Capitol Federal Financial, Inc.
For the period ended Mar 31, 2025. Filed May 9, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 9, 2025
CFFN$8.60+2.0%Stored close · as of Nov 9, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-12-31; filed 2025-02-07.
0001490906-25-000009
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsFinancial Condition - Loans ReceivableFinancial Condition - Asset QualityFinancial Condition - LiabilitiesFinancial Condition - Stockholders' EquityOperating ResultsComparison of Operating Results for the three months ended December 31, 2024 and September 30, 2024Comparison of Operating Results for the three months ended December 31, 2024 and 2023Current report: 10-Q
Period ended 2025-03-31; filed 2025-05-09.
0001490906-25-000014
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsFinancial Condition - Loans ReceivableFinancial Condition - Asset QualityFinancial Condition - LiabilitiesFinancial Condition - Stockholders' EquityOperating ResultsComparison of Operating Results for the three months ended March 31, 2025 and December 31, 2024Comparison of Operating Results for the six months ended March 31, 2025 and 2024Comparison of Operating Results for the three months ended March 31, 2025 and 2024The baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 184 previous paragraphs and 202 current paragraphs.
92 unchanged; 63 reworded; 25 added; 28 removed; 1 previous and 22 current paragraphs rearranged.
Tables are not compared: 46 previous and 57 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (25)
Current report
•the potential imposition of new or increased tariffs or changes to existing trade policies that would affect economic activity or specific industry sectors;
Current report
The Bank continues to transition from a retail oriented financial institution to one with an increasing focus on commercial customers. The Bank is active in local markets for lending, commercial deposit and treasury management relationships, even when the lending opportunity may be for locations outside of the Bank's and the customers' local footprint. For the remainder of fiscal year 2025, it is anticipated that the Bank's net interest margin will continue to improve, assuming the continuation of decreasing deposit costs and increasing yields on our loan portfolio. All areas of the Bank's operations continue to focus on the management of costs.
Current report
Total assets were $9.72 billion at March 31, 2025, a $190.6 million increase from September 30, 2024, due mainly to increases in cash and cash equivalents and securities, partially offset by a decrease in the loan portfolio. The one- to four-family loan portfolio decreased $186.9 million during the current year six month period, partially offset by commercial loan growth of $159.3 million, primarily in the commercial real estate portfolio.
Current report
Management continues to actively evaluate new and additional services for commercial and small businesses to provide services they need and grow the Bank's fee revenue streams.
Current report
Deposits increased $166.4 million, or 10.7% annualized, during the current quarter due mainly to the Bank's high yield savings account offering, which increased $112.4 million during the quarter, to $284.1 million at March 31, 2025. Management has continued to focus on retaining and growing deposits through its high yield savings account product.
Current report
Excess cash flows generated from the one- to four-family portfolio and from deposit growth are currently being used to fund commercial loan growth or being held as operating cash to accommodate near-term funding needs for commercial loan activities and to repay borrowings coming due early in the June 30, 2025 quarter.
Current report
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 March 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 from management's funding expectations. The majority of the $136.5 million of commitments expected to fund during the June 30, 2025 quarter are related to hotel loans. Management has decided that it will continue to lend to existing borrowing relationships secured by hotels but is not taking on new relationships for hotel lending. Existing hotel lending opportunities in our pipeline will continue to be evaluated. Management believes that our intended level of concentration in this category of lending will be met with our existing portfolio and pipeline opportunities.
Current report
In early April 2025, the Bank paid off a maturing $50.0 million advance with an effective rate of 0.83%. Also in April 2025, the Bank pre-borrowed a $50.0 million FHLB advance in order to fund the repayment of another $50.0 million FHLB advance that matured later in the month. Additionally, during April 2025, the Bank refinanced three of its outstanding fixed-rate advances, totaling $200.0 million, resulting in prepayment fees of $547 thousand. The prepayment fees will be recognized in interest expense over the life of the new FHLB advances. This type of transaction is commonly referred to as a "blend-and-extend" transaction. Following the aforementioned transactions, the balance of the Bank's FHLB advance portfolio was $2.09 billion with a weighted average effective rate of 3.52% and a WAL of 1.9 years. This compares to a balance of $2.14 billion with a weighted average effective rate of 3.54% and a WAL of 1.6 years as of March 31, 2025. Management will continue to monitor opportunities for wholesale funding and may pay down FHLB advances in future periods to limit total growth of the balance sheet. 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.
Current report
For the quarter ended March 31, 2025, the Company recognized net income of $15.4 million, or $0.12 per share, which was unchanged from the prior quarter. Net interest income after provision for credit losses was higher in the current quarter than the prior quarter, but was almost entirely offset by higher non-interest expense in the current quarter. The net interest margin increased six basis points, from 1.86% for the prior quarter to 1.92% for the current quarter due mainly to a decrease in the cost of deposits, specifically retail certificates of deposit.
Current report
The decrease in interest income on loans receivable was due to a lower average balance during the current quarter compared to the prior quarter. During the current quarter, the loan portfolio continued to shift from one- to four-family loans to commercial loans; however, the commercial loan volume during the current quarter did not offset the decrease in the one- to four-family loan portfolio. As of March 31, 2025, the Bank had $136.5 million of commercial real estate loan commitments which are expected to fund early during the June 30, 2025 quarter. See additional discussion regarding the composition of the loan portfolio and management's strategy to shift from one- to four-family loans to commercial loans in the "Executive Summary" section above. The increase in interest income on cash and cash equivalents was due mainly to an increase in the average balance as a higher level of operating cash was maintained during the current quarter to accommodate near-term funding needs for commercial loan activities and to repay borrowings coming due early in the June 30, 2025 quarter.
Current report
The decrease in interest expense on deposits was due mainly to a decrease in the weighted average rates on retail certificates of deposit and money market accounts, which were partially offset by increases in the weighted average rate and average balance related to savings accounts, due to growth in the Bank's high yield savings account. The increase in borrowings expense was due to an increase in the weighted average interest rate as borrowings that renewed in the current quarter and prior quarter were at rates which exceeded that of the overall portfolio.
Current report
There was no impact to the provision for credit losses during the current quarter as the decrease in the ACL was entirely offset by the increase in the reserve for off-balance sheet credit exposures. The reduction in the ACL in the current quarter was due primarily to an increase in prepayment speeds on commercial real estate loans. The increase in the reserve for off-balance sheet credit exposures was due primarily to an increase in commercial off-balance sheet credit exposures. The Company recorded a provision for credit losses of $677 thousand during the prior quarter.
Current report
The increase in insurance commissions was due primarily to the receipt of annual contingent insurance commissions during the current quarter, which were higher than anticipated and accrued for in the prior quarter. The increase in other non-interest income was due primarily to an increase in BOLI related to the receipt of death benefits in the current quarter while none were received in the prior quarter.
