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

TOPEKA, Kan.--(BUSINESS WIRE)--Capitol Federal Financial, Inc.® (NASDAQ: CFFN) (the "Company," "we" or "our"), the parent company of Capitol Federal Savings Bank (the "Bank"), announced results today for the quarter ended December 31, 2024. For best viewing results, please view this release in Portable Document Format (PDF) on our website, https://ir.capfed.com. Highlights for the current quarter include: net income of $15.4 million, $3.4 million higher than the previous quarter; basic and diluted earnings per share of $0.12, up $0.03 from the previous quarter; net interest margin of 1.86%, an increase of six basis points from the prior quarter; continued shift in the loan portfolio to commercial loans with a $137.5 million increase in that portion of the portfolio; paid dividends of $0.085 per share; and on January 28, 2025, announced a cash dividend of $0.085 per share, payable on February 21, 2025 to stockholders of record as of the close of business on February 7, 2025. Comparison of Operating Results for the Three Months Ended December 31, 2024 and September 30, 2024 For the quarter ended December 31, 2024, the Company recognized net income of $15.4 million, or $0.12 per share, compared to net income of $12.1 million, or $0.09 per share, for the quarter ended September 30, 2024. The higher net income in the current quarter was due primarily to lower income tax expense compared to the prior quarter due mainly to income tax expense associated with the pre-1988 bad debt recapture during the prior quarter. There was no similar tax expense in the current quarter. See additional discussion regarding the pre-1988 bad debt recapture in the "Income Tax Expense" section below. The net interest margin increased six basis points, from 1.80% for the prior quarter to 1.86% for the current quarter due mainly to growth in the higher yielding commercial loan portfolio. Interest and Dividend Income The following table presents the components of interest and dividend income for the time periods presented, along with the change measured in dollars and percent. For the Three Months Ended December 31, September 30, Change Expressed in: 2024 2024 Dollars Percent (Dollars in thousands) INTEREST AND DIVIDEND INCOME: Loans receivable $ 81,394 $ 79,841 $ 1,553 1.9 % Mortgage-backed securities ("MBS") 11,024 10,412 612 5.9 Federal Home Loan Bank Topeka ("FHLB") stock 2,352 2,418 (66 ) (2.7 ) Cash and cash equivalents 1,871 2,562 (691 ) (27.0 ) Investment securities 981 1,634 (653 ) (40.0 ) Total interest and dividend income $ 97,622 $ 96,867 $ 755 0.8 The increase in interest income on loans receivable was due mainly to an increase in the average balance of the commercial loan portfolio, along with an increase in the weighted average yield on the overall loan portfolio. See additional discussion regarding the composition of the loan portfolio in the "Financial Condition as of December 31, 2024" section below. The increase in interest income on MBS was due to an increase in average balance primarily a result of purchases made early during the current quarter using excess cash. The decrease in interest income on cash and cash equivalents was due mainly to a decrease in the average balance as excess operating cash was used to fund MBS purchases and commercial loan activities and to pay semi-annual escrow payments for customers during the current quarter. The decrease in interest income on investment securities was due primarily to a decrease in the average balance as a result of certain called securities not being replaced in their entirety. Interest Expense The following table presents the components of interest expense for the time periods presented, along with the change measured in dollars and percent. For the Three Months Ended December 31, September 30, Change Expressed in: 2024 2024 Dollars Percent (Dollars in thousands) INTEREST EXPENSE: Deposits $ 37,345 $ 37,458 $ (113 ) (0.3 )% Borrowings 18,047 18,585 (538 ) (2.9 ) Total interest expense $ 55,392 $ 56,043 $ (651 ) (1.2 ) The decrease in interest expense on deposits was due to a decrease in the weighted average rate on money market accounts, retail certificates of deposit and checking accounts, which was almost entirely offset by an increase in the weighted average rate on savings accounts due to growth in the Bank's high yield savings account. The decrease in borrowings expense was due primarily to the maturity of a $50.0 million advance late during 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. Provision for Credit Losses For the quarter ended December 31, 2024, the Bank recorded a provision for credit losses of $677 thousand, compared to a provision release of $637 thousand for the prior quarter. The provision in the current quarter was comprised of a $2.0 million increase in the allowance for credit losses ("ACL") for loans, partially offset by a $1.3 million decrease in the reserve for off-balance sheet credit exposures. The increase in ACL was due mainly to commercial loan growth during the current quarter. The decrease in the reserves for off-balance sheet credit exposures was due primarily to a decrease in the balance of commercial off-balance sheet credit exposures between quarters due mainly to the funding of commercial commitments during the current quarter. Non-Interest Income The following table presents the components of non-interest income for the time periods presented, along with the change measured in dollars and percent. For the Three Months Ended December 31, September 30, Change Expressed in: 2024 2024 Dollars Percent (Dollars in thousands) NON-INTEREST INCOME: Deposit service fees $ 2,707 $ 2,830 $ (123 ) (4.3 )% Insurance commissions 776 754 22 2.9 Other non-interest income 1,210 1,202 8 0.7 Total non-interest income $ 4,693 $ 4,786 $ (93 ) (1.9 ) Non-Interest Expense The following table presents the components of non-interest expense for the time periods presented, along with the change measured in dollars and percent. For the Three Months Ended December 31, September 30, Change Expressed in: 2024 2024 Dollars Percent (Dollars in thousands) NON-INTEREST EXPENSE: Salaries and employee benefits $ 14,232 $ 13,086 $ 1,146 8.8 % Information technology and related expense 4,550 4,637 (87 ) (1.9 ) Occupancy, net 3,333 3,442 (109 ) (3.2 ) Regulatory and outside services 1,113 1,398 (285 ) (20.4 ) Federal insurance premium 1,038 1,113 (75 ) (6.7 ) Advertising and promotional 822 1,054 (232 ) (22.0 ) Deposit and loan transaction costs 591 584 7 1.2 Office supplies and related expense 399 506 (107 ) (21.1 ) Other non-interest expense 1,070 1,220 (150 ) (12.3 ) Total non-interest expense $ 27,148 $ 27,040 $ 108 0.4 The increase in salaries and employee benefits was due primarily to the accrual of incentive compensation during the current quarter related to the Bank's short-term performance plan. The prior quarter included a reduction in incentive compensation due to the Company's financial results for fiscal year 2024 being lower than projected. The decrease in regulatory and outside services was due primarily to the timing of audit and other outside services. More services were provided during the prior quarter compared to the current quarter. The decrease in advertising and promotional expense was due mainly to the timing of campaigns and sponsorships compared to the prior quarter. Overall, management is expecting a 4.0% increase in non-interest expenses for fiscal year 2025 compared to fiscal year 2024. The Company's efficiency ratio was 57.86% for the current quarter compared to 59.29% for the prior quarter. The improvement in the efficiency ratio was due to higher net interest income during the current quarter. The efficiency ratio is a measure of a financial institution's total non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. A lower value generally indicates that it is costing the financial institution less money to generate revenue. Income