Capitol Federal Financial, Inc. ® Reports Fourth Quarter and Fiscal Year 2025 Results

TOPEKA, Kan.--( BUSINESS WIRE)--Capitol Federal Financial, Inc. ® (NASDAQ: CFFN) (the "Company," "we" or "our"), the parent company of Capitol Federal Savings Bank (the "Bank"), announced preliminary results today for the quarter and fiscal year ended September 30, 2025. For best viewing results, please view this release in Portable Document Format (PDF) on our website, https://ir.capfed.com.

Capitol Federal Financial, Inc. closed fiscal year 2025 with total assets of $9.78 billion, stockholders' equity of $1.05 billion and net income of $68.0 million. Each of these amounts grew from our previous fiscal year. This growth and improvement is a direct result of the strategic operational changes that the Board and management have implemented in recent years.

These results have been enhanced by our thoughtful approach to value-creating opportunities. Capital City Bank was acquired to facilitate the expansion of the Company's product and service offerings, as well as to diversify our asset and deposit bases, thereby expanding our revenue opportunities. Since that transaction, our commercial loan portfolio and non-retail deposits have grown from $319.1 million to $2.12 billion and $194.8 million to $508.2 million, respectively. Using the strength of the Company's brand, new core operating system, and selective additions to staff, we plan to continue growing our commercial loan portfolio through redeploying funds received from the repayment of correspondent loans. We expect that growth in the commercial deposit base will continue to lower our cost of funds.

We are also still benefiting from our October 2023 securities restructuring whereby we sold $1.30 billion of securities at a yield of 1.22%, purchased $632.0 million of securities yielding 5.75%, and paid down $500.0 million of Bank Term Funding debt at 4.70%, all of which led to an increase in our net interest margin by approximately 60 basis points in fiscal year 2024, a nearly 50% increase from our net interest margin for fiscal year 2023. Our net interest margin has further improved in fiscal year 2025.

John B. Dicus, Chairman and CEO, stated that, "We are delivering value to stockholders through a more diversified balance sheet, expanded income streams, and diligent credit risk management. We expect the pace of the past two years to continue as we roll out more products and services and add to an already seasoned team of professionals focused on driving our commercial business lines. We are proud of our disciplined capital management approach which has resulted in our returning $2.01 billion to stockholders through share repurchases and dividends since our second-step conversion in 2010, and we will continue to focus on capital management decisions that drive long-term value for stockholders."

Highlights for the current quarter include:

Highlights for the fiscal year include:

Balance sheet highlights include:

Strategic Banking Initiatives

The Company is committed to the ongoing development of a full-service commercial bank and is investing in technology, people, products and services to make that happen. Our investments in technology to date have allowed the Company to launch new services and products, while the addition of seasoned and well-connected commercial bankers and trust and wealth advisors give us access to an exciting new customer group. Expanding our product suite of treasury management services enables us to service this new customer group, and expanded marketing and business development has increased the depth of customer relationships. As we complete the second year since embarking on our digital transformation, we have seen our efforts bear fruit and expect progress to accelerate going forward.

Mr. Dicus stated, "While Capitol Federal has deep roots in our retail banking markets, we are focused and committed to prudently growing our commercial banking operations as we transform our business to provide a full-service community oriented commercial bank for our customers. We believe that by doing so, we are delivering long-term sustainable value to our stockholders."

Strategic Actions. The long-term success of this transformation is predicated on management's continued focus on deepening relationships with consumer and commercial customers. Management and the Board have committed resources through the growth of talented and skilled bankers, investments in technology, expanding marketing and outreach, as well as the development and increased internal monitoring of performance metrics that ensure we are on the path to achieve our performance objectives. Through our experienced relationship managers, we deliver customized solutions using advanced digital platforms and sophisticated cash management tools. Additionally, we are leveraging our centralized organizational structure to respond quickly to customers. We are actively pursuing opportunities to expand our non-interest-bearing deposit base and diversify fee-based revenue streams through strategic growth in treasury management services, trust and wealth management services, insurance, and small business banking.

Commercial Lending. During the current fiscal year, we closed on $901.9 million in commercial loans compared to $350.6 million in the prior fiscal year and commercial loans continue to grow as a percentage of our overall loan portfolio. As of September 30, 2025, commercial loans comprised 26% of our loan portfolio compared to 19% at the prior fiscal year end. Maintaining strong credit quality remains a top priority as we expand our commercial loan portfolio. To accomplish this, in addition to disciplined underwriting and ongoing credit administration, we monitor concentration levels by collateral types, geographic location and borrowing relationships. During the current fiscal year, the Bank implemented commercial loan pricing and profitability software that provides pricing and profitability insights based on the full customer banking relationship. We also implemented software that provides market insight regarding competitor pricing to assist loan officers when preparing a loan offering. This has increased our ability to profitably compete with other banks in our markets as well as financial institutions outside of our markets.

Treasury Management. The Bank services commercial customers through a competitive suite of treasury management products and an experienced team of treasury management officers. This team is focused on the deposit and cash management needs of commercial customers and growing this line of business through acquisition of new customers located both in our immediate market areas, and those who we lend to outside of our local market areas. Additionally, this fiscal year, the Bank deployed a team of business development officers tasked with growing the deposit base within the small business customer segment, focused on serving small businesses in our market areas with a dedicated line of products specifically designed for these customers. The Bank expects to introduce digital onboarding for small business customers using industry-leading risk management and screening tools, which will replace many manual verification tasks. Additionally, as we add more sophisticated commercial clients, we are evaluating new technology in order to capture a larger share of their business with additional products and services. Within calendar year 2026, we expect to implement new technology for lockbox services, integrated accounts receivables, purchase cards and corporate cards. While the majority of our commercial deposit growth in fiscal year 2025 resulted from commercial loan covenants and provisions, our treasury management officers and business development officers often land depository relationships independent of a lending relationship. This will be a focus area for our sales teams as the Bank continues to diversify funding sources and seeks to increase fee revenue tied to depository accounts.

Digital Banking. We are advancing towards a seamless digital banking experience for all customers, enhancing the Bank's ability to attract and retain deposits. This strategy includes a new deposit account onboarding platform that was implemented in November 2024 and digital banking enhancements for debit cardholders which will allow customers to begin using their card immediately online and in digital wallets without waiting for the delivery of a physical card. These enhancements are projected to be implemented in the second quarter of fiscal year 2026. Since changing core and digital providers in August 2023, the Bank has taken advantage of our open-source platforms through the evaluation of add-on technologies that will integrate into our digital banking experience for consumers, small businesses, and commercial customers.

Private Banking, Trust and Wealth Management. We are preparing to implement a comprehensive suite of private banking products and services which is a new line of business for the Bank. During the current quarter, the Bank added several seasoned and well-connected wealth management professionals to focus on these products and services. Their expertise in private banking and related areas will support our new private banking efforts and is expected to transform our trust and wealth management business. Private banking relationships are defined as customers with $5 million or more in personal relationships with the Bank by way of loans, deposits, or assets under management. Private banking customers are expected to begin onboarding in the first quarter of fiscal year 2026. We believe that our private banking line of business will be a gateway to driving off-balance sheet revenue and bridge the gap between high-net-worth depository customers, small business owners or key commercial customers, and corporate trustee opportunities for the Bank.

Stockholder Value. Delivering long-term sustainable stockholder value will continue to be our North Star while also maintaining a strong capital position. As part of our historically robust and disciplined approach to capital management, our approach continues to generate returns to stockholders through dividend payments and share repurchases. Total dividends declared and paid during fiscal year 2025 were $44.3 million. The Company repurchased 618,260 shares for $3.9 million during fiscal year 2025, all of which occurred in the last quarter of the fiscal year. Since completing our second-step conversion in December 2010, we have returned $2.01 billion to stockholders through $1.57 billion in cash dividends and $439.9 million of share repurchases. For fiscal year 2026, it is the intention of the Board of Directors to continue the regular quarterly cash dividend of $0.085 per share and to seek further opportunities for value-enhancing share repurchases.

Comparison of Operating Results for the Three Months Ended September 30, 2025 and June 30, 2025

For the quarter ended September 30, 2025, the Company recognized net income of $18.8 million, or $0.14 per share, compared to net income of $18.4 million, or $0.14 per share, for the quarter ended June 30, 2025. The increase in net income in the current quarter was due primarily to higher net interest income, partially offset by higher non-interest expense, income tax expense and provision for credit losses. The net interest margin increased 11 basis points, from 1.98% for the prior quarter to 2.09% for the current quarter due mainly to growth in the higher yielding commercial loan portfolio.

Interest and Dividend Income

The following table presents the components of interest and dividend income for the time periods presented, along with the change measured in dollars and percent.

For the Three Months Ended

September 30,

June 30,

Change Expressed in:

2025

Dollars

Percent

(Dollars in thousands)

INTEREST AND DIVIDEND INCOME:

Loans receivable

87,343

82,914

4,429

5.3

Mortgage-backed securities ("MBS")

11,808

12,163

(355

)

(2.9

)

Federal Home Loan Bank Topeka ("FHLB") stock

2,163

2,197

(34

)

(1.5

)

Cash and cash equivalents

2,148

1,620

528

32.6

Investment securities

582

784

(202

)

(25.8

)

Total interest and dividend income

104,044

99,678

4,366

4.4

The increase in interest income on loans receivable was due mainly to increases in the average balance and yield of the commercial loan portfolio compared to the prior quarter. The decrease in interest income on MBS was due primarily to a lower average balance compared to the prior quarter, resulting from principal repayments that were not reinvested into the portfolio. The increase in interest income on cash and cash equivalents was due to an increase in the average balance. The decrease in interest income on investment securities was due mainly to a lower average balance compared to the prior quarter, resulting primarily from investments that were called and not replaced. Cash flows from MBS and investment securities and deposit growth during the current quarter were mainly used to fund commercial loan growth. Cash inflows from the securities portfolios not used for immediate commercial loan funding needs were retained in cash and cash equivalents in anticipation of future commercial loan funding and operational needs.

Interest Expense

The following table presents the components of interest expense for the time periods presented, along with the change measured in dollars and percent.

For the Three Months Ended

September 30,

June 30,

Change Expressed in:

2025

Dollars

Percent

(Dollars in thousands)

INTEREST EXPENSE:

Deposits

37,204

35,860

1,344

3.7

Borrowings

18,057

18,360

(303

)

(1.7

)

Total interest expense

55,261

54,220

1,041

1.9

Interest expense on deposits was higher during the current quarter, due mainly to continued growth of the Bank's high yield savings account offering, along with an increase in the average balance of retail certificates of deposit and the cost of money market accounts due to an increase in the average balance of higher tier money market accounts. Management has continued to focus on retaining and growing deposits through its high yield savings account product. See additional discussion in "Financial Condition as of September 30, 2025" below. The decrease in borrowings expense was due to a decrease in the average balance, due mainly to FHLB borrowings that matured between periods and were not replaced. Cash flows from the increase in the deposit portfolio were used to repay these borrowings.