Current report
The increase in salaries and employee benefits was primarily due to compensation-related accrual fluctuations between periods. The increase in information technology and related expense was due mainly to higher software licensing expense and professional services. The increase in regulatory and outside services was due primarily to the timing of outside services. The increase in deposit and loan transaction costs was due mainly to expenses related to calendar year-end statement-related processing that is seasonal and occurred during the current quarter. The increase in other non-interest expense was due primarily to higher customer fraud losses in the current quarter, along with higher costs associated with OREO property, largely related to a one- to four-family bulk purchased OREO, and a loss on a property sold during the current quarter related to an acquisition in 2018.
Current report
Average Balance Sheet
Current report
(2)AFS security yields are based upon amortized cost which is adjusted for premiums and discounts.
Current report
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 three months ended March 31, 2025 to the three months ended December 31, 2024. 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 year's average rate and (2) changes in rate, which are changes in the average rate multiplied by the average balance from the previous year 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.
Current report
Comparison of Operating Results for the Six Months Ended March 31, 2025 and 2024
Current report
(2)AFS security yields are based upon amortized cost which is adjusted for premiums and discounts.
Current report
For the quarter ended March 31, 2025, the Company recognized net income of $15.4 million, or $0.12 per share, compared to net income of $13.8 million, or $0.11 per share for the quarter ended March 31, 2024. The increase in net income was due primarily to an increase in net interest income partially offset by higher non-interest expense. The net interest margin increased 10 basis points, from 1.82% for the prior year quarter to 1.92% for the current year quarter, due primarily to higher yields on loans and the continued shift within the loan portfolio from one- to four-family loans to higher yielding commercial loans, which outpaced the increase in the cost of deposits, largely in retail certificates of deposits.
Current report
The increase in insurance commissions was due primarily to the receipt of annual contingent insurance commissions during the current quarter, which were higher than anticipated and higher than the prior year quarter.
Current report
The Company's efficiency ratio was 60.54% for the current quarter compared to 61.89% for the prior year quarter. The improvement in the efficiency ratio was due primarily to higher net interest income in the current quarter, which was partially offset by higher non-interest expense compared to the prior year quarter. The Company's operating expense ratio (annualized) for the current quarter was 1.23% compared to 1.19% for the prior year quarter, due mainly to higher non-interest expense.
Current report
Average Balance Sheet
Current report
(2)AFS security yields are based upon amortized cost which is adjusted for purchase premiums and discounts.
Current report
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 three months ended March 31, 2025 to the three months ended March 31, 2024. 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 year's average rate and (2) changes in rate, which are changes in the average rate multiplied by the average balance from the previous year 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.
Removed paragraphs (28)
Previous report
The loan portfolio was $7.95 billion at December 31, 2024, a $46.2 million increase from September 30, 2024. The loan portfolio mix continued to shift from one- to four-family loans to commercial loans during the current year quarter. During the current year quarter the commercial portfolio grew by 36.5% on an annualized basis. Management does not expect that rate of commercial loan growth to continue, but does expect continued growth during the current fiscal year.
Previous report
Loans receivable, net increased $46.2 million during the current year quarter. The loan portfolio mix continued to shift from one- to four-family loans to commercial loans during the current year quarter, with $137.5 million in commercial loan growth, partially offset by a $90.8 million reduction in one- to four-family loans due primarily to decreases of $48.7 million and $34.1 million in one- to four-family correspondent loans and one- to four-family originated loans, respectively.
Previous report
Deposits increased $76.1 million during the current quarter, primarily in retail savings accounts due to the Bank's high-yield savings account offering and retail checking accounts, partially offset by a decrease in retail certificates of deposit. Management has continued to focus on retaining and growing deposits through its high-yield savings account, which had an annual percentage yield of 4.30% for balances over $10 thousand as of December 31, 2024. The high-yield savings account balance was $171.7 million as of December 31, 2024 compared to $96.2 million and $520 thousand as of September 30, 2024 and December 31, 2023, respectively.
Previous report
(1)This ratio is not presented due to loan recoveries exceeding loan charge-offs during the period.
Previous report
Stockholders' Equity. Stockholders' equity totaled $1.03 billion at December 31, 2024 a decrease of $5.3 million from September 30, 2024 due primarily to a decrease in AOCI, net of tax, partially offset by a decrease in accumulated deficit. The decrease in AOCI, net of tax, was due to a decrease in unrealized gains on AFS securities as a result of an increase in market interest rates during the current quarter.
Previous report
(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.
Previous report
(2)AFS securities are adjusted for unamortized purchase premiums or discounts.
Previous report
For the quarter ended December 31, 2024, the Company recognized net income of $15.4 million, or $0.12 per share, compared to net income of $12.1 million, or $0.09 per share, for the quarter ended September 30, 2024. The higher net income in the current quarter was due primarily to lower income tax expense compared to the prior quarter due mainly to income tax expense associated with the pre-1988 bad debt recapture during the prior quarter. There was no similar tax expense in the current quarter. See additional discussion regarding the pre-1988 bad debt recapture in the "Income Tax Expense" section below. The net interest margin increased six basis points, from 1.80% for the prior quarter to 1.86% for the current quarter due mainly to growth in the higher yielding commercial loan portfolio.
Previous report
Interest and Dividend Income
Previous report
Interest Expense
Previous report
The decrease in interest expense on deposits was due to a decrease in the weighted average rate on money market accounts, retail certificates of deposit and checking accounts, which was almost entirely offset by an increase in the weighted average rate on savings accounts due to growth in the Bank's high-yield savings account. The decrease in borrowings expense was due primarily to the maturity of a $50.0 million advance late in the prior quarter that was not renewed, as well as to a reduction in borrowings outstanding during the current quarter as a result of principal payments made on the Bank's amortizing advances.
Previous report
Provision for Credit Losses
Previous report
Non-Interest Income
Previous report
The following table presents the components of non-interest income for the time periods presented, along with the change measured in dollars and percent.
Previous report
Non-Interest Expense
Previous report
The following table presents the components of non-interest expense for the time periods presented, along with the change measured in dollars and percent.
Previous report
Income Tax Expense
Previous report
Income tax expense was higher in the prior quarter due primarily to recording $2.0 million of federal income tax expense associated with the Bank's pre-1988 bad debt recapture during the quarter, along with higher state income tax expense mainly related to the tax treatment of the bad debt recapture. The income tax expense associated with the pre-1988 bad debt recapture negatively impacted earnings by $0.02 per share in the prior quarter.