Tax Expense The following table presents pretax income, income tax expense, and net income for the time periods presented, along with the change measured in dollars and percent and the effective tax rate. For the Three Months Ended December 31, September 30, Change Expressed in: 2024 2024 Dollars Percent (Dollars in thousands) Income before income tax expense $ 19,098 $ 19,207 $ (109 ) (0.6 )% Income tax expense 3,667 7,150 (3,483 ) (48.7 ) Net income $ 15,431 $ 12,057 $ 3,374 28.0 Effective Tax Rate 19.2 % 37.2 % Income tax expense was higher in the prior quarter due primarily to recording $2.0 million of federal income tax expense associated with the Bank's pre-1988 bad debt recapture, along with higher state income tax expense mainly related to the tax treatment of the bad debt recapture. The income tax expense associated with the pre-1988 bad debt recapture negatively impacted earnings by $0.02 per share in the prior quarter. The income tax on the earnings distribution from the Bank to the Company during the prior quarter was due to the recapture of a portion of the Bank's bad debt reserves which were established prior to September 30, 1988, and are included in the Bank's retained earnings ("pre-1988 bad debt reserves"). A taxable net loss was reported on the Company's September 30, 2024 federal tax return due to the net losses associated with the securities strategy (defined in the "Securities Strategy to Improve Earnings" section below), which resulted in the Bank and Company having a negative current and accumulated earnings and profit tax position. This requires the Bank to draw upon the pre-1988 bad debt reserves for any 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 during fiscal year 2026 and not have those distributions subject to the pre-1988 bad debt recapture tax. Comparison of Operating Results for the Three Months Ended December 31, 2024 and 2023 The Company recognized net income of $15.4 million, or $0.12 per share, for the current quarter, compared to net income of $2.5 million, or $0.02 per share, for the prior year quarter. The lower net income in the prior year quarter was primarily a result of the impairment loss on the securities associated with the securities strategy. See additional discussion regarding the securities strategy in the "Securities Strategy to Improve Earnings" section below. The securities associated with the securities strategy were sold in the prior year quarter, and in that quarter the Company incurred $13.3 million ($10.0 million net of tax) of net losses related to the sale of those securities. Excluding the effects of the net loss associated with the securities strategy, earnings per share would have been $0.10 for the prior year quarter. The increase in earnings per share excluding the effects of the net loss associated with the securities strategy was due primarily to higher net interest income in the current quarter. The net interest margin increased 15 basis points, from 1.71% for the prior year quarter to 1.86% for the current quarter. The increase was due mainly to higher yields on loans and securities, which outpaced the increase in the cost of deposits, largely in retail certificates of deposit, along with the continued shift of loan balances from the one- to four-family loan portfolio to the higher yielding commercial loan portfolio. Securities Strategy to Improve Earnings In October 2023, the Company initiated a securities strategy (the "securities strategy") by selling $1.30 billion of securities, representing 94% of its securities portfolio. Since the Company did not have the intent to hold the $1.30 billion of securities to maturity at September 30, 2023, the Company recognized an impairment loss on those securities of $192.6 million which was reflected in the Company's financial statements for the quarter and fiscal year ended September 30, 2023. The securities strategy allowed the Company to improve its earnings stream going forward, beginning in the quarter ended December 31, 2023, by redeploying most of the proceeds into then current market rate securities and to provide liquidity to deleverage the balance sheet utilizing the remaining proceeds. During the quarter ended December 31, 2023, the Company completed the sale of securities and recognized $13.3 million ($10.0 million net of tax), or $0.08 per share, of additional loss related to the sale of the securities. See additional information regarding the impact of the securities strategy on our financial measurements in "Average Balance Sheets" below. The $1.30 billion of securities sold had a weighted average yield of 1.22% and an average duration of 3.6 years. With the proceeds from the sale of the securities, the Company purchased $632.0 million of securities yielding 5.75%, paid down $500.0 million of borrowings with a weighted average cost of 4.70%, and held the remaining cash at the Federal Reserve Bank of Kansas City ("FRB") earning interest at the reserve balance rate until such time as it could be used to fund commercial activity or for other Bank operations. Interest and Dividend Income The following table presents the components of interest and dividend income for the time periods presented, along with the change measured in dollars and percent. For the Three Months Ended December 31, Change Expressed in: 2024 2023 Dollars Percent (Dollars in thousands) INTEREST AND DIVIDEND INCOME: Loans receivable $ 81,394 $ 75,941 $ 5,453 7.2 % MBS 11,024 5,859 5,165 88.2 FHLB stock 2,352 2,586 (234 ) (9.0 ) Cash and cash equivalents 1,871 4,778 (2,907 ) (60.8 ) Investment securities 981 2,528 (1,547 ) (61.2 ) Total interest and dividend income $ 97,622 $ 91,692 $ 5,930 6.5 The increase in interest income on loans receivable was due largely to an increase in the weighted average yield, along with an increase in the average balance of the portfolio primarily as a result of growth in the commercial loan portfolio as the loan portfolio mix continued to shift from one- to four-family loans to commercial loans. The increase in the weighted average yield was due primarily to originations at higher market rates between periods, as well as disbursements on commercial real estate and commercial construction loans at rates higher than the overall portfolio rate. The increase in interest income on MBS securities was due mainly to an increase in the average balance of the portfolio, along with an increase in the weighted average yield compared to the prior year quarter. The increase in the average balance was due mainly to securities purchases between periods. The higher weighted average yield was due mainly to the securities strategy, as the securities that were sold during the prior year quarter were reinvested into higher yielding securities, and due to additional securities purchases between periods at higher yields than the prior year quarter. Interest income on cash and cash equivalents decreased due largely to a decrease in the average balance of cash and cash equivalents, as a result of cash balances being drawn down during the prior fiscal year to fund loans and other operational needs. The decrease in interest income on investment securities was due primarily to a decrease in average balance, partially offset by an increase in the weighted average yield, both due to the securities strategy. Additionally, the investment securities purchased with the proceeds from the securities strategy were invested into shorter term securities which were largely called or matured during fiscal year 2024. Interest Expense The following table presents the components of interest expense for the time periods presented, along with the change measured in dollars and percent. For the Three Months Ended December 31, Change Expressed in: 2024 2023 Dollars Percent (Dollars in thousands) INTEREST EXPENSE: Deposits $ 37,345 $ 32,443 $ 4,902 15.1 % Borrowings 18,047 19,656 (1,609 ) (8.2 ) Total interest expense $ 55,392 $ 52,099 $ 3,293 6.3 The increase in interest