretion in connection with their supervisory and enforcement activities, including the ability to impose restrictions on a bank's operations, reclassify assets, determine the adequacy of a bank's ACL, and determine the level of deposit insurance premiums assessed.
As a result, a steeper yield curve, meaning long-term interest rates are significantly higher than short-term interest rates, would provide the Bank with a better opportunity to increase net interest income.
As a result, a steeper yield curve, meaning long-term interest rates are higher than short-term interest rates, would provide the Bank with a better opportunity to increase net interest income.
An economic downturn, including a decline in real estate values, especially affecting our geographic market areas and certain regions of the country where we have commercial real estate loans or correspondent loans secured by one- to four-family properties, could have an adverse impact on our business and financial results.
An economic downturn, including a decline in real estate values, especially affecting our geographic market areas and certain regions of the country where we have commercial real estate loans or purchased loans secured by one- to four-family properties, could have an adverse impact on our business and financial results.
Stockholders' equity, specifically accumulated other comprehensive income (loss) ("AOCI"), is increased or decreased by the amount of change in the estimated fair value of our AFS securities, net of deferred income taxes. Increases in interest rates generally decrease the fair value of AFS securities, which adversely impacts stockholders' equity. For additional information, see "Part II, Item 7.
Stockholders' equity, specifically, accumulated other comprehensive income (loss) ("AOCI"), is increased or decreased by the amount of change in the estimated fair value of our AFS securities, net of deferred income taxes. Increases in interest rates generally decrease the fair value of AFS securities, which adversely impacts 10 stockholders' equity. For additional information, see "Part II, Item 8.
The Company's failure to comply with laws, regulations or policies could result in civil or criminal sanctions and money penalties by state and federal agencies, and/or reputational damage, which could have an adverse effect on the Company's business, financial condition and results of operations. See "Part I, Item 1.
The Company's failure to comply with laws, regulations or policies, including Presidential Executive Orders, could result in civil or criminal sanctions and money penalties by state and federal agencies, and/or reputational damage, which could have an adverse effect on the Company's business, financial condition and results of operations. See "Part I, Item 1.
While the Company has procedures and systems in place to detect, prevent, and mitigate fraud losses, fraud losses may still occur and could be material to the Company's results of operations. Item 1B. Unresolved Staff Comments None.
While the Bank and the Company have procedures and systems in place to detect, prevent, and mitigate fraud losses, fraud losses may still occur and could be material to the Bank and the Company's results of operations. Item 1B. Unresolved Staff Comments None.
New laws and regulations may significantly affect the markets in which we do business, the markets for and value of our loans and securities, the products we offer, the fees we can charge and our ongoing operations, costs, and profitability.
New Presidential Executive Orders, laws and regulations may significantly affect the markets in which we do business, the markets for and value of our loans and securities, the products we offer, the fees we can charge and our ongoing operations, costs, and profitability.
Third-party vendors are sources of operational and information security risk to the Company, including risks associated with operations errors, information system interruptions or breaches, and unauthorized disclosures of sensitive or confidential customer information.
Third-party vendors are sources of operational and information security risk to the Bank and the Company, including risks associated with operation errors, information system interruptions or breaches, and unauthorized disclosures of sensitive or confidential customer information.
Adverse conditions in our local economies and in certain areas where we have commercial real estate loans and correspondent loans, such as inflation, unemployment, supply chain disruptions, recession, natural disasters or pandemics, or other factors beyond our control, could adversely impact the ability of our borrowers to repay their loans.
Adverse conditions in our local economies and in certain areas where we have commercial real estate loans and purchased one-to four-family loans, such as inflation, unemployment, supply chain disruptions, recession, natural disasters or pandemics, or other factors beyond our control, could adversely impact the ability of our borrowers to repay their loans.
Our results of operations are primarily dependent on net interest income, which is the difference between the interest earned on loans, securities, cash at the Federal Reserve Bank and dividends received on FHLB stock, and the interest paid on deposits and borrowings.
Our results of operations are primarily dependent on net interest income, which is the difference between the interest earned on loans, securities, cash at the FRB and dividends received on FHLB stock, and the interest paid on deposits and borrowings.
The occurrence of any information system failure or interruption, breach of security or cyberattack, at the Company, at its third-party service providers or counterparties may have an adverse effect on our business, reputation, financial condition and results of operations.
Risks Related to Cybersecurity, Third Parties, and Technology . The occurrence of any information system failure or interruption, breach of security or cyberattack, at the Company, at its third-party service providers or counterparties may have an adverse effect on our business, reputation, financial condition and results of operations.
Fluctuations in interest rates also affect customer demand for loan and deposit products. Competition from financial institutions and others could affect our ability to attract and retain deposits and could result in the Bank paying more for deposits. In addition to general changes in interest rates, changes that affect the shape of the yield curve could negatively impact the Bank.
Competition from financial institutions and others could affect our ability to attract and retain deposits and could result in the Bank paying more for deposits. In addition to general changes in interest rates, changes that affect the shape of the yield curve could negatively impact the Bank.
We monitor the current status and trends of local and national employment levels and trends and current conditions in the real estate and housing markets, as well as commercial real estate markets, in our local market areas and certain areas where we have commercial real estate loans and correspondent loans.
We monitor the current status and trends of local and national employment levels and trends and current conditions in the real estate and housing markets, as well as commercial real estate markets, in our local market areas and certain areas where we have commercial real estate loans and purchased one- to four-family loans.
Decreases in local real estate values could adversely affect the value of the property used as collateral for our loans, which could cause us to realize a loss in the event of a foreclosure.
Decreases in real estate values could adversely affect the value of the property used as collateral for our commercial real estate and one- to four-family loans, which could cause us to realize a loss in the event of a foreclosure.
This type of risk is known as interest rate risk and is affected by prevailing economic and competitive conditions that are beyond the 9 Company's control, including general economic conditions, inflationary trends and/or monetary policies of the FRB and fiscal policies of the United States federal government.
This type of risk is known as interest rate risk and is affected by prevailing economic and competitive conditions that are beyond the Company's control, including general economic conditions, inflationary trends and/or monetary policies of the FRB and fiscal policies of the United States federal government. The impact of changes in interest rates is generally observed on the income statement.
Generally, as interest rates decline, the amount of interest-earning assets expected to reprice will increase as borrowers have an economic incentive to reduce the cost of their mortgage or debt, which would negatively impact the Bank's interest income.
Generally, as interest rates decline, the amount of interest-earning assets expected to reprice will increase as borrowers have an economic incentive to reduce the cost of their mortgage or debt, which would negatively impact the Bank's interest income to the extent deposits are not repriced lower at a faster pace.
Furthermore, there continues to be heightened legislative and regulatory focus on privacy, data protection and information security. New or revised laws and regulations may significantly impact our current and planned privacy, data protection and information security-related practices, the collection, use, sharing, retention and safeguarding of consumer and employee information, and current or planned business activities.
New or revised laws and regulations may significantly impact our current and planned privacy, data protection and information security-related practices, the collection, use, sharing, retention and safeguarding of consumer and employee information, and current or planned business activities.
The occurrence of a security breach involving our customers' information, regardless of its origin, could damage our reputation and result in a loss of customers and business, subject us to additional 12 regulatory scrutiny, and expose us to litigation and possible financial liability.
The occurrence of a security breach involving our customers' information, regardless of its origin, could damage our reputation and result in a loss of customers and business, subject us to additional regulatory scrutiny, and expose us to litigation and possible financial liability. Any of these events could have an adverse effect on our business, financial condition and results of operations.
We also maintain a compliance program to identify, measure, assess, and report on our adherence to applicable laws, policies and procedures. While we assess and improve these programs on an ongoing basis, there can be no assurance that our risk management or compliance programs, along with other related controls, will effectively mitigate all risk and limit losses in our business.
While we assess and improve these programs on an ongoing basis, there can be no assurance that our risk management or compliance programs, along with other related controls, will effectively mitigate all risk and limit losses in our business.
As we have grown our commercial real estate lending portfolio, we have continued to maintain relationships not only in our local markets but in geographically diverse markets.
As we strategically grow our commercial real estate lending portfolio, we have continued to prospect for new relationships and maintain existing relationships not only in our local markets but in geographically diverse markets.
The CFPB enforces consumer protection laws and regulations for the benefit of consumers and not the protection or benefit of investors. In addition, new laws and regulations, including those related to environmental, social, and governance initiatives, may continue to increase our costs of regulatory compliance and of doing business, and otherwise affect our operations.
The CFPB enforces consumer protection laws and regulations for the benefit of consumers and not the protection or benefit of investors. In addition, changes in laws and regulations, or the application of these laws and regulations, may continue to impact our costs of regulatory compliance and of doing business, and otherwise affect our operations.
Like most financial institutions, the Bank significantly depends on technology to deliver its products and services and to otherwise conduct business. To remain technologically competitive and operationally efficient, the Bank invests in system upgrades, new technological solutions, and other technology initiatives.
Like most financial institutions, the Bank significantly depends on technology to deliver its products and services and to otherwise conduct business. The Bank continues to invest in new technological solutions, system upgrades, and other technology initiatives, which allows us to offer new and competitive products and services to our customers.
Repayment of such loans may be affected by factors outside the borrower's control, such as adverse conditions in the real estate market, the economy, environmental factors, natural disasters or pandemics, and/or changes in government regulation.
Repayment of commercial loans often depends on the successful operation of a 11 business or of the underlying property which may be affected by factors outside the borrower's control, such as adverse conditions in the real estate market, the economy, the implementation of tariffs, environmental factors, natural disasters or pandemics, and/or changes in government regulation.
The Company requires third-party vendors to maintain certain levels of information security; however, vendors may remain vulnerable to breaches, unauthorized access, misuse, computer viruses, and/or other malicious attacks that could ultimately compromise sensitive information. We have developed procedures and processes for selecting and monitoring third-party vendors, but ultimately are dependent on these third-party vendors to secure their information.
The Bank and the Company require third-party vendors to maintain certain levels of information security; however, vendors may remain vulnerable to breaches, unauthorized access, misuse, computer viruses, and/or other malicious attacks that could ultimately compromise sensitive information.
Commercial and industrial loans are primarily made based on the identified cash flow of the borrower and secondarily on the collateral underlying the loans. The borrowers' cash flow may prove to be unpredictable, and collateral securing these loans may fluctuate in value. Most often, this collateral consists of accounts receivable, inventory and equipment.
A borrower's cash flow may prove to be unpredictable, and collateral securing these loans may fluctuate in value. Most often, this collateral consists of accounts receivable, inventory and equipment.
In addition to confidential information regarding our customers, employees and others, we, and in some cases a third party, compile, process, transmit and store proprietary, non-public information concerning our business, operations, plans and strategies. 11 Information security risks for financial institutions continue to increase in part because of evolving technologies, the use of the internet and telecommunications technologies (including mobile devices) to conduct financial and other business transactions and the increased sophistication and activities of organized crime, perpetrators of fraud, hackers, terrorists and others.
Information security risks for financial institutions continue to increase in part because of evolving technologies, the use of the internet and telecommunications technologies (including mobile devices) to conduct financial and other business transactions and the increased sophistication and activities of organized crime, perpetrators of fraud, hackers, terrorists and others.
Any of these events could have an adverse effect on our business, financial condition and results of operations. See "Part I, Item 1C. Cybersecurity" for additional discussion related to cybersecurity. Third-party vendors subject the Company to potential business, reputation and financial risks.
See "Part I, Item 1C. Cybersecurity" for additional discussion related to cybersecurity. Third-party vendors subject the Bank and the Company to potential business, reputation and financial risks.
Our risk management and compliance programs and functions may not be effective in mitigating risk and loss. We maintain an enterprise risk management program that is designed to identify, quantify, monitor, report, and control the risks that we face. These risks include: interest-rate, credit, liquidity, operations, reputation, compliance and litigation.
We maintain an enterprise risk management program that is designed to identify, quantify, monitor, report, and control the risks that we face. These risks include: interest-rate, credit, liquidity, operations, compliance and litigation. We also maintain a compliance program to identify, measure, assess, and report on our adherence to applicable laws, policies and procedures.