Previous report
The income tax on the earnings distribution from the Bank to the Company during the prior quarter was due to the recapture of a portion of the Bank's bad debt reserves which were established prior to September 30, 1988, and are included in the Bank's retained earnings ("pre-1988 bad debt reserves"). A taxable net loss was reported on the Company's September 30, 2024 federal tax return due to net losses associated with the securities strategy (defined in the "Executive Summary - Securities Strategy to Improve Earnings" section above), which resulted in the Bank and Company having a negative current and accumulated earnings and profit tax position. This required the Bank to draw upon the pre-1988 bad debt reserves for distributions from the Bank to the Company and to pay taxes on the reduction to the pre-1988 bad debt reserves at the current corporate tax rate as of time of such distribution ("pre-1988 bad debt recapture"). It is the intention of management and the Board of Directors to not make distributions from the Bank to the Company during fiscal year 2025 to limit the tax associated with the pre-1988 bad debt recapture. It is currently anticipated that the Bank will have sufficient taxable income during fiscal year 2025 to replenish the Bank's tax accumulated earnings and profits to a positive level allowing the Bank to make earnings distributions to the Company beginning in fiscal year 2026 and not have those distributions subject to the pre-1988 bad debt recapture tax.
Previous report
Interest and Dividend Income
Previous report
Interest Expense
Previous report
Provision for Credit Losses
Previous report
Non-Interest Income
Previous report
The following table presents the components of non-interest income for the time periods presented, along with the change measured in dollars and percent.
Previous report
Non-Interest Expense
Previous report
The following table presents the components of non-interest expense for the time periods presented, along with the change measured in dollars and percent.
Previous report
Income Tax Expense
Reworded paragraphs (63)
Previous wording
•our ability to generate a sufficient volume of loans in order to maintain the balance of the portfolio at a level desired by management;
Current wording
•our ability to generate a sufficient volume of loans in order to maintain the loan portfolio balance at a level desired by management;
Previous wording
The Company recognized net income of $15.4 million, or $0.12 per share, for the current year quarter, compared to net income of $2.5 million, or $0.02 per share, for the prior year quarter. The lower net income in the prior year quarter was primarily a result of the impairment loss on the securities associated with the securities strategy. See additional discussion regarding the securities strategy in the "Securities Strategy to Improve Earnings" section below. Excluding the effects of the net loss associated with the securities strategy, EPS would have been $0.10 for the prior year quarter. The increase in EPS excluding the effects of the net loss associated with the securities strategy was due primarily to higher net interest income in the current year quarter.
Current wording
The Company recognized net income of $30.8 million, or $0.24 per share, for the current year six month period, compared to net income of $16.3 million, or $0.12 per share, for the prior year six month period. The lower net income in the prior year six month period was primarily a result of the net losses on the sale of securities associated with the securities strategy. See additional discussion regarding the securities strategy in the "Securities Strategy to Improve Earnings" section below. Excluding the effects of the net loss associated with the securities strategy, EPS would have been $0.20 for the prior year six month period. The increase in EPS excluding the effects of the net loss associated with the securities strategy was due primarily to higher net interest income in the current year six month period.
Previous wording
The net interest margin increased 15 basis points, from 1.71% for the prior year quarter to 1.86% for the current year quarter, due mainly to higher yields on loans and securities, which outpaced the increase in the cost of deposits, largely in retail certificates of deposit, along with the continued shift of loan balances from the one- to four-family loan portfolio to the higher yielding commercial loan portfolio.
Current wording
The net interest margin increased 13 basis points, from 1.76% for the prior year six month period to 1.89% for the current year six month period. The increase was due mainly to higher yields on loans and the continued shift of loan balances from the one- to four-family loan portfolio to the higher yielding commercial loan portfolio, which outpaced the increase in the cost of deposits, largely in retail certificates of deposit.
Previous wording
The Company's efficiency ratio was 57.86% for the current year quarter compared to 92.86% for the prior year quarter. Excluding the net losses from the securities strategy, the efficiency ratio would have been 64.73% for the prior year quarter. The improvement in the efficiency ratio, excluding the net losses from the securities strategy, was due primarily to higher net interest income and lower non-interest expense in the current year quarter compared to the prior year quarter. The Company's operating expense ratio (annualized) for the current year quarter was 1.14% compared to 1.18% for the prior year quarter, due mainly to lower non-interest expense in the current year quarter.
Current wording
The Company's efficiency ratio was 59.23% for the current year six month period compared to 74.29% for the prior year six month period. Excluding the net losses from the securities strategy, the efficiency ratio would have been 63.28% for the prior year six month period. The improvement in the efficiency ratio, excluding the net losses from the securities strategy, was due primarily to higher net interest income compared to the prior year six month period. The Company's operating expense ratio (annualized) for the current year six month period was 1.18%, unchanged from the prior year six month period.
Previous wording
Total deposits were $6.21 billion at December 31, 2024, a $76.1 million increase from September 30, 2024. The increase was primarily in retail savings accounts due to the Bank's high-yield savings account offering, along with an increase in retail checking accounts, partially offset by a decrease in retail certificates of deposit. Management continued to focus on retaining and growing deposits through its high-yield savings account offering.
Current wording
Total deposits were $6.37 billion at March 31, 2025, a $242.6 million increase from September 30, 2024. The increase was due primarily to the Bank's high yield savings account offering and retail checking accounts, partially offset by a decrease in retail certificates of deposit. Management has continued to focus on retaining and growing deposits through the Bank's high yield savings account product, which as of March 31, 2025 had an annual percentage yield of 4.30% for accounts meeting the account criteria, including a $10 thousand balance minimum.
Previous wording
Total borrowings were $2.16 billion at December 31, 2024, a $15.8 million decrease from September 30, 2024. The decrease was due to principal payments made on the Bank's amortizing FHLB advances. Management estimates that the Bank had $2.91 billion in additional liquidity available at December 31, 2024 based on the Bank's blanket collateral agreement with FHLB and unencumbered securities.
Current wording
Total borrowings were $2.14 billion at March 31, 2025, a $36.6 million decrease from September 30, 2024. The decrease was due to principal payments made on the Bank's amortizing FHLB advances. Management estimates that the Bank had $2.96 billion in liquidity available at March 31, 2025 based on the Bank's blanket collateral agreement with FHLB and unencumbered securities.
Previous wording
Stockholders' equity totaled $1.03 billion at December 31, 2024, a decrease of $5.3 million from September 30, 2024. As of December 31, 2024, the Bank's capital ratios exceeded the well-capitalized requirements. The Bank's community bank leverage ratio ("CBLR") as of December 31, 2024 was 9.4%.
Current wording
Stockholders' equity totaled $1.04 billion at March 31, 2025, an increase of $4.8 million from September 30, 2024. As of March 31, 2025, the Bank's capital ratios exceeded the well-capitalized requirements. The Bank's community bank leverage ratio ("CBLR") as of March 31, 2025 was 9.5%.
Previous wording
The Bank's asset quality remains strong, reflected in the continued low level of loan delinquency and charge-off ratios. At December 31, 2024, loans 30 to 89 days delinquent were 0.40% of total loans receivable, net, and loans 90 or more days delinquent or in foreclosure were 0.13% of total loans receivable, net. See "Asset Quality - Delinquent and nonaccrual loans and OREO" below for additional discussion. During the current year quarter, net recoveries were $7 thousand.