expense on deposits was due primarily to an increase in the weighted average rate paid on deposits, specifically retail certificates of deposit and savings accounts, partially offset by a decrease in the weighted average rate paid on money market accounts. To a lesser extent, the average balance of retail certificates of deposit also increased interest expense on deposits. The decrease in interest expense on borrowings was due to a decrease in the average balance, which was partially offset by higher interest rates on the borrowings that were replaced during fiscal year 2024. The decrease in the average balance of borrowings was due to a decrease in borrowings under the Federal Reserve's Bank Term Funding Program ("BTFP"), which were repaid during the prior year quarter using some of the proceeds resulting from the securities strategy, along with some FHLB borrowings that matured between periods and were not replaced. Provision for Credit Losses The Company recorded a provision for credit losses of $677 thousand during the current quarter, compared to a provision for credit losses of $123 thousand for the prior year quarter. See "Comparison of Operating Results for the Three Months Ended December 31, 2024 and September 30, 2024" above for additional information regarding the provision for credit losses during the current quarter. Non-Interest Income The following table presents the components of non-interest income for the time periods presented, along with the change measured in dollars and percent. For the Three Months Ended December 31, Change Expressed in: 2024 2023 Dollars Percent (Dollars in thousands) NON-INTEREST INCOME: Deposit service fees $ 2,707 $ 2,575 $ 132 5.1 % Insurance commissions 776 863 (87 ) (10.1 ) Net loss from securities transactions — (13,345 ) 13,345 100.0 Other non-interest income 1,210 1,013 197 19.4 Total non-interest income $ 4,693 $ (8,894 ) $ 13,587 152.8 The net loss from securities transactions in the prior year quarter related to the securities strategy. The increase in other non-interest income was due mainly to a net loss on financial derivatives related to a lending relationship in the prior year quarter, largely driven by changes in market interest rates. The financial derivatives related to the lending relationship matured during the fourth quarter of fiscal year 2024 so there was no such activity in the current quarter. Non-Interest Expense The following table presents the components of non-interest expense for the time periods presented, along with the change measured in dollars and percent. For the Three Months Ended December 31, Change Expressed in: 2024 2023 Dollars Percent (Dollars in thousands) NON-INTEREST EXPENSE: Salaries and employee benefits $ 14,232 $ 12,992 $ 1,240 9.5 % Information technology and related expense 4,550 5,369 (819 ) (15.3 ) Occupancy, net 3,333 3,372 (39 ) (1.2 ) Regulatory and outside services 1,113 1,643 (530 ) (32.3 ) Federal insurance premium 1,038 1,860 (822 ) (44.2 ) Advertising and promotional 822 988 (166 ) (16.8 ) Deposit and loan transaction costs 591 542 49 9.0 Office supplies and related expense 399 361 38 10.5 Other non-interest expense 1,070 1,381 (311 ) (22.5 ) Total non-interest expense $ 27,148 $ 28,508 $ (1,360 ) (4.8 ) The increase in salaries and employee benefits was mainly attributable to salary adjustments between periods to remain market competitive. The decrease in information technology and related expense was due mainly to lower third-party project management expenses due to the Bank's digital transformation project during the prior year quarter, along with lower software licensing expenses. The decrease in regulatory and outside services was due to the prior year quarter including expenses related to the digital transformation project, along with a reduction in rates and usage related to certain outside services. The decrease in the federal insurance premium was due primarily to a decrease in the Federal Deposit Insurance Corporation ("FDIC") assessment rate as a result of the way the assessment rate was adjusted in fiscal year 2024 for the occurrence of the Bank's net loss during the quarter ended September 30, 2023. The decrease in advertising and promotional expense was due mainly to the timing of campaigns and sponsorships compared to the prior year quarter. The decrease in other non-interest expense was due mainly to the maturity of an interest rate swap agreement during the current quarter which reduced the expense associated with the collateral held in relation to the interest rate swap and due to decreases in other miscellaneous expenses. The Company's efficiency ratio was 57.86% for the current quarter compared to 92.86% for the prior year quarter. Excluding the net losses from the securities strategy, the efficiency ratio would have been 64.73% for the prior year quarter. The improvement in the efficiency ratio, excluding the net losses from the securities strategy, was due primarily to higher net interest income and lower non-interest expense in the current quarter compared to the prior year quarter. Income Tax Expense The following table presents pretax income, income tax expense, and net income for the time periods presented, along with the change measured in dollars and percent and effective tax rate. For the Three Months Ended December 31, Change Expressed in: 2024 2023 Dollars Percent (Dollars in thousands) Income before income tax expense (benefit) $ 19,098 $ 2,068 $ 17,030 823.5 % Income tax expense (benefit) 3,667 (475 ) 4,142 872.0 Net income $ 15,431 $ 2,543 $ 12,888 506.8 Effective Tax Rate 19.2 % (23.0 %) In the prior year quarter, absent the income tax benefit associated with the net loss on the securities strategy, the effective tax rate would have been 18.0% and income tax expense would have been $2.8 million. Income tax expense was higher in the current quarter compared to the prior year quarter, excluding the income tax benefit associated with the net losses on the securities strategy, due to higher pretax income in the current quarter, along with a slightly higher effective tax rate in the current quarter. Financial Condition as of December 31, 2024 The following table summarizes the Company's financial condition at the dates indicated. Annualized December 31, September 30, Percent 2024 2024 Change (Dollars and shares in thousands) Total assets $ 9,538,167 $ 9,527,608 0.4 % Available-for-sale ("AFS") securities 861,501 856,266 2.4 Loans receivable, net 7,953,556 7,907,338 2.3 Deposits 6,206,117 6,129,982 5.0 Borrowings 2,163,775 2,179,564 (2.9 ) Stockholders' equity 1,026,939 1,032,270 (2.1 ) Equity to total assets at end of period 10.8 % 10.8 % Average number of basic shares outstanding 129,973 129,918 0.2 Average number of diluted shares outstanding 129,973 129,918 0.2 Loans receivable, net increased $46.2 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 $137.5 million in commercial loan growth, partially offset by a $90.8 million decrease in one- to four-family loans due primarily to decreases of $48.7 million and $34.1 million in one- to four-family correspondent loans and one- to four-family originated loans, respectively. As a result of continued high interest rates and lack of housing inventory which has reduced housing market transactions, our single-family origination activity has slowed which directly impacts the Bank's one- to four-family loan portfolio. 