Capitol Federal Financial Inc.

02/06/2026 | Press release | Distributed by Public on 02/06/2026 09:46

Quarterly Report for Quarter Ending December 31, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The Company and the Bank may from time to time make written or oral "forward-looking statements," including statements contained in documents filed or furnished by the Company with the SEC. These forward-looking statements may be included in this Quarterly Report on Form 10-Q and the exhibits attached to it, in the Company's reports to stockholders, in the Company's press releases, and in other communications by the Company, which are made in good faith pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements include statements about our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, which are subject to significant risks and uncertainties, and are subject to change based on various factors, some of which are beyond our control. The words "may," "could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan" and similar expressions are intended to identify forward-looking statements. The following factors, among others, could cause our future results to differ materially from the beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions expressed in the forward-looking statements:
•our ability to maintain overhead costs at reasonable levels;
•our ability to generate a sufficient volume of loans in order to maintain the loan portfolio balance at a level desired by management;
•our ability to invest funds in wholesale or secondary markets at favorable yields;
•our ability to access cost-effective funding and maintain sufficient liquidity;
•our ability to expand our commercial banking and trust asset management expertise across our market areas;
•fluctuations in deposit flows;
•transactions or activities that would result in the recapture of base-year, tax basis bad debt reserves;
•the future earnings and capital levels of the Bank, the impact of potential pre-1988 bad debt recapture and the continued non-objection by our primary federal banking regulators, to the extent required, to distribute capital from the Bank to the Company, which could affect the Company's income tax expense and the Company's ability to pay dividends in accordance with its dividend policy and/or repurchase shares;
•the strength of the U.S. economy in general and in the local economies in which we conduct operations, including areas where we have purchased large amounts of correspondent loans, originated commercial loans, and entered into commercial loan participations;
•changes in real estate values, unemployment levels, general economic trends, and the level and direction of loan delinquencies and charge-offs may require changes in the estimates of the adequacy of the ACL and adversely affect our business;
•increases in classified and/or non-performing assets, which may require the Bank to increase the ACL, charge-off loans and incur elevated collection and carrying costs, or not recognize income for a period of time, related to such non-performing assets;
•results of examinations of the Bank and the Company by their respective primary federal banking regulators, including the possibility that the regulators may, among other things, require us to increase our ACL;
•changes in accounting principles, policies, or guidelines;
•the effects of, and changes in, monetary and interest rate policies of the Board of Governors of the Federal Reserve System ("FRB");
•the effects of, and changes in, trade and fiscal policies and foreign and military policies of the United States government;
•inflation, interest rate, market, monetary, and currency fluctuations and the effects of a potential economic recession or slower economic growth;
•the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor or depositor sentiment;
•the timely development and acceptance of new products and services and the perceived overall value of these products and services by users, including the features, pricing, and quality compared to competitors' products and services;
•the willingness of users to substitute competitors' products and services for our products and services;
•our success in gaining regulatory approval of our products and services and branching locations, when required;
•the impact of interpretations of, and changes in, financial services laws and regulations, including laws concerning taxes, banking, securities, consumer protection, trust and insurance and the impact of other governmental initiatives affecting the financial services industry;
•the ability to attract and retain skilled employees;
•implementing business initiatives may be more difficult or expensive than anticipated;
•significant litigation;
•technological changes and the costs thereof;
•our ability to maintain the security of our financial, accounting, technology, and other operating systems and facilities, including the ability to withstand cyberattacks;
•changes in consumer spending, borrowing and saving habits; and
•our success at managing the risks involved in our business.
This list of factors is not all inclusive. For a discussion of risks and uncertainties related to our business that could adversely impact our operations and/or financial results, see "Part I, Item 1A. Risk Factors" in the Company's Annual Report on Form 10-Kfor the fiscal year ended September 30, 2025 and Part II, Item 1A. Risk Factors within this Quarterly Report on Form 10-Q. We do not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company or the Bank.
As used in this Form 10-Q, unless we specify or the context indicates otherwise, "the Company," "we," "us," and "our" refer to Capitol Federal Financial, Inc. a Maryland corporation, and its subsidiaries. "Capitol Federal Savings," and "the Bank," refer to Capitol Federal Savings Bank, a federal savings bank and the wholly-owned subsidiary of Capitol Federal Financial, Inc.
The following discussion and analysis is intended to assist in understanding the financial condition, results of operations, liquidity, and capital resources of the Company. The Bank comprises almost all of the consolidated assets and liabilities of the Company and the Company is dependent primarily upon the performance of the Bank for the results of its operations. Because of this relationship, references to management actions, strategies and results of actions apply to both the Bank and the Company except where the context indicates otherwise. This discussion and analysis should be read in conjunction with Management's Discussion and Analysis included in the Company's Annual Report on Form 10-Kfor the fiscal year ended September 30, 2025, filed with the SEC.
Available Information
Financial and other Company information, including press releases, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports can be obtained free of charge from our investor relations website, https://ir.capfed.com. SEC filings are available on our website immediately after they are electronically filed with or furnished to the SEC, and are also available on the SEC's website at www.sec.gov.
Critical Accounting Estimates
Our most critical accounting estimate is our methodology used to determine the ACL and reserve for off-balance sheet credit exposures. This estimate is important to the presentation of our financial condition and results of operations, involves a high degree of complexity, and requires management to make difficult and subjective judgments that may require assumptions about highly uncertain matters. The use of different judgments, assumptions, and estimates could affect reported results materially. This critical accounting estimate and its application is reviewed at least annually by the audit committee of our Board of Directors. For a full discussion of our critical accounting estimates, see "Part II, Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates" in the Company's Annual Report on Form 10-Kfor the fiscal year ended September 30, 2025.
Executive Summary
The following summary should be read in conjunction with the Management's Discussion and Analysis of Financial Condition and Results of Operations section in its entirety.
The Company recognized net income of $20.3 million, or $0.16 per share, for the quarter ended December 31, 2025 compared to net income of $15.4 million, or $0.12 per share, for the quarter ended December 31, 2024. The increase in net income was due mainly to higher net interest income, partially offset by higher non-interest expense and income tax expense. The net interest margin increased 33 basis points, from 1.86% for the prior year quarter to 2.19% for the current quarter. The increase was due mainly to growth in the higher yielding commercial loan portfolio.
The Bank continues its progression from a primarily retail oriented financial institution to a full-service commercial bank by strategically growing all aspects of commercial banking through investments in technology, people, products, and services. For additional discussion, see the "Strategic Banking Initiatives" section below.
The Company's efficiency ratio was 53.66% for the current quarter compared to 57.86% for the prior year quarter. The improvement in the efficiency ratio was due primarily to higher net interest income compared to the prior year quarter, partially offset by higher non-interest expense. The Company's operating expense ratio (annualized) for the current quarter was 1.24% compared to 1.14% for the prior year quarter. The operating expense ratio was higher in the current quarter due mainly to higher non-interest expense, partially offset by higher average assets compared to the prior year quarter.
The loan portfolio totaled $8.18 billion at December 31, 2025, a $64.8 million increase from September 30, 2025. Commercial loans grew $162.6 million, mainly in the commercial real estate portfolio, partially offset by a $98.6 million decrease in one- to four-family loans due primarily to repayments exceeding originations as cash flows from this portfolio are being used to fund commercial loan
growth. It is expected that repayments from our one- to four-family loan portfolio will continue to be directed toward supporting commercial loan growth, aligning with our ongoing commitment to expand commercial banking services. The Bank expects to fund approximately $60.0 million of undisbursed amounts on existing commercial real estate and commercial construction loans and approximately $5.0 million of commercial real estate and commercial construction commitments during the March 31, 2026 quarter. The near-term projected growth for commercial loan balances is approximately 1% in the quarter ending March 31, 2026, with projected overall commercial loan growth of approximately 18% for the current fiscal year. The weighted average DSCR for commercial loan originations and new participations during the current quarter was 2.52x and the weighted average LTV for commercial real estate and construction loans originated and new participations was 72%. The weighted average DSCR and LTV for our commercial real estate and construction loan portfolio was 1.73x and 63%, respectively, at December 31, 2025.
The Bank's asset quality remains strong, reflected in the continued low level of loan delinquency and charge-off ratios. At December 31, 2025, loans 30 to 89 days delinquent were 0.24% of total loans receivable, net, and loans 90 or more days delinquent or in foreclosure were 0.10% of total loans receivable, net. See "Management's Discussion and Analysis of Financial Condition and Results of Operation - Asset Quality - Delinquent and nonaccrual loans and OREO" below for additional discussion. During the current quarter, the Bank had net charge-offs ("NCOs") of $119 thousand.
Total deposits were $6.76 billion at December 31, 2025, an increase of $167.2 million compared to September 30, 2025. The increase in deposits was due mainly to increases in the Bank's high yield savings account offering and retail checking accounts. Management has continued to focus on retaining and growing deposits through the Bank's high yield savings account product, which, as of December 31, 2025, had an annual percentage yield of 3.80% for accounts that meet the $10 thousand balance minimum. The annual percentage yield on the high yield savings account product decreased to 3.70% mid-January 2026.
Total borrowings were $1.83 billion at December 31, 2025, a decrease of $120.9 million compared to September 30, 2025. The decrease was due primarily to the maturity of $100.0 million in borrowings that were not replaced, along with principal payments made on the Bank's amortizing FHLB advances. Cash flows from the deposit portfolio were used to pay down borrowings during the current quarter. Management estimated that the Bank had $4.09 billion in liquidity available at December 31, 2025, based on the Bank's blanket collateral agreement with the FHLB, available brokered and public unit deposit capacity, unencumbered securities, and cash and cash equivalent balances.
Stockholders' equity totaled $1.04 billion at December 31, 2025, a decrease of $6.4 million from September 30, 2025 due to strategic share repurchases and dividend payments, continuing our efforts to enhance stockholder value. During the current quarter, the Company repurchased 2,376,633 shares of common stock at an average price of $6.86 per share, or $16.3 million in total, and paid regular quarterly dividends totaling $11.0 million, or $0.085 per share. As of December 31, 2025, the Bank's capital ratios exceeded the well-capitalized requirements. The Bank's community bank leverage ratio ("CBLR") as of December 31, 2025 was 9.5%.
At December 31, 2025, the gap between the Bank's interest-earning assets and interest-bearing liabilities projected to reprice within one year was $(1.23) billion, or (12.6%) of total assets, compared to $(983.6) million, or (10.1%) of total assets, at September 30, 2025. See additional discussion in "Part I, Item 3. Quantitative and Qualitative Disclosures About Market Risk." As of December 31, 2025, the Bank was in compliance with its internal policy thresholds for sensitivity to changes in interest rates.