The Company may be adversely affected by an increasing prevalence of fraud and other financial crimes. Reported instances of fraud and related financial crimes are rising nationwide. Like all financial institutions, the Company is vulnerable to increasing fraud losses as fraud schemes perpetrated against the Company and its customers continue to evolve and become more sophisticated.
Like all financial institutions, the Bank and the Company are vulnerable to increasing fraud losses as fraud schemes perpetrated against the Bank, the Company, and our customers continue to evolve and become more sophisticated.
The Bank will report a net loss for tax purposes for fiscal year 2024 due to the sale of securities in October 2023 associated with the securities strategy and will therefore have negative current and accumulated earnings and profits for fiscal year 2024.
The Bank's bad debt recapture amount may impact the amount and timing of capital distributions to the Company. The Bank reported a net loss on its fiscal year 2024 federal tax return due to the sale of securities in October 2023 associated with the securities strategy which resulted in negative current and accumulated earnings and profits for fiscal year 2024.
It is 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 capital distributions to the Company during fiscal year 2026 and not be taxed on those distributions. See additional discussion regarding the Bank's pre-1988 bad debt recapture in "Part II.
During the fourth quarter of fiscal year 2025, the Bank reached a point where there was sufficient taxable income to replenish the Bank's tax accumulated earnings and profits to a positive level, allowing the Bank to make distributions to the holding company and not have that distribution subject to the pre-1988 bad debt recapture tax.
Under certain circumstances, capital distributions from the Bank to the Company may be subject to regulatory approvals. See "Item 1. Business – Regulation and Supervision" for additional information. The Bank's bad debt recapture amount may impact the amount and timing of capital distributions to the Company.
Under certain circumstances, capital distributions from the Bank to the Company may be subject to regulatory approvals. See "Item 1. Business – Regulation and Supervision" for additional information. The Company values constructive input from stockholders, and our Board of Directors and management team are committed to acting in the best interests of all stockholders .
Accumulated Other Comprehensive Income." Changes in interest rates, as they relate to customers, can also have an adverse impact on our financial condition and results of operations. In times of rising interest rates, default risk may increase among borrowers with adjustable-rate loans as the rates on their loans adjust upward and their payments increase.
Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 15. Accumulated Other Comprehensive Income." Changes in interest rates, as they relate to customers, can also have an adverse impact on our financial condition and results of operations.
An increase in valuation allowances and charge-offs related to our commercial and industrial loan portfolio could have an adverse effect on our business, financial condition, results of operations and future prospects. Risks Related to Cybersecurity, Third Parties, and Technology .
The deterioration of one commercial loan or a commercial borrowing relationship could cause a significant increase in the dollar amount of delinquencies, non-performing assets, net charge-offs, and future loan loss provisions. An increase in valuation allowances and charge-offs related to our commercial loan portfolio could have an adverse effect on our business, financial condition, results of operations and future prospects.
We also outsource certain aspects of our data processing, data processing operations, remote network monitoring, engineering and managed security services to third-party service providers.
We also outsource certain aspects of our data processing, data processing operations, remote network monitoring, engineering and managed security services to third-party service providers. In addition to confidential information regarding our customers, employees and others, we, and in some cases a third party, compile, process, transmit and store proprietary, non-public information concerning our business, operations, plans and strategies.
This additional tax expense reduced the amount of earnings available to be distributed to the holding company 14 during fiscal year 2024. The Bank had $75.9 million in pre-1988 bad debt reserves at September 30, 2024, which equates to an unrecorded deferred tax liability of $15.9 million.
This additional tax expense reduced the amount of Bank earnings available to be distributed to the holding company during fiscal year 2024.
A growing portion of our loan portfolio consists of commercial loans. These loan types tend to be larger than and in different geographic regions from most of our existing loan portfolio and are generally considered to have different and greater risks than one- to four-family residential real estate loans and may involve multiple loans to groups of related borrowers.
Commercial loans typically have larger loan balances than one- to four-family residential loans and may involve multiple loans to groups of related borrowers.
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The impact of changes in interest rates is generally observed on the income statement.
Added
In times of rising interest rates, default risk may increase among borrowers with adjustable-rate loans as the rates on their loans adjust upward and their payments increase. Fluctuations in interest rates also affect customer demand for loan and deposit products.
Removed
Management's Discussion and Analysis of Financial Condition and Results of Operations - Strategic Securities Transaction," "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Stockholders' Equity" and "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 15.
Added
As part of the Company's strategic initiatives to develop a full-service commercial banking business, we are growing our commercial loan portfolio. Maintaining strong asset quality in association with the commercial loan growth is a top priority for the Bank.
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In addition, a decline in commercial real estate values would likewise adversely affect the value of collateral securing commercial real estate loans.
Added
We are applying disciplined underwriting and ongoing credit and performance monitoring and we monitor concentration levels by collateral type, geographic location and borrowing relationship.
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A growing commercial loan portfolio also subjects us to greater regulatory scrutiny.
Added
However, there are still lending and credit risks that could adversely impact our financial condition and results of operations as commercial loans are generally considered to have different and greater credit risks than one- to four-family residential real estate loans.
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Furthermore, these loan types can expose us to a greater risk of delinquencies, non-performing assets, loan losses, and future loan loss provisions than one- to four-family residential real estate loans because repayment of such loans often depends on the successful operation of a business or of the underlying property.
Added
Additionally, if we foreclose on these loans, our holding period for the collateral may be longer than for a one- to-four family residential property as there are generally fewer potential purchasers of this type of collateral. Commercial and industrial loans are primarily made based on the identified cash flow of the borrower and secondarily on the collateral underlying the loans.
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Risks Related to Competition Strong competition may limit our growth and profitability. While we are one of the largest mortgage loan originators in the state of Kansas, we compete in the same market areas as local, regional, and national banks, savings institutions, credit unions, mortgage brokerage firms, investment banking and brokerage firms, mortgage bankers and online competitors.
Added
We have developed procedures and processes for selecting and monitoring third-party vendors, but ultimately are dependent on these third-party vendors to secure their information.
Removed
We also compete with online investment and mortgage brokerages and online banks that are not confined to any specific market area. Many of these competitors operate on a national or regional level, are a conglomerate of various financial services providers housed under one corporation, or otherwise have substantially greater financial or technological resources than the Bank.
Added
The Company and its third-party vendors may develop or incorporate artificial intelligence technology into certain business processes, services or products. The use of artificial intelligence presents several risks, including an uncertain and evolving legal and regulatory environment, along with the reliability of information generated and the complexity and rapid pace of change in artificial intelligence models.
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We compete primarily on the basis of the interest rates offered to depositors, the terms of loans offered to borrowers, and the benefits afforded to customers as a local institution and portfolio lender. Should we face competitive pressure to increase deposit rates or decrease loan rates, our net interest income could be adversely affected.
Added
Risks Related to Competition Strong competition may limit our growth and profitability. The Company operates in a highly competitive environment for quality commercial banking relationships, one-to four-family lending relationships and attracting and growing deposits.
Removed
Moreover, bank regulatory agencies have been active in responding to concerns and trends identified in examinations and have issued formal enforcement orders requiring capital ratios in excess of regulatory requirements and/or assessing monetary penalties.
Added
Our competition includes larger national, regional and local financial institutions, savings institutions, credit unions, investment banking and mortgage brokerage firms, farm credit lenders, commercial finance companies, insurance companies, online competitors that are not confined to any specific market area, and non-bank lenders and smaller local institutions that offer aggressive pricing and specialized loan structures and banking services.
Removed
Given the amount of cash at the holding company level ($50.1 million as of September 30, 2024), and in an effort to minimize the tax associated with the 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.
Added
Additionally, they may offer deposit and loan rates that we cannot offer as it may adversely impact our net interest income. The Bank cannot grow profitably without growing our deposit portfolio as those funds are generally used to fund loan growth. Our profitability depends upon our ability to compete with other entities for the same customer base.
Removed
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Comparison of Operating Results for the Years Ended September 30, 2024 and 2023" and "Part II, Item 8. Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 9. Income Taxes".
Added
All publicly traded companies face the risk that stockholders may disagree with the composition of the Board of Directors, the Company's strategic direction, or the way the Company is managed and may seek to effect change through various strategies that range from private engagement to public filings, proxy contests, efforts to force transactions not supported by the Board of Directors, and litigation.
Added
Responding to these actions may be costly and time-consuming, disrupt the Company's operations and/or divert the attention of the Board of Directors and executive management.
Added
Such activities could interfere with the Company's ability to execute its strategic plan and to attract and retain qualified executive leadership, as well as create perceived uncertainty as to the Company's future direction, which could also affect the market price and volatility of the Company's common stock.
Added
Due to the Bank's expected continuing positive tax accumulated and earnings profit balance, it is anticipated that the Bank will be in a position to distribute earnings to the holding company during fiscal year 2026.
Added
Earnings distributions from the Bank to the 15 holding company will be limited to the extent necessary to prevent the Bank from re-entering a negative accumulated earnings and profit position which would require the payment of the pre-1988 bad debt recapture tax on earnings moved from the Bank to the holding company.
Added
See additional discussion regarding the Bank's pre-1988 bad debt recapture in "Part I, Item 1. Business - Taxation" and "Part II, Item 8. Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 9. Income Taxes". Our risk management and compliance programs and functions may not be effective in mitigating risk and loss.
Added
The Bank and the Company may be adversely affected by an increasing prevalence of fraud and other financial crimes. Reported instances of fraud and related financial crimes are rising nationwide.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe response procedures are designed to identify, analyze, contain and remediate any such cyber incident that occurs. The Bank engages in the periodic assessment and testing of our policies, standards, processes and practices that are designed to address cybersecurity threats and incidents.
Biggest changeWhile processes are in place to minimize the chance of a successful cyberattack, the Bank has established incident response procedures to address a cyberattack that may occur despite these safeguards. The response procedures are designed to identify, analyze, contain and remediate any such cyber incident that occurs.
The minutes and materials from the ITOC meetings are available to the Board of Directors on the Directors' Board Portal. The Bank's Information Security Officer provides the Board of Directors an annual report on all aspects of Information Security, including steps taken to minimize the risk of cyber incidents through training and testing employees on phishing, social engineering, etc.
The minutes and materials from the ITOC meetings are available to the Board of Directors on the Directors' Board Portal. The Bank's Information Security Officer provides the Board of Directors with an annual report on all aspects of Information Security, including steps taken to minimize the risk of cyber incidents through training and testing employees on phishing, social engineering, etc.
These programs and policies leverage frameworks and controls from the National Institute of Standards and Technology ("NIST") Cybersecurity Framework, Federal Financial Institutions Examination Council ("FFIEC") cybersecurity guidance, Center for Internet Security ("CIS") Benchmarks, as well as various other regulatory requirements and industry-specific standards.
These programs and policies leverage frameworks and controls from the National Institute of Standards and Technology ("NIST") Cybersecurity Framework, Federal Financial Institutions Examination Council ("FFIEC") cybersecurity guidance, Center for Internet Security ("CIS") Benchmarks, Cyber Risk Institute Profile, as well as various other regulatory requirements and industry-specific standards.
As one of the critical elements of the Bank's overall risk management approach, our cybersecurity risk management program and strategy is focused on the following key areas: • Incident Response and Recovery Planning: The Bank has implemented a comprehensive, cross-functional approach to identifying, preventing and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that provide for the prompt escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by management in a timely manner. • Technical Safeguards: The Bank deploys technical safeguards that are designed to protect the sensitive information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and multifactor authentication and other access controls, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence. • Outside Experts: The Bank routinely works with outside experts, consultants, auditors and other third parties in connection with managing its cybersecurity risks and for advice regarding best practices and technical expertise. • Education and Awareness: The Bank provides regular, mandatory training for personnel regarding cybersecurity threats on matters such as phishing and email security best practices to equip our personnel with effective tools to address cybersecurity threats, and to communicate the Bank's evolving information security policies, standards, processes and practices. 16 While processes are in place to minimize the chance of a successful cyberattack, the Bank has established incident response procedures to address a cyberattack that may occur despite these safeguards.