Provision for Credit Losses

The Company recorded a provision for credit losses of $519 thousand during the current quarter compared to a release of provision for credit losses of $451 thousand for the prior quarter. The provision for credit losses in the current quarter was comprised of a $1.3 million increase in the allowance for credit losses ("ACL") for loans, partially offset by a $778 thousand decrease in the reserve for off-balance sheet credit exposures. The $1.3 million increase in the ACL was mainly related to commercial loan growth and commercial commitment fundings during the current quarter. The $778 thousand decrease in the reserve for off-balance sheet credit exposures was due mainly to a decrease in commercial off-balance sheet credit exposures as several large dollar commitments from the prior quarter were funded.

Non-Interest Income

The following table presents the components of non-interest income for the time periods presented, along with the change measured in dollars and percent.

For the Three Months Ended

September 30,

June 30,

Change Expressed in:

2025

Dollars

Percent

(Dollars in thousands)

NON-INTEREST INCOME:

Deposit service fees

2,873

2,867

0.2

Insurance commissions

1,018

884

134

15.2

Other non-interest income

1,900

1,537

363

23.6

Total non-interest income

5,791

5,288

503

9.5

During the current quarter, insurance commissions increased due primarily to the receipt of commissions that exceeded accruals. Other non-interest income increased compared to the prior quarter, due mainly to higher income from bank-owned life insurance ("BOLI") due to changes in rates and an increase in the crediting rate as a result of updates to certain policies that were executed during the current quarter.

Non-Interest Expense

The following table presents the components of non-interest expense for the time periods presented, along with the change measured in dollars and percent.

For the Three Months Ended

September 30,

June 30,

Change Expressed in:

2025

Dollars

Percent

(Dollars in thousands)

NON-INTEREST EXPENSE:

Salaries and employee benefits

15,936

15,277

659

4.3

Information technology and related expense

5,053

5,163

(110

)

(2.1

)

Occupancy, net

3,292

3,270

0.7

Regulatory and outside services

1,590

1,261

329

26.1

Advertising and promotional

1,915

1,453

462

31.8

Federal insurance premium

1,114

1,072

3.9

Deposit and loan transaction costs

658

715

(57

)

(8.0

)

Office supplies and related expense

490

370

120

32.4

Other non-interest expense

970

983

(13

)

(1.3

)

Total non-interest expense

31,018

29,564

1,454

4.9

The increase in salaries and employee benefits compared to the prior quarter was due mainly to compensation and compensation-related accruals. The increase in regulatory and outside services was due mainly to higher consulting expenses and the usage of outside services in the current quarter. The increase in advertising and promotional expense was due primarily to the timing of seasonal sponsorships and campaigns compared to the prior quarter.

The Company's efficiency ratio was 56.84% for the current quarter compared to 58.26% for the prior quarter. The improvement in the efficiency ratio was due to higher net interest income during the current quarter, partially offset by higher non-interest expense. The efficiency ratio is a measure of a financial institution's total non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. A lower value generally indicates that it is costing the financial institution less money to generate revenue. The Company's operating expense ratio (annualized) for the current quarter was 1.27% compared to 1.23% for the prior quarter. The operating expense ratio was higher in the current quarter due to higher non-interest expense. The operating expense ratio is a measure of a financial institution's total non-interest expense as a percentage of average assets, providing insight into how efficiently the Company is managing its expenses in relation to its assets and does not take into consideration changes in interest rates.

Income Tax Expense

The following table presents pretax income, income tax expense, and net income for the time periods presented, along with the change measured in dollars and percent and the effective tax rate.

For the Three Months Ended

September 30,

June 30,

Change Expressed in:

2025

Dollars

Percent

(Dollars in thousands)

Income before income tax expense

23,037

21,633

1,404

6.5

Income tax expense

4,224

3,251

973

29.9

Net income

18,813

18,382

431

2.3

Effective Tax Rate

18.3

15.0

During the prior quarter, a change in Kansas tax law was enacted that is effective October 1, 2027 for the Company and the Bank. The State of Kansas is changing the way it attributes taxable income to the state, specifically, moving from a three-factor apportionment (property, payroll and receipts) method to a single receipts method. Most of the Bank's property and payroll are located in Kansas, though a large amount of its revenue-generating activities, predominantly loan interest income, are conducted outside of Kansas. The Bank is expecting a decrease in income apportioned to Kansas starting in fiscal year 2028 due to the tax law change. As a result, as of June 30, 2025, the Bank remeasured its state deferred tax assets and liabilities expected as of October 1, 2027. The Bank recorded an $857 thousand reduction in net state income tax expense related to this law change, which is the primary reason for the lower effective tax rate and income tax expense for the prior quarter.

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 year, compared to net income of $38.0 million, or $0.29 per share, for the prior year. The increase in net income was due mainly to higher net interest and non-interest income, partially offset by higher non-interest expense. Non-interest income was lower in the prior year due mainly to the net losses on the sale of securities associated with the securities strategy. See additional discussion regarding the securities strategy in the "Securities Strategy to Improve Earnings" section below. The securities associated with the securities strategy were sold in the prior year, and in that period the Company incurred $13.3 million ($10.0 million net of tax) of net losses related to the sale of those securities. Excluding the effects of the net loss associated with the securities strategy, earnings per share would have been $0.37 for the prior year. The increase in earnings per share excluding the effects of the net loss associated with the securities strategy was due primarily to higher net interest income in the current year.

The net interest margin increased 19 basis points, from 1.77% for the prior year to 1.96% for the current year. The increase was due mainly to higher yields on the loan portfolio due to the continued shift of loan balances from the one- to four-family loan portfolio to the higher yielding commercial loan portfolio, which outpaced the increase in the cost of deposits.

Securities Strategy to Improve Earnings

In October 2023, the Company initiated a securities strategy (the "securities strategy") by selling $1.30 billion of securities, representing 94% of its securities portfolio. Since the Company did not have the intent to hold the $1.30 billion of securities to maturity at September 30, 2023, the Company recognized an impairment loss on those securities of $192.6 million which was reflected in the Company's financial statements for the quarter and fiscal year ended September 30, 2023. The securities strategy allowed the Company to improve its earnings stream going forward, beginning in the quarter ended December 31, 2023, by redeploying most of the proceeds into then-current market rate securities. The Company utilized the remaining proceeds to deleverage the balance sheet. 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. See additional information regarding the impact of the securities strategy on our financial measurements in "Supplemental Financial Information - Average Balance Sheets" below. The $1.30 billion of securities sold had a weighted average yield of 1.22% and an average duration of 3.6 years. With the proceeds from the sale of the securities, the Company purchased $632.0 million of securities yielding 5.75%, paid down $500.0 million of borrowings with a weighted average cost of 4.70%, and held the remaining cash at the Federal Reserve Bank of Kansas City ("FRB") 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.

Interest and Dividend Income

The following table presents the components of interest and dividend income for the time periods presented, along with the change measured in dollars and percent.

For the Year Ended

September 30,

Change Expressed in:

2025

2024

Dollars

Percent

(Dollars in thousands)

INTEREST AND DIVIDEND INCOME:

Loans receivable

332,518

308,707

23,811

7.7

MBS

46,259

33,650

12,609

37.5

FHLB stock

8,997

10,009

(1,012

)

(10.1

)

Cash and cash equivalents

8,368

15,728

(7,360

)

(46.8

)

Investment securities

3,377

8,749

(5,372

)

(61.4

)

Total interest and dividend income

399,519

376,843

22,676

6.0

The increase in interest income on loans receivable was due primarily to the continued shift of loan balances from the one- to four-family loan portfolio to higher yielding commercial loans. See additional discussion regarding the composition of the loan portfolio in the "Financial Condition as of September 30, 2025" section below. The increase in interest income on MBS was due mainly to an increase in the average balance of the portfolio, due mainly to securities purchases between periods. Interest income on cash and cash equivalents decreased due largely to a decrease in the average balance, along with a decrease in the weighted average yield compared to the prior year due to lower FRB interest rates. The decrease in the average balance was mainly a result of the securities strategy in the prior year, as not all proceeds from the sale of securities were immediately redeployed. The decrease in interest income on investment securities was due to a decrease in average balance, due primarily to the securities purchased as part of the securities strategy being called or maturing during fiscal year 2024 and not being replaced in their entirety. The cash flows from the investment securities portfolio that were not reinvested were generally invested in the MBS portfolio.

Interest Expense

The following table presents the components of interest expense for the time periods presented, along with the change measured in dollars and percent.

For the Year Ended

September 30,

Change Expressed in:

2025

2024

Dollars

Percent

(Dollars in thousands)

INTEREST EXPENSE:

Deposits

146,262

139,549

6,713

4.8

Borrowings

72,946

75,233

(2,287

)

(3.0

)

Total interest expense

219,208

214,782

4,426

2.1

The increase in interest expense on deposits was due primarily to growth in the high yield savings account, and to a lesser extent, an increase in the average balance of retail certificates of deposits. The increases were partially offset by a decrease in the weighted average rate paid on, and in the average balance of, money market accounts. See additional discussion regarding high yield savings in the "Financial Condition as of September 30, 2025" section below.

The decrease in interest expense on borrowings was due to a decrease in the average balance, which was partially offset by a higher weighted average interest rate. The decrease in the average balance of borrowings was due mainly to FHLB borrowings that matured between periods and were not renewed, along with a decrease in borrowings under the Federal Reserve's Bank Term Funding Program ("BTFP"), which were repaid during the prior year using a portion of the proceeds from the securities strategy. Cash flows from the deposit portfolio were generally used to pay off maturing FHLB borrowings. The increase in the weighted average interest rate was due primarily to higher market interest rates on FHLB borrowings that matured and were renewed between periods.

Provision for Credit Losses

The Company recorded a provision for credit losses of $745 thousand during the current year compared to a provision for credit losses of $1.3 million for the prior year. The provision for credit losses in the current 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 increase in ACL for loans was due to commercial loan growth during the current year, partially offset by an update to the ACL model's regression analyses implemented during the current year which largely impacted the commercial loan portfolio. See additional details in the "Supplemental Financial Information - Allowance for Credit Losses" discussion below. The decrease in the reserve for off-balance sheet credit exposures was due mainly to a decrease in commercial off-balance sheet credit exposures.

Non-Interest Income

The following table presents the components of non-interest income for the time periods presented, along with the change measured in dollars and percent.

For the Year Ended

September 30,

Change Expressed in:

2025

2024

Dollars

Percent

(Dollars in thousands)

NON-INTEREST INCOME:

Deposit service fees

11,043

10,562

481

4.6

Insurance commissions

3,605

3,257

348

10.7

Net loss from securities transactions

—

(13,345

)

13,345

100.0

Other non-interest income

6,077

4,770

1,307

27.4

Total non-interest income

20,725

5,244

15,481

295.2

The increase in deposit service fees was due mainly to growth in treasury management service fees. The increase in insurance commissions was due primarily to the receipt of commissions exceeding accrued amounts. The net loss from securities transactions in the prior year was related to the securities strategy. Other non-interest income was higher in the current year due mainly to an increase in BOLI income primarily from an increase in the crediting rate as a result of updates made to certain existing policies that were executed during the current year. Additionally, in the prior year there was a net loss on a financial derivative related to a commercial lending relationship and no such loss in the current year due to the related loan being paid off in the prior year.