Strategic Banking Initiatives
The Company continues its progression to a full-service commercial bank by investing in technology, people, products, and services. Our investments in technology have allowed us to launch new services and products, while our seasoned and well-connected commercial bankers and our trust and wealth advisors deliver access to new customer groups. Our expanded product suite of treasury management services enables us to service these new customers. Increased marketing and business development efforts have increased the depth of customer relationships. As we move through the third year of our digital transformation, we are seeing our efforts bear fruit and expect progress to continue.
Strategic Actions.The long-term success of our transition to a full-service bank is predicated on management's continued focus on deepening relationships with consumer and commercial customers. Management and the Board have committed resources to support the growth of talented, skilled, and experienced bankers, investments in technology, expanded marketing and outreach, as well as the development and increased internal monitoring of performance metrics intended to 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. We are leveraging our centralized organizational structure to respond quickly to customers. We are actively pursuing opportunities to expand our non-interest-bearing, commercial 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 first quarter of the current fiscal year, we closed on $364.6 million in commercial loans, compared to $263.1 million during the quarter ended September 30, 2025. Commercial loans continue to grow as a percentage of our overall loan portfolio, comprising 28% of our loan portfolio at December 31, 2025, compared to 26% and 21% at September 30, 2025 and December 31, 2024, respectively. To maintain strong credit quality, in addition to disciplined underwriting and ongoing credit administration, we monitor concentration levels by collateral type, geographic location and borrowing relationship. The Bank utilizes commercial loan pricing and profitability software that provides insights on new lending opportunities based on the full customer banking relationship. We utilize software that provides market intelligence regarding competitor pricing to assist loan officers when preparing a loan offering. This enhances our ability to profitably compete with other financial institutions in our markets as well as those outside 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 the acquisition of new customers located in our immediate market areas, as well as those we lend to outside of our local market areas. In fiscal year 2026, a team of business development officers is also 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. 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 well as the Bank continues to diversify funding sources and seeks to increase fee revenue tied to depository accounts. During the second quarter of fiscal year 2026, 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. We are evaluating additional technology in order to capture a larger share of this business with even more products and services. Within calendar year 2026, we expect to implement new technology for lockbox services, integrated accounts receivables, purchase cards, and corporate cards.
Digital Banking.We are advancing towards a seamless digital banking experience for all customers, enhancing the Bank's ability to attract and retain deposits and lower the cost to service our customers. This strategy includes a new deposit account onboarding platform 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 on track to be implemented in the second quarter of fiscal year 2026. The Bank is taking advantage of fintech plug-in technologies that we expect will integrate into our digital banking experience for consumers, small businesses, and commercial customers.
Wealth Management.We have begun to implement private wealth management products and services, with some customers on-boarded during the first quarter of the current fiscal year. We are continuing to expand our comprehensive suite of private banking products and services which is a new line of business for the Bank. Private banking relationships are defined as customers with $5.0 million or more in personal relationships with the Bank by way of loans, deposits, or assets under management. We believe that our private banking line of business will be a gateway to driving revenue growth from off-balance sheet assets and bridge the gap between high-net-worth depository customers, small business owners and key commercial customers and create corporate trustee opportunities for the Bank.
Stockholder Value. Delivering long-term sustainable stockholder value continues to be our North Star while also maintaining a strong capital position. As part of our historically robust and disciplined approach to capital management, we continue to generate returns to stockholders through dividend payments and share repurchases. Total dividends declared and paid during fiscal year 2025 were $44.3 million. During the first quarter of fiscal year 2026, the Company repurchased 2,376,633 shares for $16.3 million and paid regular quarterly cash dividends totaling $11.0 million, or $0.085 per share. Since completing our second-step conversion in December 2010, we have returned $2.03 billion to stockholders through $1.58 billion in cash dividends and $456.2 million in share repurchases. For the remainder of 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.
Financial Condition
The following table summarizes the Company's financial condition at the dates indicated.
Annualized
December 31, September 30, Percent
2025 2025 Change
(Dollars and shares in thousands)
Total assets $ 9,778,400 $ 9,778,701 - %
AFS securities 829,704 867,216 (17.3)
Loans receivable, net 8,176,736 8,111,961 3.2
Deposits 6,758,632 6,591,448 10.1
Borrowings 1,829,914 1,950,770 (24.8)
Stockholders' equity 1,041,320 1,047,677 (2.4)
Equity to total assets at end of period 10.6 % 10.7 %
Average number of basic and diluted
shares outstanding 		128,953 129,874 (2.8)
The loan portfolio increased $64.8 million during the current quarter, as cash flows from the securities portfolio were used to fund loan growth. Commercial loans grew $162.6 million, mainly in the commercial real estate portfolio, partially offset by a $98.6 million decrease in one- to four-family loans. Deposits increased $167.2 million during the current quarter, due mainly to the Bank's high yield savings account offering and retail checking accounts. Borrowings decreased $120.9 million due to borrowings that matured during the current quarter and were not replaced, along with principal payments made on the Bank's amortizing FHLB advances. Cash flows from the increase in the deposit portfolio were used to pay down borrowings. Stockholders' equity decreased $6.4 million during the current quarter, due primarily to strategic share repurchases and dividend payments, partially offset by net income.
Loans Receivable.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. One- to four-family purchased loans in the following tables include correspondent purchased loans and bulk purchased loans.
December 31, 2025 September 30, 2025 December 31, 2024
Amount Rate Amount Rate Amount Rate
(Dollars in thousands)
One- to four-family:
Originated $ 3,725,622 3.82 % $ 3,774,134 3.78 % $ 3,907,809 3.64 %
Purchased 2,065,179 3.50 2,114,447 3.49 2,286,876 3.45
Construction 15,228 6.14 16,054 6.17 19,165 6.35
Total 5,806,029 3.71 5,904,635 3.68 6,213,850 3.58
Commercial:
Commercial real estate 1,874,506 5.74 1,709,990 5.82 1,353,482 5.48
Commercial and industrial 219,909 6.74 210,119 6.92 131,267 6.66
Commercial construction 184,227 6.83 195,886 6.42 161,744 6.14
Total 2,278,642 5.93 2,115,995 5.98 1,646,493 5.64
Consumer loans:
Home equity 107,490 7.76 104,809 8.15 103,006 8.31
Other 7,814 5.56 8,436 5.55 9,680 5.77
Total 115,304 7.61 113,245 7.96 112,686 8.09
Total loans receivable 8,199,975 4.38 8,133,875 4.34 7,973,029 4.07
Less:
ACL 24,572 24,039 24,997
Deferred loan fees/discounts 31,125 31,268 30,973
Premiums/deferred costs (32,458) (33,393) (36,497)
Total loans receivable, net $ 8,176,736 $ 8,111,961 $ 7,953,556
Loan Activity - The following table summarizes activity in the loan portfolio, along with weighted average rates where applicable, for the periods indicated, excluding changes in ACL, deferred loan fees/discounts, and premiums/deferred costs. Loans that were paid off as a result of refinances are included in repayments. Loan endorsements are not included in the activity in the following table because a new loan is not generated at the time of the endorsement. The endorsed balance and rate are included in the ending loan portfolio balance and rate. Commercial loan renewals are not included in the activity presented in the following table unless new funds are disbursed at the time of renewal. The renewal balance and rate are included in the ending loan portfolio balance and rate.
For the Three Months Ended
December 31, 2025 December 31, 2024
Amount Rate Amount Rate
(Dollars in thousands)
Beginning balance $ 8,133,875 4.34 % $ 7,923,251 4.02 %
Originated and refinanced 376,869 6.40 265,731 6.76
Participations 83,520 6.37 69,790 7.21
Change in undisbursed loan funds (44,036) (36,990)
Repayments (349,905) (248,760)
Principal (charge-offs)/recoveries, net (119) 7
Other (229) -
Ending balance $ 8,199,975 4.38 $ 7,973,029 4.07
The following table presents loan origination, refinance, and participation activity for the periods indicated, excluding endorsement activity, along with associated weighted average rates and percent of total. Commercial loan renewals are not included in the activity in the following table except to the extent new funds are disbursed at the time of renewal. Loan originations, participations, and refinances are reported together.
For the Three Months Ended
December 31, 2025 December 31, 2024
Amount Rate % of Total Amount Rate % of Total
(Dollars in thousands)
Commercial:
Commercial real estate
Fixed-rate $ 148,799 6.30 % 32.3 % $ 28,494 7.03 % 8.5 %
Adjustable-rate 58,941 6.30 12.8 119,055 6.79 35.5
207,740 6.30 45.1 147,549 6.84 44.0
Commercial and industrial
Fixed-rate 30,393 6.62 6.6 16,875 7.49 5.0
Adjustable-rate 3,712 6.36 0.8 9,811 7.28 2.9
34,105 6.59 7.4 26,686 7.41 7.9
Commercial construction
Fixed-rate 98,172 6.59 21.4 1,135 8.00 0.4
Adjustable-rate 24,584 7.04 5.3 65,906 7.47 19.6
122,756 6.68 26.7 67,041 7.47 20.0
Total commercial
Fixed-rate 277,364 6.44 60.3 46,504 7.22 13.9
Adjustable-rate 87,237 6.51 18.9 194,772 7.04 58.0
364,601 6.45 79.2 241,276 7.08 71.9
One- to four-family and consumer:
One- to four-family
Fixed-rate 49,930 5.95 10.8 75,736 5.91 22.6
Adjustable-rate 32,458 5.79 7.1 5,809 6.50 1.7
82,388 5.89 17.9 81,545 5.95 24.3
Consumer
Fixed-rate 1,959 8.15 0.4 2,144 8.25 0.6
Adjustable-rate 11,441 7.96 2.5 10,556 8.28 3.2
13,400 7.99 2.9 12,700 8.28 3.8
One- to four-family and consumer
Fixed-rate 51,889 6.03 11.3 77,880 5.98 23.2
Adjustable-rate 43,899 6.36 9.5 16,365 7.65 4.9
95,788 6.18 20.8 94,245 6.27 28.1
Total commercial, one- to four-family, and consumer
Fixed-rate 329,253 6.37 71.6 124,384 6.44 37.1
Adjustable-rate 131,136 6.46 28.4 211,137 7.09 62.9
$ 460,389 6.40 100.0 % $ 335,521 6.85 100.0 %
Commercial participations included above:
Fixed-rate $ 83,520 6.37 % $ 24,500 7.00 %
Adjustable-rate - - 45,290 7.32
$ 83,520 6.37 $ 69,790 7.21
One- to Four-Family Loans - The following table presents, for our portfolio of one- to four-family loans, the amount, percent of total, weighted average rate, weighted average credit score, weighted average LTV, and average balance per loan as of December 31, 2025. Credit scores were updated in September 2025 from a nationally recognized consumer rating agency. The LTVs were based on the current loan balance and either the lesser of the purchase price or original appraisal, or the most recent Bank appraisal, if available. 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 $ 3,725,622 64.1 % 3.82 % 770 57 % $ 170
Purchased 2,065,179 35.6 3.50 768 60 378
Construction 15,228 0.3 6.14 778 43 331
5,806,029 100.0 % 3.71 769 58 212
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 quarter ended December 31, 2025. As of December 31, 2025, the Bank had one- to four-family loan and refinance commitments totaling $24.7 million at a weighted average rate of 5.97%.