As one of the critical elements of the Bank's overall risk management approach, our cybersecurity risk management program and strategy is focused on the following key areas: • Incident Response and Recovery Planning: The Bank has implemented a comprehensive, cross-functional approach to identifying, preventing and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that provide for the prompt escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by management in a timely manner. • Technical Safeguards: The Bank deploys technical safeguards that are designed to protect the sensitive information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and multifactor authentication and other access controls, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence. • Outside Experts: The Bank routinely works with outside experts, consultants, auditors and other third parties in connection with managing its cybersecurity risks and for advice regarding best practices and technical expertise. • Education and Awareness: The Bank provides regular, mandatory training for personnel regarding cybersecurity threats on matters such as phishing and email security best practices to equip our personnel with effective tools to address cybersecurity threats, and to communicate the Bank's evolving information security policies, standards, processes and practices.
Third-party services related to advice, assessments, auditing, testing and support related to cybersecurity and information technology processes and services, where appropriate, are also subject to the third-party risk program. Like other financial institutions, the Bank experiences malicious cyber activity on an ongoing basis directed at its websites, computer systems, software, networks and users.
Third-party services related to advice, assessments, auditing, testing and support related to cybersecurity and information technology processes and services, where appropriate, are also subject to the third-party risk program. Like other financial institutions, the Bank is targeted with malicious cyber activity on an ongoing basis directed at its websites, computer systems, software, networks and users.
Cyber incidents with (i) the potential of materiality; (ii) anticipated publicity; or (iii) anticipated written notices to a significant number of customers; have been promptly reported to the Board with ongoing updates during regular Board meetings. The Bank's Chief Information Officer presents updates on new security measures, programs and services to ITOC.
Cyber incidents with (i) the potential of materiality, pursuant to SEC cybersecurity disclosure rules; (ii) anticipated publicity; or (iii) anticipated written notices to a significant number of customers; have been promptly reported to the Board with ongoing updates during regular Board meetings. The Bank's Chief Information Officer presents updates on new security measures, programs and services to ITOC.
This malicious activity includes attempts at unauthorized access and implantation of computer viruses or malware. The Bank also experiences large volumes of phishing and other forms of social engineering attempted for the purpose of perpetuating fraud.
This malicious activity includes attempts at unauthorized access and implantation of computer viruses or malware. The Bank is also targeted with large volumes of phishing and other forms of social engineering attempted for the purpose of perpetuating fraud.
The Bank's Chief Technology Officer provides annual training on cyber security topics and reports to the Board of Directors on the Bank's cyber incidents, if any.
The Bank's Chief Information Officer or delegate provides annual training on cyber security topics and reports to the Board of Directors on the Bank's cyber incidents, if any.
Our information security program, under the responsibility of the Chief Information Officer and the Chief Compliance & Risk Management Officer, balances security risks with business goals and provides appropriate protections for the confidentiality, integrity and availability of Bank and customer information. We annually benchmark our information security program to assess its strength as measured against recommended industry security best practices.
Our information security program, under the responsibility of the Chief Information Officer and the Chief Compliance & Risk Management Officer, balances security risks with business goals and provides appropriate protections for the confidentiality, integrity and 16 availability of Bank and customer information.
Risk Factors, cybersecurity incidents and other security breaches involving this information at the Bank, at our service providers or counterparties, may negatively impact our business or performance. 15 We have implemented a strategy to address threats to Bank assets and confidential information.
Risk Factors - Risks Related to Cybersecurity, Third Parties, and Technology", cybersecurity incidents and other security breaches involving this information at the Bank, at our service providers or counterparties, may negatively impact our business or performance.
This model is composed of a variety of different components including administrative controls, technical controls and other safeguards. These various components are centrally managed and monitored, creating a multi-layered and interlocking cybersecurity defense system.
This model is composed of a variety of different components including administrative controls, technical controls and other safeguards. These components are centrally managed and monitored, creating a multi-layered and interlocking cybersecurity defense system. We maintain programs and policies to support the management of cybersecurity risk with a focus on prevention, detection and recovery processes.
These efforts include a wide range of activities, including audits, assessments, tabletop exercises, threat modeling, vulnerability testing and other exercises focused on evaluating the effectiveness of our cybersecurity measures and planning.
The Bank engages in the periodic assessment and testing of our policies, standards, processes and practices that are designed to address cybersecurity threats and incidents. These efforts include a wide range of activities, including audits, assessments, tabletop exercises, threat modeling, vulnerability testing and other exercises focused on evaluating the effectiveness of our 17 cybersecurity measures and planning.
Item 1C. Cybersecurity Risk Management and Strategy Information security and privacy are an important part of our culture and foundational to our goal of delivering safe, secure and quality products and services. This philosophy is emphasized throughout the Bank by its Board of Directors, senior leaders, officers, managers and other employees to promote a Bank-wide culture of cybersecurity risk management.
This philosophy is emphasized throughout the Bank by its Board of Directors, senior leaders, officers, managers and other employees to promote a Bank-wide culture of cybersecurity risk management.
This annual report also includes an independent third-party assessment of the Bank's information security systems together with information on steps taken to address any identified weaknesses.
This annual report also includes an independent third-party assessment of the Bank's information security systems together with information on steps taken to address any identified weaknesses. The Board of Directors also participates in an annual evaluation of enterprise risk and is presented with management's assessment of the top risks, which generally include several cybersecurity components.
Unauthorized access to our customers' confidential or proprietary information as a result of a cybersecurity incident or otherwise could expose us to reputational harm and litigation and adversely affect our ability to attract and retain customers. We maintain a variety of programs and policies to support the management of cybersecurity risk with a focus on prevention, detection and recovery processes.
Unauthorized access to our customers' confidential or proprietary information as a result of a cybersecurity incident or otherwise could expose us to reputational harm and litigation and adversely affect our ability to attract and retain customers. We have implemented a strategy to address threats to Bank assets and confidential information.
The Board of Directors also participates in an annual evaluation of risk and is presented with management's assessment of the top risks, which generally includes several cybersecurity components. 17 Material Cybersecurity Incidents As of September 30, 2024, we were not aware of any cybersecurity incidents that have materially affected or are reasonably likely to materially affect the Bank, including its business strategies, results of operations or financial condition.
Material Cybersecurity Incidents As of September 30, 2025, we were not aware of any cybersecurity incidents that have materially affected or are reasonably likely to materially affect the Bank, including its business strategies, results of operations or financial condition. For more information on our cybersecurity-related risks, see "Item 1A.
For more information on our cybersecurity-related risks, see "Item 1A. Risk Factors – Risks Related to Cybersecurity, Third Parties, and Technology”.
Risk Factors – Risks Related to Cybersecurity, Third Parties, and Technology". 18
Added
Item 1C. Cybersecurity Risk Management and Strategy Information security and privacy are an important part of our culture and are foundational to our goal of delivering safe, secure and quality products and services.
Added
We annually benchmark our information security program to assess its strength as measured against recommended industry security best practices.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties At September 30, 2024, we had 44 traditional branch offices and four in-store branch offices. As of September 30, 2024, the Bank owned the office building and related land in which its home office and executive offices are located, and 35 of its other branch offices. The remaining 12 branches are either leased or partially owned.
Biggest changeItem 2. Properties At September 30, 2025, we had 44 traditional branch offices and two in-store branch offices. As of September 30, 2025, the Bank owned the office building and related land in which its home office and executive offices are located, and 35 of its other branch offices. The remaining 10 branches are either leased or partially owned.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe 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.
Biggest changeThe plaintiffs appealed this decision to the Kansas Court of Appeals, which issued an opinion on October 4, 2024 reversing the district court's ruling. On October 17, 2025, the Kansas Supreme Court affirmed the ruling of the Court of Appeals, remanding the case to the District Court for further proceedings.
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 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 district court granted the Bank's motion to dismiss the complaint, with prejudice.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThis plan has no expiration date; however, the Federal Reserve Bank's approval for the Company to repurchase shares extends through February 2025. 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.
Biggest changeShares 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. From December 2010 through September 30, 2025, $439.9 million worth of common stock was repurchased.
See "Part I, Item 1. Business - Limitations on Dividends and Other Capital Distributions" and "Part I, Item 1A. Risk Factors - Other Risks" for additional discussion on the Bank's ability to make capital distributions to the Company. Item 6. [Reserved] 20
See "Part I, Item 1. Business - Limitations on Dividends and Other Capital Distributions" and "Part I, Item 1A. Risk Factors - Other Risks" for additional discussion on the Bank's ability to make capital distributions to the Company. Item 6. [Reserved] 21
The dividend policy of the Company is subject to the discretion of the Board of Directors and will 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, and the amount of cash at the holding company level.
The dividend policy of the Company is subject to the discretion of the Board of Directors and depends 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, and the amount of cash at the holding company level.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Stock Listing Capitol Federal Financial, Inc. common stock is traded on the Global Select tier of the NASDAQ Stock Market under the symbol "CFFN". At November 21, 2024, there were approximately 7,040 holders of record of Capitol Federal Financial, Inc. common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Stock Listing Capitol Federal Financial, Inc.'s common stock is traded on the Global Select tier of the NASDAQ Stock Market under the symbol "CFFN". At November 21, 2025, there were approximately 6,576 holders of record of Capitol Federal Financial, Inc. common stock.
Total Number of Approximate Dollar Total Shares Purchased as Value of Shares Number of Average Part of Publicly that May Yet Be Shares Price Paid Announced Plans Purchased Under the Purchased per Share or Programs Plans or Programs July 1, 2024 through July 31, 2024 — $ — — $ 75,000,000 August 1, 2024 through August 31, 2024 — — — 75,000,000 September 1, 2024 through September 30, 2024 — — — 75,000,000 Total — — — 75,000,000 Stockholders and General Inquiries Copies of our Annual Report on Form 10-K for the fiscal year ended September 30, 2024 are available to stockholders at no charge in the Investor Relations section of our website, www.capfed.com. 19 Stockholder Return Performance Presentation The information presented below assumes $100 invested on September 30, 2019 in the Company's common stock and in each of the indices, and assumes the reinvestment of all dividends.
Total Number of Approximate Dollar Total Shares Purchased as Value of Shares Number of Average Part of Publicly that May Yet Be Shares Price Paid Announced Plans Purchased Under the Purchased per Share or Programs Plans or Programs July 1, 2025 through July 31, 2025 — $ — — $ 75,000,000 August 1, 2025 through August 31, 2025 469,436 6.15 469,436 72,111,869 September 1, 2025 through September 30, 2025 148,824 6.48 148,824 71,147,502 Total 618,260 6.23 618,260 71,147,502 Stockholders and General Inquiries Copies of our Annual Report on Form 10-K for the fiscal year ended September 30, 2025 are available to stockholders at no charge from our investor relations website, https://ir.capfed.com. 20 Stockholder Return Performance Presentation The information presented below assumes $100 invested on September 30, 2020 in the Company's common stock and in each of the indices, and assumes the reinvestment of all dividends.
BMI Banks Index 100.00 73.42 133.58 102.63 99.42 146.57 Source: S&P Global Market Intelligence Restrictions on the Payment of Dividends The Company's ability to pay dividends is dependent, in part, upon its ability to obtain capital distributions from the Bank.
BMI Banks Index 100.00 181.94 139.78 135.41 199.63 270.17 Source: S&P Global Market Intelligence Restrictions on the Payment of Dividends The Company's ability to pay dividends is dependent, in part, upon its ability to obtain capital distributions from the Bank.
Historical stock price performance is not necessarily indicative of future stock price performance. Period Ending Index 9/30/2019 9/30/2020 9/30/2021 9/30/2022 9/30/2023 9/30/2024 Capitol Federal Financial, Inc. 100.00 70.83 94.25 73.08 45.68 59.46 NASDAQ Composite Index 100.00 140.96 183.61 135.41 170.76 236.74 S&P U.S.
Historical stock price performance is not necessarily indicative of future stock price performance. Period Ending Index 9/30/2020 9/30/2021 9/30/2022 9/30/2023 9/30/2024 9/30/2025 Capitol Federal Financial, Inc. 100.00 133.08 103.19 64.49 83.95 96.57 NASDAQ Composite Index 100.00 130.26 96.06 121.14 167.95 210.64 S&P U.S.