Non-Interest Expense

The following table presents the components of non-interest expense for the time periods presented, along with the change measured in dollars and percent.

For the Year Ended

September 30,

Change Expressed in:

2025

2024

Dollars

Percent

(Dollars in thousands)

NON-INTEREST EXPENSE:

Salaries and employee benefits

60,383

52,272

8,111

15.5

Information technology and related expense

19,690

20,324

(634

)

(3.1

)

Occupancy, net

13,397

13,558

(161

)

(1.2

)

Regulatory and outside services

5,433

5,743

(310

)

(5.4

)

Advertising and promotional

4,950

4,264

686

16.1

Federal insurance premium

4,319

6,052

(1,733

)

(28.6

)

Deposit and loan transaction costs

2,843

2,719

124

4.6

Office supplies and related expense

1,696

1,691

0.3

Other non-interest expense

4,559

5,320

(761

)

(14.3

)

Total non-interest expense

117,270

111,943

5,327

4.8

The increase in salaries and employee benefits was mainly attributable to an increase in the number of employees between periods, merit increases and salary adjustments to remain market competitive, and a higher accrual of incentive compensation during the current year than the prior year related to the Bank's short-term performance plan. The decrease in information technology and related expense was due mainly to a decrease in usage of third-party professional services along with a decrease in depreciation expense during the current year. The decrease in regulatory and outside services was due to a reduction in usage of certain outside services compared to the prior year. The increase in advertising and promotional expense was due to timing of campaigns, including campaigns from the prior fiscal year that were delayed until the current fiscal year. The decrease in the federal insurance premium was due primarily to a decrease in the Federal Deposit Insurance Corporation ("FDIC") assessment rate as a result of the way the assessment rate was adjusted in fiscal year 2024 for the occurrence of the Bank's net loss during the quarter ended September 30, 2023. The decrease in other non-interest expense was due mainly to higher customer fraud losses in the prior year and the maturity of an interest rate swap agreement during the current year which reduced the expense associated with the collateral held in relation to the interest rate swap.

The Company's efficiency ratio was 58.33% for the current year compared to 66.91% for the prior year. Excluding the net losses from the securities strategy, the efficiency ratio would have been 61.97% for 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 year, partially offset by higher non-interest expense. The Company's operating expense ratio for the current year was 1.22% compared to 1.17% for the prior year. The operating expense ratio was higher in the current 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 time periods presented, along with the change measured in dollars and percent and effective tax rate.

For the Year Ended

September 30,

Change Expressed in:

2025

2024

Dollars

Percent

(Dollars in thousands)

Income before income tax expense

83,021

54,103

28,918

53.4

Income tax expense

14,996

16,093

(1,097

)

(6.8

)

Net income

68,025

38,010

30,015

79.0

Effective Tax Rate

18.1

29.7

Income tax expense was lower in the current year compared to the prior year, due mainly to income tax associated with the pre-1988 bad debt recapture in the prior fiscal year, partially offset by higher pretax income in the current year. Management anticipates the effective tax rate for fiscal year 2026 will be 19% to 20%.

Fiscal Year 2026 Outlook

Salary and employee benefit expense is anticipated to increase approximately 9% from fiscal year 2025 due to the expected hiring of additional professionals, merit increases, continued staff compensation alignment with market compensation levels, and the impact of the first full year of compensation for recently hired sales professionals. Information technology expense in fiscal year 2025 was less than anticipated due primarily to projects being postponed to fiscal year 2026. It is anticipated that information technology expense will increase approximately 15% from fiscal year 2025 due to project postponements to fiscal year 2026, along with several new initiatives that are anticipated to be implemented during fiscal year 2026. Overall, non-interest expense is projected to increase 7% in fiscal year 2026 from the fiscal year 2025 amount. Management anticipates the FRB will continue to reduce rates during our 2026 fiscal year, which should allow a reduction in our deposit interest expense while our loan portfolio yield is expected to remain stable or increase due to the ongoing remixing of our loan portfolio. As a result of the strategic initiatives previously discussed, it is likely the Company will grow past $10 billion in total assets in the coming fiscal years.

Financial Condition as of September 30, 2025

The following table summarizes the Company's financial condition at the dates indicated.

Annualized

September 30,

June 30,

Percent

September 30,

Percent

2025

Change

2024

Change

(Dollars and shares in thousands)

Total assets

9,778,701

9,692,739

3.5

9,527,608

2.6

Available-for-sale ("AFS") securities

867,216

956,229

(37.2

)

856,266

1.3

Loans receivable, net

8,111,961

8,023,554

4.4

7,907,338

2.6

Deposits

6,591,448

6,431,137

10.0

6,129,982

7.5

Borrowings

1,950,770

2,071,585

(23.3

)

2,179,564

(10.5

)

Stockholders' equity

1,047,677

1,046,158

0.6

1,032,270

1.5

Equity to total assets at end of period

10.7

10.8

Average number of basic shares outstanding

129,874

130,081

(0.6

)

129,918

—

Average number of diluted shares outstanding

129,874

130,081

(0.6

)

129,918

—

Securities decreased $89.0 million from June 30, 2025 to September 30, 2025, due primarily to calls and principal repayments during the current quarter that were not reinvested into the portfolio. The loan portfolio increased $88.4 million during the current quarter as cash flows from the securities portfolio were used to fund loan growth. The loan portfolio mix continued to shift from one- to four-family loans to commercial loans during the current quarter, with commercial loan growth of $204.2 million, partially offset by a $113.9 million decrease in one- to four-family loans. The growth in commercial loans was due mainly to a $148.3 million increase in the commercial real estate loan portfolio during the quarter. As of September 30, 2025, the Bank expects to fund approximately $76 million of undisbursed amounts on existing commercial real estate and commercial construction loans and approximately $40 million of commercial real estate and commercial construction loan commitments during the December 31, 2025 quarter. Additionally, the Bank expects to fund approximately $26 million of undisbursed amounts and commitments related to commercial and industrial loans during the December 31, 2025 quarter.

As a result of continued high interest rates and a lack of housing inventory, which has reduced 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 suspended its one- to four-family correspondent lending channels during fiscal year 2024 for the foreseeable future. Management expects the Bank's one- to four-family originated loan portfolio will continue to decrease as the affordability of housing remains challenging, there is a limited supply of homes for sale and we compete with nationwide online mortgage originators. It is expected that cash flows generated from the repayments of our one- to four-family portfolio will continue to be used to fund commercial loan growth. Maintaining strong credit quality remains a top priority as we expand our commercial loan portfolio. The weighted average debt service coverage ratio ("DSCR") for commercial loan originations and purchases during the current fiscal year was 1.68x and the weighted average loan-to-value ("LTV") for commercial real estate and construction loans originated and purchased was 74%. The weighted average DSCR and LTV for our commercial real estate and construction loans was 1.65x and 61%, respectively, at September 30, 2025.

Deposits increased $160.3 million during the current quarter due mainly to retail certificates of deposit, commercial deposits, and the Bank's high yield savings account offering. Borrowings decreased $120.8 million due to the maturity of $100.0 million in borrowings during the current quarter that were not replaced, along with principal payments made on the Bank's amortizing FHLB advances.

Total assets increased $251.1 million from September 30, 2024, due to growth in the loan portfolio, which was largely funded with deposit growth, mainly through the Bank's high yield savings account offering. The commercial loan portfolio increased $607.0 million during the current year, due primarily to commercial real estate loan growth, partially offset by a decrease of $400.0 million in one- to four-family loans.

Deposits increased $461.5 million from September 30, 2024, due mainly to the Bank's high yield savings account offering, which increased $364.5 million during the current year. Management has continued to focus on retaining and growing deposits through the Bank's high yield savings account product, which, as of September 30, 2025, had an annual percentage yield of 4.00% for accounts that meet the $10 thousand balance minimum.

Borrowings decreased $228.8 million during the current year due to principal payments made on the Bank's amortizing advances, along with borrowings that matured but were not replaced. Management estimates that the Bank had $2.92 billion in liquidity available at September 30, 2025, based on the Bank's blanket collateral agreement with FHLB and unencumbered securities.

The following table summarizes loan originations and purchases, deposit activity, and borrowing activity, along with certain related weighted average rates, during the periods indicated. The borrowings presented in the table have original contractual terms of one year or longer.

For the Three Months Ended

For the Year Ended

September 30, 2025

Amount

Rate

Amount

Rate

(Dollars in thousands)

Loan originations, purchases, and participations

One- to four-family and consumer:

Originated

88,055

6.61

352,003

6.52

Commercial:

Originated

251,192

6.58

797,466

6.93

Participations/Purchased

11,952

6.85

104,431

7.10

351,199

6.60

1,253,900

6.83

Deposit Activity

Non-maturity deposits

69,212

414,096

Retail/Commercial certificates of deposit

85,893

1,986

Borrowing activity

Maturities and repayments

(121,168

)

3.30

(879,672

)

3.39

New borrowings

—

650,000

4.13

Stockholders' Equity

Stockholders' equity totaled $1.05 billion at September 30, 2025, an increase of $15.4 million from September 30, 2024. 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. As of September 30, 2025, the Bank's community bank leverage ratio was 9.6%.

During the year ended September 30, 2025, the Company paid regular quarterly cash dividends totaling $44.3 million, or $0.34 per share. On October 28, 2025, the Company announced a regular quarterly 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. 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.

The Board of Directors continues to evaluate various alternatives for capital allocation to enhance stockholder value, including the repurchase of stock, the payment of additional cash dividends, or retaining earnings to support future growth. Since our second-step conversion in December 2010, we have returned $2.01 billion in capital to stockholders through dividends totaling $1.57 billion and stock repurchases totaling $439.9 million. This is supported by our holistic approach to managing the balance sheet through continuous modeling of the Bank's performance, risk management, our commitment to credit quality and periodic stress testing.

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. Through the payment of the True Blue dividend in prior years, the Company was able to provide stockholder value by reducing its excess capital. The last True Blue dividend occurred in fiscal year 2022. Management and the Board of Directors believe that a tier 1 leverage ratio of about 9% is appropriate to manage the risk profile of the Company.

At September 30, 2025, Capitol Federal Financial, Inc., at the holding company level, had $17.6 million in cash on deposit at the Bank. During the current quarter, the Bank distributed $14.0 million from the Bank to the Company. This represented the only distribution from the Bank to the Company during fiscal year 2025. Distributions from the Bank to the Company during fiscal year 2025 were limited due to the tax associated with the pre-1988 bad debt recapture which is related to the Bank's tax accumulated earnings and profits. During the current quarter, the Bank reached a point that there was sufficient taxable income earned to replenish the Bank's tax accumulated earnings and profits to a positive level, allowing the Bank to make a distribution to the Company and not have that distribution subject to the pre-1988 bad debt recapture tax. Due to the Bank's expected continuing positive tax accumulated earnings and profit balance, it is anticipated that the Bank will be in a position to make earnings distributions to the Company during fiscal year 2026. Earnings distributions from the Bank to the Company will be limited to the extent necessary to prevent the Bank from re-entering a negative accumulated earnings and profit position and have to pay the pre-1988 bad debt recapture tax on earnings moved from the Bank to the Company.