Credit
Amount Rate LTV Score
(Dollars in thousands)
$ 82,388 5.89 % 73 % 764
Commercial Loans - The table below presents commercial loan origination and participation activity for the quarter ended December 31, 2025, along with weighted average LTV and weighted average DSCR. For commercial real estate and commercial construction loans, the LTV 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.
Originated Participation Total Weighted Weighted
Amount Rate Amount Rate Amount Rate LTV DSCR
(Dollars in thousands)
Commercial real estate $ 175,230 6.31 % $ 32,510 6.25 % $ 207,740 6.30 % 71 % 2.77x
Commercial and industrial 34,105 6.59 - - 34,105 6.59 N/A 5.37
Commercial construction 71,746 6.85 51,010 6.45 122,756 6.68 73 1.29
$ 281,081 6.48 $ 83,520 6.37 $ 364,601 6.45 72 2.52
The following table presents commercial loan disbursements, excluding lines of credit, during the periods indicated.
For the Three Months Ended
December 31, 2025 December 31, 2024
Amount Rate Amount Rate
(Dollars in thousands)
Commercial real estate $ 207,243 6.32 % $ 147,268 6.61 %
Commercial and industrial 27,585 6.97 10,200 7.33
Commercial construction 70,004 6.65 46,968 6.24
$ 304,832 6.46 $ 204,436 6.56
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.
December 31, 2025 September 30,
2025 		December 31,
2024
Unpaid Undisbursed Gross Loan Gross Loan Gross Loan
Count Principal Amount Amount Amount Amount
(Dollars in thousands)
Hotel 32 $ 616,357 $ 67,562 $ 683,919 $ 603,124 $ 432,647
Senior housing 52 537,585 15,024 552,609 483,959 345,812
Multi-family 34 286,694 125,538 412,232 365,316 386,341
Retail building 126 314,868 88,114 402,982 334,665 336,135
Office building 73 86,540 6,583 93,123 136,058 128,410
One- to four-family property 301 61,805 3,976 65,781 70,420 63,879
Warehouse/manufacturing 51 62,969 1,799 64,768 58,853 34,569
Land 24 34,008 593 34,601 35,605 15,615
Single use building 25 32,821 262 33,083 33,718 40,061
Other 32 25,086 630 25,716 28,192 30,110
750 $ 2,058,733 $ 310,081 $ 2,368,814 $ 2,149,910 $ 1,813,579
Weighted average rate 5.84 % 6.68 % 5.95 % 5.99 % 5.75 %
The following table presents the unpaid principal balance of loans secured by non-owner occupied and owner occupied properties within the Bank's commercial real estate loan portfolio as of the dates indicated.
December 31,
2025 		September 30,
2025 		December 31,
2024
(Dollars in thousands)
Non-owner occupied $ 1,379,099 $ 1,271,905 $ 1,017,025
Owner occupied 161,736 167,925 166,147
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 December 31, 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
March 31,
2026 		June 30,
2026 		September 30,
2026 		Thereafter Revolving Lines of Credit Total
(Dollars in thousands)
Undisbursed amounts $ 59,605 $ 64,130 $ 47,032 $ 132,070 $ 7,244 $ 310,081
Commitments 4,775 8,518 8,652 56,982 - 78,927
$ 64,380 $ 72,648 $ 55,684 $ 189,052 $ 7,244 $ 389,008
Weighted average rate 6.65 % 6.73 % 6.71 % 6.72 % 6.91 % 6.71 %
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.
December 31, 2025 September 30,
2025 		December 31,
2024
Unpaid Undisbursed Gross Loan Gross Loan Gross Loan
Count Principal Amount Amount Amount Amount
(Dollars in thousands)
Kansas 542 $ 823,732 $ 86,977 $ 910,709 $ 799,827 $ 709,162
Missouri 120 310,295 41,926 352,221 354,772 305,835
Texas 20 246,508 54,841 301,349 312,805 330,283
Arizona 7 129,536 23,801 153,337 122,429 36,446
California 6 94,325 16,207 110,532 96,848 81,451
New York 2 109,482 - 109,482 109,828 60,000
Colorado 13 60,920 23,024 83,944 84,199 60,805
Tennessee 3 37,671 13,940 51,611 56,781 40,782
Washington 2 51,200 - 51,200 - -
Other 35 195,064 49,365 244,429 212,421 188,815
750 $ 2,058,733 $ 310,081 $ 2,368,814 $ 2,149,910 $ 1,813,579
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 December 31, 2025. The LTV is calculated using the gross loan amount (composed of unpaid principal and undisbursed amounts) as of December 31, 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 Arizona New York California Other Total
(Dollars in thousands)
Hotel $ 41,544 $ 20,648 $ 141,320 $ 106,709 $ 109,482 $ 90,096 $ 106,558 $ 616,357
Senior housing 323,857 141,629 - - - - 72,099 537,585
Retail building 87,670 41,492 84,736 20,068 - - 80,902 314,868
Multi-family 199,638 53,592 20,000 - - - 13,464 286,694
Office building 60,153 7,747 452 136 - - 18,052 86,540
Warehouse/manufacturing 38,382 17,869 - - - - 6,718 62,969
One- to four-family property 42,110 4,264 - 2,248 - 1,620 11,563 61,805
Land 7,119 152 - - - - 26,737 34,008
Single use building 11,682 18,155 - 375 - 2,609 - 32,821
Other 11,577 4,747 - - - - 8,762 25,086
$ 823,732 $ 310,295 $ 246,508 $ 129,536 $ 109,482 $ 94,325 $ 344,855 $ 2,058,733
Weighted LTV 67 % 66 % 56 % 54 % 46 % 51 % 66 % 63 %
Weighted DSCR 2.03x 1.51x 1.40x 1.42x 1.55x 1.50x 1.68x 1.73x
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 December 31, 2025.
Unpaid Weighted Weighted Weighted
Count Principal Rate LTV DSCR
(Dollars in thousands)
Hotel 32 $ 616,357 6.31 % 54 % 1.31x
Senior housing 52 537,585 5.21 73 1.64
Retail building 126 314,868 5.51 61 1.93
Multi-family 34 286,694 5.97 64 1.30
Office building 73 86,540 6.43 64 3.49
Warehouse/manufacturing 51 62,969 6.34 65 2.26
One- to four-family property 301 61,805 6.03 56 3.18
Land 24 34,008 6.24 71 4.19
Single use building 25 32,821 6.26 62 1.90
Other 32 25,086 5.89 53 2.09
750 $ 2,058,733 5.84 63 1.73
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 December 31, 2025, categorized by aggregate gross loan and commitment amount, along with average loan amount, weighted average rate, LTV, and DSCR. For loans over $60.0 million, there was $152.2 million of such loans related to hotels in Arizona and California, $143.1 million related to multi-family properties in Kansas, and $69.6 million related to senior housing in Kansas. The largest loan included in the table below was $86.0 million, which was fully disbursed as of December 31, 2025, and is collateralized by a hotel in Arizona.
Gross Loan
and Commitment Average Weighted Weighted Weighted
Count Amounts Amount Rate LTV DSCR
(Dollars in thousands)
Greater than $60 million 5 $ 364,957 $ 72,991 6.18 % 60 % 1.50x
>$50 to $60 million 3 164,252 54,751 5.66 61 1.45
>$40 to $50 million 2 97,162 48,581 6.15 57 1.59
>$30 to $40 million 10 349,885 34,989 5.85 64 1.27
>$20 to $30 million 18 433,755 24,098 6.13 65 1.29
>$10 to $20 million 27 380,861 14,106 6.43 67 1.51
>$5 to $10 million 37 262,319 7,090 5.71 70 2.57
$1 to $5 million 122 283,694 2,325 5.27 58 2.18
Less than $1 million 532 110,856 208 6.35 52 3.27
756 $ 2,447,741 3,238 5.98 63 1.71
The following table summarizes the Bank's commercial and industrial loans by loan purpose as of the dates indicated. Of the $285.4 million of commercial and industrial loans at December 31, 2025, 59%, or $168.2 million, had a gross loan balance of $5.0 million or more. The largest commercial and industrial lending relationship at December 31, 2025 had a gross loan balance of $81.6 million, which represented 29% of the gross commercial and industrial loan balance at December 31, 2025. The Bank had no commercial and industrial loan commitments at December 31, 2025. Management anticipates growth in the commercial and industrial loan portfolio as the Bank advances its strategy to grow all aspects of commercial banking. However, given the inherent characteristics of these loans, balances will likely fluctuate over time.
December 31, 2025 September 30,
2025 		December 31,
2024
Unpaid Undisbursed Gross Loan Gross Loan Gross Loan
Count Principal Amount Amount Amount Amount
(Dollars in thousands)
Working capital 192 $ 101,869 $ 54,708 $ 156,577 $ 153,967 $ 86,186
Purchase/refinance business assets 48 49,586 306 49,892 49,805 42,066
Finance/lease vehicle 174 32,423 2,050 34,473 36,406 26,655
Purchase equipment 63 21,275 6,391 27,666 54,201 23,472
Other 19 14,756 2,059 16,815 7,508 8,143
496 $ 219,909 $ 65,514 $ 285,423 $ 301,887 $ 186,522
Weighted average rate 6.74 % 6.80 % 6.75 % 6.97 % 6.83 %
The following table summarizes the Bank's commercial and industrial loans by the state in which the borrower is located, as of December 31, 2025.