Share Repurchases The following table summarizes our share repurchase activity during the three months ended September 30, 2024 and additional information regarding our share repurchase program.
Share Repurchases The following table summarizes our share repurchase activity during the three months ended September 30, 2025. As of September 30, 2025, the Company had $71.1 million remaining authorized under its existing stock repurchase plan.
Removed
In February 2024, the Company notified the FRB of its intent to authorize the repurchase of up to $75.0 million in common stock over a period of time, depending upon market conditions and cash balances at the holding company level.
Added
The plan has no expiration date; however, we are required to annually seek the FRB's non-objection for the remaining buyback amount or we can request a new buyback amount. The FRB's current non-objection for the Company to repurchase up to $75.0 million of stock expires in February 2026.
Removed
From December 2010 through September 30, 2024, $436.1 million worth of common stock was repurchased.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

179 edited+124 added−84 removed47 unchanged
Biggest changeFor the Year Ended September 30, 2024 September 30, 2023 Amount Rate % of Total Amount Rate % of Total (Dollars in thousands) Fixed-rate: One- to four-family $ 207,757 6.39 % 29.3 % $ 404,598 5.47 % 25.7 % One- to four-family construction 24,578 6.56 3.5 39,599 5.72 2.5 Commercial: Real estate 7,920 7.63 1.1 43,408 7.48 2.7 Commercial and industrial 22,251 6.96 3.1 40,238 7.81 2.6 Construction 3,632 7.07 0.5 149,046 5.89 9.5 Home equity 8,402 9.00 1.2 6,080 8.20 0.4 Consumer other 2,975 7.22 0.4 4,620 6.93 0.3 Total fixed-rate 277,515 6.58 39.1 687,589 5.87 43.7 Adjustable-rate: One- to four-family 53,910 6.37 7.6 342,093 4.97 21.7 One- to four-family construction 16,875 6.51 2.4 28,545 5.22 1.8 Commercial: Real estate 114,502 7.56 16.2 223,910 5.60 14.2 Commercial and industrial 49,593 7.65 7.0 57,295 7.28 3.6 Construction 152,739 7.96 21.5 177,471 6.22 11.3 Home equity 40,248 9.39 5.7 55,896 8.43 3.6 Consumer other 3,267 5.42 0.5 1,635 4.25 0.1 Total adjustable-rate 431,134 7.68 60.9 886,845 5.75 56.3 Total originated, refinanced and purchased/participations $ 708,649 7.25 100.0 % $ 1,574,434 5.81 100.0 % Purchased and participation loans included above: Fixed-rate: Correspondent purchased - one- to four-family $ 2,978 6.43 $ 199,858 5.20 Participations and purchases - commercial 4,400 7.08 19,016 9.43 Total fixed-rate purchased/participations 7,378 6.82 218,874 5.57 Adjustable-rate: Correspondent purchased - one- to four-family 519 2.93 215,939 4.86 Participations and purchases - commercial 39,815 8.04 209,259 6.36 Total adjustable-rate purchased/participations 40,334 7.98 425,198 5.60 Total purchased/participation loans $ 47,712 7.80 $ 644,072 5.59 30 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 loan-to-value ("LTV") ratio, and average balance per loan as of September 30, 2024.
Biggest changeFor the Year Ended September 30, 2025 September 30, 2024 Amount Rate % of Total Amount Rate % of Total (Dollars in thousands) Commercial: Commercial real estate Fixed-rate $ 155,315 6.53 % 12.4 % $ 7,920 7.63 % 1.1 % Adjustable-rate 373,526 6.85 29.8 114,502 7.56 16.2 528,841 6.76 42.2 122,422 7.57 17.3 Commercial and industrial Fixed-rate 102,489 7.20 8.2 22,251 6.96 3.1 Adjustable-rate 75,375 7.34 6.0 49,593 7.65 7.0 177,864 7.26 14.2 71,844 7.44 10.1 Commercial construction Fixed-rate 26,235 6.69 2.1 3,632 7.07 0.5 Adjustable-rate 168,957 7.27 13.5 152,739 7.96 21.6 195,192 7.19 15.6 156,371 7.94 22.1 Total commercial Fixed-rate 284,039 6.79 22.7 33,803 7.13 4.8 Adjustable-rate 617,858 7.02 49.3 316,834 7.77 44.7 901,897 6.95 72.0 350,637 7.71 49.5 One- to four-family and consumer: One- to four-family Fixed-rate 181,667 6.18 14.5 232,335 6.41 32.8 Adjustable-rate 109,599 6.17 8.7 70,785 6.40 10.0 291,266 6.17 23.2 303,120 6.40 42.8 Consumer Fixed-rate 8,034 8.08 0.6 11,377 8.54 1.6 Adjustable-rate 52,703 8.18 4.2 43,515 9.09 6.1 60,737 8.17 4.8 54,892 8.98 7.7 Total one- to four-family and consumer Fixed-rate 189,701 6.26 15.1 243,712 6.50 34.4 Adjustable-rate 162,302 6.82 12.9 114,300 7.43 16.1 352,003 6.52 28.0 358,012 6.80 50.5 Total commercial, one- to four-family, and consumer Fixed-rate 473,740 6.57 37.8 277,515 6.58 39.2 Adjustable-rate 780,160 6.98 62.2 431,134 7.68 60.8 $ 1,253,900 6.83 100.0 % 708,649 7.25 100.0 % Commercial participations included above: Fixed-rate $ 34,500 6.93 % $ 4,400 7.08 % Adjustable-rate 69,931 7.19 39,815 8.04 $ 104,431 7.10 $ 44,215 7.95 32 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, and average balance per loan as of September 30, 2025.
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 WAM is the remaining weighted average contractual term in years. The beginning and ending WAMs represent the remaining maturity at each date presented.
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.
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. 24 Recent Accounting Pronouncements For a discussion of Recent Accounting Pronouncements, see "Part II, Item 8.
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. Recent Accounting Pronouncements For a discussion of Recent Accounting Pronouncements, see "Part II, Item 8.
Due 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. The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of customers.
Due to the nature of public unit certificates of deposit and commercial certificates of deposit, retention rates are not as predictable as retail certificates of deposit. The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of customers.
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.
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, participations, and refinances are reported together.
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. 52 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.
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. 57 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.
Financial Statements and Supplementary Data – Notes to Financial Statements – Note 1. Summary of Significant Accounting Policies." Financial Condition The following table summarizes the Company's financial condition at the dates indicated.
Financial Statements and Supplementary Data – Notes to Financial Statements – Note 1. Summary of Significant Accounting Policies." 26 Financial Condition The following table summarizes the Company's financial condition at the dates indicated.
The cash flows are discounted back to the balance sheet date using each loan's effective yield, to arrive at a present value of future cash flows, which is compared to the amortized cost basis of the loan pool to determine the amount of ACL required by the calculation. Management then considers qualitative factors when assessing the overall level of ACL.
The cash flows are discounted back to the balance sheet date using each loan's effective yield, to arrive at a present value of expected cash flows, which is compared to the amortized cost basis of the loan pool to determine the amount of ACL required by the calculation. Management then considers qualitative factors when assessing the overall level of ACL.
The qualitative factors applied at September 30, 2024, and the importance and levels of the qualitative factors applied, may change in future periods depending on the level of changes to items such as the uncertainty of economic conditions and management's assessment of the level of credit risk within the loan portfolio as a result of such changes, compared to the amount of ACL calculated by the model.
The qualitative factors applied at September 30, 2025, and the importance and levels of the qualitative factors applied, may change in future periods depending on the level of changes to items such as the uncertainty of economic conditions and management's assessment of the level of credit risk within the loan portfolio as a result of such changes, compared to the amount of ACL calculated by the model.
The evaluation of qualitative factors is inherently imprecise and requires significant management judgment. See "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 4. Loans Receivable and Allowance for Credit Losses - Allowance for Credit Losses" for additional information regarding the qualitative factors applied at September 30, 2024.
The evaluation of qualitative factors is inherently imprecise and requires significant management judgment. See "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 4. Loans Receivable and Allowance for Credit Losses - Allowance for Credit Losses" for additional information regarding the qualitative factors applied at September 30, 2025.
Such qualitative factors may include changes in the Bank's loan portfolio composition and credit concentrations, changes in the balances and/or trends in asset quality and/or loan credit performance, changes in lending underwriting standards, the effect of other external factors such as significant unique events or conditions, and actual and/or expected changes in economic conditions, real estate values, and/or other economic developments.
Such qualitative factors may include changes in the Company's loan portfolio composition and credit concentrations, changes in the balances and/or trends in asset quality and/or loan credit performance, changes in lending underwriting standards, the effect of other external factors such as significant unique events or conditions, and actual and/or expected changes in economic conditions, real estate values, and/or other economic developments.
Management continues to monitor the net interest rate spread and overall profitability of the leverage strategy. Maturities of Interest-Bearing Liabilities.
Management continues to monitor the net interest rate spread and overall profitability of the leverage strategy. 47 Maturities of Interest-Bearing Liabilities.
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.
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 current tax earnings and accumulated earnings and profits, and the amount of cash at the holding company level.
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 fiscal years 2024 to 2023. For the comparison of fiscal years 2023 to 2022, see "Part II, Item 7.
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 fiscal years 2025 to 2024. For the comparison of fiscal years 2024 to 2023, see "Part II, Item 7.
The following table presents the average balances of our assets, liabilities, and stockholders' equity, and the related weighted average yields and rates on our interest-earning assets and interest-bearing liabilities for the periods indicated. For fiscal year 2022 information, see "Part II, Item 7.
The following table presents the average balances of our assets, liabilities, and stockholders' equity, and the related weighted average yields and rates on our interest-earning assets and interest-bearing liabilities for the periods indicated. For fiscal year 2023 information, see "Part II, Item 7.
The macroeconomic forecast is applied for a reasonable and supportable time period before reverting to long-term historical averages for each economic index. The forecast and reversion to mean time period used for each economic index at September 30, 2024 was four quarters.
The macroeconomic forecast is applied for a reasonable and supportable time period before reverting to long-term historical averages for each economic index. The forecast and reversion to mean time period used for each economic index at September 30, 2025 was four quarters.
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. (11) The operating expense ratio represents non-interest expense as a percentage of average assets.
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 non-interest expense as a percentage of average assets.
The weighted average yields are current yields and includes the amortization of premiums or discounts and are calculated by multiplying each estimated fair value by its current yield and dividing the sum of these results by the total estimated fair value.
The weighted average yields are current yields and include the amortization of premiums or discounts and are calculated by multiplying each estimated fair value by its current yield and dividing the sum of these results by the total estimated fair value.
Management's Discussion and Analysis of Financial Condition and Results of Operations - Comparison of Operating Results for the Years Ended September 30, 2023 and 2022" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2023. 51 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.
Management's Discussion and Analysis of Financial Condition and Results of Operations - Comparison of Operating Results for the Years Ended September 30, 2024 and 2023" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024. 56 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.
Additionally, the Company recognized $406 thousand of FDIC premiums and $215 thousand of income tax expense during the prior year related to the leverage strategy. When the leverage strategy is in place, it reduces the net interest margin due to the amount of earnings from the transaction in comparison to the size of the transaction.
Additionally, the Company recognized $406 thousand of FDIC premiums and $215 thousand of income tax expense during fiscal year 2023 related to the leverage strategy. When the leverage strategy is in place, it reduces the net interest margin due to the amount of earnings from the transaction in comparison to the size of the transaction.
Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2023.
Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024.
Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2023.
Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024.
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. (8) Net interest margin represents 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.
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 net interest income as a percentage of average interest-earning assets. Management believes that the net interest margin is important to investors as it is a profitability measure for financial institutions.
During the prior year, the average balance of cash associated with the leverage strategy was $882.8 million and interest earned on that cash was $37.8 million, the average balance of FHLB stock associated with the leverage strategy was $41.6 million and dividends earned on that stock were $3.6 million, and the average balance of FHLB borrowings associated with the leverage strategy was $924.4 million and the related interest expense was $39.7 million.