During the current quarter, the Company repurchased 618,260 shares of common stock at an average price of $6.23 per share. The Company currently has $71.1 million remaining authorized under its existing stock repurchase plan. Shares may be repurchased from time to time based upon market conditions, available liquidity and other factors. Although our existing repurchase plan has no expiration date we are required to annually seek the FRB's non-objection for the buyback amount. The FRB's current non-objection for the Company to repurchase up to $75 million of stock expires in February 2026.

The following table presents a reconciliation of total to net shares outstanding as of September 30, 2025.

Total shares outstanding

132,204,305

Less unallocated Employee Stock Ownership Plan ("ESOP") shares and unvested restricted stock

(2,644,392

)

Net shares outstanding

129,559,913

Capitol Federal Financial, Inc. is the holding company for the Bank. As of September 30, 2025, the Bank had 46 branch locations in Kansas and Missouri and is one of the largest residential lenders in the State of Kansas. News and other information about the Company can be found at the Bank's website, http://www.capfed.com.

Forward-Looking Statements

Except for the historical information contained in this press release, the matters discussed herein may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements about our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions. The words "may," "could," "should," "would," "will," "believe," "anticipate," "estimate," "expect," "intend," "plan," and similar expressions are intended to identify forward-looking statements. Forward-looking statements involve risks and uncertainties, including: changes in policies or the application or interpretation of laws and regulations by regulatory agencies and tax authorities; other governmental initiatives affecting the financial services industry; changes in accounting principles, policies or guidelines; fluctuations in interest rates and the effects of inflation or a potential recession, whether caused by Federal Reserve action or otherwise; the potential imposition of new or increased tariffs or changes to existing trade policies that could affect economic activity or specific industry sectors; the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor or depositor sentiment; demand for loans in the Company's market areas; the future earnings and capital levels of the Bank and the impact of potential pre-1988 bad debt recapture, which could affect the ability of the Company to pay dividends in accordance with its dividend policies; competition; and other risks detailed from time to time in documents filed or furnished by the Company with the Securities and Exchange Commission. Actual results may differ materially from those currently expected. These forward-looking statements represent the Company's judgment as of the date of this release. The Company disclaims, however, any intent or obligation to update these forward-looking statements.

SUPPLEMENTAL FINANCIAL INFORMATION

CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollars in thousands, except per share amounts)

September 30,

June 30,

September 30,

2025

2024

ASSETS:

Cash and cash equivalents (includes interest-earning deposits of $229,566, $150,552 and $192,138)

252,443

174,965

217,307

AFS securities, at estimated fair value (amortized cost of $847,369, $933,360 and $829,852)

867,216

956,229

856,266

Loans receivable, net (ACL of $24,039, $22,808 and $23,035)

8,111,961

8,023,554

7,907,338

FHLB stock, at cost

90,662

98,225

101,175

Premises and equipment, net

89,314

88,967

91,463

Income taxes receivable, net

220

1,070

359

Deferred income tax assets, net

23,826

21,399

21,978

Other assets

343,059

328,330

331,722

TOTAL ASSETS

9,778,701

9,692,739

9,527,608

LIABILITIES:

Deposits

6,591,448

6,431,137

6,129,982

Borrowings

1,950,770

2,071,585

2,179,564

Advances by borrowers

65,416

38,857

61,801

Deferred income tax liabilities, net

2,056

—

Other liabilities

121,334

105,002

123,991

Total liabilities

8,731,024

8,646,581

8,495,338

STOCKHOLDERS' EQUITY:

Preferred stock, $0.01 par value; 100,000,000 shares authorized, no shares issued or outstanding

—

Common stock, $0.01 par value; 1,400,000,000 shares authorized, 132,204,305, 132,800,865 and 132,735,565 shares issued and outstanding as of September 30, 2025, June 30, 2025, and September 30, 2024, respectively

1,322

1,328

1,327

Additional paid-in capital

1,142,711

1,146,648

1,146,851

Unearned compensation, ESOP

(24,780

)

(25,193

)

(26,431

)

Accumulated deficit

(87,331

)

(95,078

)

(111,104

)

Accumulated other comprehensive income, net of tax

15,755

18,453

21,627

Total stockholders' equity

1,047,677

1,046,158

1,032,270

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

9,778,701

9,692,739

9,527,608

CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(Dollars in thousands)

For the Three Months Ended

For the Year Ended

September 30,

June 30,

September 30,

2025

2024

INTEREST AND DIVIDEND INCOME:

Loans receivable

87,343

82,914

332,518

308,707

MBS

11,808

12,163

46,259

33,650

FHLB stock

2,163

2,197

8,997

10,009

Cash and cash equivalents

2,148

1,620

8,368

15,728

Investment securities

582

784

3,377

8,749

Total interest and dividend income

104,044

99,678

399,519

376,843

INTEREST EXPENSE:

Deposits

37,204

35,860

146,262

139,549

Borrowings

18,057

18,360

72,946

75,233

Total interest expense

55,261

54,220

219,208

214,782

NET INTEREST INCOME

48,783

45,458

180,311

162,061

PROVISION FOR CREDIT LOSSES

519

(451

)

745

1,259

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

48,264

45,909

179,566

160,802

NON-INTEREST INCOME:

Deposit service fees

2,873

2,867

11,043

10,562

Insurance commissions

1,018

884

3,605

3,257

Net loss from securities transactions

—

(13,345

)

Other non-interest income

1,900

1,537

6,077

4,770

Total non-interest income

5,791

5,288

20,725

5,244

NON-INTEREST EXPENSE:

Salaries and employee benefits

15,936

15,277

60,383

52,272

Information technology and related expense

5,053

5,163

19,690

20,324

Occupancy, net

3,292

3,270

13,397

13,558

Regulatory and outside services

1,590

1,261

5,433

5,743

Advertising and promotional

1,915

1,453

4,950

4,264

Federal insurance premium

1,114

1,072

4,319

6,052

Deposit and loan transaction costs

658

715

2,843

2,719

Office supplies and related expense

490

370

1,696

1,691

Other non-interest expense

970

983

4,559

5,320

Total non-interest expense

31,018

29,564

117,270

111,943

INCOME BEFORE INCOME TAX EXPENSE

23,037

21,633

83,021

54,103

INCOME TAX EXPENSE

4,224

3,251

14,996

16,093

NET INCOME

18,813

18,382

68,025

38,010

Average Balance Sheets

The following tables present the average balances of our assets, liabilities, and stockholders' equity, and the related annualized weighted average yields and rates on our interest-earning assets and interest-bearing liabilities for the periods indicated, as well as selected performance ratios and other information for the periods shown. Weighted average yields are derived by dividing annualized income by the average balance of the related assets, and weighted average rates are derived by dividing annualized expense by the average balance of the related liabilities, for the periods shown. Average outstanding balances are derived from average daily balances. The weighted average yields and rates include amortization of fees, costs, premiums and discounts, which are considered adjustments to yields/rates. Weighted average yields on tax-exempt securities are not calculated on a fully taxable equivalent basis.

For the Three Months Ended

September 30, 2025

June 30, 2025

Average

Interest

Average

Interest

Outstanding

Earned/

Yield/

Outstanding

Earned/

Yield/

Amount

Paid

Rate

Amount

Paid

Rate

(Dollars in thousands)

Assets:

Interest-earning assets:

One- to four-family loans:

Originated

3,794,781

36,521

3.85

3,838,361

36,340

3.79

Purchased

2,167,994

17,668

3.26

2,232,868

18,454

3.31

Total one- to four-family loans

5,962,775

54,189

3.63

6,071,229

54,794

3.61

Commercial loans:

Commercial real estate

1,670,205

24,317

5.70

1,496,569

20,669

5.46

Commercial and industrial

196,992

3,515

6.98

143,479

2,478

6.83

Commercial construction

182,855

3,050

6.53

174,407

2,778

6.30

Total commercial loans

2,050,052

30,882

5.89

1,814,455

25,925

5.65

Consumer loans

113,979

2,272

7.91

110,809

2,195

7.95

Total loans receivable (1)

8,126,806

87,343

4.27

7,996,493

82,914

4.13

MBS (2)

860,833

11,808

5.49

884,321

12,163

5.50

Investment securities (2)(3)

45,467

582

5.13

60,319

784

5.19

FHLB stock

94,288

2,163

9.10

96,564

2,197

9.13

Cash and cash equivalents

192,755

2,148

4.36

145,579

1,620

4.40

Total interest-earning assets

9,320,149

104,044

4.43

9,183,276

99,678

4.33

Other non-interest-earning assets

468,378

455,441

Total assets

9,788,527

9,638,717

Liabilities and stockholders' equity:

Interest-bearing liabilities:

Checking

869,328

497

0.23

883,428

497

0.23

High yield savings

427,416

4,229

3.93

352,815

3,606

4.10

Other savings

428,106

0.07

438,821

0.07

Money market

1,244,320

4,037

1.29

1,220,567

3,700

1.22

Retail certificates

2,787,294

26,596

3.79

2,739,886

26,481

3.88

Commercial certificates

60,637

553

3.62

59,586

557

3.75

Wholesale certificates

118,066

1,211

4.07

91,645

942

4.12

Total deposits

5,935,167

37,204

2.49

5,786,748

35,860

2.49

Total interest-bearing liabilities

7,962,253

55,261

2.75

7,872,444

54,220

2.76

Non-interest-bearing deposits

587,128

564,913

Other non-interest-bearing liabilities

189,471

159,035

Stockholders' equity

1,049,675

1,042,325

Total liabilities and stockholders' equity

9,788,527

9,638,717

Net interest income (4)

48,783

45,458

Net interest-earning assets

1,357,896

1,310,832

Net interest margin (5)

2.09

1.98

Ratio of interest-earning assets to interest-bearing liabilities

1.17x

Selected performance ratios:

Return on average assets (annualized) (6)(10)

0.77

0.76

Return on average equity (annualized) (7)(10)

7.17

7.05

Average equity to average assets

10.72

10.81

Operating expense ratio (annualized) (8)

1.27

1.23

Efficiency ratio (9)(10)

56.84

58.26

For the Year Ended September 30,

2025

2024

Average

Interest

Average

Interest

Outstanding

Earned/

Yield/

Outstanding

Earned/

Yield/

Amount

Paid

Rate

Amount

Paid

Rate

(Dollars in thousands)

Assets:

Interest-earning assets:

One- to four-family loans:

Originated

3,859,371

145,552

3.77

3,984,971

142,011

3.56

Purchased

2,256,624

73,932

3.28

2,473,301

79,492

3.21

Total one- to four-family loans

6,115,995

219,484

3.59

6,458,272

221,503

3.43

Commercial loans:

Commercial real estate

1,452,288

82,426

5.60

1,074,424

59,154

5.42

Commercial and industrial

151,126

10,396

6.78

119,156

7,897

6.52

Commercial construction

176,620

11,333

6.33

184,841

10,991

5.85

Total commercial loans

1,780,034

104,155

5.77

1,378,421

78,042

5.57

Consumer loans

111,402

8,879

7.97

107,357

9,162

8.53

Total loans receivable (1)

8,007,431

332,518

4.13

7,944,050

308,707

3.87

MBS (2)

834,345

46,259

5.54

619,521

33,650

5.43

Investment securities (2)(3)

63,650

3,377

5.31

180,640

8,749

4.84

FHLB stock

97,054

8,997

9.27

106,064

10,009

9.44

Cash and cash equivalents

185,052

8,368

4.46

286,988

15,728

5.39

Total interest-earning assets

9,187,532

399,519

4.33

9,137,263

376,843

4.11

Other non-interest-earning assets

460,405

460,278

Total assets

9,647,937

9,597,541

Liabilities and stockholders' equity:

Interest-bearing liabilities:

Checking

874,377

2,010

0.23

873,097

1,978

0.23

High yield savings

283,605

11,492

4.05

31,345

1,297

4.14

Other savings

437,766

335

0.08

462,111

529

0.11

Money market

1,237,612

15,643

1.26

1,302,817

22,333

1.71

Retail certificates

2,782,181

110,813

3.98

2,680,003

106,204

3.96

Commercial certificates

58,675

2,318

3.95

54,484

2,247

4.12

Wholesale certificates

86,457

3,651

4.22

109,217

4,961

4.54

Total deposits

5,760,673

146,262

2.54

5,513,074

139,549

2.53

Borrowings

2,108,626

72,946

3.46

2,338,222

75,233

3.21

Total interest-bearing liabilities

7,869,299

219,208

2.78

7,851,296

214,782

2.73

Non-interest-bearing deposits

562,084

533,821

Other non-interest-bearing liabilities

177,178

180,979

Stockholders' equity

1,039,376

1,031,445

Total liabilities and stockholders' equity

9,647,937

9,597,541

Net interest income (4)

180,311

162,061

Net interest-earning assets

1,318,233

1,285,967

Net interest margin (5)

1.96

1.77

Ratio of interest-earning assets to interest-bearing liabilities

1.17x

1.16x

Selected performance ratios:

Return on average assets (6)(10)

0.71

0.40

Return on average equity (7)(10)

6.54

3.69

Average equity to average assets

10.77

10.75

Operating expense ratio (8)

1.22

1.17

Efficiency ratio (9)(10)

58.33

66.91

(1)

Balances are adjusted for unearned loan fees and deferred costs. Loans that are 90 or more days delinquent are included in the loans receivable average balance with a yield of zero percent.

(2)

AFS security yields are based upon amortized cost which is adjusted for premiums and discounts.

(3)

There were no nontaxable securities included in the average balance of investment securities for the quarters ended September 30, 2025 and June 30, 2025, or for the year ended September 30, 2025. The average balance of investment securities includes an average balance of nontaxable securities of $51 thousand for the year ended September 30, 2024.

(4)

Net interest income represents the difference between interest income earned on interest-earning assets and interest paid on interest-bearing liabilities. Net interest income depends on the average balance of interest-earning assets and interest-bearing liabilities, and the interest rates earned or paid on them.

(5)

Net interest margin represents annualized net interest income as a percentage of average interest-earning assets. Management believes the net interest margin is important to investors as it is a profitability measure for financial institutions.

(6)

Return on average assets represents annualized net income as a percentage of total average assets. Management believes that the return on average assets is important to investors as it shows the Company's profitability in relation to the Company's average assets.

(7)

Return on average equity represents annualized net income as a percentage of total average equity. Management believes that the return on average equity is important to investors as it shows the Company's profitability in relation to the Company's average equity.

(8)

The operating expense ratio represents annualized non-interest expense as a percentage of average assets. Management believes the operating expense ratio is important to investors as it provides insight into how efficiently the Company is managing its expenses in relation to its assets. It is a financial measurement ratio that does not take into consideration changes in interest rates.

(9)

The efficiency ratio represents non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. Management believes the efficiency ratio is important to investors as it is a measure of a financial institution's total non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. A lower value generally indicates that it is costing the financial institution less money to generate revenue, related to its net interest margin and non-interest income.

(10)

The table below provides a reconciliation between performance measures presented in accordance with 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. 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 "Comparison of Operating Results for the Years Ended September 30, 2025 and 2024 - Securities Strategy to Improve Earnings".

For the Year Ended September 30, 2024

Excluding

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

Earnings per share (11)

0.29

(0.08

)

0.37

(11)

Earnings per share is calculated as net income divided by average shares outstanding. 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.

Loan Portfolio

The following table presents information related to the composition of our loan portfolio in terms of dollar amounts, weighted average rates, and percentage of total as of the dates indicated.

September 30, 2025

June 30, 2025

September 30, 2024

% of

Amount

Rate

Total

Amount

Rate

Total

Amount

Rate

Total

(Dollars in thousands)

One- to four-family:

Originated

3,774,134

3.78

46.4

3,828,171

3.74

47.6

3,941,952

3.60

49.8

Purchased

2,114,447

3.49

26.0

2,175,455

3.48

27.0

2,339,748

3.44

29.5

Construction

16,054

6.17

0.2

14,860

6.27

0.2

22,970

6.05

0.3

Total

5,904,635

3.68

72.6

6,018,486

3.65

74.8

6,304,670

3.55

79.6

Commercial:

Commercial real estate

1,709,990

5.82

21.0

1,561,691

5.76

19.4

1,191,624

5.43

15.0

Commercial and industrial

210,119

6.92

2.6

184,390

6.94

2.3

129,678

6.66

1.6

Commercial construction

195,886

6.42

2.4

165,760

6.39

2.1

187,676

6.40

2.4

Total

2,115,995

5.98

26.0

1,911,841

5.93

23.8

1,508,978

5.65

19.0

Consumer loans:

Home equity

104,809

8.15

1.3

103,564

8.17

1.3

99,988

8.90

1.3

Other

8,436

5.55

0.1

9,109

5.83

0.1

9,615

5.72

0.1

Total

113,245

7.96

1.4

112,673

7.99

1.4

109,603

8.62

1.4

Total loans receivable

8,133,875

4.34

100.0

8,043,000

4.25

100.0

7,923,251

4.02

100.0

Less:

ACL

24,039

22,808

23,035

Deferred loan fees/discounts

31,268

31,159

30,336

Premiums/deferred costs

(33,393

)

(34,521

)

(37,458

)

Total loans receivable, net

8,111,961

8,023,554

7,907,338

Loan Activity: The following table summarizes activity in the loan portfolio, along with weighted average rates where applicable, for the periods indicated, excluding changes in ACL, deferred loan fees/discounts, and premiums/deferred costs. Loans that were paid off as a result of refinances are included in repayments. Loan endorsements are not included in the activity in the following table because a new loan is not generated at the time of the endorsement. The endorsed balance and rate are included in the ending loan portfolio balance and rate. Commercial loan renewals are not included in the activity presented in the following table unless new funds are disbursed at the time of renewal. The renewal balance and rate are included in the ending loan portfolio balance and rate.

For the Three Months Ended

For the Year Ended

September 30, 2025

Amount

Rate

Amount

Rate

(Dollars in thousands)

Beginning balance

8,043,000

4.25

7,923,251

4.02

Originated and refinanced

339,247

6.59

1,149,469

6.80

Purchased and participations

11,952

6.85

104,431

7.10

Change in undisbursed loan funds

11,760

(14,556

)

Repayments

(271,802

)

(1,026,401

)

Principal (charge-offs)/recoveries, net

(66

)

(198

)

Other

(216

)

(2,121

)

Ending balance

8,133,875

4.34

8,133,875

4.34

One- to Four-Family Loans: The following table presents, for our portfolio of one- to four-family loans, the amount, percent of total, weighted average rate, weighted average credit score, weighted average LTV ratio, and average balance per loan as of September 30, 2025. Credit scores were updated in September 2025 from a nationally recognized consumer rating agency. The LTV ratios were based on the current loan balance and either the lesser of the purchase price or original appraisal, or the most recent Bank appraisal, if available. In most cases, the most recent appraisal was obtained at the time of origination.

% of

Credit

Average

Amount

Total

Rate

Score

LTV

Balance

(Dollars in thousands)

Originated

3,774,134

63.9

3.78

770

170

Purchased

2,114,447

35.8

3.49

768

382

Construction

16,054

0.3

6.17

775

334

5,904,635

100.0

3.68

769

213

The following table presents origination and refinance activity for our one- to four-family loan portfolio, excluding endorsement activity, along with the weighted average rate, weighted average LTV and weighted average credit score for the time periods presented. As of September 30, 2025, the Bank had one- to four-family loan and refinance commitments totaling $42.0 million at a weighted average rate of 6.29%.

For the Three Months Ended

For the Year Ended

September 30, 2025

Credit

Amount

Rate

LTV

Score

Amount

Rate

LTV

Score

(Dollars in thousands)

69,577

6.26

771

291,266

6.17

768

Commercial Loans: The table below presents commercial loan origination and participation activity for the time periods presented, along with weighted average LTV and weighted average DSCR. For commercial real estate and commercial construction loans, the LTV ratio is calculated using the gross loan amount (composed of unpaid principal and undisbursed amounts) and the collateral value at the time of origination. For existing real estate, the "as is" value is used. If the property is to be constructed, the "as completed" value of the collateral is utilized. The DSCR is calculated based on historical borrower performance, or projected borrower performance for newly formed entities with no performance history.

For the Three Months Ended September 30, 2025

Originated

Participation

Total

Weighted

Amount

Rate

Amount

Rate

Amount

Rate

LTV

DSCR

(Dollars in thousands)

Commercial real estate

187,667

6.45

—

187,667

6.45

1.62

Commercial and industrial

31,903

6.88

—

31,903

6.88

N/A

2.71

Commercial construction

31,622

7.04

11,952

6.85

43,574

6.99

1.20

251,192

6.58

11,952

6.85

263,144

6.59

1.68

For the Year Ended September 30, 2025

Originated

Participation

Total

Weighted

Amount

Rate

Amount

Rate

Amount

Rate

LTV

DSCR

(Dollars in thousands)

Commercial real estate

493,115

6.74

35,726

7.02

528,841

6.76

1.66

Commercial and industrial

176,964

7.26

900

7.25

177,864

7.26

N/A

2.32

Commercial construction

127,387

7.22

67,805

7.14

195,192

7.19

1.50

797,466

6.93

104,431

7.10

901,897

6.95

1.76

The following table presents commercial loan disbursements, excluding lines of credit, during the year ended September 30, 2025.