Unpaid Undisbursed Gross Loan
Principal Amount Amount
(Dollars in thousands)
Kansas $ 152,800 $ 60,796 $ 213,596
Arizona 11,923 - 11,923
Missouri 10,221 760 10,981
California 7,800 2,237 10,037
Ohio 9,785 215 10,000
Other 27,380 1,506 28,886
$ 219,909 $ 65,514 $ 285,423
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 December 31, 2025, categorized by aggregate gross loan and commitment amounts and average loan amount. Both loans greater than $15.0 million related to working capital loans in Kansas. The largest loan included in the table below was $36.0 million, of which $16.3 million was undisbursed as of December 31, 2025. This loan is part of the $81.6 million commercial and industrial lending relationship mentioned above.
Gross Loan
and Commitment Average
Count Amounts Amount DSCR
(Dollars in thousands)
Greater than $15 million 2 $ 54,718 $ 27,359 1.56x
>$10 to $15 million 3 34,845 11,615 2.37
>$5 to $10 million 10 78,650 7,865 1.39
>$1 to $5 million 27 56,447 2,091 8.37
>$500 thousand to $1 million 32 23,700 741 3.46
Less than $500 thousand 422 37,063 88 4.02
496 $ 285,423 575 3.43
Asset Quality
Delinquent and nonaccrual loans and OREO. The following table presents the Bank's 30 to 89 day delinquent loans at the dates indicated. The amounts in the table represent the unpaid principal balance of the loans less related charge-offs, if any. Of the loans 30 to 89 days delinquent at December 31, 2025 and September 30, 2025, approximately 59% and 49%, respectively, were 59 days or less delinquent.
December 31, September 30,
2025 2025
Count Amount Count Amount
(Dollars in thousands)
One- to four-family:
Originated 83 $ 9,351 68 $ 7,338
Purchased 21 5,767 13 3,221
Commercial:
Commercial real estate 6 2,584 7 1,236
Commercial and industrial 5 1,039 1 32
Consumer 29 635 22 520
144 $ 19,376 111 $ 12,347
Loans 30 to 89 days delinquent
to total loans receivable, net 0.24 % 0.15 %
The following table presents the Bank's nonaccrual loans and OREO at the dates indicated. Non-performing assets consist of nonaccrual loans and OREO. The amounts in the table represent the unpaid principal balance of the loans less related charge-offs, if any. Nonaccrual loans are loans that are 90 or more days delinquent or in foreclosure and other loans required to be reported as nonaccrual pursuant to the Bank's internal policies, even if the loans are current. At all dates presented, there were no loans 90 or more days delinquent that were still accruing interest.
December 31, September 30,
2025 2025
Count Amount Count Amount
(Dollars in thousands)
Loans 90 or More Days Delinquent or in Foreclosure:
One- to four-family:
Originated 29 $ 3,223 29 $ 2,754
Purchased 6 1,469 6 1,524
Commercial:
Commercial real estate 12 3,358 11 3,123
Commercial and industrial 2 199 2 210
Consumer 14 218 10 94
63 8,467 58 7,705
Loans 90 or more days delinquent or in foreclosure
as a percentage of total loans 0.10 % 0.09 %
Nonaccrual loans less than 90 Days Delinquent:(1)
Commercial:
Commercial real estate 4 $ 40,338 3 $ 40,249
Commercial and industrial 1 77 2 109
5 40,415 5 40,358
Total nonaccrual loans 68 48,882 63 48,063
Nonaccrual loans as a percentage of total loans 0.60 % 0.59 %
OREO:
One- to four-family:
Originated(2)
2 $ 291 1 $ 62
Consumer 1 135 1 135
3 426 2 197
Total non-performing assets 71 $ 49,308 65 $ 48,260
Non-performing assets as a percentage
of total assets 0.50 % 0.49 %
(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 states where the properties securing ten percent or more of the total amount of the Bank's one- to four-family loans, excluding construction loans, are located and the corresponding balance of loans 30 to 89 days delinquent, 90 or more days delinquent or in foreclosure, and weighted average LTV for loans 90 or more days delinquent or in foreclosure at December 31, 2025. The amounts in the table represent the unpaid principal balance of the loans, less related charge-offs, if any. The LTVs were based on the current loan balance and either the lesser of the purchase price or original appraisal, or the most recent Bank appraisal, if available.
Loans 30 to 89 Loans 90 or More Days Delinquent
One- to Four-Family Days Delinquent or in Foreclosure
State Amount % of Total Amount % of Total Amount % of Total LTV
(Dollars in thousands)
Kansas $ 3,271,080 56.4 % $ 7,608 50.3 % $ 2,962 63.1 % 44 %
Missouri 993,969 17.1 3,474 23.0 688 14.7 62
Other states 1,540,980 26.5 4,036 26.7 1,042 22.2 45
$ 5,806,029 100.0 % $ 15,118 100.0 % $ 4,692 100.0 % 47
The following table presents the unpaid principal balance of commercial real estate loans, aggregated by state, that were 30 to 89 days delinquent or 90 or more days delinquent or in foreclosure, and the weighted average LTV and weighted average DSCR for loans 90 or more days delinquent or in foreclosure at December 31, 2025. See additional discussion regarding the Bank's commercial real estate loan DSCRs and LTVs in the "Management's Discussion and Analysis of Financial Condition and Results of Operation - Loans Receivable - Commercial Loans" section above.
Loans 30 to 89 Loans 90 or More Days Delinquent
Days Delinquent or in Foreclosure
State Amount % of Total Amount % of Total LTV DSCR
(Dollars in thousands)
Kansas $ 333 12.9 % $ 3,142 93.6 % 48 % 2.51x
Missouri 2,251 87.1 - - - -
Other states - - 216 6.4 41 1.84
$ 2,584 100.0 % $ 3,358 100.0 % 48 2.47
Classified Loans.The following table presents the amortized cost of loans classified as special mention or substandard at the dates presented. The decrease in commercial real estate special mention loans at December 31, 2025 compared to September 30, 2025 was due mainly to a $36.1 million hotel participation loan being upgraded to pass, due to an improvement in the hotel's financial results.
December 31, 2025 September 30, 2025
Special Mention Substandard Special Mention Substandard
(Dollars in thousands)
One- to four-family $ 14,236 $ 21,611 $ 13,055 $ 20,616
Commercial:
Commercial real estate 22,448 45,801 59,993 45,550
Commercial and industrial 579 277 399 473
Consumer 106 365 326 322
$ 37,369 $ 68,054 $ 73,773 $ 66,961
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 December 31, 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.
See "Part II, Item 8. Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 1. Summary of Significant Accounting Policies" in the Company's Annual Report on Form 10-Kfor the fiscal year ended September 30, 2025 and "Part I, Item 1. Note 4. Loans Receivable and Allowance for Credit Losses" within this Quarterly Report on Form 10-Q for additional information related to the key assumptions used in the discounted cash flow model and the qualitative factors.
The distribution of our ACL and the ratio of ACL to loans receivable, by loan type, at the dates indicated is summarized below. The decrease in the commercial ACL to loans receivable ratio as of December 31, 2025, compared to September 30, 2025, was primarily driven by changes in the composition of the commercial and industrial and commercial construction loan portfolios. These shifts affected the weighted average lives of the respective portfolios, which in turn influenced the discounted cash flow results compared to September 30, 2025. Based on management's evaluation of the credit risk within the Bank's commercial loan portfolio, taking into consideration DSCRs and LTVs, management believes the Bank's ACL ratio for commercial loans is appropriate for the credit risk. See additional discussion regarding the Bank's commercial real estate loan DSCRs and LTVs in the "Financial Condition - Loans Receivable - Commercial Loans" section above.
Distribution of ACL Ratio of ACL to Loans Receivable
December 31, September 30, December 31, September 30,
2025 2025 2025 2025
(Dollars in thousands)
One- to four-family:
Originated $ 1,622 $ 1,730 0.04 % 0.05 %
Purchased 1,203 1,298 0.06 0.06
Construction 17 18 0.11 0.11
One- to four-family 2,842 3,046 0.05 0.05
Commercial:
Commercial real estate 16,825 15,809 0.90 0.92
Commercial and industrial 1,826 2,499 0.83 1.19
Commercial construction 2,871 2,468 1.56 1.26
Total commercial 21,522 20,776 0.94 0.98
Consumer 208 217 0.18 0.19
Total $ 24,572 $ 24,039 0.30 0.30
Historically, the Bank has maintained very low delinquency ratios and NCO rates. Over the past two years, the Bank's highest ratio of commercial loans 90 days or more delinquent to total commercial loans at a quarter end was 0.22%. The highest such ratio for one- to four-family loans was 0.12%. Total NCOs during the current quarter were $119 thousand. During the 10-year period ended December 31, 2025, the Bank recognized $875 thousand of total NCOs. As of December 31, 2025, the ACL balance was $24.6 million and the reserve for off-balance sheet credit exposures totaled $6.0 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.
At or For the Three Months Ended
December 31, 2025 December 31, 2024
(Dollars in thousands)
Balance at beginning of period $ 24,039 $ 23,035
Charge-offs (123) (17)
Recoveries 4 24
Net (charge-offs) recoveries (119) 7
Provision for credit losses 652 1,955
Balance at end of period $ 24,572 $ 24,997
Ratio of NCOs during the period
to average non-performing assets 0.24 % (0.07 %)
ACL to nonaccrual loans at end of period 50.27 220.02
ACL to loans receivable, net at end of period 0.30 0.31
ACL at end of period to NCOs during the period (annualized) 52x
N/M(1)
(1) This ratio is not presented due to loan recoveries exceeding loan charge-offs during the period.
The ratio of NCOs to average non-performing assets was positive this quarter, compared to a negative ratio in the prior year quarter, due to a NCO this quarter versus a net recovery in the prior year quarter. The ratio of ACL to nonaccrual loans was lower at the end of the current quarter compared to the prior year quarter due to a higher balance of nonaccrual loans at December 31, 2025. The decrease in the ratio of the ACL to total loans as of December 31, 2025 from December 31, 2024 was due primarily to the regression analysis update that occurred in the second half of the prior fiscal year, partially offset by the changes in the loan portfolio mix due to continued growth in commercial loans, which have a higher ACL to loan ratio than one- to four-family loans. See Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates" in the Company's Annual Report on Form 10-Kfor the fiscal year ended September 30, 2025 for additional information on the regression analysis update that occurred in the prior fiscal year. Additional information related to ACL activity by specific loan categories for the current period can be found in "Part I, Item 1. Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 4. Loans Receivable and Allowance for Credit Losses" within this Quarterly Report on Form 10-Q.
The following table presents NCOs, average loans, and NCOs as a percentage of average loans, by loan type, for the periods indicated.