During fiscal year 2023, the average balance of cash associated with the leverage strategy was $882.8 million and interest earned on that cash was $37.8 million, the average balance of FHLB stock associated with the leverage strategy was $41.6 million and dividends earned on that stock were $3.6 million, and the average balance of FHLB borrowings associated with the leverage strategy was $924.4 million and the related interest expense was $39.7 million.
The amounts in the table represent the unpaid principal balance of the loans, less related charge-offs, if any. 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.
The amounts in the table represent the unpaid principal balance of the loans, less related charge-offs, if any. The LTVs 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.
The majority of home equity loans assume a maximum term of 240 months. 28 The following table presents, as of September 30, 2024, the amount of loans due after September 30, 2025, and whether these loans have fixed or adjustable interest rates.
The majority of home equity loans assume a maximum term of 240 months. 30 The following table presents, as of September 30, 2025, the amount of loans due after September 30, 2026, and whether these loans have fixed or adjustable interest rates.
(12) 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.
(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.
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 September 30, 2024 and 2023, approximately 66% and 72%, respectively, were 59 days or less delinquent.
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 September 30, 2025 and 2024, approximately 49% and 66%, respectively, were 59 days or less delinquent.
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 earning interest at the reserve balance rate until such time as it could be used to fund commercial loan activity or for other Bank operations.
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 lending activities or for other Bank operations.
(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. 35 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, excluding construction 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 September 30, 2024.
(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. 39 The following table presents the states where the properties securing ten percent or more of the total amount of the Bank's one- to four-family loans, excluding construction 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 for loans 90 or more days delinquent or in foreclosure at September 30, 2025.
The following table presents regular quarterly cash dividends and special cash dividends paid in calendar years 2024, 2023, and 2022.
The following table presents regular quarterly cash dividends and special cash dividends paid in calendar years 2025, 2024, and 2023.
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 approved by FHLB senior management was 50% of Bank Call Report total assets as of September 30, 2024.
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 September 30, 2025, as approved by FHLB senior management.
As of September 30, 2024, the Bank's policy allowed for combined brokered and public unit certificates of deposit up to 15% of total deposits. At September 30, 2024, the Bank did not have any brokered certificates of deposit, and public unit certificates of deposit were approximately 1% of total deposits.
As of September 30, 2025, the Bank's policy allowed for combined brokered and public unit certificates of deposit up to 15% of total deposits. At September 30, 2025, the Bank did not have any brokered certificates of deposit, and public unit certificates of deposit were approximately 2% of total deposits.
Leverage strategy borrowings are repaid prior to each quarter end so there is no impact to 42 quarter end capital ratios. The leverage strategy was not in place at any time during the current year due to the strategy being unprofitable, but it was in place at points during the prior year.
Leverage strategy borrowings are repaid prior to each quarter end so there is no impact to quarter end capital ratios. The leverage strategy was not in place at any time during the current fiscal year or fiscal year 2024 due to the strategy being unprofitable, but it was in place at points during fiscal year 2023.
(9) Return on average assets represents 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. (10) Return on average equity represents net income as a percentage of total average equity.
(6) Return on average assets represents 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 net income as a percentage of total average equity.
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 NCOs during fiscal year 2024 was $111 thousand.
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 0.22%. The highest such ratio for one- to four-family originated and correspondent loans, combined, was 0.12%. The amount of total NCOs during the current fiscal year was $198 thousand.
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.
Credit scores were updated in September 2025 from a nationally recognized consumer rating agency. The LTVs 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.
During the quarter ended December 31, 2023, the Company sold the 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.
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.
At September 30, 2024, the Bank had $744.2 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.
At September 30, 2025, the Bank had $713.6 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.
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 September 30, 2024. Amortizing FHLB advances are presented based on their maturity dates versus their quarterly scheduled repayment dates.
The following table presents the maturity of term borrowings, which consist of FHLB advances, along with the associated weighted average contractual and effective rates as of September 30, 2025. Amortizing FHLB advances totaling $276.0 million are presented based on their maturity dates versus their quarterly scheduled repayment dates.
The Bank had pledged securities with an estimated fair value of $108.7 million as collateral for public unit certificates of deposit at September 30, 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.
The Bank had pledged securities with an estimated fair value of $150.9 million as collateral for public unit certificates of deposit at September 30, 2025. 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.
(14) The table below provides a reconciliation between performance measures presented in accordance with accounting standards generally accepted in the United States of America ("GAAP") and the same performance measures excluding the impact of the net loss on the securities transactions associated with the securities strategy, which are not presented in accordance with GAAP.
(10) The table below provides a reconciliation between performance measures presented in accordance with accounting principles generally accepted in the United States of America ("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.
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.
See additional information regarding the impact of the securities strategy on our financial measurements in "Management's Discussion and Analysis of Financial Condition and Results of Operation - 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.
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 term borrowings for the next four quarters as of September 30, 2024.
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 September 30, 2025.
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, such as the leverage 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.
If management observes unusual trends in the amount and frequency of line of credit utilization and/or short-term borrowings that are not in conjunction with a planned strategy, the Bank will likely utilize term wholesale borrowing sources such as FHLB advances to provide term funding.
Since the Company had the intent to sell 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 fiscal year ended September 30, 2023.
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.
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 September 30, 2024, the Bank's capital ratios exceeded the well-capitalized requirements and the Bank exceeded all internal policy thresholds for sensitivity to changes in rates.
Consistent with our goal to operate a sound and profitable financial organization that delivers long-term stockholder value, we actively seek to maintain a well-capitalized status for the Bank in accordance with regulatory standards. As of September 30, 2025, 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 "Allowance for Credit Losses on Loans Receivable" and "Reserve for Off-Balance Sheet Credit Exposures" within "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 1.
See "Allowance for Credit Losses on Loans Receivable" and "Reserve for Off-Balance Sheet Credit Exposures" within "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 1. Summary of Significant Accounting Policies" for additional information.
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 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.
Management believes earnings per share is an important measure to investors as it shows the Company's earnings in relation to the Company's outstanding shares. 47 Comparison of Operating Results for the Years Ended September 30, 2024 and 2023 The Company recognized net income of $38.0 million, or $0.29 per share, for the current year, compared to net loss of $101.7 million, or $(0.76) per share, for the prior year.
Management believes EPS is an important measure to investors as it shows the Company's earnings in relation to the Company's outstanding shares. 52 Comparison of Operating Results for the Years Ended September 30, 2025 and 2024 The Company recognized net income of $68.0 million, or $0.52 per share, for the current fiscal year, compared to net income of $38.0 million, or $0.29 per share, for the prior fiscal year.
The economic indices sourced from the macroeconomic forecast and used in projecting loss rates are the national unemployment rate, changes in commercial real estate prices, changes in home values, and changes in the United States gross domestic product. The economic index used in the calculation to which the calculation is most sensitive is the national unemployment rate.
The economic indices sourced from the macroeconomic forecast and used in projecting loss rates are the national unemployment rate, changes in commercial real estate prices, changes in home values, changes in the United States consumer price index, and changes in the United States gross domestic product.
The provision for credit losses in the current year was comprised of a $1.9 million increase in the reserve for off-balance sheet credit exposures, partially offset by a $633 thousand release in the ACL for loans.
The provision for credit losses in the current fiscal year was comprised of a $1.2 million increase in the ACL for loans, partially offset by a $457 thousand decrease in the reserve for off-balance sheet credit exposures.
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.
The maturities of our borrowings are generally staggered in order to mitigate the risk of a highly negative cash flow position at maturity. The Bank has used fully-amortizing FHLB advances that require periodic payments of principal over the term of the advance.
Provision for Credit Losses The Company recorded a provision for credit losses of $1.3 million during the current year, compared to a provision for credit losses of $6.8 million for the prior year.
Provision for Credit Losses The Company recorded a provision for credit losses of $745 thousand during the current fiscal year compared to a provision for credit losses of $1.3 million for the prior fiscal year.
The securities strategy was non-recurring in nature; therefore management believes it is meaningful to investors to present certain financial measures excluding the securities strategy to better evaluate the Company's core operations. See information regarding the securities strategy in the "Executive Summary" discussion above.
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 "Management's Discussion and Analysis of Financial Condition and Results of Operation - Executive Summary" discussion above.
The LTV ratio is calculated using the gross loan amount (composed of unpaid principal and undisbursed amounts) as of September 30, 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.
The LTV is calculated using the gross loan amount (composed of unpaid principal and undisbursed amounts) as of September 30, 2025 and the most current collateral value available, which is most often the value at origination/purchase.
The leverage strategy is not a core operating business for the Company. It provides the Company the ability to utilize excess capital to generate earnings. Additionally, it is a strategy that can be exited quickly without additional costs.
It provides the Company with the ability to utilize excess capital to generate earnings. Additionally, it is a strategy that can be exited quickly without additional costs.
The ACL and the reserve for off-balance sheet credit exposures were $23.0 million and $6.0 million, respectively at September 30, 2024, compared to $23.8 million and $4.1 million, respectively, at September 30, 2023.
The ACL and the reserve for off-balance sheet credit exposures were $24.0 million and $5.5 million, respectively, at September 30, 2025, compared to $23.0 million and $6.0 million, respectively, at September 30, 2024.
The increase in the federal insurance premium was due primarily 50 to an increase in the FDIC assessment rate as a result of the way the assessment rate was adjusted for the occurrence of the Bank's net loss during the quarter ending September 30, 2023.
The decrease in the federal insurance premium was due primarily to a decrease in the 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.
Loans Receivable and Allowance for Credit Losses" for additional information related to ACL activity by specific loan categories. 38 The following table presents NCOs, average loans, and NCOs as a percentage of average loans, by loan type, for the periods indicated.
Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 4. Loans Receivable and Allowance for Credit Losses" for additional information related to ACL activity by specific loan categories. 42 The following table presents NCOs, average loans, and NCOs as a percentage of average loans, by loan type, for the periods indicated.
Total borrowings at September 30, 2024 were $2.18 billion, which was comprised of $1.98 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.
Total borrowings at September 30, 2025 were $1.95 billion, which was comprised of $1.85 billion in fixed-rate FHLB advances, $100.0 million in variable-rate FHLB advances tied to interest rate swaps, and $1.1 million in finance leases.
On October 22, 2024, the Company announced a regular quarterly cash dividend of $0.085 per share, or approximately $11.1 million, payable on November 15, 2024 to stockholders of record as of the close of business on November 1, 2024.
On October 28, 2025, the Company announced a regular cash dividend of $0.085 per share, or approximately $11.0 million, payable on November 21, 2025 to stockholders of record as of the close of business on November 7, 2025.
At or For the Year Ended September 30, 2024 2023 2022 (Dollars in thousands) Balance at beginning of period $ 23,759 $ 16,371 $ 19,823 ASU 2022-02 Adoption 20 — — Charge-offs (160) (115) (70) Recoveries 49 9 256 Net (charge-offs) recoveries (111) (106) 186 Provision for credit losses (633) 7,494 (3,638) Balance at end of period $ 23,035 $ 23,759 $ 16,371 Ratio of NCOs during the period to average non-performing assets 1.12 % 1.09 % (1.59) % ACL to nonaccrual loans at end of period 228.25 252.51 173.37 ACL to loans receivable, net at end of period 0.29 0.30 0.22 ACL at end of period to NCOs during the period 207x 223x N/M The ratio of NCOs to average non-performing assets during the current year was higher than the prior year due to higher NCOs compared to the prior year.
At or For the Year Ended September 30, 2025 2024 2023 (Dollars in thousands) Balance at beginning of period $ 23,035 $ 23,759 $ 16,371 ASU 2022-02 Adoption — 20 — Charge-offs (271) (160) (115) Recoveries 73 49 9 Net (charge-offs) recoveries (198) (111) (106) Provision for credit losses 1,202 (633) 7,494 Balance at end of period $ 24,039 $ 23,035 $ 23,759 Ratio of NCOs during the period to average non-performing assets 0.68 % 1.12 % 1.09 % ACL to nonaccrual loans at end of period 50.02 228.25 252.51 ACL to loans receivable, net at end of period 0.30 0.29 0.30 ACL at end of period to NCOs during the period 121x 207x 223x The ratio of NCOs to average non-performing assets during the current fiscal year was lower than the prior fiscal year due to a higher balance of non-performing assets compared to the prior fiscal year.