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 continue to decrease as the affordability of housing remains challenging and there is limited supply of homes for sale. Cash flows generated from the one- to four-family portfolio are currently being used to fund commercial loan growth. Deposits increased $76.1 million during the current quarter, primarily in retail savings accounts due to the Bank's high-yield savings account offering and retail checking accounts, partially offset by a decrease in retail certificates of deposit. Management has continued to focus on retaining and growing deposits through its high-yield savings account which had an annual percentage yield of 4.30% for balances over $10 thousand as of December 31, 2024. The high-yield savings account balance was $171.7 million as of December 31, 2024 compared to $96.2 million and $520 thousand as of September 30, 2024 and December 31, 2023, respectively. Borrowings decreased $15.8 million during the current quarter due to principal payments made on the Bank's amortizing 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. The following table summarizes loan originations and purchases, deposit activity, and borrowing activity, along with certain related weighted average rates, during the periods indicated. The borrowings presented in the table have original contractual terms of one year or longer. For the Three Months Ended December 31, 2024 September 30, 2024 Amount Rate Amount Rate (Dollars in thousands) Loan originations, purchases, and participations One- to four-family and consumer: Originated $ 94,245 6.27 % $ 102,076 6.56 % Commercial: Originated 171,486 7.02 47,016 7.70 Participations/Purchased 69,790 7.21 13,500 7.43 $ 335,521 6.85 $ 162,592 6.96 Deposit Activity Non-maturity deposits $ 126,981 $ (35,178 ) Retail/Commercial certificates of deposit (32,833 ) 56,395 Borrowing activity Maturities and repayments (216,168 ) 3.42 (187,418 ) 3.01 New borrowings 200,000 4.27 75,000 4.50 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 accumulated other comprehensive income, net of tax, partially offset by a decrease in accumulated deficit. The decrease in the accumulated other comprehensive income, net of tax, was due to a decrease in unrealized gains on AFS securities as a result of an increase in market interest rates during the current quarter. Consistent with our goal to operate a sound and profitable financial organization, we actively seek to maintain a well-capitalized status for the Bank in accordance with regulatory standards. As of December 31, 2024, the Bank's capital ratios exceeded the well-capitalized requirements and the Bank exceeded internal policy thresholds for sensitivity to changes in interest rates. As of December 31, 2024, the Bank's community bank leverage ratio was 9.4%. During the quarter ended December 31, 2024, the Company paid regular quarterly cash dividends totaling $11.1 million, or $0.085 per share. On January 28, 2025 the Company announced a regular quarterly cash dividend of $0.085 per share, or approximately $11.1 million, payable on February 21, 2025 to stockholders of record as of the close of business on February 7, 2025. At December 31, 2024, Capitol Federal Financial, Inc., at the holding company level, had $39.1 million in cash on deposit at the Bank. 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 taxable current earnings and accumulated earnings and profits, and the amount of cash at the holding company level. The Company currently has $75.0 million authorized for repurchase under an existing stock repurchase plan. The FRB's current approval for the Company to repurchase shares up to the $75.0 million authorization expires in February 2025, and an application for extension is in process. Shares may be repurchased from time to time based upon market conditions, available liquidity and other factors. There were no share repurchases during the current quarter. The following table presents a reconciliation of total to net shares outstanding as of December 31, 2024. Total shares outstanding 132,774,365 Less unallocated Employee Stock Ownership Plan ("ESOP") shares and unvested restricted stock (2,755,566 ) Net shares outstanding 130,018,799 Capitol Federal Financial, Inc. is the holding company for the Bank. The Bank has 46 branch locations in Kansas and Missouri, and is one of the largest residential lenders in the State of Kansas. News and other information about the Company can be found at the Bank's website, http://www.capfed.com. Forward-Looking Statements Except for the historical information contained in this press release, the matters discussed herein may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements about our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions. The words "may," "could," "should," "would," "will," "believe," "anticipate," "estimate," "expect," "intend," "plan," and similar expressions are intended to identify forward-looking statements. Forward-looking statements involve risks and uncertainties, including: changes in policies or the application or interpretation of laws and regulations by regulatory agencies and tax authorities; other governmental initiatives affecting the financial services industry; changes in accounting principles, policies or guidelines; fluctuations in interest rates and the effects of inflation or a potential recession, whether caused by Federal Reserve action or otherwise; the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor or depositor sentiment; demand for loans in the Company's market areas; the future earnings and capital levels of the Bank and the impact of the pre-1988 bad debt recapture, which could affect the ability of the Company to pay dividends in accordance with its dividend policies; competition; and other risks detailed from time to time in documents filed or furnished by the Company with the Securities and Exchange Commission. Actual results may differ materially from those currently expected. These forward-looking statements represent the Company's judgment as of the date of this release. The Company disclaims, however, any intent or obligation to update these forward-looking statements. SUPPLEMENTAL FINANCIAL INFORMATION CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands, except per share amounts) December 31, September 30, 2024 2024 ASSETS: Cash and cash equivalents (includes interest-earning deposits of $140,287 and $192,138) $ 170,324 $ 217,307 AFS securities, at estimated fair value (amortized cost of $850,570 and $829,852) 861,501 856,266 Loans receivable, net (ACL of $24,997 and $23,035) 7,953,556 7,907,338 FHLB stock, at cost 100,364 101,175 Premises and equipment, net 90,326 91,463 Income taxes receivable, net 843 359 Deferred income tax assets, net 24,420 21,978 Other assets 336,833 331,722 TOTAL ASSETS $ 9,538,167 $ 9,527,608 LIABILITIES: Deposits $ 6,206,117 $ 6,129,982 Borrowings 2,163,775 2,179,564 Advances by borrowers 26,088 61,801 Other liabilities 115,248 123,991 Total liabilities 8,511,228 8,495,338 STOCKHOLDERS' EQUITY: Preferred stock, $0.01 par value; 100,000,000 shares authorized, no shares issued or outstanding — — Common stock, $0.01 par value; 1,400,000,000 shares authorized, 132,774,365 and 132,735,565 shares issued and outstanding as of December 31, 2024 and September 30, 2024, respectively 1,328 1,327 Additional paid-in capital 1,146,802 1,146,851 Unearned compensation, ESOP (26,019 ) (26,431 ) Accumulated deficit (106,734 ) (111,104 ) Accumulated other comprehensive income, net of tax 11,562 21,627 Total stockholders' equity 1,026,939 1,032,270 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,538,167 $ 9,527,608 CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands) For the Three Months Ended December 31, September 30, December 31, 2024 2024 2023 INTEREST AND DIVIDEND INCOME: Loans receivable $ 81,394 $ 79,841 $ 75,941 MBS 11,024 10,412 5,859 FHLB stock 2,352 2,418 2,586 Cash and cash equivalents 1,871 2,562 4,778 Investment securities 981 1,634 2,528 Total interest and dividend income 97,622 96,867 91,692 INTEREST EXPENSE: Deposits 37,345 37,458 32,443 Borrowings 18,047 18,585 19,656 Total interest expense 55,392 56,043 52,099 NET INTEREST INCOME 42,230 40,824 39,593 PROVISION FOR CREDIT LOSSES 677 (637 ) 123 NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 41,553 41,461 39,470 NON-INTEREST INCOME: Deposit service fees 2,707 2,830 2,575 Insurance commissions 776 754 863 Net loss from securities transactions — — (13,345 ) Other non-interest income 1,210 1,202 