Current wording
The Bank's asset quality remains strong, reflected in the continued low level of loan delinquency and charge-off ratios. At March 31, 2025, loans 30 to 89 days delinquent were 0.18% of total loans receivable, net, and loans 90 or more days delinquent or in foreclosure were 0.12% of total loans receivable, net. See "Asset Quality - Delinquent and nonaccrual loans and OREO" below for additional discussion. During the current year six month period, net charge-offs were $107 thousand.
Previous wording
At December 31, 2024, the gap between the Bank's amount of interest-earning assets and interest-bearing liabilities projected to reprice within one year was $(1.58) billion, or (16.6)% of total assets, compared to $(1.51) billion, or (15.8)% of total assets, at September 30, 2024. As of December 31, 2024, the Bank exceeded internal policy thresholds for sensitivity to changes in interest rates. See additional discussion in "Part I, Item 3. Quantitative and Qualitative Disclosures About Market Risk."
Current wording
At March 31, 2025 the gap between the Bank's amount of interest-earning assets and interest-bearing liabilities projected to reprice within one year was $(1.11) billion, or (11.4)% of total assets, compared to $(1.51) billion, or (15.8)% of total assets, at September 30, 2024. As of March 31, 2025, the Bank exceeded internal policy thresholds for sensitivity to changes in interest rates. See additional discussion in "Part I, Item 3. Quantitative and Qualitative Disclosures About Market Risk."
Previous wording
In October 2023, the Company initiated a securities strategy (the "securities strategy") by selling $1.30 billion of securities, representing 94% of its securities portfolio. Since the Company did not have the intent to hold the $1.30 billion of securities to maturity at September 30, 2023, the Company recognized an impairment loss on those securities of $192.6 million which was reflected in the Company's financial statements for the quarter and fiscal year ended September 30, 2023. The securities strategy allowed the Company to improve its earnings stream going forward, beginning in the quarter ended December 31, 2023, by redeploying most of the proceeds into then current market rate securities and to provide liquidity to deleverage the balance sheet utilizing the remaining proceeds. During the quarter ended December 31, 2023, the Company completed the sale of securities and recognized $13.3 million ($10.0 million net of tax), or $0.08 per share, of additional loss related to the sale of the securities. See additional information regarding the impact of the securities strategy on our financial measurements in "Average Balance Sheets" below. The $1.30 billion of securities sold had a weighted average yield of 1.22% and an average duration of 3.6 years. With the proceeds from the sale of the securities, the Company purchased $632.0 million of securities yielding 5.75%, paid down $500.0 million of borrowings with a weighted average cost of 4.70%, and held the remaining cash at the FRB of Kansas City earning interest at the reserve balance rate until such time as it could be used to fund commercial activity or for other Bank operations.
Current wording
In October 2023, the Company initiated a securities strategy (the "securities strategy") by selling $1.30 billion of securities, representing 94% of its securities portfolio. Since the Company did not have the intent to hold the $1.30 billion of securities to maturity at September 30, 2023, the Company recognized an impairment loss on those securities of $192.6 million which was reflected in the Company's financial statements for the quarter and fiscal year ended September 30, 2023. The securities strategy allowed the Company to improve its earnings stream going forward, beginning in the quarter ended December 31, 2023, by redeploying most of the proceeds into then current market rate securities and to provide liquidity to deleverage the balance sheet utilizing the remaining proceeds. During the quarter ended December 31, 2023, the Company completed the sale of securities and recognized $13.3 million ($10.0 million net of tax), or $0.08 per share, of additional loss. See additional information regarding the impact of the securities strategy on our financial measurements in "Average Balance Sheets" below. The $1.30 billion of securities sold had a weighted average yield of 1.22% and an average duration of 3.6 years. With the proceeds from the sale of the securities, the Company purchased $632.0 million of securities yielding 5.75%, paid down $500.0 million of borrowings with a weighted average cost of 4.70%, and held the remaining cash at the FRB of Kansas City earning interest at the reserve balance rate until such time as it could be used to fund commercial activity or for other Bank operations.
Previous wording
Management continues to focus on strategically growing commercial banking through the alignment of technology, people, products and services. We believe we will be successful in this initiative as we are focusing on the financial needs of growing companies and small and middle-market businesses and pairing these companies with experienced relationship managers who offer a broad range of customized services, digital platforms and sophisticated cash management tools tailored to their businesses. Leveraging our new technology and organizational structure to quickly respond to customer needs in the sales pipeline is central to our growth strategy for commercial deposits. Commercial loan growth will continue to be driven by prospecting, maintaining and expanding current relationships. Strong credit quality remains a priority for the Bank as it grows commercial lending.
Current wording
Management continues to focus on strategically growing commercial banking through the alignment of technology, people, products and services. Management believes we will be successful in this initiative as we are focusing on the financial needs of growing companies and small businesses and pairing these companies with experienced relationship managers who offer a broad range of customized services, digital platforms and sophisticated cash management tools tailored to their businesses. Leveraging our new technology and organizational structure to quickly respond to customer needs in the sales pipeline is central to our growth strategy for commercial deposits. We expect that commercial loan growth will continue to be driven by prospecting for new relationships and maintaining and expanding existing relationships. Strong credit quality remains a priority for the Bank as it seeks to grow commercial lending, and we are now able to offer a full suite of treasury management products to service these new and existing lending relationships.
Previous wording
During the second quarter of fiscal year 2025, we intend to implement and begin utilizing commercial loan pricing and profitability software which is expected to provide consistent pricing and profitability based on the full customer banking relationship. The software is also expected to provide market insight regarding competitor pricing to assist loan officers when preparing a loan offering for a customer.
Current wording
During the current quarter we implemented and began utilizing commercial loan pricing and profitability software which provides pricing and profitability based on the full customer banking relationship. Management intends to implement additional modules associated with the software during the remainder of fiscal year 2025 that should provide market insight regarding competitor pricing to assist loan officers when preparing a loan offering for a customer.
Previous wording
We continue to see small business banking as an opportunity for deposit and loan growth. In the second quarter of fiscal year 2025, we plan to launch new checking products and digital banking services for small businesses. Additionally, we have hired a team of bankers focused on the deposit and loan needs of small businesses in our area.
Current wording
We see many opportunities to grow our non-interest bearing deposit base and diversify fee-based revenue streams through growth not only in treasury management services, but also trust and wealth management services, and small business banking. We have a team of bankers focused on the deposit and loan needs of small businesses in our market area. Early in the June 30, 2025 quarter, we plan to launch additional new checking products and digital banking services specifically designed for small businesses.
Previous wording
In retail banking, the Bank continues investing in digital banking as part of our strategy to attract and retain deposits, including a new deposit account onboarding platform implemented in November 2024 and digital banking enhancements for debit cardholders projected to be implemented in the fourth quarter of fiscal year 2025.