For the Year Ended September 30, 2024 September 30, 2023 Amount Yield WAL Amount Yield WAL (Dollars in thousands) Beginning balance - carrying value $ 1,384,482 1.35 % 3.8 $ 1,563,307 1.29 % 4.2 Maturities and repayments (455,110) (186,860) Proceeds from sale (1,272,512) — Net amortization of (premiums)/discounts 8,182 (3,016) Purchases 1,176,645 5.55 5.1 — — — Net loss from securities sales (13,345) — Change in valuation on AFS securities 27,924 11,051 Ending balance - carrying value $ 856,266 5.63 5.2 $ 1,384,482 1.35 3.8 Liabilities.
For the Year Ended September 30, 2025 September 30, 2024 Amount Yield WAL Amount Yield WAL (Dollars in thousands) Beginning balance - carrying value $ 856,266 5.63 % 5.2 $ 1,384,482 1.35 % 3.8 Maturities and repayments (233,986) (455,110) Proceeds from sale — (1,272,512) Net amortization of (premiums)/discounts 3,296 8,182 Purchases 248,207 4.97 7.5 1,176,645 5.55 5.1 Net loss from securities sales — (13,345) Change in valuation on AFS securities (6,567) 27,924 Ending balance - carrying value $ 867,216 5.45 4.8 $ 856,266 5.63 5.2 Liabilities.
As a result of continued high interest rates and lack of housing inventory which has reduced housing market transactions, our single-family origination activity has slowed which has directly impacted the Bank's one- to four-family loan portfolio. Origination and refinance activity has slowed considerably, and one- to four-family loan balances have been reduced through scheduled repayments and loan payoffs.
As a result of continued high interest rates and a lack of housing inventory, which has reduced the volume of housing market transactions, our one- to four-family origination and refinance activity has slowed, directly impacting the Bank's one- to four-family loan portfolio.
The Bank's owner-occupied construction-to-permanent loan program combines the construction loan and the permanent loan into one loan, allowing the borrower to secure the same interest rate structure throughout the construction period and the permanent loan term.
The Bank's owner-occupied construction-to-permanent loan program combines the construction loan and the permanent loan into one loan, allowing the borrower to secure the same interest rate structure throughout the construction period and the permanent loan term. The Bank's commercial loan portfolio is composed of commercial real estate loans, commercial construction loans and commercial and industrial loans.
Prepayment and curtailment assumptions are generally based on the Company's historical experience and are adjusted by management as deemed necessary. The prepayment and curtailment assumptions vary based on loan product type.
Prepayment and curtailment assumptions are generally based on the Company's historical experience and are adjusted by management as deemed necessary. The prepayment and curtailment assumptions vary for each respective loan pool in the model.
The ACL is a valuation amount that is deducted from the amortized cost basis of loans and represents management's estimate of lifetime credit losses expected on the Company's loan portfolio as of the balance sheet date.
The ACL is a valuation amount that is deducted from the amortized cost basis of loans and represents management's estimate of total expected credit losses for the Company's loans over their remaining contractual lives, as of the balance sheet date.
At September 30, 2024, $2.20 billion of the Bank's certificate of deposit portfolio was scheduled to mature within the next 12 months, including $59.2 million of public unit certificates of deposit and $49.0 million of commercial certificates of deposit.
At September 30, 2025, $2.17 billion of the Bank's certificate of deposit portfolio was scheduled to mature within the next 12 months, including $83.6 million of public unit certificates of deposit and $53.5 million of commercial certificates of deposit.
For the Year Ended September 30, 2024 2023 Without Without Securities Securities Actual Securities Strategy Actual Securities Strategy (GAAP) Strategy (Non-GAAP) (GAAP) Strategy (Non-GAAP) Return on average assets 0.40 % (0.10) % 0.50 % (0.93) % (1.33) % 0.40 % Return on average equity 3.69 (0.97) 4.66 (9.48) (13.58) 4.10 Efficiency Ratio 66.91 4.94 61.97 (626.63) (691.94) 65.31 Earnings per share (15) $ 0.29 $ (0.08) $ 0.37 $ (0.76) $ (1.09) $ 0.33 (15) Earnings per share is calculated as net income divided by average shares outstanding.
For the Year Ended September 30, 2024 Without Securities Actual Securities Strategy (GAAP) Strategy (Non-GAAP) Return on average assets 0.40 % (0.10 %) 0.50 % Return on average equity 3.69 (0.97) 4.66 Efficiency Ratio 66.91 4.94 61.97 EPS (11) $ 0.29 $ (0.08) $ 0.37 (11) EPS is calculated as net income divided by average shares outstanding.
The Bank's commercial loan portfolio is composed of commercial real estate loans, commercial construction loans and commercial and industrial loans. Our commercial real estate loans include a variety of property types, including multi-family dwellings, senior housing facilities, hotels, retail buildings, and office buildings located in Kansas, Texas, and Missouri, and 15 other states.
Our commercial real estate loans include a variety of property types, including hotels, senior housing facilities, multi-family dwellings, retail buildings, and office buildings located in Kansas, Missouri, Texas, and 19 other states as of September 30, 2025. The Bank's commercial and industrial loan portfolio consists largely of loans secured by accounts receivable, inventory and equipment.
The ACL and reserve for off-balance sheet credit exposures may be materially affected by qualitative factors, for items not reflected in the economic forecast and/or discounted cash flow model, but which are deemed appropriate by management's current assessment of the risks related to the loan portfolio and/or external factors.
Management generally determines the likelihood of funding based on historical experience, but it may be adjusted by management as deemed necessary based upon their knowledge of the composition of the underlying off-balance sheet credit exposure balances. 25 The ACL and reserve for off-balance sheet credit exposures may be materially affected by qualitative factors, for items not reflected in the economic forecast and/or discounted cash flow model, but which are deemed appropriate by management's current assessment of the risks related to the loan portfolio and/or external factors.
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 compared to the prior year.
The improvement in the efficiency ratio, excluding the net losses from the securities strategy, was due primarily to higher net interest income compared to the prior fiscal year, partially offset by higher non-interest expense. The Company's operating expense ratio for the current fiscal year was 1.22% compared to 1.17% for the prior fiscal year.
September 30, 2024 September 30, 2023 Amount Yield WAL Amount Yield WAL (Dollars in thousands) MBS $ 756,775 5.63 % 5.7 $ 901,440 1.71 % 4.7 Government-sponsored enterprises ("GSE") debentures 69,077 5.63 0.4 479,610 0.64 1.9 Corporate bonds 4,000 5.12 7.6 4,000 5.12 8.6 Municipal bonds — — — 942 2.55 6.9 $ 829,852 5.63 5.2 $ 1,385,992 1.35 3.8 39 The composition and maturities of the securities portfolio at September 30, 2024 is indicated in the following table by remaining contractual maturity, without consideration of call features or pre-refunding dates, along with associated weighted average yields.
September 30, 2025 September 30, 2024 Amount Yield WAL Amount Yield WAL (Dollars in thousands) MBS $ 843,369 5.45 % 4.8 $ 756,775 5.63 % 5.7 GSE debentures — — — 69,077 5.63 0.4 Corporate bonds 4,000 5.12 6.6 4,000 5.12 7.6 $ 847,369 5.45 4.8 $ 829,852 5.63 5.2 43 The composition and maturities of the securities portfolio, based on estimated fair value, at September 30, 2025 is indicated in the following table by remaining contractual maturity, without consideration of call features or pre-refunding dates, along with associated weighted average yields.
Calendar Year 2024 2023 2022 Amount Per Share Amount Per Share Amount Per Share (Dollars in thousands, except per share amounts) Regular quarterly dividends paid Quarter ended March 31 $ 11,127 $ 0.085 $ 11,319 $ 0.085 $ 11,535 $ 0.085 Quarter ended June 30 11,044 0.085 11,321 0.085 11,534 0.085 Quarter ended September 30 11,043 0.085 11,323 0.085 11,534 0.085 Quarter ended December 31 11,061 0.085 11,308 0.085 11,508 0.085 True-up dividends paid — — — — 37,701 0.280 True Blue Capitol dividends paid — — — — 27,143 0.200 Calendar year-to-date dividends paid $ 44,275 $ 0.340 $ 45,271 $ 0.340 $ 110,955 $ 0.820 44 Rate/Volume Analysis.
Calendar Year 2025 2024 2023 Amount Per Share Amount Per Share Amount Per 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 11,063 0.085 11,044 0.085 11,321 0.085 Quarter ended September 30 11,066 0.085 11,043 0.085 11,323 0.085 Quarter ended December 31 11,017 0.085 11,061 0.085 11,308 0.085 Calendar year-to-date dividends paid $ 44,208 $ 0.340 $ 44,275 $ 0.340 $ 45,271 $ 0.340 49 Rate/Volume Analysis.
For the Year Ended September 30, 2024 September 30, 2023 Amount Rate Amount Rate (Dollars in thousands) Beginning balance $ 7,984,381 3.76 % $ 7,471,670 3.33 % Originated and refinanced 660,937 7.21 930,362 5.96 Purchased and participations 47,712 7.80 644,072 5.59 Change in undisbursed loan funds 168,483 (99,179) Repayments (917,871) (956,562) Principal (charge-offs)/recoveries, net (111) (106) Other (20,280) (5,876) Ending balance $ 7,923,251 4.02 $ 7,984,381 3.76 29 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.
For the Year Ended September 30, 2025 September 30, 2024 Amount Rate Amount Rate (Dollars in thousands) Beginning balance $ 7,923,251 4.02 % $ 7,984,381 3.76 % Originated and refinanced 1,149,469 6.80 660,937 7.21 Purchased and participations 104,431 7.10 47,712 7.80 Change in undisbursed loan funds (14,556) 168,483 Repayments (1,026,401) (917,871) Principal (charge-offs)/recoveries, net (198) (111) Other (2,121) (20,280) Ending balance $ 8,133,875 4.34 $ 7,923,251 4.02 31 The following table presents loan origination, refinance, and participation activity for the periods indicated, excluding endorsement activity, along with associated weighted average rates and percent of total.
Income Tax Expense The following table presents pretax income, income tax expense, and net income for the periods presented, along with the change measured in dollars and percent and effective tax rate.
The operating expense ratio was higher in the current fiscal year due mainly to higher non-interest expense. Income Tax Expense The following table presents pretax income, income tax expense, and net income for the periods presented, along with the change measured in dollars and percent and effective tax rate.
The majority of our consumer loan portfolio is comprised of home equity lines of credit, which have adjustable interest rates. For a majority of the home equity lines of credit, the Bank has the first mortgage or the Bank is in the first lien position.
The majority of our consumer loan portfolio is comprised of home equity lines of credit, which have adjustable interest rates.
At September 30, 2024, Capitol Federal Financial, Inc. at the holding company level, had $50.1 million in cash on deposit at the Bank.
At September 30, 2025, the Bank's Tier 1 leverage ratio was 9.6%. At September 30, 2025, Capitol Federal Financial, Inc., at the holding company level, had $17.6 million in cash on deposit at the Bank.
The ratio of ACL to nonaccrual loans was lower at the end of the current year compared to the prior year-end due to a higher balance of nonaccrual loans and a lower ACL balance.