1,013 Total non-interest income 4,693 4,786 (8,894 ) NON-INTEREST EXPENSE: Salaries and employee benefits 14,232 13,086 12,992 Information technology and related expense 4,550 4,637 5,369 Occupancy, net 3,333 3,442 3,372 Regulatory and outside services 1,113 1,398 1,643 Federal insurance premium 1,038 1,113 1,860 Advertising and promotional 822 1,054 988 Deposit and loan transaction costs 591 584 542 Office supplies and related expense 399 506 361 Other non-interest expense 1,070 1,220 1,381 Total non-interest expense 27,148 27,040 28,508 INCOME BEFORE INCOME TAX EXPENSE (BENEFIT) 19,098 19,207 2,068 INCOME TAX EXPENSE (BENEFIT) 3,667 7,150 (475 ) NET INCOME $ 15,431 $ 12,057 $ 2,543 Average Balance Sheets The following table presents the average balances of our assets, liabilities, and stockholders' equity, and the related annualized weighted average yields and rates on our interest-earning assets and interest-bearing liabilities for the periods indicated, as well as selected performance ratios and other information for the periods shown. Weighted average yields are derived by dividing annualized income by the average balance of the related assets, and weighted average rates are derived by dividing annualized expense by the average balance of the related liabilities, for the periods shown. Average outstanding balances are derived from average daily balances. The weighted average yields and rates include amortization of fees, costs, premiums and discounts, which are considered adjustments to yields/rates. Weighted average yields on tax-exempt securities are not calculated on a fully taxable equivalent basis. For the Three Months Ended December 31, 2024 September 30, 2024 December 31, 2023 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 $ 3,925,427 $ 36,375 3.71 % $ 3,956,014 $ 36,188 3.66 % $ 4,025,539 $ 35,060 3.48 % Correspondent purchased 2,212,300 18,089 3.27 2,262,838 18,705 3.31 2,413,900 19,660 3.26 Bulk purchased 126,095 895 2.84 128,520 839 2.61 136,609 694 2.03 Total one- to four-family loans 6,263,822 55,359 3.54 6,347,372 55,732 3.51 6,576,048 55,414 3.37 Commercial loans 1,606,748 23,756 5.79 1,483,197 21,756 5.74 1,306,917 18,267 5.47 Consumer loans 110,661 2,279 8.19 109,404 2,353 8.56 105,958 2,260 8.46 Total loans receivable(1) 7,981,231 81,394 4.05 7,939,973 79,841 4.00 7,988,923 75,941 3.78 MBS(2) 781,252 11,024 5.64 736,695 10,412 5.65 526,733 5,859 4.45 Investment securities(2)(3) 72,561 981 5.41 115,856 1,634 5.64 266,873 2,528 3.79 FHLB stock 99,151 2,352 9.41 101,942 2,418 9.44 108,648 2,586 9.44 Cash and cash equivalents 154,752 1,871 4.73 187,484 2,562 5.35 346,220 4,778 5.40 Total interest-earning assets 9,088,947 97,622 4.27 9,081,950 96,867 4.24 9,237,397 91,692 3.95 Other non-interest-earning assets 463,322 458,253 466,084 Total assets $ 9,552,269 $ 9,540,203 $ 9,703,481 Liabilities and stockholders' equity: Interest-bearing liabilities: Checking $ 865,738 531 0.24 $ 853,921 590 0.27 $ 886,530 445 0.20 Savings 567,533 1,422 0.99 531,579 972 0.73 472,819 138 0.12 Money market 1,245,714 4,212 1.34 1,243,150 4,630 1.48 1,364,565 6,737 1.96 Retail certificates 2,812,034 29,755 4.20 2,789,666 29,601 4.22 2,555,375 23,199 3.60 Commercial certificates 57,859 636 4.36 59,020 651 4.39 49,558 463 3.70 Wholesale certificates 69,487 789 4.50 87,259 1,014 4.62 130,857 1,461 4.43 Total deposits 5,618,365 37,345 2.64 5,564,595 37,458 2.68 5,459,704 32,443 2.36 Borrowings 2,171,476 18,047 3.30 2,227,278 18,585 3.31 2,467,410 19,656 3.15 Total interest-bearing liabilities 7,789,841 55,392 2.82 7,791,873 56,043 2.86 7,927,114 52,099 2.61 Non-interest-bearing deposits 544,548 534,912 537,144 Other non-interest-bearing liabilities 186,227 184,320 202,743 Stockholders' equity 1,031,653 1,029,098 1,036,480 Total liabilities and stockholders' equity $ 9,552,269 $ 9,540,203 $ 9,703,481 Net interest income(4) $ 42,230 $ 40,824 $ 39,593 Net interest-earning assets $ 1,299,106 $ 1,290,077 $ 1,310,283 Net interest margin(5) 1.86 1.80 1.71 Ratio of interest-earning assets to interest-bearing liabilities 1.17x 1.17x 1.17x Selected performance ratios: Return on average assets (annualized)(6)(10) 0.65 % 0.51 % 0.10 % Return on average equity (annualized)(7)(10) 5.98 4.69 0.98 Average equity to average assets 10.80 10.79 10.68 Operating expense ratio(8) 1.14 1.13 1.18 Efficiency ratio(9)(10) 57.86 59.29 92.86 (1) Balances are adjusted for unearned loan fees and deferred costs. Loans that are 90 or more days delinquent are included in the loans receivable average balance with a yield of zero percent. (2) AFS securities are adjusted for unamortized purchase premiums or discounts. (3) There were no nontaxable securities included in the average balance of investment securities for the quarters ended December 31, 2024 or September 30, 2024. The average balance of investment securities includes an average balance of nontaxable securities of $201 thousand for the quarter ended December 31, 2023. (4) Net interest income represents the difference between interest income earned on interest-earning assets and interest paid on interest-bearing liabilities. Net interest income depends on the average balance of interest-earning assets and interest-bearing liabilities, and the interest rates earned or paid on them. (5) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets. Management believes the net interest margin is important to investors as it is a profitability measure for financial institutions. (6) Return on average assets represents annualized net income as a percentage of total average assets. Management believes that the return on average assets is important to investors as it shows the Company's profitability in relation to the Company's average assets. (7) Return on average equity represents annualized net income as a percentage of total average equity. Management believes that the return on average equity is important to investors as it shows the Company's profitability in relation to the Company's average equity. (8) The operating expense ratio represents annualized non-interest expense as a percentage of average assets. Management believes the operating expense ratio is important to investors as it provides insight into how efficiently the Company is managing its expenses in relation to its assets. It is a financial measurement ratio that does not take into consideration changes in interest rates. (9) The efficiency ratio represents non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. Management believes the efficiency ratio is important to investors as it is a measure of a financial institution's total non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. A higher value generally indicates that it is costing the financial institution more money to generate revenue, related to its net interest margin and non-interest income. (10) The table below provides a reconciliation between performance measures presented in accordance with accounting standards generally accepted in the United States of America ("GAAP") and the same performance measures excluding the impact of the net loss on the securities transactions associated with the securities strategy, which are not presented in accordance with GAAP. The securities strategy was non-recurring in nature; therefore management believes it is meaningful to investors to present certain financial measures excluding the securities strategy to better evaluate the Company's core operations. See information regarding the securities strategy in "Comparison of Operating Results for the Three Months Ended December 31, 2024 and 2023 - Securities Strategy". For the Three Months Ended December 31, 2023 Excluding Securities Actual Securities Strategy (GAAP) Strategy (Non-GAAP) Return on average assets 0.10 % (0.42 )% 0.52 % Return on average equity 0.98 (3.89 ) 4.87 Efficiency Ratio 92.86 28.13 64.73 Earnings per share(11) $ 0.02 $ (0.08 ) $ 0.10 (11) Earnings per share is calculated as net income divided by average