Current wording
As part of this growth strategy, we intend to create a seamless digital banking experience for all customers, which we believe will better enable the Bank to attract and retain deposits. This includes the new deposit account onboarding platform implemented in November 2024 and digital banking enhancements for debit cardholders which is projected to be implemented in the fourth quarter of fiscal year 2025.
Previous wording
As a result of continued high interest rates and lack of housing inventory which has reduced housing market transactions, our single-family origination and refinance activity has slowed considerably, and there has been a reduction in one- to four-family loan balances through scheduled repayments and loan payoffs. Additionally, the Bank suspended its one- to four-family correspondent lending channels during fiscal year 2024 for the foreseeable future. Management expects the Bank's one- to four-family originated loan portfolio will decrease as the affordability of housing remains challenging and there is limited supply of homes for sale. Cash flows generated from the one- to four-family portfolio are currently being used to fund commercial loan growth.
Current wording
Loans receivable, net decreased $77.7 million during the current quarter. The loan portfolio mix continued to shift from one- to four-family loans to commercial loans during the current quarter, with a $96.0 million decrease in one- to four-family loans, partially offset by commercial loan growth of $21.8 million. Management expects the Bank's one- to four-family originated loan portfolio will continue to decrease as the affordability of housing remains challenging and there is a limited supply of homes for sale.
Previous wording
The following table presents loan origination, refinance, and purchase/participation activity for the periods indicated, excluding endorsement activity, along with associated weighted average rates and percent of total. Commercial loan renewals are not included in the activity in the following table except to the extent new funds are disbursed at the time of renewal. Loan originations, purchases/participations, and refinances are reported together.
Current wording
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.
Previous wording
The following table presents origination activity in our one- to four-family loan portfolio, excluding endorsement activity, along with the weighted average rate, weighted average LTV and weighted average credit score for the three months ended December 31, 2024.
Current wording
The following table presents origination and refinance activity in our one- to four-family loan portfolio, excluding endorsement activity, along with the weighted average rate, weighted average LTV and weighted average credit score for the time periods presented.
Previous wording
The following table presents commercial loan disbursements, excluding lines of credit, during the three months ended December 31, 2024.
Current wording
The following table presents commercial loan disbursements, excluding lines of credit, during the six months ended March 31, 2025.
Previous wording
The following table presents the Bank's commercial real estate and commercial construction loans by type of primary collateral as of the dates indicated. As of December 31, 2024, the Bank had five commercial real estate and commercial construction loan commitments, totaling $53.7 million, at a weighted average rate of 7.32%. We anticipate fully funding the majority of the undisbursed amounts as most are not cancellable by the Bank. Of the total commercial real estate and commercial construction undisbursed amounts and commitments outstanding as of December 31, 2024, management anticipates funding approximately $87.5 million during the March 2025 quarter, $91.4 million during the June 2025 quarter, $73.8 million during the September 2025 quarter, and $94.3 million during the December 2025 quarter or later. At December 31, 2024, the unpaid principal balance of non-owner occupied commercial real estate loans was $1.02 billion and the unpaid principal balance of owner occupied commercial real estate loans was $166.1 million, which are included in the table below.
Current wording
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. At March 31, 2025, the unpaid principal balance of non-owner occupied commercial real estate loans was $1.01 billion and the unpaid principal balance of owner occupied commercial real estate loans was $163.4 million, both of which are included in the table below.
Previous wording
The following table presents the Bank's commercial real estate and commercial construction loans by unpaid principal balance, aggregated by type of primary collateral and state, along with weighted average LTV ratio and weighted average DSCR as of December 31, 2024. The LTV ratio is calculated using the gross loan amount (composed of unpaid principal and undisbursed amounts) as of December 31, 2024 and the most current collateral value available, which is most often the value at origination/purchase. For existing real estate, the "as is" value is used. If the property is to be constructed, the "as completed" value of the collateral is utilized. The DSCR is calculated based on historical borrower performance, or projected borrower performance for newly formed entities with no performance history. The DSCR presented in the table below is based on the DSCR at the time of origination unless an updated DSCR has been calculated at the time of subsequent loan renewals or reviews of borrower financials.
Current wording
The following table presents the Bank's commercial real estate and commercial construction loans by unpaid principal balance, aggregated by type of primary collateral and state, along with weighted average LTV ratio and weighted average DSCR as of March 31, 2025. The LTV ratio is calculated using the gross loan amount (composed of unpaid principal and undisbursed amounts) as of March 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. Commercial loans that have an outstanding balance of $1.5 million or more, or borrowing relationships with a total relationship exposure of $5.0 million or more are reviewed no less often than annually to monitor financial performance.
Previous wording
The following table presents the Bank's commercial loan portfolio and outstanding loan commitments, categorized by aggregate gross loan amount (unpaid principal plus undisbursed amounts) or outstanding loan commitment amount and average loan amount, as of December 31, 2024. For loans and commitments over $50.0 million, $181.8 million related to hotels in California, New York, and Texas, $143.1 million related to multi-family properties located in Kansas, and $60.0 million related to an office building in Texas.
Current wording
The following table presents the Bank's commercial loan portfolio and outstanding loan commitments, categorized by aggregate gross loan amount (unpaid principal plus undisbursed amounts) or outstanding loan commitment amount and average loan amount, as of March 31, 2025. For loans and commitments over $50.0 million, $267.4 million was related to hotels in Arizona, California, New York, and Texas, $143.1 million was related to multi-family properties in Kansas, and $60.0 million was related to an office building in Texas.
Previous wording
The following table summarizes the Bank's commercial and industrial loans by loan purpose as of the dates indicated. As of December 31, 2024, the Bank also had two commercial and industrial loan commitments totaling $981 thousand, at a weighted average rate of 7.95%.
Current wording
The following table summarizes the Bank's commercial and industrial loans by loan purpose as of the dates indicated. As of March 31, 2025, the Bank also had four commercial and industrial loan commitments totaling $4.2 million, at a weighted average rate of 7.00%.
Previous wording
Delinquent and nonaccrual loans and OREO. The following table presents the Company's 30 to 89 day delinquent loans at the dates indicated. The amounts in the table represent the unpaid principal balance of the loans less related charge-offs, if any. Of the loans 30 to 89 days delinquent at December 31, 2024, 81% were 59 days or less delinquent. The increase in 30-89 day delinquent commercial real estate loans as of December 31, 2024 was due primarily to a $15.5 million Community Reinvestment Act loan. The borrower is in the process of obtaining tax credit funding which will service the loan until the project is stabilized. The tax credit funding is anticipated to be received by the borrower during the quarter ended March 31, 2025.
Current wording
Delinquent and nonaccrual loans and OREO. The following table presents the Company's 30 to 89 day delinquent loans at the dates indicated. The amounts in the table represent the unpaid principal balance of the loans less related charge-offs, if any. Of the loans 30 to 89 days delinquent at March 31, 2025, 64% were 59 days or less delinquent. The decrease in 30-89 day delinquent commercial real estate loans as of March 31, 2025 was due primarily to a $15.5 million Community Reinvestment Act loan that was paid current during the current quarter.