For the Three Months Ended
December 31, 2025 December 31, 2024
NCOs Average Loans % of Average Loans NCOs Average Loans % of Average Loans
(Dollars in thousands)
One- to four-family:
Originated $ - $ 3,732,553 - % $ (3) $ 3,905,333 - %
Purchased - 2,113,076 - - 2,338,395 -
Construction - 15,468 - - 20,094 -
Total - 5,861,098 - (3) 6,263,822 -
Commercial:
Commercial real estate - 1,776,342 - (19) 1,304,100 -
Commercial and industrial 100 215,211 0.05 (1) 131,021 -
Commercial construction - 198,300 - - 171,627 -
Total 100 2,189,853 - (20) 1,606,748 -
Consumer:
Home equity 13 106,482 0.01 15 101,335 0.01
Other 6 8,105 0.07 1 9,326 0.01
Total 19 114,588 0.02 16 110,661 0.01
$ 119 $ 8,165,539 - $ (7) $ 7,981,231 -
While management utilizes its best judgment and information available, the adequacy of the ACL and reserve for off-balance sheet credit exposures is determined by certain factors outside of the Company's control, such as the performance of our loan portfolio, changes in the economic environment, including economic uncertainty, changes in interest rates, and the view of regulatory authorities toward classification of assets and the level of ACL and reserve for off-balance sheet credit exposures. Additionally, the level of ACL and reserve for off-balance sheet credit exposures may fluctuate based on the balance and mix of the loan portfolio and off-balance sheet credit exposures. If actual results differ significantly from our assumptions, our ACL and reserve for off-balance sheet credit exposures may not be sufficient to cover inherent losses in our loan portfolio, resulting in additions to our ACL and an increase in the provision for credit losses.
Securities.The following table presents the distribution of our securities portfolio, at amortized cost, at the dates indicated. The majority of our securities are government guaranteed or issued by GSEs. Overall, fixed-rate securities comprised 91% of our securities portfolio at December 31, 2025. The WAL is the estimated remaining maturity (in years) after three-month historical prepayment speeds and projected call option assumptions have been applied. Weighted average yields on tax-exempt securities are not calculated on a fully tax-equivalent basis.
December 31, 2025 September 30, 2025
Amount Yield WAL Amount Yield WAL
(Dollars in thousands)
MBS $ 805,099 5.48 % 4.1 $ 843,369 5.45 % 4.8
Corporate bonds 4,000 5.12 6.4 4,000 5.12 6.6
$ 809,099 5.48 4.1 $ 847,369 5.45 4.8
The following table summarizes the activity in our securities portfolio based on the estimated fair value, which is also the carrying value, for the periods presented. The weighted average yields for the beginning and ending balances are as of the first and last days of the periods presented and are generally derived from recent prepayment activity on the securities in the portfolio. The beginning and ending WALs are the estimated remaining principal repayment terms (in years) after three-month historical prepayment speeds and projected call option assumptions have been applied.
For the Three Months Ended
December 31, 2025 December 31, 2024
Amount Yield WAL Amount Yield WAL
(Dollars in thousands)
Beginning balance - carrying value $ 867,216 5.45 % 4.8 $ 856,266 5.63 % 5.2
Maturities and repayments (40,956) (51,574)
Net amortization of (premiums)/discounts 838 876
Purchases 1,848 6.64 3.1 71,416 4.89 6.7
Change in valuation on AFS securities 758 (15,483)
Ending balance - carrying value $ 829,704 5.48 4.1 $ 861,501 5.62 4.8
Liabilities.Total liabilities were $8.74 billion at December 31, 2025, compared to $8.73 billion at September 30, 2025. The $6.1 million increase was due primarily to a $167.2 million increase in deposits, partially offset by a $120.9 million decrease in borrowings and a $36.9 million decrease in advances by borrowers due to the timing of semi-annual real estate payments.
Deposits. The following table presents the amount, weighted average rate and percent of total for the components of our deposit portfolio at the dates presented. The increase in deposits from September 30, 2025 was due mainly to a $96.8 million increase in the Bank's high yield savings account offering and a $54.8 million increase in retail checking accounts. The decrease in the deposit portfolio rate at December 31, 2025 compared to September 30, 2025 and December 31, 2024 was due mainly to lower rates on retail certificates of deposit.
December 31, 2025 September 30, 2025 December 31, 2024
% of % of % of
Amount Rate Total Amount Rate Total Amount Rate Total
(Dollars in thousands)
Non-interest-bearing checking $ 641,201 - % 9.5 % $ 601,371 - % 9.1 % $ 556,515 - % 9.0 %
Interest-bearing checking 907,684 0.23 13.4 859,256 0.21 13.0 888,287 0.22 14.3
High yield savings 557,559 3.70 8.3 460,712 3.88 7.0 171,656 4.14 2.8
Other savings 424,280 0.07 6.3 423,942 0.07 6.5 439,407 0.07 7.1
Money market 1,229,427 1.19 18.2 1,233,487 1.29 18.7 1,235,788 1.19 19.9
Certificates of deposit 2,998,481 3.65 44.3 3,012,680 3.74 45.7 2,914,464 4.15 46.9
$ 6,758,632 2.18 100.0 % $ 6,591,448 2.26 100.0 % $ 6,206,117 2.34 100.0 %
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.
December 31, 2025 September 30, 2025 December 31, 2024
% of % of % of
Amount Rate Total Amount Rate Total Amount Rate Total
(Dollars in thousands)
Retail non-maturity deposits:
Non-interest-bearing checking $ 431,397 - % 6.4 % $ 409,722 - % 6.2 % $ 434,432 - % 7.0 %
Interest-bearing checking 823,946 0.08 12.2 790,783 0.08 12.0 819,644 0.09 13.2
High yield savings 557,559 3.70 8.3 460,712 3.88 7.0 171,656 4.14 2.8
Other savings 420,756 0.07 6.2 420,330 0.07 6.4 436,147 0.07 7.0
Money market 1,060,980 1.03 15.7 1,050,841 1.07 15.9 1,145,615 1.09 18.5
Total 3,294,638 0.99 48.8 3,132,388 0.96 47.5 3,007,494 0.69 48.5
Commercial non-maturity deposits:
Non-interest-bearing checking 209,804 - 3.1 191,649 - 2.9 122,083 - 2.0
Interest-bearing checking 83,738 1.73 1.2 68,473 1.72 1.0 68,643 1.75 1.1
Savings 3,524 0.05 0.1 3,612 0.05 0.1 3,260 0.05 0.1
Money market 168,447 2.18 2.5 182,646 2.52 2.8 90,173 2.50 1.5
Total 465,513 1.10 6.9 446,380 1.29 6.8 284,159 1.22 4.6
Certificates of deposit:
Retail certificates of deposit 2,818,392 3.63 41.7 2,828,982 3.73 43.0 2,799,418 4.14 45.1
Commercial certificates of deposit 62,178 3.55 0.9 61,819 3.64 0.9 56,564 4.27 0.9
Public unit certificates of deposit 117,911 4.02 1.7 121,879 4.06 1.8 58,482 4.48 0.9
Total 2,998,481 3.65 44.3 3,012,680 3.74 45.7 2,914,464 4.15 47.0
$ 6,758,632 2.18 100.0 % 6,591,448 2.26 100.0 % 6,206,117 2.34 100.0 %
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.
December 31, 2025 September 30, 2025 December 31, 2024
% of % of % of
Amount Rate Total Amount Rate Total Amount Rate Total
(Dollars in thousands)
Total retail deposits $ 6,113,030 2.21 % 90.5 % $ 5,961,370 2.28 % 90.5 % $ 5,806,912 2.35 % 93.6 %
Total commercial deposits 527,691 1.39 7.8 508,199 1.58 7.7 340,723 1.72 5.5
Public unit certificates of deposit 117,911 4.02 1.7 121,879 4.06 1.8 58,482 4.48 0.9
$ 6,758,632 2.18 100.0 % $ 6,591,448 2.26 100.0 % $ 6,206,117 2.34 100.0 %
As of December 31, 2025, approximately $776.8 million (or approximately 11%) of the Bank's Call Report deposit balance was uninsured, of which approximately $599.4 million (or approximately 9% 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. Total borrowings at December 31, 2025 were $1.83 billion, which was comprised of $1.73 billion in fixed-rate FHLB advances, $100.0 million in variable-rate FHLB advances tied to an interest rate swap, and $1.1 million in finance leases. Borrowings decreased $120.9 million from September 30, 2025 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. Cash flows from the increase in the deposit portfolio were used to pay down the borrowings portfolio during the current quarter. 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.
The following table presents the maturity of term borrowings, which consist of FHLB advances, along with the associated weighted average contractual and effective rates as of December 31, 2025. Amortizing FHLB advances totaling $254.8 million 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 $ 275,000 2.31 % 2.42 %
2027 740,000 3.49 3.56
2028 611,066 4.20 4.07
2029 123,750 4.45 4.45
2030 80,000 4.20 4.20
$ 1,829,816 3.64 3.65
(1)The effective rate includes the impact of the interest rate swap and the amortization of deferred prepayment penalties resulting from FHLB advances previously prepaid.
The following table presents borrowing activity for the periods shown. The borrowings presented in the table have original contractual terms of one year or longer or are tied to the interest rate swap which has an original contractual term longer than one year. 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 the interest rate swap 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 quarter, 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 year 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. This activity is reflected in the table below.
For the Three Months Ended
December 31, 2025 December 31, 2024
Effective Effective
Amount Rate WAM Amount Rate WAM
(Dollars in thousands)
Beginning balance $ 1,950,984 3.54 % 1.5 $ 2,180,656 3.29 % 1.6
Maturities and repayments (171,168) 2.34 - (216,168) 3.42 -
New FHLB borrowings 50,000 3.64 2.0 200,000 4.27 3.7
Ending balance $ 1,829,816 3.65 1.4 $ 2,164,488 3.37 1.6
Maturities of Interest-Bearing Liabilities.The following table presents the maturity and weighted average repricing rate, which is also the weighted average effective rate, of certificates of deposit, split between retail/commercial and public unit amounts, and non-amortizing FHLB advances for the next four quarters as of December 31, 2025.
March 31, June 30, September 30, December 31,
2026 2026 2026 2026 Total
(Dollars in thousands)
Retail/Commercial Certificates:
Amount $ 407,199 $ 636,261 $ 595,282 $ 550,620 $ 2,189,362
Repricing Rate 3.64 % 3.79 % 3.66 % 3.58 % 3.68 %
Public Unit Certificates:
Amount $ 44,281 $ 9,001 $ 16,379 $ 18,000 $ 87,661
Repricing Rate 4.12 % 4.22 % 3.94 % 3.62 % 3.99 %
Term Borrowings:
Amount $ 100,000 $ 50,000 $ 125,000 $ 250,000 $ 525,000
Repricing Rate 1.60 % 0.98 % 3.66 % 4.29 % 3.31 %
Total
Amount $ 551,480 $ 695,262 $ 736,661 $ 818,620 $ 2,802,023
Repricing Rate 3.31 % 3.59 % 3.67 % 3.80 % 3.62 %
The following table sets forth the WAM information for our certificates of deposit, in years, as of December 31, 2025.