Amount

Rate

(Dollars in thousands)

Commercial real estate

533,719

6.64

Commercial and industrial

107,841

7.31

Commercial construction

211,824

6.68

853,384

6.73

The following table presents the Bank's commercial real estate and commercial construction loans by type of primary collateral as of the dates indicated. Management anticipates fully funding the majority of the undisbursed amounts, as most are not cancellable by the Bank.

September 30, 2025

June 30,

2025

September 30,

2024

Unpaid

Undisbursed

Gross Loan

Count

Principal

Amount

(Dollars in thousands)

Hotel

545,782

57,342

603,124

585,080

323,396

Senior housing

464,611

19,348

483,959

357,573

332,334

Multi-family

262,414

102,902

365,316

356,347

359,707

Retail building

134

285,159

49,506

334,665

320,377

316,261

Office building

131,316

4,742

136,058

129,297

127,961

One- to four-family property

316

66,112

4,308

70,420

70,648

63,416

Warehouse/manufacturing

55,181

3,672

58,853

56,987

34,656

Land

34,829

776

35,605

34,728

32,943

Single use building

33,456

262

33,718

34,109

43,438

Other

27,016

1,176

28,192

26,709

29,070

769

1,905,876

244,034

2,149,910

1,971,855

1,663,182

Weighted average rate

5.88

6.90

5.99

5.96

5.77

The following table presents the unpaid principal balance of non-owner occupied and owner occupied loans within the Bank's commercial real estate loan portfolio as of the dates indicated.

September 30, 2025

June 30, 2025

September 30, 2024

(Dollars in thousands)

Non-owner occupied

$ 1,271,905

$ 1,135,243

$ 886,101

Owner occupied

$ 167,925

$ 163,745

165,334

The following table presents management's funding expectations for the Bank's commercial real estate and commercial construction undisbursed amounts and commitments outstanding as of September 30, 2025. Due to the nature of a revolving line of credit, management is unable to project funding expectations for those balances, so those amounts are presented separately.

Projected Disbursements for the Quarters Ending

December 31,

2025

March 31,

2026

June 30,

2026

Thereafter

Revolving Lines of Credit

Total

(Dollars in thousands)

Undisbursed amounts

75,856

61,735

50,395

48,684

7,364

244,034

Commitments

39,606

9,250

27,000

85,038

—

160,894

115,462

70,985

77,395

133,722

7,364

404,928

Weighted average rate

6.71

6.97

6.94

6.89

7.32

6.87

The following table summarizes the Bank's commercial real estate and commercial construction loans by the state in which the collateral is located, as of the dates indicated.

September 30, 2025

June 30,

2025

September 30,

2024

Unpaid

Undisbursed

Gross Loan

Count

Principal

Amount

(Dollars in thousands)

Kansas

562

738,887

60,940

799,827

723,192

713,437

Missouri

125

305,078

49,694

354,772

310,569

313,146

Texas

289,481

23,324

312,805

318,484

348,066

Arizona

105,934

16,495

122,429

122,434

15,452

New York

109,828

—

109,828

110,000

60,000

California

90,256

6,592

96,848

95,318

15,040

Colorado

58,341

25,858

84,199

60,920

50,017

Tennessee

41,495

15,286

56,781

40,439

35,973

Nebraska

17,068

27,139

44,207

38,366

32,422

Other

149,508

18,706

168,214

152,133

79,629

769

1,905,876

244,034

2,149,910

1,971,855

1,663,182

The following table presents the Bank's commercial real estate and commercial construction loans by unpaid principal balance, aggregated by type of primary collateral and state, along with weighted average LTV and weighted average DSCR as of September 30, 2025. 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 DSCR is calculated at the time of origination and is updated at the time of subsequent loan renewals, financial reviews (for applicable loans and lending relationships), and any other time management is aware of changes that may impact the DSCR. The DSCR presented in the table below is based on the DSCR at the time of origination unless an updated DSCR has been calculated or the loan has reached the end of its stabilization period. In general, commercial borrowers with total loans of $2.5 million or more are reviewed at least annually to monitor financial performance.

Kansas

Missouri

Texas

New York

Arizona

California

Other

Total

(Dollars in thousands)

Hotel

41,385

18,059

141,960

109,828

102,093

85,935

46,522

545,782

Senior housing

249,912

142,168

—

72,531

464,611

Retail building

91,574

44,050

66,714

—

82,821

285,159

Multi-family

185,815

48,318

20,000

—

8,281

262,414

Office building

57,441

7,945

59,907

—

142

—

5,881

131,316

One- to four-family property

44,922

4,592

—

3,325

1,620

11,653

66,112

Warehouse/manufacturing

35,269

16,729

—

3,183

55,181

Land

7,039

153

900

—

26,737

34,829

Single use building

12,126

18,255

—

374

2,701

—

33,456

Other

13,404

4,809

—

8,803

27,016

738,887

305,078

289,481

109,828

105,934

90,256

266,412

1,905,876

Weighted LTV

Weighted DSCR

1.84x

1.54x

1.41x

1.55x

1.44x

1.49x

1.69x

1.65x

The following table presents the unpaid principal balance of the Bank's commercial real estate and commercial construction loans aggregated by type of primary collateral, along with weighted average rate, LTV, and DSCR as of September 30, 2025.

Unpaid

Weighted

Count

Principal

Rate

LTV

DSCR

(Dollars in thousands)

Hotel

545,782

6.46

1.32

Senior housing

464,611

5.11

1.52

Retail building

134

285,159

5.32

2.02

Multi-family

262,414

6.09

1.27

Office building

131,316

6.44

1.94

One- to four-family property

316

66,112

6.08

2.42

Warehouse/manufacturing

55,181

6.28

2.40

Land

34,829

6.53

3.95

Single use building

33,456

6.17

1.94

Other

27,016

5.84

2.05

769

1,905,876

5.88

1.65

The following table presents the Bank's commercial real estate and construction loans, including unpaid principal and undisbursed amounts, along with outstanding loan commitments as of September 30, 2025, categorized by aggregate gross loan and commitment amount, along with average loan amount, and weighted average rate, LTV, and DSCR. For loans over $50.0 million, there were $266.5 million related to hotels in Arizona, California, New York, and Texas, $143.1 million related to multi-family properties in Kansas, and $59.5 million related to an office building in Texas.

Gross Loan

and Commitment

Average

Weighted

Count

Amounts

Amount

Rate

LTV

DSCR

(Dollars in thousands)

Greater than $50 million

469,057

67,008

6.31

1.37

>$30 to $50 million

415,669

37,788

6.10

1.34

>$20 to $30 million

384,413

24,026

6.22

1.30

>$15 to $20 million

188,214

17,110

6.39

1.26

>$10 to $15 million

183,798

12,253

6.24

1.77

>$5 to $10 million

255,724

7,103

5.52

1.76

$1 to $5 million

126

295,633

2,346

5.38

2.02

Less than $1 million

556

118,296

213

6.29

3.20

778

2,310,804

2,970

6.05

1.60

The following table summarizes the Bank's commercial and industrial loans by loan purpose as of the dates indicated. Of the $301.9 million of commercial and industrial loans at September 30, 2025, 63%, or $190.2 million, had a gross loan balance of $5 million or more. The largest commercial and industrial lending relationship at September 30, 2025 had a gross loan balance of $81.7 million, which represented 27% of the gross commercial and industrial loan balance at September 30, 2025. In addition, the Bank had four commercial and industrial loan commitments totaling $15.7 million, with a weighted average rate of 7.03%, at September 30, 2025. No commitments are presented in the table below. The recent growth in this portfolio aligns with the Bank's strategy to grow all aspects of commercial banking. Management anticipates growth will continue in the commercial and industrial loan portfolio but it will likely fluctuate over time due to the nature of these loans.

September 30, 2025

June 30,

2025

September 30,

2024

Unpaid

Undisbursed

Gross Loan

Count

Principal

Amount

(Dollars in thousands)

Working capital

193

79,264

74,703

153,967

151,642

74,097

Purchase equipment

47,043

7,158

54,201

55,646

15,457

Purchase/refinance business assets

45,579

4,226

49,805

40,145

37,950

Finance/lease vehicle

190

33,631

2,775

36,406

26,769

28,318

Other

4,602

2,906

7,508

6,993

7,735

514

210,119

91,768

301,887

281,195

163,557

Weighted average rate

6.92

7.10

6.97

7.03

6.89

The following table summarizes the Bank's commercial and industrial loans by the state in which the borrower is located, as of September 30, 2025.

Unpaid

Undisbursed

Gross Loan

Principal

Amount

(Dollars in thousands)

Kansas

122,547

82,061

204,608

Missouri

37,788

170

37,958

Arizona

12,099

—

12,099

Ohio

5,865

4,135

10,000

California

7,882

2,000

9,882

Other

23,938

3,402

27,340

210,119

91,768

301,887

The following table presents the Bank's commercial and industrial loan portfolio, including unpaid principal and undisbursed amounts, along with outstanding loan commitments as of September 30, 2025, categorized by aggregate gross loan and commitment amounts and average loan amount. For loans over $15.0 million, there was $54.7 million related to working capital loans in Kansas and $29.9 million related to a loan to purchase equipment in Missouri.

Gross Loan

and Commitment

Average

Count

Amounts

Amount

DSCR

(Dollars in thousands)

Greater than $15 million

84,619

28,206

1.56

>$10 to $15 million

36,325

12,108

2.37

>$5 to $10 million

79,288

7,929

1.46

>$1 to $5 million

55,827

2,326

9.38

>$500 thousand to $1 million

21,983

733

4.75

Less than $500 thousand

448

39,574

3.87

518

317,616

613

3.51

Asset Quality

The following tables present loans 30 to 89 days delinquent, non-performing loans, and other real estate owned ("OREO") as of 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, approximately 49% were 59 days or less delinquent. Nonaccrual loans are loans that are 90 or more days delinquent or in foreclosure and other loans required to be reported as nonaccrual pursuant to accounting and/or regulatory reporting requirements and/or internal policies, even if the loans are current. Non-performing assets include nonaccrual loans and OREO. The increase in nonaccrual commercial real estate loans from March 31, 2025 to June 30, 2025 and September 30, 2025 was due primarily to two participation loans related to the same borrowing relationship that were moved to substandard during the June 30, 2025 quarter. See the asset classification discussion below for additional information regarding these loans.