Previous wording
Classified loans. The following table presents the amortized cost of loans classified as special mention or substandard at the dates presented. Included in the commercial real estate substandard loans at December 31, 2024 is a participation loan for $39.1 million related to a hotel in Texas. The property is taking longer than projected to stabilize and the borrower is not meeting the debt service coverage loan covenant required by the loan agreement. The LTV ratio on this loan was 47.5% as of December 31, 2024. As the hotel continues to increase occupancy and interest rates decrease on this adjustable-rate loan, it is expected that cash flows from the operation of the hotel will improve sufficiently to allow the debt service coverage to be sufficient to meet the DSCR covenant within the loan agreement without additional support. The loan was not delinquent as of December 31, 2024.
Current wording
Classified loans. The following table presents the amortized cost of loans classified as special mention or substandard at the dates presented. The increase in commercial real estate substandard loans at March 31, 2025 and December 31, 2024 compared to September 30, 2024 was due mainly to a participation loan for $39.0 million as of March 31, 2025 related to a hotel in Texas. The property is taking longer than projected to stabilize and the borrower is not meeting the debt service coverage loan covenant required by the loan agreement. The borrower projects improved occupancy and cash flow during the remainder of calendar year 2025 and expects the project to fully stabilize during calendar year 2026. As of March 31, 2025, the LTV on this loan was 47% and the loan was not delinquent.
Previous wording
Allowance for Credit Losses. The Bank utilizes a discounted cash flow approach for estimating expected credit losses for pooled loans and loan commitments. Management applied qualitative factors at December 31, 2024 to account for large dollar commercial loan concentrations and potential risk of loss in market value for newer one- to four-family loans. These qualitative factors were applied to account for credit risks not fully reflected in the discounted cash flow model. See "Part II, Item 8. Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 1. Summary of Significant Accounting Policies" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024 and "Part 1, Item 1. Note 4. Loans Receivable and Allowance for Credit Losses" within this Quarterly Report on Form 10-Q for additional information related to the key assumptions used in the discounted cash flow model and the qualitative factors.
Current wording
Allowance for Credit Losses. The Bank utilizes a discounted cash flow approach 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 March 31, 2025, management selected a slightly worse economic scenario to use in the discounted cash flow model than at December 31, 2024 to account for current economic conditions and future economic uncertainty related to recently issued and proposed federal government policies. Management applied qualitative factors at March 31, 2025 to account for large dollar commercial loan concentrations and potential risk of loss in market value for newer one- to four-family loans. These qualitative factors were applied to account for credit risks not fully reflected in the discounted cash flow model. See "Part II, Item 8. Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 1. Summary of Significant Accounting Policies" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024 and "Part 1, Item 1. Note 4. Loans Receivable and Allowance for Credit Losses" within this Quarterly Report on Form 10-Q for additional information related to the key assumptions used in the discounted cash flow model and the qualitative factors.
Previous wording
The distribution of our ACL and the ratio of ACL to loans receivable, by loan type, at the dates indicated is summarized below. The increase in the ratio of the ACL to total loans as of December 31, 2024 from September 30, 2024 was primarily the result of commercial loan growth during the quarter. The ratio of ACL to loans receivable has been generally consistent over the past two quarters and, given the economic outlook at December 31, 2024, management expects it to remain relatively consistent through the remainder of this fiscal year.
Current wording
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 ratio of the ACL to total loans as of March 31, 2025 from December 31, 2024 was due primarily to an increase in prepayment speeds on commercial real estate loans which reduced the related model-calculated ACL. The ratio of ACL to loans receivable has been generally consistent over the past three quarters. As of March 31, 2025, management believes there is risk in the economic outlook over the next several quarters but is uncertain of the direction and what the actual impact to the Bank's ACL will be as a result of that uncertainty.
Previous wording
Historically, the Bank has maintained very low delinquency ratios and net charge-off ("NCO") rates. Over the past two years, the Bank's highest ratio of commercial loans 90 days or more delinquent to total commercial loans at a quarter end was 0.17%. The highest such ratio for one- to four-family originated and correspondent loans, combined, was 0.12%. The amount of total net recoveries during the current quarter was $7 thousand. During the 10-year period ended December 31, 2024, the Bank recognized $1.2 million of total NCOs. As of December 31, 2024, the ACL balance was $25.0 million and the reserve for off-balance sheet credit exposures totaled $4.7 million. Management believes that this level of ACL and reserve for off-balance sheet credit exposures is adequate for the risk characteristics in our loan portfolio as of December 31, 2024.
Current wording
Historically, the Bank has maintained very low delinquency ratios and net charge-off ("NCO") rates. Over the past two years, the Bank's highest ratio of commercial loans 90 days or more delinquent to total commercial loans at a quarter end was 0.22%. The highest such ratio for one- to four-family originated and correspondent loans, combined, was 0.12%. The amount of total NCOs during the current quarter and current year six month period was $114 thousand and $107 thousand, respectively, the majority of which related to one one- to four- family bulk purchased loan. During the 10-year period ended March 31, 2025, the Bank recognized $1.2 million of total NCOs. As of March 31, 2025, the ACL balance was $24.0 million and the reserve for off-balance sheet credit exposures totaled $5.6 million, which management believes is adequate for the risk characteristics in our loan portfolio.
Previous wording
The Bank's commercial real estate ACL ratios in aggregate, continue to be higher than those of our peers. The following tables present the average and median commercial real estate ACL ratios for the Bank and two of the Bank's peer groups for the periods noted. The Office of the Comptroller of the Currency ("OCC") peer group consists of all savings banks greater than $1 billion in assets and the asset size peer group consists of all banks between $5 billion and $15 billion in asset size. The peer group information is sourced from the respective peers' Call Reports.
Current wording
The Bank's commercial real estate ACL ratios in aggregate, continue to be higher than those of our peers. The following tables present the average and median commercial real estate ACL ratios for the Bank and two of the Bank's peer groups for the periods noted. The Office of the Comptroller of the Currency ("OCC") peer group consists of all savings banks with greater than $1 billion in assets, and the asset size peer group consists of all banks between $5 billion and $15 billion in asset size. The peer group information is sourced from the respective peers' Call Reports.
Previous wording
The ratio of NCOs to average non-performing assets was a negative percentage in the current year quarter compared to a positive percentage in the prior year quarter, due primarily to a net recovery in the current year quarter and a NCO in the prior year quarter. The ratio of ACL to nonaccrual loans was lower at the end of the current year quarter compared to the end of the prior year quarter due mainly to a higher balance of nonaccrual loans compared to the prior year quarter, partially offset by a higher ACL balance at December 31, 2024. The ratio of ACL to loans receivable, net was higher at the end of the current year quarter compared to the end of the prior year quarter due primarily to changes in the loan portfolio mix, specifically commercial loan growth. See "Note 4. Loans Receivable and Allowance for Credit Losses" for additional information related to ACL activity by specific loan categories.