Retail certificates of deposit 0.8
Commercial certificates of deposit 0.6
Public unit certificates of deposit 0.6
Total certificates of deposit 0.8
Stockholders' Equity.Stockholders' equity totaled $1.04 billion at December 31, 2025. 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 December 31, 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 December 31, 2025, the Bank's CBLR was 9.5%. See "Liquidity and Capital Resources" below for additional information regarding the Bank's regulatory capital requirements.
During the quarter ended December 31, 2025, the Company repurchased 2,376,633 shares of common stock at an average price of $6.86 per share, or $16.3 million in total. Subsequent to December 31, 2025 and through February 4, 2026, the Company repurchased 108,000 shares at an average price of $7.51 per share. The Company currently has 54.0 million remaining authorized under its existing stock repurchase plan. The Company intends to continue to opportunistically repurchase stock 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 of Kansas City's non-objection for the buyback amount. The Company has notified the FRB of its intent to extend the stock repurchase plan another year.
During the quarter ended December 31, 2025, the Company paid regular quarterly cash dividends totaling $11.0 million, or $0.085 per share. On December 17, 2025, the Company announced a special cash dividend of $0.04 per share, or approximately $5.1 million, which was paid on January 23, 2026 to stockholders of record as of the close of business on January 9, 2026. On January 27, 2026, the Company announced a regular quarterly cash dividend of $0.085 per share, or approximately $10.8 million, payable on February 20, 2026 to stockholders of record as of the close of business on February 6, 2026. The special cash dividend, in addition to the Company's history of regular quarterly dividends and opportunistic share repurchases, demonstrates the Company's multi-channel focus on delivering stockholder value through disciplined capital allocation which balances investments in the future of the Company while simultaneously pursuing incremental opportunities to return capital to stockholders.
For the remainder of 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. Dividend payments depend upon a number of factors, including the Company's financial condition and results of operations, regulatory capital compliance, regulatory limitations on the Bank's ability to
make capital distributions to the Company, the Bank's current tax earnings and accumulated earnings and profits, and the amount of cash at the holding company level.
The 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 through December 31, 2025, we have returned $2.03 billion in capital to stockholders through dividends totaling $1.58 billion and stock repurchases totaling $456.2 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.
At December 31, 2025, Capitol Federal Financial, Inc., at the holding company level, had $14.9 million in cash on deposit at the Bank. During the quarter ended December 31, 2025, the Bank distributed $25.0 million from the Bank to the Company. The Bank is expected to continue to have a positive tax accumulated earnings and profit balance during fiscal year 2026, so 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 being required to pay the pre-1988 bad debt recapture tax on earnings moved from the Bank to the Company.
Currently, the Company's priorities for the use of cash are cash dividends, share repurchases and operations. The amount of cash available for share repurchases and for dividends in excess of the Board's and management's current intention of $0.085 per share per quarter is limited to the earnings distributed from the Bank to the Company less the amount of dividends paid as well as the need to replenish the cash balance at the holding company level to be in compliance with Board policies
The following table presents regular quarterly cash dividends and special cash dividends paid in calendar years 2026, 2025, and 2024. The amounts represent cash dividends paid during each period shown. For the quarter ending March 31, 2026, the amount presented represents the estimated dividend payable on February 20, 2026 to stockholders of record as of the close of business on February 6, 2026.
Calendar Year
2026 2025 2024
Amount Per Share Amount Per Share Amount Per Share
(Dollars in thousands, except per share amounts)
Regular quarterly dividends paid
Quarter ended March 31 $ 10,826 $ 0.085 $ 11,062 $ 0.085 $ 11,127 $ 0.085
Quarter ended June 30 - - 11,063 0.085 11,044 0.085
Quarter ended September 30 - - 11,066 0.085 11,043 0.085
Quarter ended December 31 - - 11,017 0.085 11,061 0.085
Special dividends paid 5,094 0.040 - - - -
Calendar year-to-date dividends paid $ 15,920 $ 0.125 $ 44,208 $ 0.340 $ 44,275 $ 0.340
Operating Results
The following table presents selected income statement and other information for the quarters indicated.
For the Three Months Ended
December 31, September 30, June 30, March 31, December 31,
2025 2025 2025 2025 2024
(Dollars in thousands, except per share data)
Interest and dividend income:
Loans receivable $ 89,792 $ 87,343 $ 82,914 $ 80,867 $ 81,394
MBS 11,341 11,808 12,163 11,264 11,024
Cash and cash equivalents 2,773 2,148 1,620 2,729 1,871
FHLB stock 2,032 2,163 2,197 2,285 2,352
Investment securities 51 582 784 1,030 981
Total interest and dividend income 105,989 104,044 99,678 98,175 97,622
Interest expense:
Deposits 37,500 37,204 35,860 35,853 37,345
Borrowings 17,172 18,057 18,360 18,482 18,047
Total interest expense 54,672 55,261 54,220 54,335 55,392
Net interest income 51,317 48,783 45,458 43,840 42,230
Provision for credit losses 1,106 519 (451) - 677
Net interest income
(after provision for credit losses) 50,211 48,264 45,909 43,840 41,553
Non-interest income 5,479 5,791 5,288 4,953 4,693
Non-interest expense 30,476 31,018 29,564 29,540 27,148
Income tax expense 4,910 4,224 3,251 3,854 3,667
Net income $ 20,304 $ 18,813 $ 18,382 $ 15,399 $ 15,431
Efficiency ratio 53.66 % 56.84 % 58.26 % 60.54 % 57.86 %
Operating expense ratio (annualized) 1.24 1.27 1.23 1.23 1.14
Basic EPS $ 0.16 $ 0.14 $ 0.14 $ 0.12 $ 0.12
Diluted EPS 0.16 0.14 0.14 0.12 0.12
Average Balance Sheets
The following table presents the average balances of our assets, liabilities, and stockholders' equity, and the related annualized weighted average yields and rates on our interest-earning assets and interest-bearing liabilities for the periods indicated, as well as selected performance ratios and other information for the periods shown. Weighted average yields are derived by dividing annualized income by the average balance of the related assets, and weighted average rates are derived by dividing annualized expense by the average balance of the related liabilities, for the periods shown. Average outstanding balances are derived from average daily balances. The weighted average yields and rates include amortization of fees, costs, premiums and discounts, which are considered adjustments to yields/rates.
For the Three Months Ended
December 31, 2025 September 30, 2025 December 31, 2024
Average Interest Average Interest Average Interest
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Amount Paid Rate Amount Paid Rate Amount Paid Rate
(Dollars in thousands)
Assets:
Interest-earning assets:
One- to four-family loans:
Originated $ 3,748,022 $ 36,490 3.89 % $ 3,794,781 $ 36,521 3.85 % $ 3,925,427 $ 36,375 3.71 %
Purchased 2,113,076 17,469 3.31 2,167,994 17,668 3.26 2,338,395 18,984 3.25
Total one- to four-family loans 5,861,098 53,959 3.68 5,962,775 54,189 3.63 6,263,822 55,359 3.54
Commercial loans:
Commercial real estate 1,776,342 26,456 5.83 1,670,205 24,317 5.70 1,303,095 18,755 5.63
Commercial and industrial 215,211 3,868 7.03 196,992 3,515 6.98 132,026 2,217 6.57
Commercial construction 198,300 3,316 6.54 182,855 3,050 6.53 171,627 2,784 6.35
Total commercial loans 2,189,853 33,640 6.01 2,050,052 30,882 5.89 1,606,748 23,756 5.79
Consumer loans 114,588 2,193 7.59 113,979 2,272 7.91 110,661 2,279 8.19
Total loans receivable(1)
8,165,539 89,792 4.36 8,126,806 87,343 4.27 7,981,231 81,394 4.05
MBS(2)
826,320 11,341 5.49 860,833 11,808 5.49 781,252 11,024 5.64
Investment securities(2)(3)
4,000 51 5.13 45,467 582 5.13 72,561 981 5.41
FHLB stock 88,223 2,032 9.14 94,288 2,163 9.10 99,151 2,352 9.41
Cash and cash equivalents 274,154 2,773 3.96 192,755 2,148 4.36 154,752 1,871 4.73
Total interest-earning assets 9,358,236 105,989 4.49 9,320,149 104,044 4.43 9,088,947 97,622 4.27
Other non-interest-earning assets 468,876 468,378 463,322
Total assets $ 9,827,112 $ 9,788,527 $ 9,552,269
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Checking $ 881,139 503 0.23 $ 869,328 497 0.23 $ 865,738 531 0.24
High yield savings 507,126 4,970 3.89 427,416 4,229 3.93 126,047 1,322 4.17
Other savings 422,933 79 0.07 428,106 81 0.07 441,486 100 0.09
Money market 1,241,106 3,925 1.25 1,244,320 4,037 1.29 1,245,714 4,212 1.34
Retail certificates 2,823,991 26,213 3.68 2,787,294 26,596 3.79 2,812,034 29,755 4.20
Commercial certificates 61,917 555 3.56 60,637 553 3.62 57,859 636 4.36
Wholesale certificates 124,247 1,255 4.01 118,066 1,211 4.07 69,487 789 4.50
Total deposits 6,062,459 37,500 2.45 5,935,167 37,204 2.49 5,618,365 37,345 2.64
Borrowings 1,911,552 17,172 3.56 2,027,086 18,057 3.53 2,171,476 18,047 3.30
Total interest-bearing liabilities 7,974,011 54,672 2.72 7,962,253 55,261 2.75 7,789,841 55,392 2.82
Non-interest-bearing deposits 609,471 587,128 544,548
Other non-interest-bearing liabilities 192,207 189,471 186,227
Stockholders' equity 1,051,423 1,049,675 1,031,653
Total liabilities and stockholders' equity $ 9,827,112 $ 9,788,527 $ 9,552,269
(Continued)
For the Three Months Ended
December 31, 2025 September 30, 2025 December 31, 2024
Average Interest Average Interest Average Interest
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Amount Paid Rate Amount Paid Rate Amount Paid Rate
(Dollars in thousands)
Net interest income(4)
$ 51,317 $ 48,783 $ 42,230
Net interest-earning assets $ 1,384,225 $ 1,357,896 $ 1,299,106
Net interest margin(5)
2.19 2.09 1.86
Ratio of interest-earning assets to interest-bearing liabilities 1.17x 1.17x 1.17x
Selected performance ratios:
Return on average assets (annualized)(6)
0.83 % 0.77 % 0.65 %
Return on average equity (annualized)(7)
7.72 7.17 5.98
Average equity to average assets 10.70 10.72 10.80
Operating expense ratio(8)
1.24 1.27 1.14
Efficiency ratio(9)
53.66 56.84 57.86
(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 in the average balance of securities for the quarters ended December 31, 2025, September 30, 2025, or December 31, 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 that 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.