shares outstanding. Management believes earnings per share is an important measure to investors as it shows the Company's earnings in relation to the Company's outstanding shares. Loan Portfolio The following table presents information related to the composition of our loan portfolio in terms of dollar amounts, weighted average rates, and percentage of total as of the dates indicated. December 31, 2024 September 30, 2024 December 31, 2023 % of % of % of Amount Rate Total Amount Rate Total Amount Rate Total (Dollars in thousands) One- to four-family: Originated $ 3,907,809 3.64 % 49.0 % $ 3,941,952 3.60 % 49.8 % $ 3,986,479 3.44 % 50.1 % Correspondent purchased 2,163,847 3.48 27.1 2,212,587 3.48 27.9 2,360,843 3.45 29.7 Bulk purchased 123,029 2.97 1.6 127,161 2.80 1.6 134,504 2.10 1.7 Construction 19,165 6.35 0.2 22,970 6.05 0.3 43,631 4.47 0.5 Total 6,213,850 3.58 77.9 6,304,670 3.55 79.6 6,525,457 3.42 82.0 Commercial: Commercial real estate 1,353,482 5.48 17.0 1,191,624 5.43 15.0 1,019,431 5.27 12.8 Commercial and industrial 131,267 6.66 1.7 129,678 6.66 1.6 113,686 6.46 1.4 Construction 161,744 6.14 2.0 187,676 6.40 2.4 196,493 5.41 2.5 Total 1,646,493 5.64 20.7 1,508,978 5.65 19.0 1,329,610 5.39 16.7 Consumer loans: Home equity 103,006 8.31 1.3 99,988 8.90 1.3 96,952 8.84 1.2 Other 9,680 5.77 0.1 9,615 5.72 0.1 9,670 5.32 0.1 Total 112,686 8.09 1.4 109,603 8.62 1.4 106,622 8.52 1.3 Total loans receivable 7,973,029 4.07 100.0 % 7,923,251 4.02 100.0 % 7,961,689 3.82 100.0 % Less: ACL 24,997 23,035 24,178 Deferred loan fees/discounts 30,973 30,336 30,653 Premiums/deferred costs (36,497 ) (37,458 ) (40,652 ) Total loans receivable, net $ 7,953,556 $ 7,907,338 $ 7,947,510 Loan Activity: The following table summarizes activity in the loan portfolio, along with weighted average rates where applicable, for the periods indicated, excluding changes in ACL, deferred loan fees/discounts, and premiums/deferred costs. Loans that were paid off as a result of refinances are included in repayments. Loan endorsements are not included in the activity in the following table because a new loan is not generated at the time of the endorsement. The endorsed balance and rate are included in the ending loan portfolio balance and rate. Commercial loan renewals are not included in the activity presented in the following table unless new funds are disbursed at the time of renewal. The renewal balance and rate are included in the ending loan portfolio balance and rate. During the current quarter, the one- to four-family loan portfolio decreased as expected, while 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. For the Three Months Ended December 31, 2024 Amount Rate (Dollars in thousands) Beginning balance $ 7,923,251 4.02 % Originated and refinanced 265,731 6.76 Purchased and participations 69,790 7.21 Change in undisbursed loan funds (36,990 ) Repayments (248,760 ) Principal recoveries/ (charge-offs), net 7 Ending balance $ 7,973,029 4.07 One- to Four-Family Loans: The following table presents, for our portfolio of one- to four-family loans, the amount, percent of total, weighted average rate, weighted average credit score, weighted average loan-to-value ("LTV") ratio, and average balance per loan as of December 31, 2024. Credit scores were updated in September 2024 from a nationally recognized consumer rating agency. The LTV ratios were based on the current loan balance and either the lesser of the purchase price or original appraisal, or the most recent Bank appraisal, if available. In most cases, the most recent appraisal was obtained at the time of origination. % of Credit Average Amount Total Rate Score LTV Balance (Dollars in thousands) Originated $ 3,907,809 62.9 % 3.64 % 771 58 % $ 169 Correspondent purchased 2,163,847 34.8 3.48 767 62 401 Bulk purchased 123,029 2.0 2.97 773 53 279 Construction 19,165 0.3 6.35 780 46 355 $ 6,213,850 100.0 3.58 770 60 214 The following table presents origination activity in our one- to four-family loan portfolio, excluding endorsement activity, along with the weighted average rate, weighted average LTV and weighted average credit score for the three months ended December 31, 2024. Credit Amount Rate LTV Score (Dollars in thousands) Originated $ 81,545 5.95 % 72.67 % 766 The following table presents the amount and weighted average rate of one- to four-family loan origination and refinance commitments as of December 31, 2024. Amount Rate (Dollars in thousands) Originate/refinance $ 42,023 6.47 % Commercial Loans: The table below presents commercial loan origination and purchase activity during the three months ended December 31, 2024. Amount Rate (Dollars in thousands) Commercial real estate $ 147,549 6.84 % Commercial and industrial 26,686 7.41 Commercial construction 67,041 7.47 $ 241,276 7.08 The following table presents commercial loan disbursements, excluding lines of credit, during the three months ended December 31, 2024. Amount Rate (Dollars in thousands) Commercial real estate $ 147,268 6.61 % Commercial and industrial 10,200 7.33 Commercial construction 46,968 6.24 $ 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. 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%. Management anticipates fully funding the majority of the undisbursed amounts as most are not cancellable by the Bank. Of the total commercial real estate and commercial construction undisbursed amounts and commitments outstanding as of December 31, 2024, management anticipates funding approximately $87.5 million during the March 2025 quarter, $91.4 million during the June 2025 quarter, $73.8 million during the September 2025 quarter, and $94.3 million during the December 2025 quarter or later. At December 31, 2024, the unpaid principal balance of non-owner occupied commercial real estate loans was $1.02 billion and the unpaid principal balance of owner occupied commercial real estate loans was $166.1 million, which are included in the table below. December 31, 2024 September 30, 2024 Unpaid Undisbursed Gross Loan Gross Loan Count Principal Amount Amount Amount (Dollars in thousands) Hotel 23 $ 387,305 $ 45,342 $ 432,647 $ 323,396 Multi-family 37 206,681 179,660 386,341 359,707 Senior housing 37 342,049 3,763 345,812 332,334 Retail building 134 273,496 62,639 336,135 316,261 Office building 78 127,738 672 128,410 127,961 One- to four-family property 315 59,480 4,399 63,879 63,416 Single use building 31 39,799 262 40,061 43,438 Warehouse/manufacturing 48 34,272 297 34,569 34,656 Other 66 44,406 1,319 45,725 62,013 769 $ 1,515,226 $ 298,353 $ 1,813,579 $ 1,663,182 Weighted average rate 5.55 % 6.77 % 5.75 % 5.77 % The following table summarizes the Bank's commercial real estate and commercial construction loans by state as of the dates indicated. December 31, 2024 September 30, 2024 Unpaid Undisbursed Gross Loan Gross Loan Count Principal Amount Amount Amount (Dollars in thousands) Kansas 566 $ 590,691 $ 118,471 $ 709,162 $ 713,437 Texas 20 289,521 40,762 330,283 348,066 Missouri 132 259,886 45,949 305,835 313,146 California 3 80,569 882 81,451 15,040 Colorado 10 46,060 14,745 60,805 50,017 New York 1 60,000 — 60,000 60,000 Nebraska 8 32,262 27,144 59,406 32,422 Tennessee 3 37,840 2,942 40,782 35,973 Other 26 118,397 47,458 165,855 95,081 769 $ 1,515,226 $ 298,353 $ 1,813,579 $ 1,663,182 The following table presents the Bank's commercial real estate and commercial construction loans by unpaid principal balance, aggregated by type of primary collateral and state, along with weighted average LTV and weighted average debt service coverage ratio ("DSCR") as of December 31, 2024. The LTV 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 is calculated at the time of origination, and is updated at the time of subsequent loan renewals or reviews of borrower financials. The DSCR presented in the table below is based on the DSCR at the time of origination unless an updated DSCR has been calculated. Weighted Weighted Kansas Texas Missouri California Other Total LTV DSCR (Dollars in thousands) Hotel $ 42,272 $ 140,576 $ 9,596 $ 77,601 $ 117,260 $ 387,305 54.8 % 1.58 x Senior housing 176,266 — 109,431 — 56,352 342,049 70.8 1.48 Retail building 86,884 69,651 49,011 — 67,950 273,496 63.0 1.91 Multi-family 122,647 17,926 45,481 — 20,627 206,681 64.3 1.24 Office building 58,079 60,467 8,844 — 348 127,738 52.0 2.69 Other 104,543 901 37,523 2,968 32,022 177,957 59.0 2.99 $ 590,691 $ 289,521 $ 259,886 $ 80,569 $ 294,559 $ 1,515,226 61.4 1.83 Weighted LTV 64.3 % 55.1 % 66.6 % 48.6 % 61.0 % 61.4 % Weighted DSCR 1.96x 1.51x 2.10x 2.08x 1.58x 1.83x The following table presents the Bank's commercial real estate and construction loans and outstanding loan commitments, categorized by aggregate gross loan amount (unpaid principal plus undisbursed amounts) or outstanding loan commitment amount, average loan amount, weighted average LTV and weighted average DSCR, as of December 31, 2024. See information above for the weighted average LTV and DSCR calculations. 