Current wording
The ratio of NCOs to average non-performing assets was higher in the current year six month period compared to the prior year six month period, due primarily to higher NCOs in the current year six month period. As noted above, the majority of the NCOs in the current year six month period related to one one- to four- family bulk purchased loan. The ratio of ACL to nonaccrual loans was lower at the end of the current year six month period compared to the end of the prior year period due mainly to a higher balance of nonaccrual loans in the current year six month period compared to the prior year six month period, along with a lower ACL balance at March 31, 2025. The ratio of ACL to loans receivable, net was lower at the end of the current year six month period compared to the end of the prior year six month period due primarily to a reduction in the ACL/loan ratio for commercial real estate loans, partially offset by changes in the loan portfolio mix, specifically commercial loan growth which is at a higher ACL/loan ratio than one- to four-family loans. See "Note 4. Loans Receivable and Allowance for Credit Losses" for additional information related to ACL activity by specific loan categories. ACL at the end of period to NCOs during the period (annualized) was lower compared to the prior year six month period, due primarily to higher NCOs in the current year six month period.
Previous wording
Securities. The following table presents the distribution of our securities portfolio, at amortized cost, at the dates indicated. The majority of our securities are government guaranteed or issued by GSEs. Overall, fixed-rate securities comprised 95% of our securities portfolio at December 31, 2024. The weighted average life ("WAL") is the estimated remaining maturity (in years) after three month historical prepayment speeds and projected call option assumptions have been applied. Weighted average yields on tax-exempt securities are not calculated on a fully tax-equivalent basis.
Current wording
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 92% of our securities portfolio at March 31, 2025. The weighted average life ("WAL") is the estimated remaining maturity (in years) after three month historical prepayment speeds and projected call option assumptions have been applied. Weighted average yields on tax-exempt securities are not calculated on a fully tax-equivalent basis.
Previous wording
Liabilities. Total liabilities were $8.51 billion at December 31, 2024, compared to $8.50 billion at September 30, 2024. The increase was due primarily to a $76.1 million increase in deposits, partially offset by a $35.7 million decrease in advances by borrowers due to the payment of property taxes during the current quarter, and a $15.8 million decrease in borrowings due to principal payments made on the Bank's amortizing advances.
Current wording
Liabilities. Total liabilities were $8.68 billion at March 31, 2025, compared to $8.50 billion at September 30, 2024. The increase was due primarily to a $242.6 million increase in deposits, partially offset by a $36.6 million decrease in borrowings due to principal payments made on the Bank's amortizing advances.
Previous wording
Deposits. The following table presents the amount, weighted average rate and percent of total for the components of our deposit portfolio at the dates presented. The increase in the deposit portfolio balance at December 31, 2024 compared to September 30, 2024 was primarily in the Bank's high-yield savings account offering and retail checking accounts, partially offset by a decrease in retail certificates of deposit. The decrease in the deposit portfolio rate at December 31, 2024 compared to September 30, 2024 was due mainly to lower rates on retail certificates of deposit and retail money market accounts.
Current wording
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 decrease in the deposit portfolio rate at March 31, 2025 compared to December 31, 2024 and September 30, 2024 was due mainly to lower rates on retail certificates of deposit.
Previous wording
The following table presents the amount, weighted average rate, and percent of total for total retail deposits, commercial deposits, and public unit certificates of deposit for the periods noted.
Current wording
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.
Previous wording
As of December 31, 2024, approximately $757.8 million (or approximately 12%) of the Bank's Call Report deposit balance was uninsured, of which approximately $461.5 million related to commercial and retail deposit accounts and with the remainder mainly comprised of fully collateralized public unit deposits and intercompany accounts. The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank's regulatory reporting requirements.
Current wording
As of March 31, 2025, approximately $802.4 million (or approximately 12%) of the Bank's Call Report deposit balance was uninsured, of which approximately $475.3 million 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.
Previous wording
Borrowings. Total borrowings at December 31, 2024 were $2.16 billion, which was comprised of $1.96 billion in fixed-rate FHLB advances, $200.0 million in FHLB variable-rate advances tied to interest rate swaps, and $1.1 million in finance leases.
Current wording
Borrowings. Total borrowings at March 31, 2025 were $2.14 billion, which was comprised of $1.94 billion in fixed-rate FHLB advances, $200.0 million in FHLB variable-rate advances tied to interest rate swaps, and $1.1 million in finance leases.
Previous wording
The following table presents the maturity of term borrowings, which consist of FHLB advances, along with associated weighted average contractual and effective rates as of December 31, 2024. Amortizing FHLB advances are presented based on their maturity dates versus their quarterly scheduled repayment dates.
Current wording
The following table presents the maturity of term borrowings, which consist of FHLB advances, along with associated weighted average contractual and effective rates as of March 31, 2025. Amortizing FHLB advances totaling $318.3 million as of March 31, 2025 are presented based on their maturity dates versus their quarterly scheduled repayment dates.
Previous wording
The following table presents borrowing activity for the periods shown. The borrowings presented in the table have original contractual terms of one year or longer or are tied to interest rate swaps with original contractual terms of one year or longer. Line of credit borrowings and finance leases are excluded from the table. The effective rate is shown as a weighted average and includes the impact of interest rate swaps and the amortization of deferred prepayment penalties resulting from FHLB advances previously prepaid. The weighted average maturity ("WAM") is the remaining weighted average contractual term in years. The beginning and ending WAMs represent the remaining maturity at each date presented. During the prior year quarter, Federal Reserve's Bank Term Funding Program ("BTFP") borrowings were paid off with the proceeds received from the securities strategy.
Current wording
The following table presents borrowing activity for the periods shown. The borrowings presented in the table have original contractual terms of one year or longer or are tied to interest rate swaps with original contractual terms of one year or longer. Line of credit borrowings and finance leases are excluded from the table. The effective rate is shown as a weighted average and includes the impact of interest rate swaps and the amortization of deferred prepayment penalties resulting from FHLB advances previously prepaid. The weighted average maturity ("WAM") is the remaining weighted average contractual term in years. The beginning and ending WAMs represent the remaining maturity at each date presented. During the prior year six month period, Federal Reserve's Bank Term Funding Program ("BTFP") borrowings were paid off with the proceeds received from the securities strategy.
Previous wording
Consistent with our goal to operate a sound and profitable financial organization, we actively seek to maintain a well-capitalized status for the Bank in accordance with regulatory standards. As of December 31, 2024, the Bank's capital ratios exceeded the well-capitalized requirements and the Bank exceeded internal policy thresholds for sensitivity to changes in interest rates. See "Liquidity and Capital Resources" below for additional information regarding the Bank's regulatory capital requirements. As of December 31, 2024, the Bank's CBLR was 9.4%.