Rate/Volume Analysis.
The table below presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities, comparing the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (1) changes in volume, which are changes in the average balance multiplied by the previous period's average rate, and (2) changes in rate, which are changes in the average rate multiplied by the average balance from the previous period. The net changes attributable to the combined impact of both rate and volume have been allocated proportionately to the changes due to volume and the changes due to rate.
For the Three Months Ended
December 31, 2025 vs. September 30, 2025 December 31, 2025 vs. December 31, 2024
Increase (Decrease) Due to Increase (Decrease) Due to
Volume Rate Total Volume Rate Total
Interest-earning assets:
Loans receivable $ 1,209 $ 1,240 $ 2,449 $ 5,262 $ 3,136 $ 8,398
MBS (475) 8 (467) 624 (307) 317
Investment securities (531) - (531) (881) (49) (930)
FHLB stock (139) 8 (131) (253) (67) (320)
Cash and cash equivalents 838 (213) 625 1,249 (347) 902
Total interest-earning assets 902 1,043 1,945 6,001 2,366 8,367
Interest-bearing liabilities:
Checking 7 (1) 6 9 (37) (28)
Savings 391 348 739 1,284 2,343 3,627
Money market (10) (102) (112) (16) (271) (287)
Certificates of deposit 418 (755) (337) 736 (3,893) (3,157)
Borrowings (1,024) 139 (885) (2,205) 1,330 (875)
Total interest-bearing liabilities (218) (371) (589) (192) (528) (720)
Net change in net interest income $ 1,120 $ 1,414 $ 2,534 $ 6,193 $ 2,894 $ 9,087
Comparison of Operating Results for the Three Months Ended December 31, 2025 and September 30, 2025
For the quarter ended December 31, 2025, the Company recognized net income of $20.3 million, or $0.16 per share, compared to net income of $18.8 million, or $0.14 per share, for the quarter ended September 30, 2025. The increase in net income was due primarily to higher net interest income, partially offset by higher income tax expense. The net interest margin increased ten basis points, from 2.09% for the prior quarter to 2.19% 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 periods presented, along with the change measured in dollars and percent.
For the Three Months Ended
December 31, September 30, Change Expressed in:
2025 2025 Dollars Percent
(Dollars in thousands)
INTEREST AND DIVIDEND INCOME:
Loans receivable $ 89,792 $ 87,343 $ 2,449 2.8 %
MBS 11,341 11,808 (467) (4.0)
Cash and cash equivalents 2,773 2,148 625 29.1
FHLB stock 2,032 2,163 (131) (6.1)
Investment securities 51 582 (531) (91.2)
Total interest and dividend income $ 105,989 $ 104,044 $ 1,945 1.9
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 and investment securities was due primarily to a decrease in the average balance of each portfolio compared to the prior quarter, as cash flows from those portfolios were used to fund commercial loan growth. The increase in interest income on cash and cash equivalents was due to an increase in the average balance.
Interest Expense
The following table presents the components of interest expense for the periods presented, along with the change measured in dollars and percent.
For the Three Months Ended
December 31, September 30, Change Expressed in:
2025 2025 Dollars Percent
(Dollars in thousands)
INTEREST EXPENSE:
Deposits $ 37,500 $ 37,204 $ 296 0.8 %
Borrowings 17,172 18,057 (885) (4.9)
Total interest expense $ 54,672 $ 55,261 $ (589) (1.1)
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. Deposit growth was used to repay these borrowings.
Provision for Credit Losses
The Company recorded a provision for credit losses of $1.1 million during the current quarter compared to a provision for credit losses of $519 thousand for the prior quarter. The provision for credit losses in the current quarter was due primarily to commercial loan growth.
Non-Interest Income
The following table presents the components of non-interest income for the periods presented, along with the change measured in dollars and percent.
For the Three Months Ended
December 31, September 30, Change Expressed in:
2025 2025 Dollars Percent
(Dollars in thousands)
NON-INTEREST INCOME:
Deposit service fees $ 2,872 $ 2,873 $ (1) - %
Insurance commissions 789 1,018 (229) (22.5)
Other non-interest income 1,818 1,900 (82) (4.3)
Total non-interest income $ 5,479 $ 5,791 $ (312) (5.4)
Insurance commissions were higher in the prior quarter, due primarily to the receipt of commissions that exceeded accruals, with no similar activity in the current quarter, along with insurance industry changes that reduced commissions on certain lines of business in the current quarter. Due to these industry changes, we are broadening our focus on commercial insurance lines during fiscal year 2026, which aligns with our strategy of expanding our commercial banking services.
Non-Interest Expense
The following table presents the components of non-interest expense for the periods presented, along with the change measured in dollars and percent.
For the Three Months Ended
December 31, September 30, Change Expressed in:
2025 2025 Dollars Percent
(Dollars in thousands)
NON-INTEREST EXPENSE:
Salaries and employee benefits $ 15,747 $ 15,936 $ (189) (1.2 %)
Information technology and related expense 5,134 5,053 81 1.6
Occupancy, net 3,450 3,292 158 4.8
Regulatory and outside services 1,789 1,590 199 12.5
Federal insurance premium 1,111 1,114 (3) (0.3)
Advertising and promotional 1,056 1,915 (859) (44.9)
Deposit and loan transaction costs 716 658 58 8.8
Office supplies and related expense 481 490 (9) (1.8)
Other non-interest expense 992 970 22 2.3
Total non-interest expense $ 30,476 $ 31,018 $ (542) (1.7)
The increase in regulatory and outside services was due primarily to an increase in new relationships with outside service providers and additional services provided by current providers, of which approximately $325 thousand is not expected to recur in future periods. The decrease in advertising and promotional expense was due primarily to the timing of campaigns and seasonal sponsorships compared to the prior quarter.
The Company's efficiency ratio was 53.66% for the current quarter compared to 56.84% for the prior quarter. The improvement in the efficiency ratio was due to higher net interest income during the current quarter, along with lower 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 1.24% compared to 1.27% for the prior quarter. The operating expense ratio was lower in the current quarter due to lower 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 periods presented, along with the change measured in dollars and percent and effective tax rate.
For the Three Months Ended
December 31, September 30, Change Expressed in:
2025 2025 Dollars Percent
(Dollars in thousands)
Income before income tax expense $ 25,214 $ 23,037 $ 2,177 9.5 %
Income tax expense 4,910 4,224 686 16.2
Net income $ 20,304 $ 18,813 $ 1,491 7.9
Effective Tax Rate 19.5 % 18.3 %
Income tax expense was higher in the current quarter due to a higher effective tax rate and higher pretax income compared to the prior quarter. The effective tax rate was higher in the current quarter than the prior quarter due primarily to a slightly higher projected state tax rate in the current fiscal year.
Comparison of Operating Results for the Three Months Ended December 31, 2025 and 2024
The Company recognized net income of $20.3 million, or $0.16 per share, for the current quarter, compared to net income of $15.4 million, or $0.12 per share, for the prior year quarter. The increase in net income was due mainly to higher net interest income, partially offset by higher non-interest expense and income tax expense. The net interest margin increased 33 basis points, from 1.86% for the prior year quarter to 2.19% for the current quarter. The increase was 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 periods presented, along with the change measured in dollars and percent.
For the Three Months Ended
December 31, Change Expressed in:
2025 2024 Dollars Percent
(Dollars in thousands)
INTEREST AND DIVIDEND INCOME:
Loans receivable $ 89,792 $ 81,394 $ 8,398 10.3 %
MBS 11,341 11,024 317 2.9
Cash and cash equivalents 2,773 1,871 902 48.2
FHLB stock 2,032 2,352 (320) (13.6)
Investment securities 51 981 (930) (94.8)
Total interest and dividend income $ 105,989 $ 97,622 $ 8,367 8.6
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, along with growth in the commercial loan portfolio funded with cash flows from the deposit portfolio and partially from the investment securities portfolio. Interest income on cash and cash equivalents increased due largely to an increase in the average balance compared to the prior year quarter. The decrease in interest income on investment securities was due to a decrease in average balance, due primarily to securities that were called or matured between periods and were not replaced in their entirety.
Interest Expense
The following table presents the components of interest expense for the periods presented, along with the change measured in dollars and percent.
For the Three Months Ended
December 31, Change Expressed in:
2025 2024 Dollars Percent
(Dollars in thousands)
INTEREST EXPENSE:
Deposits $ 37,500 $ 37,345 $ 155 0.4 %
Borrowings 17,172 18,047 (875) (4.8)
Total interest expense $ 54,672 $ 55,392 $ (720) (1.3)
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. Cash flows from the deposit portfolio were used, in part, 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, along with lower rate advances that were not renewed, which increased the overall rate of the remaining advances.
Provision for Credit Losses
The Company recorded a provision for credit losses of $1.1 million during the current quarter compared to a provision for credit losses of $677 thousand for the prior year quarter. See additional details in the "Comparison of Operating Results for the Three Months Ended December 31, 2025 and September 30, 2025" above for additional information regarding the provision for credit losses during the current quarter.
Non-Interest Income
The following table presents the components of non-interest income for the periods presented, along with the change measured in dollars and percent.
For the Three Months Ended
December 31, Change Expressed in:
2025 2024 Dollars Percent
(Dollars in thousands)
NON-INTEREST INCOME:
Deposit service fees $ 2,872 $ 2,707 $ 165 6.1 %
Insurance commissions 789 776 13 1.7
Other non-interest income 1,818 1,210 608 50.2
Total non-interest income $ 5,479 $ 4,693 $ 786 16.7
Other non-interest income was higher in the current quarter due mainly to an increase in bank-owned life insurance ("BOLI") income due to a change in rates and an increase in the crediting rate as a result of updates to certain policies that were executed in the second half of the prior fiscal year.
Non-Interest Expense
The following table presents the components of non-interest expense for the periods presented, along with the change measured in dollars and percent.