Loans Delinquent for 30 to 89 Days at:

September 30, 2025

June 30, 2025

March 31, 2025

December 31, 2024

September 30, 2024

Number

Amount

Number

Amount

Number

Amount

Number

Amount

Number

Amount

(Dollars in thousands)

One- to four-family:

Originated

7,338

9,617

8,072

9,768

8,884

Purchased

3,221

2,958

3,107

3,020

3,117

Commercial:

Commercial real estate

1,236

1,654

2,472

18,373

2,996

Commercial and industrial

1,166

348

125

391

Consumer

520

634

441

679

642

111

12,347

133

16,029

116

14,440

134

31,965

133

16,030

30 to 89 days delinquent loans to total loans receivable, net

0.15

0.20

0.18

0.40

0.20

Non-Performing Loans and OREO at:

September 30, 2025

June 30, 2025

March 31, 2025

December 31, 2024

September 30, 2024

Number

Amount

Number

Amount

Number

Amount

Number

Amount

Number

Amount

(Dollars in thousands)

Loans 90 or More Days Delinquent or in Foreclosure:

One- to four-family:

Originated

2,754

2,168

2,814

2,338

2,274

Purchased

1,524

1,875

2,585

5,099

5,559

Commercial:

Commercial real estate

3,123

3,387

3,315

2,038

1,163

Commercial and industrial

210

412

376

309

Consumer

176

473

356

436

7,705

8,018

9,563

10,140

9,514

Loans 90 or more days delinquent or in foreclosure as a percentage of total loans

0.09

0.10

0.12

0.13

0.12

Nonaccrual loans less than 90 Days Delinquent: (1)

Commercial:

Commercial real estate

40,249

40,338

1,128

1,096

326

Commercial and industrial

109

142

125

252

40,358

40,435

1,270

1,221

578

Total nonaccrual loans

48,063

48,453

10,833

11,361

10,092

Nonaccrual loans as a percentage of total loans

0.59

0.60

0.14

0.13

OREO:

One- to four-family:

Originated (2)

—

Consumer

135

—

197

—

Total non-performing assets

48,260

48,545

10,833

11,361

10,147

Non-performing assets as a percentage of total assets

0.49

0.50

0.11

0.12

0.11

(1)

Includes loans required to be reported as nonaccrual pursuant to internal policies even if the loans are current.

(2)

Real estate-related consumer loans where we also hold the first mortgage are included in the one- to four-family category as the underlying collateral is one- to four-family property.

The following table presents the amortized cost of loans classified as special mention or substandard at the dates presented. See below for further discussion on the changes in commercial real estate loan classifications across periods.

September 30, 2025

June 30, 2025

September 30, 2024

Special Mention

Substandard

Special Mention

Substandard

Special Mention

Substandard

(Dollars in thousands)

One- to four-family

13,055

20,616

12,583

21,524

17,528

22,715

Commercial:

Commercial real estate

59,993

45,550

8,111

84,771

16,169

2,302

Commercial and industrial

399

473

882

1,201

413

335

Consumer

326

322

365

323

326

487

73,773

66,961

21,941

107,819

34,436

25,839

Special Mention: The increase in commercial real estate special mention loans at September 30, 2025 compared to June 30, 2025 was due mainly to a $36.3 million hotel participation loan that moved from substandard at June 30, 2025 to special mention at September 30, 2025, as well as to a $15.3 million Community Reinvestment Act ("CRA") loan that was classified as special mention at September 30, 2025.

The $36.3 million hotel participation loan improved from substandard to special mention during the current quarter due to actions taken by the borrower to strengthen the credit, along with continued improvement in the occupancy and cashflow of the related property. As of September 30, 2025, the loan was not delinquent and the Bank's LTV was 44% based on an appraisal completed approximately two years ago. The $15.3 million CRA loan was classified as special mention during the current quarter because the underlying property has been slow to stabilize and the borrower was delinquent on payments during the current fiscal year; however, the loan has not been 90 or more days delinquent since origination and was not delinquent at September 30, 2025. Based on the original appraisal completed approximately four years ago, the Bank's LTV was 76% as of September 30, 2025.

Substandard: The increase in substandard commercial real estate loans at September 30, 2025 compared to September 30, 2024 was due mainly to two participation loans related to the same borrowing relationship, for $40.2 million as of September 30, 2025 and secured by a hotel. The borrower is working on a recapitalization plan which is anticipated to be completed later in calendar year 2025 or early in calendar year 2026. During the previous quarter, the Bank entered into an agreement with the borrower which allows the borrower to not make payments until later in calendar year 2025 to allow time to complete the recapitalization process. As a result, the loans were considered nonaccrual and classified as substandard as of September 30, 2025 and June 30, 2025. The loans were not delinquent at September 30, 2025 or June 30, 2025 due to the terms of the agreement. As of September 30, 2025, the combined Bank LTV on the loans was 45% based on an appraisal completed in the past six months. The Bank has had a participation relationship with the lead bank of these two loans for over ten years, and the Bank holds the same percentage interest in the loans as the lead bank. Both loans are recourse with a personal guaranty and have strong LTVs. The borrower group (developer, owner and guarantors) are seasoned commercial real estate developers with over 40 years of experience. There have been no charge-offs, nor has management set aside a specific valuation allowance associated with these loans as of September 30, 2025, due to the strong LTVs.

Allowance for Credit Losses: The Bank utilizes a discounted cash flow model for estimating expected credit losses for pooled loans and loan commitments. Expected credit losses are determined by calculating projected future loss rates which are dependent upon forecasted economic indices and applying qualitative factors when deemed appropriate by management. At September 30, 2025, management applied qualitative factors to account for large dollar commercial real estate loan concentrations and potential risk of loss in market value for newer one- to four-family loans. These qualitative factors were applied to account for credit risks not fully reflected in the discounted cash flow model.

In order to model the probabilities of default used in the discounted cash flow model, the model pairs the results of a regression analysis with an economic forecast for each loan pool in the model. The regression analyses are determined by comparing historical loss rates to related economic indices. The historical loss rates are determined by using the Company's historical loss experience, or peer data when the Company's own historical loss rates are not reflective of future loss expectations. During the current year, the Company updated the regression analyses used in the model which resulted in some changes to the amounts and levels of ACL calculated by the model for commercial loans. See additional discussion below. The regression analyses were updated in order to assist management in estimating expected credit losses in the commercial loan portfolio due to growth in this portfolio, including growth in market areas outside of the Bank's local market footprint.

Management applied a qualitative factor for large dollar commercial real estate loan concentrations. The Company's commercial real estate loans generally have low LTVs and strong DSCRs which serve as indicators that losses in the commercial real estate loan portfolios might be unlikely; however, because there is uncertainty surrounding the nature, timing and amount of expected losses, management believes that in the event of a realized loss within the large dollar commercial real estate loan pool, the magnitude of such a loss could be significant. The large dollar commercial real estate loan concentration qualitative factor addresses the risk associated with a large dollar relationship deteriorating due to a loss event. As part of its analysis, management considered external data including historical commercial real estate price index trending information from a variety of sources to help determine the amount of this qualitative factor.

For one- to four-family loans, management believes there is a risk of loss in market value in an economic downturn related to, in particular, newer originations where property values have not experienced price appreciation like more seasoned loans in our portfolio and applied a qualitative factor to account for this risk. To determine the appropriate amount of the one- to four-family loan qualitative factor as of September 30, 2025, management considered external historical home price index trending information, along with historical loan loss experience and portfolio balance trending, the one- to four-family loan portfolio composition with regard to loan size, and management's knowledge of the Bank's loan portfolio and the one- to four-family lending industry.

The distribution of our ACL and the ratio of ACL to loans receivable, by loan type, at the dates indicated is summarized below.

Distribution of ACL

Ratio of ACL to Loans Receivable

September 30,

June 30,

September 30,

June 30,

September 30,

2025

2024

2025

2024

(Dollars in thousands)

One- to four-family

3,046

3,532

3,673

0.05

0.06

Commercial:

Commercial real estate

15,809

14,362

15,719

0.92

1.32

Commercial and industrial

2,499

2,441

1,186

1.19

1.32

0.91

Commercial construction

2,468

2,236

2,249

1.26

1.35

1.20

Total commercial

20,776

19,039

19,154

0.98

1.00

1.27

Consumer

217

237

208

0.19

0.21

0.19

Total

24,039

22,808

23,035

0.30

0.28

0.29

The increase in the ratio of the ACL to total loans as of September 30, 2025 from June 30, 2025 and September 30, 2024 was due mainly to changes in the loan portfolio mix due to continued growth in commercial loans which have a higher ACL to total loan ratio than one- to four-family loans. The ratio increase between September 30, 2024 and September 30, 2025 was partially offset by the regression analyses update discussed above. Based on management's evaluation of the credit risk within the Bank's commercial real estate loan portfolio, taking into consideration DSCRs and LTVs, management believes the Bank's ACL ratio for commercial real estate loans is appropriate for the credit risk. See additional discussion regarding the Bank's commercial real estate loan DSCRs and LTVs in the "Loan Portfolio - Commercial Loans" section above.

Historically, the Bank has maintained very low delinquency ratios and net charge-off rates. Over the past two years, the Bank's highest ratio of commercial loans 90 days or more delinquent to total commercial loans at a quarter end was 0.22%. The highest such ratio for one- to four-family originated and correspondent loans, combined, was 0.12%. The amount of total net charge-offs during the current quarter and current fiscal year was $66 thousand and $198 thousand, respectively. The majority of the net charge-offs during the current fiscal year related to one single-family bulk purchased loan. During the 10-year period ended September 30, 2025, the Bank recognized $999 thousand of total net charge-offs. As of September 30, 2025, the ACL balance was $24.0 million and the reserve for off-balance sheet credit exposures totaled $5.5 million, which management believes is adequate for the credit risk characteristics in our loan portfolio.

The following table presents ACL activity and related ratios at the dates and for the periods indicated. The $1.3 million provision for credit losses related to the ACL for the three months ended September 30, 2025 was partially offset by a $778 thousand release of provision for credit losses on the reserve for off-balance sheet credit exposures, which resulted in a provision for credit losses of $519 thousand for the current quarter. On October 1, 2023, the Bank adopted Accounting Standards Update ("ASU") 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures ("ASU 2022-02"), which eliminated the accounting guidance for troubled debt restructurings by creditors. The Company applied a modified retrospective approach when adopting ASU 2022-02, resulting in a cumulative-effect adjustment which is reflected in the table below ("ASU 2022-02 Adoption").

For the Three Months Ended

For the Year Ended

September 30,

2025

September 30,

2025

September 30,

2024

(Dollars in thousands)

Balance at beginning of period

22,808

23,035

23,759

ASU 2022-02 Adoption

—

Charge-offs:

One- to four-family

)

(116

)

—

Commercial

(62

)

(62

)

(80

)

Consumer

(37

)

(93

)

(80

)

Total charge-offs

(102

)

(271

)

(160

)

Recoveries:

One- to four-family

Commercial

Consumer

Total recoveries

Net (charge-offs) recoveries

(66

)

(198

)

(111

)

Provision for credit losses

1,297

1,202

(633

)

Balance at end of period

24,039

23,035

Ratio of net charge-offs during the period to average loans outstanding during the period

—

Ratio of net charge-offs (recoveries) during the period to average non-performing assets

0.14

0.68

1.12

ACL to non-performing loans at end of period

50.02

228.25

ACL to loans receivable at end of period

0.30

0.29

ACL to net charge-offs (annualized)

90x

121x

207x

The balance of the reserve for off-balance sheet credit exposures was $5.5 million at September 30, 2025, compared to $6.3 million at June 30, 2025. The decrease of $778 thousand from June 30, 2025 was due primarily to a decrease in commercial off-balance sheet credit exposures. As noted above, the decrease in the reserve for off-balance sheet credit exposures was entirely offset by a $1.3 million provision for credit losses related to the ACL for loans, resulting in a provision for credit losses of $519 thousand for three months ended September 30, 2025.