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. Average Weighted Weighted Count Amount Amount LTV DSCR (Dollars in thousands) Greater than $50 million 6 $ 384,910 $ 64,152 55.9 % 1.49 x >$30 to $50 million 6 210,870 35,145 65.9 1.41 >$20 to $30 million 17 413,149 24,303 68.2 1.34 >$15 to $20 million 8 134,805 16,851 62.6 1.67 >$10 to $15 million 11 128,264 11,660 66.5 1.61 >$5 to $10 million 29 205,966 7,102 64.4 1.84 $1 to $5 million 113 262,671 2,325 60.1 2.13 Less than $1 million 584 126,693 217 53.9 3.80 774 $ 1,867,328 2,413 62.3 1.75 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 had two commercial and industrial loan commitments totaling $981 thousand, at a weighted average rate of 7.95%. December 31, 2024 September 30, 2024 Unpaid Undisbursed Gross Loan Gross Loan Count Principal Amount Amount Amount (Dollars in thousands) Working capital 164 $ 47,978 $ 38,208 $ 86,186 $ 74,097 Purchase/refinance business assets 57 41,562 504 42,066 37,950 Finance/lease vehicle 252 26,655 — 26,655 28,318 Purchase equipment 70 8,998 14,474 23,472 15,457 Other 21 6,074 2,069 8,143 7,735 564 $ 131,267 $ 55,255 $ 186,522 $ 163,557 6.66 % 7.23 % 6.83 % 6.89 % Asset Quality The following tables present loans 30 to 89 days delinquent, non-performing loans, and other real estate owned ("OREO") as of the dates indicated. The amounts in the table represent the unpaid principal balance of the loans less related charge-offs, if any. Of the loans 30 to 89 days delinquent at December 31, 2024, approximately 81% were 59 days or less delinquent. Nonaccrual loans are loans that are 90 or more days delinquent or in foreclosure and other loans required to be reported as nonaccrual pursuant to accounting and/or regulatory reporting requirements and/or internal policies, even if the loans are current. Non-performing assets include nonaccrual loans and OREO. The increase in 30-89 day delinquent commercial real estate loans as of December 31, 2024 was due primarily to a $15.5 million Community Reinvestment Act loan. The borrower is in the process of obtaining tax credit funding which will service the loan until the project is stabilized. The tax credit funding is anticipated to be received by the borrower during the quarter ended March 31, 2025. Loans Delinquent for 30 to 89 Days at: December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 Number Amount Number Amount Number Amount Number Amount Number Amount (Dollars in thousands) One- to four-family: Originated 79 $ 9,768 69 $ 8,884 70 $ 7,148 72 $ 6,803 77 $ 7,746 Correspondent purchased 11 2,988 12 3,049 13 5,278 10 3,144 16 6,049 Bulk purchased 1 32 2 68 1 277 5 856 4 583 Commercial: Commercial real estate 7 18,373 11 2,996 10 2,516 9 3,111 13 3,579 Commercial and industrial 1 125 4 391 5 265 2 243 1 230 Consumer 35 679 35 642 40 926 35 601 40 766 134 $ 31,965 133 $ 16,030 139 $ 16,410 133 $ 14,758 151 $ 18,953 30 to 89 days delinquent loans to total loans receivable, net 0.40 % 0.20 % 0.21 % 0.19 % 0.24 % Non-Performing Loans and OREO at: December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 Number Amount Number Amount Number Amount Number Amount Number Amount (Dollars in thousands) Loans 90 or More Days Delinquent or in Foreclosure: One- to four-family: Originated 26 $ 2,338 29 $ 2,274 24 $ 2,046 23 $ 2,380 29 $ 3,749 Correspondent purchased 8 3,843 8 4,024 7 3,860 8 3,969 10 4,164 Bulk purchased 4 1,256 5 1,535 4 1,271 3 962 2 942 Commercial: Commercial real estate 7 2,038 7 1,163 6 1,078 7 1,076 6 1,116 Commercial and industrial 3 309 2 82 2 82 4 127 2 82 Consumer 22 356 20 436 13 236 10 250 5 116 70 10,140 71 9,514 56 8,573 55 8,764 54 10,169 Loans 90 or more days delinquent or in foreclosure as a percentage of total loans 0.13 % 0.12 % 0.11 % 0.11 % 0.13 % Nonaccrual loans less than 90 Days Delinquent:(1) Commercial: Commercial real estate 6 $ 1,096 3 $ 326 — $ — — $ — 1 $ 18 Commercial and industrial 1 125 2 252 1 30 1 25 — — 7 1,221 5 578 1 30 1 25 1 18 Total nonaccrual loans 77 11,361 76 10,092 57 8,603 56 8,789 55 10,187 Nonaccrual loans as a percentage of total loans 0.14 % 0.13 % 0.11 % 0.11 % 0.13 % OREO: One- to four-family: Originated(2) — $ — 1 $ 55 — $ — 1 $ 67 2 $ 225 Correspondent purchased — — — — — — — — 1 219 — — 1 55 — — 1 67 3 444 Total non-performing assets 77 $ 11,361 77 $ 10,147 57 $ 8,603 57 $ 8,856 58 $ 10,631 Non-performing assets as a percentage of total assets 0.12 % 0.11 % 0.09 % 0.09 % 0.11 % (1) Includes loans required to be reported as nonaccrual pursuant to internal policies even if the loans are current. (2) Real estate-related consumer loans where we also hold the first mortgage are included in the one- to four-family category as the underlying collateral is one- to four-family property. The following table presents the amortized cost of loans classified as special mention or substandard at the dates presented. 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 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 operations of the hotel will improve sufficiently to allow the debt service coverage to be sufficient to meet the debt service coverage ratio covenant within the loan agreement without additional support. The loan was not delinquent as of December 31, 2024. December 31, 2024 September 30, 2024 Special Mention Substandard Special Mention Substandard (Dollars in thousands) One- to four-family $ 12,481 $ 22,255 $ 17,528 $ 22,715 Commercial: Commercial real estate 15,106 42,249 16,169 2,302 Commercial and industrial 1,795 435 413 335 Consumer 219 512 326 487 $ 29,601 $ 65,451 $ 34,436 $ 25,839 Allowance for Credit Losses: The Bank is utilizing 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. The distribution of our ACL and the ratio of ACL to loans receivable, by loan type, at the dates indicated is summarized below. The increase in the ratio of the ACL to total loans as of December 31, 2024 from September 30, 2024 was primarily the result of commercial loan growth during the quarter. The ratio of ACL to loans receivable has been generally consistent over the past two quarters and given the economic outlook at December 31, 2024, management expects it to remain relatively consistent through the remainder of this fiscal year. Distribution of ACL Ratio of ACL to Loans Receivable December 31, September 30, December 31, September 30, 2024 2024 2024 2024 (Dollars in thousands) One- to four-family $ 3,757 $ 3,673 0.06 % 0.06 % Commercial: Commercial real estate 17,812 15,719 1.32 1.32 Commercial and industrial 1,209 1,186 0.92 0.91 Construction 1,978 2,249 1.22 1.20 Total commercial 20,999 19,154 1.28 1.27 Consumer 241 208 0.21 0.19 Total $ 24,997 $ 23,035 0.31 0.29 Management applied a qualitative factor for large dollar commercial loan concentrations. The Company's commercial real estate and construction loans generally have low LTVs and strong DSCRs which serve as indicators that losses in the commercial real estate and construction loan portfolios might be unlikely; however, because