For the Three Months Ended
December 31, Change Expressed in:
2025 2024 Dollars Percent
(Dollars in thousands)
NON-INTEREST EXPENSE:
Salaries and employee benefits $ 15,747 $ 14,232 $ 1,515 10.6 %
Information technology and related expense 5,134 4,550 584 12.8
Occupancy, net 3,450 3,333 117 3.5
Regulatory and outside services 1,789 1,113 676 60.7
Federal insurance premium 1,111 1,038 73 7.0
Advertising and promotional 1,056 822 234 28.5
Deposit and loan transaction costs 716 591 125 21.2
Office supplies and related expense 481 399 82 20.6
Other non-interest expense 992 1,070 (78) (7.3)
Total non-interest expense $ 30,476 $ 27,148 $ 3,328 12.3
The increase in salaries and employee benefits was mainly attributable to an increase in full-time equivalent employees between periods, merit increases and salary adjustments to remain market competitive. The increase in information technology and related expense was due mainly to an increase in software licensing expense. The increase in regulatory and outside services was due primarily to an increase in new relationships with outside service providers and additional services provided by current providers, of which approximately $325 thousand is not expected to recur in future periods. The increase in advertising and promotional expense was due to timing of campaigns compared to the prior year quarter.
The Company's efficiency ratio was 53.66% for the current quarter compared to 57.86% for the prior year quarter. The improvement in the efficiency ratio was due primarily to higher net interest income compared to the prior year quarter, partially offset by higher non-interest expense. The Company's operating expense ratio (annualized) for the current quarter was 1.24% compared to 1.14% for the prior year quarter. The operating expense ratio was higher in the current quarter due mainly to higher non-interest expense, partially offset by higher average assets compared to the prior year quarter.
Income Tax Expense
The following table presents pretax income, income tax expense, and net income for the periods presented, along with the change measured in dollars and percent and effective tax rate.
For the Three Months Ended
December 31, Change Expressed in:
2025 2024 Dollars Percent
(Dollars in thousands)
Income before income tax expense $ 25,214 $ 19,098 $ 6,116 32.0 %
Income tax expense 4,910 3,667 1,243 33.9
Net income $ 20,304 $ 15,431 $ 4,873 31.6
Effective Tax Rate 19.5 % 19.2 %
Income tax expense was higher in the current quarter due mainly to higher pretax income.
Liquidity and Capital Resources
Liquidity refers to our ability to generate sufficient cash to fund ongoing operations, to repay maturing certificates of deposit and other deposit withdrawals, to repay maturing borrowings, and to fund loan commitments. Liquidity management is both a daily and long-term function of our business management. The Company's most available liquid assets are represented by cash and cash equivalents and AFS securities. The Bank's primary sources of funds are deposits, FHLB borrowings, repayments and maturities of outstanding loans and MBS and other short-term investments, and funds provided by operations. The Bank's long-term borrowings primarily have been used to manage long-term liquidity needs and the Bank's interest rate risk with the intention to improve the earnings of the Bank while maintaining capital ratios that meet or exceed the regulatory standards for well-capitalized financial institutions. In addition, the Bank's focus on managing risk has provided additional liquidity capacity by maintaining a balance of MBS and investment securities available as collateral for borrowings.
We generally intend to manage cash reserves sufficient to meet short-term liquidity needs, which are routinely forecasted for 10, 60, and 365 days. Additionally, on a monthly basis, we perform a liquidity stress test in accordance with the Interagency Policy Statement on Funding and Liquidity Risk Management. The liquidity stress test incorporates both short-term and long-term liquidity scenarios in order to identify and to quantify liquidity risk. Management also monitors key liquidity statistics related to items such as wholesale funding gaps, borrowings capacity, and available unpledged collateral, as well as various liquidity ratios.
In the event short-term liquidity needs exceed available cash, the Bank has access to a line of credit at the FHLB, in addition to the FRB of Kansas City's discount window. Per FHLB's lending guidelines, total FHLB borrowings cannot exceed 40% of Bank Call Report total assets without the pre-approval of FHLB senior management. The Bank's FHLB borrowing limit was 44% of Bank Call Report total assets as of December 31, 2025, as approved by FHLB senior management. At December 31, 2025, the ratio of the par value of the Bank's FHLB borrowings to the Bank's Call Report total assets was 19%. The Bank was below the FHLB borrowing limit as of December 31, 2025. See additional discussion below. FHLB borrowings are secured by certain qualifying loans pursuant to a blanket collateral agreement with FHLB. The amount that can be borrowed from the FRB of Kansas City's discount window is based upon the fair value of securities pledged as collateral. At December 31, 2025, the amount of securities pledged for the discount window was $86.7 million. At December 31, 2025, there were no borrowings from the FRB of Kansas City's discount window. Management tests the Bank's access to the FRB of Kansas City's discount window at least annually with a nominal overnight borrowing.
If management observes unusual trends in the amount and frequency of line of credit utilization and/or short-term borrowings that are not in conjunction with a planned strategy, the Bank will likely utilize term wholesale borrowing sources such as FHLB advances to provide term funding. The maturities of our borrowings are generally staggered in order to mitigate the risk of a highly negative cash flow position at maturity. The Bank has used fully-amortizing FHLB advances that require periodic payments of principal over the term of the advance. This type of advance allows the Bank the opportunity to start repricing its liability cash flows sooner in a down-rate environment and generally provides for favorable pricing when compared to similar long term bullet advances with comparable average lives as a result of the current term structure of interest rates. The Bank's internal policy limits total borrowings to 55% of total assets. At December 31, 2025, the Bank had total borrowings, at par, of $1.83 billion, or approximately 19% of the Bank's Call Report total assets. The borrowings balance was composed primarily of FHLB advances, of which, $609.7 million is scheduled to be repaid (amortizing advances) or mature in the next 12 months.
The Bank is a member of the American Finance Exchange ("AFX"), through which it may borrow funds on an overnight or short-term basis with other member institutions. The availability of funds changes daily. At December 31, 2025, the Bank did not have any such borrowings outstanding through the AFX.
At December 31, 2025, the Bank had no repurchase agreements. The Bank may enter into repurchase agreements as management deems appropriate, not to exceed 15% of total assets, and subject to the total borrowings internal policy limit of 55% as discussed above.
The Bank has the ability to utilize the repayment and maturity of outstanding loans, MBS, and other investments for liquidity needs rather than reinvesting such funds into the related portfolios. At December 31, 2025, the Bank had $669.4 million of securities that were eligible but unused as collateral for borrowing or other liquidity needs. The Bank also has access to other sources of funds for liquidity purposes, such as brokered and public unit certificates of deposit. As of December 31, 2025, the Bank's policy allowed for combined brokered and public unit certificates of deposit up to 15% of total deposits. At December 31, 2025, the Bank did not have any brokered certificates of deposit, and public unit certificates of deposit were approximately 2% of total deposits. The Bank had pledged securities with an estimated fair value of $157.7 million as collateral for public unit certificates of deposit at December 31, 2025. The securities pledged as collateral for public unit certificates of deposit are held under joint custody with FHLB and generally will be released upon deposit maturity.
Management estimated that the Bank had $4.09 billion in liquidity available at December 31, 2025, based on the Bank's blanket collateral agreement with the FHLB, available brokered and public unit deposit capacity, unencumbered securities, and cash and cash equivalent balances.
At December 31, 2025, $2.28 billion of the Bank's certificate of deposit portfolio was scheduled to mature within the next 12 months, including $87.7 million of public unit certificates of deposit and $54.6 million of commercial certificates of deposit. Based on our deposit retention experience and our current pricing strategy, we anticipate the majority of the maturing retail certificates of deposit will renew or transfer to other deposit products of the Bank at prevailing rates, although no assurance can be given in this regard. Due to the nature of public unit certificates of deposit and commercial certificates of deposit, retention rates are not as predictable as retail certificates of deposit.
While scheduled payments from the amortization of loans and MBS and payments on short-term investments are relatively predictable sources of funds, deposit flows, prepayments on loans and MBS, and calls of investment securities are greatly influenced by general interest rates, economic conditions, and competition, and are less predictable sources of funds. To the extent possible, the Bank manages the cash flows of its loan and deposit portfolios by the rates it offers customers. We anticipate we will continue to have sufficient funds, through the repayments and maturities of loans and securities, deposits and borrowings, to meet our current commitments.
Limitations on Dividends and Other Capital Distributions
Office of the Comptroller of the Currency ("OCC") regulations impose restrictions on savings institutions with respect to their ability to make distributions of capital, which include dividends and other transactions charged to the capital account. Under FRB and OCC safe harbor regulations, savings institutions generally may make capital distributions during any calendar year equal to earnings of the previous two calendar years and current year-to-date earnings (to the extent not previously distributed). A savings institution that is a subsidiary of a savings and loan holding company, such as the Company, that proposes to make a capital distribution must submit written notice to the OCC and FRB 30 days prior to such distribution. The OCC and FRB may object to the distribution during that 30-day period based on safety and soundness or other concerns. Savings institutions that desire to make a larger capital distribution, are under special restrictions, or are not, or would not be, sufficiently capitalized following a proposed capital distribution must obtain regulatory non-objection prior to making such a distribution.
The long-term ability of the Company to pay dividends to its stockholders is based primarily upon the ability of the Bank to make capital distributions to the Company. So long as the Bank remains well capitalized after each capital distribution (as evidenced by maintaining regulatory capital ratios greater than the required percentages) and operates in a safe and sound manner, it is management's belief that the OCC and FRB will continue to allow the Bank to distribute its earnings to the Company, although no assurance can be given in this regard. Management continues to evaluate the timing and amount of capital distributions to be made from the Bank to the holding company during the current fiscal year and in future periods to the extent necessary to prevent the Bank from re-entering a negative accumulated earnings and profit position in connection with the Bank's pre-1988 bad debt recapture.
Regulatory Capital
Consistent with our goal to operate a sound and profitable financial organization, we actively seek to maintain a well-capitalized status for the Bank per the regulatory framework for prompt corrective action ("PCA"). Qualifying institutions that elect to use the CBLR framework, such as the Bank and the Company, that maintain the required minimum leverage ratio of 9.0% will be considered to have satisfied the generally applicable risk-based and leverage capital requirements in the regulatory agencies' capital rules, and to have met the capital requirements for the well-capitalized category under the agencies' PCA framework. As of December 31, 2025, the Bank's CBLR was 9.5% and the Company's CBLR was 10.0%, which exceeded the minimum requirements. The Bank's risk-based tier 1 capital ratio at December 31, 2025 was 16.2%.
Capitol Federal Financial Inc. published this content on February 06, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 06, 2026 at 15:46 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]