The ratio of ACL to nonaccrual loans was lower at the end of the current fiscal year compared to the prior fiscal year due to a higher balance of nonaccrual loans. See the "Delinquent and nonaccrual loans and OREO" discussion above for additional discussion regarding the increase in nonaccrual loans from the prior fiscal year.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

42 edited+16 added−10 removed24 unchanged
Biggest changeAmount Yield/Rate WAL % of Category % of Total (Dollars in thousands) Securities $ 856,266 5.63 % 2.9 9.4 % Loans receivable: Fixed-rate one- to four-family 5,376,460 3.41 6.6 67.9 % 59.1 Fixed-rate commercial 506,754 4.82 2.8 6.4 5.6 All other fixed-rate loans 36,321 6.93 6.2 0.5 0.4 Total fixed-rate loans 5,919,535 3.55 6.3 74.8 65.1 Adjustable-rate one- to four-family 905,240 4.18 3.9 11.4 9.9 Adjustable-rate commercial 1,002,224 6.13 5.1 12.6 11.0 All other adjustable-rate loans 96,252 8.33 2.8 1.2 1.1 Total adjustable-rate loans 2,003,716 5.35 4.5 25.2 22.0 Total loans receivable 7,923,251 4.01 5.8 100.0 % 87.1 FHLB stock 101,175 9.47 1.9 1.1 Cash and cash equivalents 217,307 4.60 — 2.4 Total interest-earning assets $ 9,097,999 4.24 5.4 100.0 % Non-maturity deposits $ 2,615,076 0.93 5.8 46.9 % 33.7 % Retail certificates of deposit 2,830,579 4.23 0.8 50.7 36.5 Commercial certificates of deposit 58,236 4.40 0.6 1.0 0.7 Public unit certificates of deposit 76,495 4.62 0.6 1.4 1.0 Total interest-bearing deposits 5,580,386 2.69 3.2 100.0 % 71.9 Term borrowings 2,181,738 3.29 1.6 28.1 Total interest-bearing liabilities $ 7,762,124 2.86 2.7 100.0 % 59
Biggest changeAmount Yield/Rate WAL % of Category % of Total (Dollars in thousands) Securities $ 867,216 5.45 % 3.4 9.3 % Loans receivable: Fixed-rate one- to four-family 5,000,714 3.51 6.7 61.5 % 53.4 Fixed-rate commercial 652,018 5.42 2.0 8.0 7.0 All other fixed-rate loans 34,356 7.14 7.1 0.4 0.4 Total fixed-rate loans 5,687,088 3.75 6.2 69.9 60.8 Adjustable-rate one- to four-family 887,867 4.48 4.0 10.9 9.5 Adjustable-rate commercial 1,463,977 6.03 3.5 18.0 15.7 All other adjustable-rate loans 94,943 7.91 3.2 1.2 1.0 Total adjustable-rate loans 2,446,787 5.54 3.7 30.1 26.2 Total loans receivable 8,133,875 4.29 5.4 100.0 % 87.0 FHLB stock 90,662 9.22 1.8 1.0 Cash and cash equivalents 252,443 3.77 — 2.7 Total interest-earning assets $ 9,344,196 4.43 5.0 100.0 % Non-maturity deposits $ 2,977,397 1.21 5.2 49.7 % 37.5 % Retail certificates of deposit 2,828,982 3.73 0.8 47.2 35.6 Commercial certificates of deposit 61,819 3.61 0.7 1.0 0.8 Public unit certificates of deposit 121,879 4.06 0.8 2.1 1.5 Total interest-bearing deposits 5,990,077 2.48 3.0 100.0 % 75.4 Term borrowings 1,952,047 3.53 1.5 24.6 Total interest-bearing liabilities $ 7,942,124 2.74 2.6 100.0 % 64
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.
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 environments.
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.
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, earnings should decrease.
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.
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 over the next 12 months.
The MVPE ratio continues to be an important measurement for management as we consider the changes in market interest 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.
The 58 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.
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 estimations of the MVPE presented in 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.
Net interest income is projected in the same alternative interest rate environments with both a static balance sheet and 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 53 analysis.
Net interest income is projected in the same alternative interest rate environments with both a static balance sheet and 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 amount of interest-bearing liabilities expected to reprice in a given period is not typically 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 penalty.
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.
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, borrowers generally 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.
The average life expected on our mortgage-related assets varies under different interest rate environments because borrowers have the ability to prepay their mortgage loans. Therefore, as interest rates decrease, the WAL of mortgage-related assets decrease as well.
The average life expected on our mortgage-related assets varies under different interest rate environments because borrowers have the ability to prepay their mortgage loans. Therefore, as interest rates decrease, the WAL of mortgage-related assets typically decreases as well.
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 issue new debt at lower interest rates, resulting in higher projected cash flows on these assets.
Conversely, as interest rates decrease, borrowers who obtained credit in a higher interest 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 Bank's borrowings and certificate of deposit portfolios have stated maturities, and the cash flows related to those liabilities do not generally fluctuate as a result of changes in interest rates. Cash flows from mortgage-related assets and callable agency debentures can vary significantly as a result of changes in interest rates.
The Bank's borrowings and certificate of deposit portfolios have stated maturities, and the cash flows related to fixed-rate liabilities do not generally fluctuate as a result of changes in interest rates. Cash flows from mortgage-related assets and callable agency debentures can vary significantly as a result of changes in interest rates.
Because of this, the market values of our certificates of deposit (which generally have relatively shorter average lives) tend to display less sensitivity to changes in interest rates than do our mortgage-related assets (which generally have relatively longer average lives).
As a result, the market values of our certificates of deposit (which generally have relatively shorter average lives) tend to display less sensitivity to changes in interest rates than do our mortgage-related assets (which generally have relatively longer average lives).
To illustrate this point, the projected cumulative excess (deficiency) of interest-earning assets over interest-bearing liabilities within the next 12 months as a percent of total assets ("one-year gap") is also provided for an up 200 basis point scenario, as of September 30, 2024. Qualitative Disclosure about Market Risk Gap Table.
To illustrate this point, the projected cumulative excess (deficiency) of interest-earning assets over interest-bearing liabilities within the next 12 months as a percentage of total assets ("one-year gap") is also provided for up/down 200 basis point scenarios, as of September 30, 2025. Qualitative Disclosure about Market Risk Gap Table.
All other securities are presented based on contractual maturities, term to call dates or pre-refunding dates as of September 30, 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.
All other securities are presented based on contractual maturities, term to call dates or pre-refunding dates as of September 30, 2025, at amortized cost. (3) Although the Bank's non-maturity deposits are subject to immediate withdrawal, management considers a substantial amount of these accounts to be core deposits having significantly longer effective maturities.
The change in the gap compared to when there is no change in rates was due to lower anticipated net cash flows primarily as a result of lower prepayments on mortgage-related assets in the higher rate environment.
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.
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 value of the Bank's loan and securities portfolios more so than on its deposit and borrowings portfolios.
The resulting shorter expected average lives of those assets result in a decrease in 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.
The market value of shorter term-to-maturity financial instruments is less sensitive to changes in interest rates than is the case with longer term-to-maturity financial instruments.
The market value of shorter term-to-maturity and floating/adjustable-rate financial instruments is less sensitive to changes in interest rates than is the case with longer term-to-maturity and fixed-rate financial instruments.
As interest rates increase, the WAL would be expected to increase, as well as increasing the sensitivity of these assets in higher rate environments. 57 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.
As interest rates increase, the WAL is expected to increase, which also increases the sensitivity of these assets in higher rate environments. 62 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.
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 $4.01 billion, for a cumulative one-year gap of (42.1)% of total assets. (4) Borrowings exclude deferred prepayment penalty costs.
If all of the Bank's non-maturity deposits 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 $3.63 billion, for a cumulative one-year gap of (37.1)% of total assets. (4) Borrowings exclude deferred prepayment penalty costs.
The MVPE represents the theoretical market value of capital that is calculated by netting the market value of assets, liabilities, and off-balance sheet instruments.
The opposite is generally true as interest rates fall. The MVPE represents the theoretical market value of capital that is calculated by netting the market value of assets, liabilities, and off-balance sheet instruments.
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.
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 those mortgage-related assets. 63 Similarly, call projections for callable agency debentures decrease as interest rates rise, which results in cash flows related to those assets moving closer to their contractual maturity dates.
The market value of an asset or liability reflects the present value of all the projected cash flows over its remaining life, discounted at market interest rates. As interest rates rise, generally the market value for both financial assets and liabilities decrease. The opposite is generally true as interest rates fall.
Changes in the estimated market values of our financial assets and liabilities drive changes in estimates of MVPE. The market value of an asset or liability reflects the present value of all the projected cash flows over its remaining life, discounted at market interest rates. As interest rates rise, generally the market value for both financial assets and liabilities decrease.
The Bank's net interest income projections are a reflection of the response to interest rates of assets and liabilities that are expected to mature or reprice over the next year.
Change in Net Interest Income. The Bank's net interest income projections reflect simulated responses to interest rates of assets and liabilities that are expected to mature or reprice over the next year.
If the market values of financial assets increase at a faster pace than the market values of financial liabilities, or if the market values of financial liabilities decrease at a faster pace than the market values of financial assets, the MVPE will increase.
If the market values of financial assets increase by more than the market values of financial liabilities, or if the market values of financial liabilities decrease by more than the market values of financial assets, the MVPE will increase.
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. Estimates for the -300 basis point scenario were not prepared at September 30, 2023.
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.
If interest rates were to increase 200 basis points, as of September 30, 2024, the Bank's one-year gap is projected to be $(1.71) billion, or (17.9)% of total assets.
If interest rates were to increase 200 basis points, as of September 30, 2025, the Bank's one-year gap would have been projected to be $(1.19) billion, or (12.2)% of total assets.
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.
The estimation of net interest income does not include any projected gains or losses related to the sale of assets, 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.
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 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.
The repricing for these liabilities is projected to occur at the maturity date of each interest rate swap. 55 At September 30, 2024, the Bank's gap between the amount of interest-earning assets and interest-bearing liabilities projected to reprice within one year was $(1.51) billion, or (15.8)% of total assets, compared to $(1.19) billion, or (11.7)% of total assets, at September 30, 2023.
At September 30, 2025, the Bank's gap between the amount of interest-earning assets and interest-bearing liabilities projected to reprice within one year was $(983.6) million, or (10.1)% of total assets, compared to $(1.51) billion, or (15.8)% of total assets, at September 30, 2024.
This compares to a one-year gap of $(1.21) billion, or (11.9)% of total assets, if interest rates were to have increased 200 basis points as of September 30, 2023. Change in Net Interest Income.
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 $(1.19) billion, or (12.5)% of total assets, if interest rates were to have decreased 200 basis points as of the same date.
Change Market Value of Portfolio Equity At September 30, (in Basis Points) 2024 2023 in Interest Rates (1) Amount ($) Change ($) Change (%) Amount ($) Change ($) Change (%) (Dollars in thousands) -300 bp $ 1,460,440 $ 359,922 32.7 % N/A N/A N/A -200 bp 1,345,708 245,190 22.3 1,302,781 283,093 27.8 -100 bp 1,218,938 118,420 10.8 1,145,404 125,716 12.3 000 bp 1,100,518 — — 1,019,688 — — +100 bp 962,354 (138,164) (12.6) 888,642 (131,046) (12.9) +200 bp 797,497 (303,021) (27.5) 757,870 (261,818) (25.7) +300 bp 634,145 (466,373) (42.4) 632,716 (386,972) (38.0) (1) Assumes an instantaneous, parallel, and permanent change in interest rates at all maturities.
Change Market Value of Portfolio Equity At September 30, (in Basis Points) 2025 2024 in Interest Rates (1) Amount ($) Change ($) Change (%) Amount ($) Change ($) Change (%) (Dollars in thousands) -300 bp $ 1,477,941 $ 315,678 27.2 % $ 1,460,440 $ 359,922 32.7 % -200 bp 1,362,942 200,679 17.3 1,345,708 245,190 22.3 -100 bp 1,256,515 94,252 8.1 1,218,938 118,420 10.8 000 bp 1,162,263 — — 1,100,518 — — +100 bp 1,026,750 (135,513) (11.7) 962,354 (138,164) (12.6) +200 bp 873,123 (289,140) (24.9) 797,497 (303,021) (27.5) +300 bp 725,096 (437,167) (37.6) 634,145 (466,373) (42.4) (1) Assumes an instantaneous, parallel, and permanent change in interest rates at all maturities.
Included in this line item are $200.0 million of FHLB adjustable-rate advances tied to interest rate swaps.
Included in this line item are $100.0 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.
The Bank's MVPE increased from $1.02 billion at September 30, 2023 to $1.10 billion at September 30, 2024.
The Bank's estimated MVPE remained largely unchanged, increasing from $1.10 billion at September 30, 2024 to $1.16 billion at September 30, 2025.