Current wording
Stockholders' Equity. Stockholders' equity totaled $1.04 billion at March 31, 2025, an increase of $4.8 million from September 30, 2024. Consistent with our goal to operate a sound and profitable financial organization, we actively seek to maintain a well-capitalized status for the Bank in accordance with regulatory standards. As of March 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. See "Liquidity and Capital Resources" below for additional information regarding the Bank's regulatory capital requirements. As of March 31, 2025, the Bank's CBLR was 9.5%.
Previous wording
During the quarter ended December 31, 2024, the Company paid regular quarterly cash dividends totaling $11.1 million, or $0.085 per share. On January 28, 2025 the Company announced a regular quarterly cash dividend of $0.085 per share, or approximately $11.1 million, payable on February 21, 2025 to stockholders of record as of the close of business on February 7, 2025.
Current wording
During the six months ended March 31, 2025, the Company paid regular quarterly cash dividends totaling $22.1 million, or $0.17 per share. On April 22, 2025, the Company announced a regular quarterly cash dividend of $0.085 per share, or approximately $11.5 million, payable on May 16, 2025 to stockholders of record as of the close of business on May 2, 2025.
Previous wording
For fiscal year 2025, it is the intention of the Company's Board of Directors to pay out the regular quarterly cash dividend of $0.085 per share, totaling $0.34 per share for the year. To the extent that earnings in fiscal year 2025 exceed $0.34 per share, the Board of Directors may consider the payment of additional dividends. Dividend payments depend upon a number of factors, including the Company's financial condition and results of operations, regulatory capital requirements, regulatory limitations on the Bank's ability to make capital distributions to the Company, the Bank's taxable current earnings and accumulated earnings and profits, and the amount of cash at the holding company level.
Current wording
At March 31, 2025, Capitol Federal Financial, Inc., at the holding company level, had $27.3 million in cash on deposit at the Bank. For fiscal year 2025, it is the intention of the Company's Board of Directors to pay out the regular quarterly cash dividend of $0.085 per share, totaling $0.34 per share for the year. To the extent that earnings in fiscal year 2025 exceed $0.34 per share, the Board of Directors will consider the payment of additional dividends. Dividend payments depend upon a number of factors, including the Company's financial condition and results of operations, regulatory capital requirements, regulatory limitations on the Bank's ability to make capital distributions to the Company, the Bank's tax current earnings and accumulated earnings and profits, and the amount of cash at the holding company level.
Showing the first 40 of 63 pairs. Open the source sections for the rest.
Rearranged current paragraphs (22)
Current report — wording carried from elsewhere
Commercial Loans -The table below presents commercial loan origination and purchase activity for the time periods presented. For commercial real estate and commercial construction loans, the LTV ratio is calculated using the gross loan amount (composed of unpaid principal and undisbursed amounts) and the collateral value at the time of origination. For existing real estate, the "as is" value is used. If the property is to be constructed, the "as completed" value of the collateral is utilized. The DSCR is calculated based on historical borrower performance, or projected borrower performance for newly formed entities with no performance history.
Current report — wording carried from elsewhere
(3)There were no nontaxable securities included in the average balance of investment securities for the quarters ended March 31, 2025 or December 31, 2024.
Current report — wording carried from elsewhere
The following table presents the average balances of our assets, liabilities, and stockholders' equity, and the related annualized weighted average yields and rates on our interest-earning assets and interest-bearing liabilities for the periods indicated, as well as selected performance ratios and other information for the periods shown. Weighted average yields are derived by dividing annualized income by the average balance of the related assets, and weighted average rates are derived by dividing annualized expense by the average balance of the related liabilities, for the periods shown. Average outstanding balances are derived from average daily balances. The weighted average yields and rates include amortization of fees, costs, premiums and discounts, which are considered adjustments to yields/rates. Weighted average yields on tax-exempt securities are not calculated on a fully taxable equivalent basis.
Current report — wording carried from elsewhere
(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.
Current report — wording carried from elsewhere
(5)Net interest margin represents annualized net interest income as a percentage of average interest-earning assets. Management believes the net interest margin is important to investors as it is a profitability measure for financial institutions.
Current report — wording carried from elsewhere
(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.
Current report — wording carried from elsewhere
(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.
Current report — wording carried from elsewhere
(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.
Current report — wording carried from elsewhere
(9)The efficiency ratio represents non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. Management believes the efficiency ratio is important to investors as it is a measure of a financial institution's total non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. A higher value generally indicates that it is costing the financial institution more money to generate revenue, related to its net interest margin and non-interest income.
Current report — wording carried from elsewhere
The following table presents the components of interest and dividend income for the time periods presented along with the change measured in dollars and percent.
Current report — wording carried from elsewhere
The following table presents the components of interest expense for the periods presented, along with the change measured in dollars and percent.
Current report — wording carried from elsewhere
The increase in interest expense on deposits was due mainly to an increase in the weighted average rate paid on retail certificates of deposit and savings accounts, specifically the high yield savings account product, partially offset by a decrease in the weighted average rate paid on money market accounts. To a lesser extent, the increase in the average balance of retail certificates of deposit also increased interest expense on deposits.
Current report — wording carried from elsewhere
The following table presents pretax income, income tax expense, and net income for the time periods presented, along with the change measured in dollars and percent and the effective tax rate.
Current report — wording carried from elsewhere
Income tax expense was higher in the current year quarter due to higher pretax income compared to the prior year quarter.
Current report — wording carried from elsewhere
The following table presents the average balances of our assets, liabilities, and stockholders' equity, and the related annualized weighted average yields and rates on our interest-earning assets and interest-bearing liabilities for the periods indicated, as well as selected performance ratios and other information for the periods shown. Weighted average yields are derived by dividing annualized income by the average balance of the related assets, and weighted average rates are derived by dividing annualized expense by the average balance of the related liabilities, for the periods shown. Average outstanding balances are derived from average daily balances. The weighted average yields and rates include amortization of fees, costs, premiums and discounts, which are considered adjustments to yields/rates. Weighted average yields on tax-exempt securities are not calculated on a fully taxable equivalent basis.
Current report — wording carried from elsewhere
(3)There were no nontaxable securities included in the average balance of investment securities for the three months ended March 31, 2025 or March 31, 2024.
Current report — wording carried from elsewhere
(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.
Current report — wording carried from elsewhere
(5)Net interest margin represents annualized net interest income as a percentage of average interest-earning assets. Management believes the net interest margin is important to investors as it is a profitability measure for financial institutions.
Current report — wording carried from elsewhere
(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.
Current report — wording carried from elsewhere
(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.
Current report — wording carried from elsewhere
(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.
Current report — wording carried from elsewhere
(9)The efficiency ratio represents non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. Management believes the efficiency ratio is important to investors as it is a measure of a financial institution's total non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. A higher value generally indicates that it is costing the financial institution more money to generate revenue, related to its net interest margin and non-interest income.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Commercial Loans -The table below presents commercial loan origination and purchase activity during the three months ended December 31, 2024.