Securities Portfolio

The following table presents the distribution of our securities portfolio, at amortized cost, at September 30, 2025. Overall, fixed-rate securities comprised 91% of our securities portfolio at September 30, 2025. The weighted average life ("WAL") is the estimated remaining maturity (in years) after three-month historical prepayment speeds and projected call option assumptions have been applied. Weighted average yields on tax-exempt securities are not calculated on a fully tax-equivalent basis.

Amount

Yield

WAL

(Dollars in thousands)

MBS

843,369

5.45

4.8

Corporate bonds

4,000

5.12

6.6

847,369

5.45

4.8

The following table summarizes the activity in our securities portfolio for the periods presented. The weighted average yields for the beginning and ending balances are as of the first and last days of the periods presented and are generally derived from recent prepayment activity on the securities in the portfolio. The beginning and ending WALs are the estimated remaining principal repayment terms (in years) after the most recent three-month historical prepayment speeds and projected call option assumptions have been applied.

For the Three Months Ended

For the Year Ended

September 30, 2025

Amount

Yield

WAL

Amount

Yield

WAL

(Dollars in thousands)

Beginning balance - carrying value

956,229

5.47

4.6

856,266

5.63

5.2

Maturities and repayments

(86,796

)

(233,986

)

Net amortization of (premiums)/discounts

805

3,296

Purchases

—

248,207

4.97

7.5

Change in valuation on AFS securities

(3,022

)

(6,567

)

Ending balance - carrying value

867,216

5.45

4.8

867,216

5.45

4.8

Deposit Portfolio

The following table presents the amount, weighted average rate, and percent of total for the components of our deposit portfolio at the dates presented. The decrease in the deposit portfolio rate at September 30, 2025 compared to September 30, 2024 was due mainly to lower rates on retail certificates of deposit.

September 30, 2025

June 30, 2025

September 30, 2024

% of

Amount

Rate

Total

Amount

Rate

Total

Amount

Rate

Total

(Dollars in thousands)

Non-interest-bearing checking

601,371

—

9.1

579,595

—

9.0

549,596

—

9.0

Interest-bearing checking

859,256

0.21

13.0

884,838

0.24

13.8

847,542

0.23

13.8

High yield savings

460,712

3.88

7.0

408,018

3.88

6.4

96,241

4.09

1.6

Other savings

423,942

0.07

6.5

433,188

0.07

6.7

444,331

0.11

7.2

Money market

1,233,487

1.29

18.7

1,203,917

1.22

18.7

1,226,962

1.46

20.0

Certificates of deposit

3,012,680

3.74

45.7

2,921,581

3.81

45.4

2,965,310

4.25

48.4

6,591,448

2.26

100.0

6,431,137

2.24

100.0

6,129,982

2.45

100.0

The following table presents the amount, weighted average rate, and percent of total for the components of our deposit portfolio, split between retail non-maturity deposits, commercial non-maturity deposits, and certificates of deposit at the dates presented.

September 30, 2025

June 30, 2025

September 30, 2024

% of

Amount

Rate

Total

Amount

Rate

Total

Amount

Rate

Total

(Dollars in thousands)

Retail non-maturity deposits:

Non-interest-bearing checking

409,722

—

6.2

415,066

—

6.5

418,790

—

6.8

Interest-bearing checking

790,783

0.08

12.0

810,027

0.09

12.6

799,407

0.10

13.0

High yield savings

460,712

3.88

7.0

408,018

3.88

6.4

96,241

4.09

1.6

Other savings

420,330

0.07

6.4

429,778

0.07

6.6

441,265

0.11

7.2

Money market

1,050,841

1.07

15.9

1,088,623

1.07

16.9

1,149,212

1.37

18.7

Total

3,132,388

0.96

47.5

3,151,512

0.91

49.0

2,904,915

0.73

47.4

Commercial non-maturity deposits:

Non-interest-bearing checking

191,649

—

2.9

164,529

—

2.5

130,806

—

2.1

Interest-bearing checking

68,473

1.72

1.0

74,811

1.89

1.2

48,135

2.40

0.8

Savings

3,612

0.05

0.1

3,410

0.05

0.1

3,066

0.05

0.1

Money market

182,646

2.52

2.8

115,294

2.58

1.8

77,750

2.72

1.3

Total

446,380

1.29

6.8

358,044

1.23

5.6

259,757

1.26

4.2

Certificates of deposit:

Retail certificates of deposit

2,828,982

3.73

43.0

2,745,213

3.80

42.7

2,830,579

4.23

46.2

Commercial certificates of deposit

61,819

3.64

0.9

59,695

3.69

0.9

58,236

4.40

1.0

Public unit certificates of deposit

121,879

4.06

1.8

116,673

4.12

1.8

76,495

4.62

1.2

Total

3,012,680

3.74

45.7

2,921,581

3.81

45.4

2,965,310

4.25

48.4

6,591,448

2.26

100.0

6,431,137

2.24

100.0

6,129,982

2.45

100.0

The following table presents the amount, weighted average rate, and percent of total for total retail deposits, commercial deposits, and public unit certificates of deposit at the dates noted.

September 30, 2025

June 30, 2025

September 30, 2024

% of

Amount

Rate

Total

Amount

Rate

Total

Amount

Rate

Total

(Dollars in thousands)

Total retail deposits

5,961,370

2.28

90.5

5,896,725

2.25

91.7

5,735,494

2.46

93.6

Total commercial deposits

508,199

1.58

7.7

417,739

1.58

6.5

317,993

1.84

5.2

Public unit certificates of deposit

121,879

4.06

1.8

116,673

4.12

1.8

76,495

4.62

1.2

Total

6,591,448

2.26

100.0

6,431,137

2.24

100.0

6,129,982

2.45

100.0

As of September 30, 2025, approximately $990.2 million (or approximately 15%) of the Bank's Call Report deposit balance was uninsured, of which approximately $567.3 million (or approximately 8% of the Bank's Call Report deposit balance) related to commercial and retail deposit accounts, with the remainder mainly comprised of fully collateralized public unit deposits and intercompany accounts. The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank's regulatory reporting requirements.

Borrowings

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, 2025. Amortizing FHLB advances are presented based on their maturity dates versus their quarterly scheduled repayment dates.

Maturity by

Contractual

Effective

Fiscal Year

Amount

Rate

Rate (1)

(Dollars in thousands)

2026

425,000

2.11

2.30

2027

742,500

3.49

3.56

2028

565,984

4.32

4.12

2029

132,500

4.45

2030

85,000

4.20

1,950,984

3.53

3.54

(1)

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

The following table presents borrowing activity for the period shown. The borrowings presented in the table have original contractual terms of one year or longer or are tied to interest rate swaps with original contractual terms of one year or longer. Line of credit borrowings and finance leases are excluded from the table. The effective rate is shown as a weighted average and includes the impact of interest rate swaps and the amortization of deferred prepayment penalties resulting from FHLB advances previously prepaid. The weighted average maturity ("WAM") is the remaining weighted average contractual term in years. The beginning and ending WAMs represent the remaining maturity as of the first and last days of the period presented. During the current year, the Bank prepaid fixed-rate FHLB advances with a weighted average remaining term of 0.6 years totaling $200.0 million with a weighted average contractual interest rate of 4.70% and replaced these advances with $200.0 million of fixed-rate FHLB advances with a weighted average contractual interest rate of 3.83% and a weighted average term of 2.5 years. The weighted average effective interest rate of the new advances was 3.93%, which includes the impact of deferred prepayment penalties being recognized over the life of the new advances. This activity is reflected in the table below.

For the Three Months Ended

For the Year Ended

September 30, 2025

Effective

Amount

Rate

WAM

Amount

Rate

WAM

(Dollars in thousands)

Beginning balance

2,072,152

3.52

1.7

2,180,656

3.29

1.6

Maturities and repayments

(121,168

)

3.30

(879,672

)

3.39

New FHLB borrowings

—

650,000

4.13

2.9

Ending balance

1,950,984

3.54

1.5

1,950,984

3.54

1.5

In October 2025, the Bank refinanced a $50.0 million fixed-rate advance with a weighted average effective rate of 4.03% and a WAL of 0.5 years, and replaced it with a $50.0 million fixed-rate advance with a weighted average effective rate of 3.64% and a WAL of 2.0 years. This transaction resulted in prepayment fees of $11 thousand which will be recognized in interest expense over the life of the new FHLB advance. Following the refinance, the Bank's FHLB advance portfolio totaled $1.95 billion with a weighted average effective rate of 3.53% and a WAL of 1.5 years. Management will continue to monitor opportunities for wholesale funding and may pay down FHLB advances in future periods. The Bank may also renew certain fixed-rate advances in the future using adjustable-rate advances in order to better match the repricing characteristics of its increasing commercial loan portfolio.

Maturities of Interest-Bearing Liabilities

The following table presents the maturity and weighted average repricing rate, which is also the weighted average effective rate, of certificates of deposit, split between retail/commercial and public unit amounts, and non-amortizing FHLB advances for the next four quarters as of September 30, 2025.

December 31,

March 31,

June 30,

September 30,

2025

2026

Total

(Dollars in thousands)

Retail/Commercial Certificates:

Amount

624,804

403,612

593,431

463,792

2,085,639

Repricing Rate

3.94

3.66

3.82

3.66

3.79

Public Unit Certificates:

Amount

14,476

43,772

9,001

16,380

83,629

Repricing Rate

3.87

4.11

4.22

3.94

4.05

Non-Amortizing FHLB Advances:

Amount

100,000

125,000

425,000

Repricing Rate

1.09

1.60

2.51

3.66

2.30

Total

Amount

739,280

547,384

702,432

605,172

2,594,268

Repricing Rate

3.55

3.32

3.64

3.67

3.55

The following table sets forth the WAM information for our certificates of deposit, in years, as of September 30, 2025.

Retail certificates of deposit

0.8

Commercial certificates of deposit

0.7

Public unit certificates of deposit

0.8

Total certificates of deposit

0.8

Average Rates and Lives

At September 30, 2025, the gap between the amounts of the Bank's 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 $(963.3) million, or (9.9)% of total assets, at June 30, 2025. The change in the one-year gap amount was due primarily to a net increase in the amount of projected interest-bearing liability cash flows coming due in one year. The increase in liability cash flows was primarily related to the certificate of deposit portfolio as customer balances scheduled to mature within one year increased. The increase in projected asset cash flows was primarily in the Bank's loan portfolio as well as an increase in the balance of cash between the two periods.

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 prepayment penalty. 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. 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. The changes in the gap amounts compared to when there is no change in rates was due to changes in the anticipated net cash flows primarily as a result of projected prepayments on mortgage-related assets in each rate environment. In higher rate environments, prepayments on mortgage-related assets are projected to be lower, and in lower rate environments, prepayments are projected to be higher.

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. 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.

Amount

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

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