Estimates for the -300 basis point scenario were not prepared at September 30, 2023. 56 Change Net Interest Income At September 30, (in Basis Points) 2024 2023 in Interest Rates (1) Amount ($) Change ($) Change (%) Amount ($) Change ($) Change (%) (Dollars in thousands) -300 bp $ 188,322 $ 11,696 6.6 % N/A N/A N/A -200 bp 183,769 7,143 4.0 126,495 (6,963) (5.2) -100 bp 180,936 4,310 2.4 130,374 (3,084) (2.3) 000 bp 176,626 — — 133,458 — — +100 bp 171,222 (5,404) (3.1) 136,147 2,689 2.0 +200 bp 165,422 (11,204) (6.3) 138,804 5,346 4.0 +300 bp 158,758 (17,868) (10.1) 141,494 8,036 6.0 (1) Assumes an instantaneous, parallel, and permanent change in interest rates at all maturities.
These do not reflect the earnings expectations of management. 61 Change Net Interest Income At September 30, (in Basis Points) 2025 2024 in Interest Rates (1) Amount ($) Change ($) Change (%) Amount ($) Change ($) Change (%) (Dollars in thousands) -300 bp $ 202,033 $ (8,667) (4.1) % $ 188,322 $ 11,696 6.6 % -200 bp 203,014 (7,686) (3.7) 183,769 7,143 4.0 -100 bp 206,913 (3,787) (1.8) 180,936 4,310 2.4 000 bp 210,700 — — 176,626 — — +100 bp 212,822 2,122 1.0 171,222 (5,404) (3.1) +200 bp 213,755 3,055 1.5 165,422 (11,204) (6.3) +300 bp 214,061 3,361 1.6 158,758 (17,868) (10.1) (1) Assumes an instantaneous, parallel, and permanent change in interest rates at all maturities.
This is because the Bank's mortgage-related assets continue to have a longer duration in these interest rate scenarios which results in greater sensitivity in market value as interest rates change. 58 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 September 30, 2024.
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 September 30, 2025. Yields presented for interest-earning assets include the amortization of fees, costs, premiums and discounts, which are considered adjustments to the yield.
In the decreasing interest rate scenarios, the Bank's MVPE increased due to a larger increase in the market value of the Bank's assets than the Bank's liabilities.
In the decreasing interest rate scenarios, the Bank's MVPE increases due to a larger increase in the estimated 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.
The change in the one-year gap amount was due to a net increase in the amount of liability cash flows coming due in one year, partially offset by an increase in the amount of interest-earning asset cash flows coming due in one year, as of September 30, 2024, compared to September 30, 2023.
The change in the one-year gap amount was due primarily to an increase in the amount of 60 projected asset cash flows coming due in one year, as of September 30, 2025, compared to September 30, 2024, due primarily to an increase in the balance of adjustable-rate loans as the Bank continues to shift its loan portfolio from fixed-rate one- to four-family loans to commercial loans, which tend to have adjustable-rate features.
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.
The longer expected average lives of those assets increase the sensitivity of their market value to changes in interest rates.
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. 54 More Than More Than Within One Year to Three Years Over One Year Three Years to Five Years Five Years Total Interest-earning assets: (Dollars in thousands) Loans receivable (1) $ 1,678,859 $ 1,846,594 $ 1,417,793 $ 2,977,546 $ 7,920,792 Securities (2) 260,983 270,581 151,144 147,144 829,852 Other interest-earning assets 192,251 — — — 192,251 Total interest-earning assets 2,132,093 2,117,175 1,568,937 3,124,690 8,942,895 Interest-bearing liabilities: Non-maturity deposits (3) 716,264 487,721 368,611 1,642,186 3,214,782 Certificates of deposit 2,204,475 654,578 106,060 197 2,965,310 Borrowings (4) 721,264 1,157,685 310,331 25,188 2,214,468 Total interest-bearing liabilities 3,642,003 2,299,984 785,002 1,667,571 8,394,560 Excess (deficiency) of interest-earning assets over interest-bearing liabilities $ (1,509,910) $ (182,809) $ 783,935 $ 1,457,119 $ 548,335 Cumulative excess (deficiency) of interest-earning assets over interest-bearing liabilities $ (1,509,910) $ (1,692,719) $ (908,784) $ 548,335 Cumulative excess (deficiency) of interest-earning assets over interest-bearing liabilities as a percent of total Bank assets at: September 30, 2024 (15.9) % (17.8) % (9.5) % 5.8 % September 30, 2023 (11.7) Cumulative one-year gap - interest rates +200 bps at: September 30, 2024 (17.9) September 30, 2023 (11.9) (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.
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. 59 More Than More Than Within One Year to Three Years Over One Year Three Years to Five Years Five Years Total Interest-earning assets: (Dollars in thousands) Loans receivable (1) $ 2,228,781 $ 1,899,064 $ 1,279,761 $ 2,680,708 $ 8,088,314 Securities (2) 187,493 319,172 166,178 174,526 847,369 Other interest-earning assets 229,134 — — — 229,134 Total interest-earning assets 2,645,408 2,218,236 1,445,939 2,855,234 9,164,817 Interest-bearing liabilities: Non-maturity deposits (3) 948,416 607,043 438,536 1,602,403 3,596,398 Certificates of deposit 2,169,268 800,449 42,700 263 3,012,680 Borrowings (4) 511,316 1,392,292 56,267 23,311 1,983,186 Total interest-bearing liabilities 3,629,000 2,799,784 537,503 1,625,977 8,592,264 Excess (deficiency) of interest-earning assets over interest-bearing liabilities $ (983,592) $ (581,548) $ 908,436 $ 1,229,257 $ 572,553 Cumulative excess (deficiency) of interest-earning assets over interest-bearing liabilities $ (983,592) $ (1,565,140) $ (656,704) $ 572,553 Cumulative excess (deficiency) of interest-earning assets over interest-bearing liabilities as a percent of total Bank assets at: September 30, 2025 (10.1) % (16.0) % (6.7) % 5.9 % September 30, 2024 (15.9) Cumulative one-year gap - interest rates +200 bps at: September 30, 2025 (12.2) September 30, 2024 (17.9) Cumulative one-year gap - interest rates -200 bps at: September 30, 2025 (5.8) 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.
The increase was due primarily to a decrease in market interest rates between the two periods, most notably across the intermediate and long-term tenors of the yield curve, as well as to the Bank's balance sheet composition changes resulting from the securities strategy.
Compositional changes on the balance sheet, including within the Bank's loan portfolio as it continues to shift from one- to four-family to commercial loans, helped to offset the impact resulting from an increase in intermediate and long-term market interest rates between the two periods.
The net interest income projection was higher in the base case scenario at September 30, 2024 compared to September 30, 2023, due primarily to transactions associated with the securities strategy, which resulted in a decrease in interest expense on borrowings due to the Bank repaying its BTFP borrowing and an increase in interest income on securities due to reinvestment of proceeds into higher-yielding securities.
The net interest income projection was higher in the base case scenario at September 30, 2025 compared to September 30, 2024, due primarily to an increase in the average balance and average rate of the Bank's loan portfolio, lower costing liabilities, as well as to the steepening of the yield curve between the two periods.
Removed
The net increase in liability cash flows coming due in one year primarily related to the Bank's retail certificate of deposit portfolio, partially offset by a net decrease in borrowings coming due in one year as the Bank repaid its BTFP amount outstanding in conjunction with the securities strategy during the current year.
Added
The increase in projected asset cash flows, which was primarily driven by an increased balance of commercial loans, was partially offset by a decrease in the amount of fixed-rate mortgage-related asset cash flows as a result of a general decrease in balance as well as 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.
Removed
The increase in the one-year cash flow for retail certificates of deposit was due to the Bank continuing to offer higher rates on shorter-term certificates of deposit.
Added
Changes in projected liability cash flows, between the two periods, were largely offsetting. Increases resulting from increases in non-maturity deposits were fully offset by projected decreases in the Bank's borrowings portfolio and, to a lesser extent, the certificate of deposit portfolio.
Removed
The increase in interest-earning assets projected to mature or reprice within one year was due primarily to an increase in the amount of loans expected to mature or reprice, partially offset by decreases in securities in conjunction with the securities strategy and the balance of cash between periods.
Added
The decrease in borrowings was primarily related to the Bank prepaying and replacing $200.0 million of fixed-rate FHLB advances during the prior quarter that went from a weighted average remaining term of 0.6 years to 2.5 years, as well as to a continued decrease in the overall balance of wholesale funds.
Removed
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.
Added
If interest rates were to decrease 200 basis points, as of September 30, 2025, the Bank's one-year gap would have been projected to be $(570.8) million, or (5.8)% of total assets.
Removed
During the current fiscal year, growth in the Bank's deposit portfolio was almost entirely within its certificate of deposit portfolio; more specifically, in short-term certificates of deposit as the Bank's highest offer rates were on products in this category.
Added
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.
Removed
The WAM of the Bank's retail certificate of deposit portfolio decreased from 1.3 years as of September 30, 2023, to 0.8 years as of September 30, 2024, due in part to the passage of time, but primarily due to growth in the balance of shorter-term certificates of deposit.
Added
As a result, interest income projections associated with the Bank's interest-earning asset cash flows, primarily the loan portfolio, increased by more than the increase in interest expense projections on the Bank's interest-bearing liability cash flows.
Removed
The current Federal Open Market Committee ("FOMC") tightening cycle reached its peak during the prior year and expectations of easing have now become the consensus. By shortening the WAL of its certificate of deposit portfolio, the Bank will be better positioned to reprice its highest-costing deposits as short-term market interest rates decrease.
Added
As of September 30, 2025, projected net interest income increased in each of the increasing rate scenarios presented and decreased in each of the decreasing rate scenarios presented, compared to September 30, 2024, where the opposite profile existed.
Removed
This dynamic, when coupled with the growth in the certificate of deposit portfolio and increases in deposit betas, is the primary driver of the change in the Bank's net interest income profile projections between September 30, 2023 and 2024. Change in MVPE. Changes in the estimated market values of our financial assets and liabilities drive changes in estimates of MVPE.
Added
This change was due primarily to growth in the Bank's commercial loan portfolio between the two periods, as well as to a decrease in the amount of projected interest-bearing liabilities coming due between the two periods, mainly within the wholesale borrowings portfolio.
Removed
The decrease in market interest rates resulted in an increase in the value of the Bank's interest-earning assets more than it increased the value of its interest-bearing liabilities.
Added
Commercial loans often have adjustable-rate features, which makes the projected amount of interest income on these assets more sensitive to changes in interest rates as they reprice on a more frequent basis.
Removed
The WAL presented for term borrowings includes the effect of interest rate swaps.
Added
The decrease in borrowings was primarily related to the Bank prepaying and replacing $200.0 million of fixed-rate FHLB advances during the current fiscal year that went from a weighted average remaining term of 0.6 years to 2.5 years, as well as to a continued decrease in the overall balance of wholesale funds. Change in MVPE.
Added
Our one- to four-family loans are predominately fixed-rate loans with long maturities and, therefore, are more economically sensitive to changes in market interest rates whereas commercial loans often have shorter average lives and floating/adjustable-rate features, which results in less sensitivity to changes in market interest rates.
Added
Between the two periods, the balance of the Bank's one- to four-family loans decreased $400.0 million and the balance of its commercial loans increased $607.0 million.
Added
In elevated interest rate environments, such as the current environment, the estimated market value of the Bank's one- to four-family loan portfolio in the base case scenario is reduced as the average rate of the portfolio is less than current market rates.
Added
The Bank's commercial loans have, predominately, been originated more recently at current market rates, giving them higher estimated values in the base case compared to the Bank's one- to four-family loans.
Added
To the extent that the balance of the Bank's one- to four-family loan portfolio, with overall average rates less than current market rates, continues to decrease and the balance of commercial loans, with average rates closer to or above current market rates, continues to increase, the estimated market value of the Bank's overall loan portfolio, in the base case scenario, will continue to increase.
Added
The steepening of the yield curve between periods did not result in an overall decrease in the Bank's estimated MVPE in the base case because the shift in the loan portfolio, as described above, had a greater positive impact on MVPE than the change realized on the Bank's liabilities.

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