there is uncertainty surrounding the nature, timing and amount of expected losses, management believes that in the event of a realized loss within the large dollar commercial loan pools, the magnitude of such a loss is likely to be significant. The large dollar commercial loan concentration qualitative factor addresses the risk associated with a large dollar relationship deteriorating due to a loss event. As part of its analysis, management considered external data including historical loss information for the industry and commercial real estate price index trending information from a variety of reputable sources to help determine the amount of this qualitative factor. For one- to four-family loans, management believes there is potential risk of loss in market value in an economic downturn related to, in particular, newer originations where property values have not experienced price appreciation like more seasoned loans in our portfolio and applied a qualitative factor to account for this risk. To determine the appropriate amount of the one- to four-family loan qualitative factor as of December 31, 2024, management considered external historical home price index trending information, along with the Bank's recent origination/purchase activity, historical loan loss experience and portfolio balance trending, the one- to four-family loan portfolio composition with regard to loan size, and management's knowledge of the Bank's loan portfolio and the one- to four-family lending industry. The 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. Average December 31 2022 March 31 2023 June 30 2023 September 30 2023 December 31 2023 March 31 2024 June 30 2024 September 30 2024 December 31 2024 Bank 1.30 % 1.28 % 1.45 % 1.57 % 1.58 % 1.60 % 1.57 % 1.32 % 1.32 % OCC 0.92 % 1.21 % 1.22 % 1.21 % 1.14 % 1.10 % 1.11 % 1.10 % N/A Asset Size 1.19 % 1.17 % 1.19 % 1.23 % 1.16 % 1.16 % 1.16 % 1.18 % N/A Median December 31 2022 March 31 2023 June 30 2023 September 30 2023 December 31 2023 March 31 2024 June 30 2024 September 30 2024 December 31 2024 Bank 1.30 % 1.28 % 1.45 % 1.57 % 1.58 % 1.60 % 1.57 % 1.32 % 1.32 % OCC 0.84 % 1.00 % 0.98 % 1.06 % 1.02 % 0.98 % 1.02 % 0.99 % N/A Asset Size 1.16 % 1.13 % 1.12 % 1.12 % 1.10 % 1.14 % 1.08 % 1.09 % N/A Historically, the Bank has maintained very low delinquency ratios and net charge-off rates. Over the past two years, the Bank's highest ratio of commercial loans 90 days or more delinquent to total commercial loans at a quarter end was 0.17%. 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 net charge-offs. 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 reserves is adequate for the risk characteristics in our loan portfolio. The following table presents ACL activity and related ratios at the dates and for the periods indicated. For the Three Months Ended December 31, 2024 September 30, 2024 (Dollars in thousands) Balance at beginning of period $ 23,035 $ 25,854 Charge-offs: One- to four-family — — Commercial — (20 ) Consumer (17 ) (39 ) Total charge-offs (17 ) (59 ) Recoveries: One- to four-family 3 3 Commercial 20 2 Consumer 1 1 Total recoveries 24 6 Net (charge-offs) recoveries 7 (53 ) Provision for credit losses 1,955 (2,766 ) Balance at end of period $ 24,997 $ 23,035 Ratio of net charge-offs during the period to average loans outstanding during the period — % — % Ratio of net charge-offs (recoveries) during the period to average non-performing assets (0.07 ) 0.57 ACL to non-performing loans at end of period 220.02 228.25 ACL to loans receivable at end of period 0.31 0.29 ACL to net charge-offs (annualized) N/M (1) 109 x (1) This ratio is not presented due to loan recoveries exceeding loan charge-offs during the period. The balance of the reserves for off-balance sheet credit exposures was $4.7 million at December 31, 2024 compared to $6.0 million at September 30, 2024. The decrease from the previous quarter of $1.3 million was due primarily to a decrease in the balance of commercial real estate off-balance sheet credit exposures, mainly related to commitments that were funded during the current quarter. Securities Portfolio The following table presents the distribution of our securities portfolio, at amortized cost, at December 31, 2024. 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. Amount Yield WAL (Dollars in thousands) MBS $ 774,655 5.64 % 4.9 U.S. government-sponsored enterprise debentures 71,915 5.37 2.6 Corporate bonds 4,000 5.12 7.4 $ 850,570 5.62 4.8 The following table summarizes the activity in our securities portfolio for the period presented. The weighted average yields for the beginning and ending balances are as of the first and last days of the period presented and are generally derived from recent prepayment activity on the securities in the portfolio. The beginning and ending WALs are the estimated remaining principal repayment terms (in years) after the most recent three-month historical prepayment speeds and projected call option assumptions have been applied. For the Three Months Ended December 31, 2024 Amount Yield WAL (Dollars in thousands) Beginning balance - carrying value $ 856,266 5.63 % 5.2 Maturities and repayments (51,574 ) Net amortization of (premiums)/discounts 876 Purchases 71,416 4.89 6.7 Change in valuation on AFS securities (15,483 ) Ending balance - carrying value $ 861,501 5.62 4.8 Deposit Portfolio The following table presents the amount, weighted average rate, and percent of total for the components of our deposit portfolio at the dates presented. The decrease in the deposit portfolio rate at December 31, 2024 compared to September 30, 2024 was due mainly to lower rates on retail certificates of deposit and retail money market accounts. December 31, 2024 September 30, 2024 December 31, 2023 % of % of % of Amount Rate Total Amount Rate Total Amount Rate Total (Dollars in thousands) Non-interest-bearing checking $ 556,515 — % 9.0 % $ 549,596 — % 9.0 % $ 555,382 — % 9.2 % Interest-bearing checking 888,287 0.22 14.3 847,542 0.23 13.8 895,665 0.17 14.9 Savings 611,063 1.21 9.9 540,572 0.82 8.8 471,372 0.12 7.8 Money market 1,235,788 1.19 19.9 1,226,962 1.46 20.0 1,360,349 1.96 22.6 Certificates of deposit 2,914,464 4.15 46.9 2,965,310 4.25 48.4 2,738,827 3.79 45.5 $ 6,206,117 2.34 100.0 % $ 6,129,982 2.45 100.0 % $ 6,021,595 2.20 100.0 % 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. 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, 2024 September 30, 2024 December 31, 2023 % of % of % of Amount Rate Total Amount Rate Total Amount Rate Total (Dollars in thousands) Retail non-maturity deposits: Non-interest-bearing checking $ 434,432 — % 7.0 % $ 418,790 — % 6.8 % $ 428,368 — % 7.1 % Interest-bearing checking 819,644 0.09 13.2 799,407 0.10 13.0 841,350 0.08 14.0 Savings 607,803 1.22 9.8 537,506 0.83 8.8 468,003 0.12 7.8 Money market 1,145,615 1.09 18.5 1,149,212 1.37 18.7 1,296,977 1.92 21.5 Total 3,007,494 0.69 48.5 2,904,915 0.73 47.4 3,034,698 0.86 50.4 Commercial non-maturity deposits: Non-interest-bearing checking 122,083 — 2.0 130,806 — 2.1 127,014 — 2.1 Interest-bearing checking 68,643 1.75 1.1 48,135 2.40 0.8 54,316 1.63 0.9 Savings 3,260 0.05 0.1 3,066 0.05 0.1 3,370 0.05 0.1 Money market 90,173 2.50 1.5 77,750 2.72 1.3 63,370 2.70 1.1 Total 284,159 1.22 4.6 259,757 1.26 4.2 248,070 1.05 4.1 Certificates of deposit: Retail certificates of deposit 2,799,418 4.14 45.1 2,830,579 4.23 46.2 2,569,391 3.75 42.7 Commercial certificates of deposit 56,564 4.27 0.9 58,236 4.40 1.0 49,152 3.80 0.8 Public unit certificates of deposit 58,482 4.48 0.9 76,495 4.62 1.2 120,284 4.54 2.0 Total 2,914,464 4.15 47.0 2,965,310 4.25 48.4 2,738,827 3.79 45.5 $ 6,206,117 2.34 100.0 % $ 6,129,982 2.45 100.0 % $ 6,021,595 2.20 100.0 % The following table presents the amount, weighted average rate, and percent of total for total retail deposits, commercial deposits, and public unit certificates of deposit for the periods noted. December 31, 2024 September 30, 2024 December 31, 2023 % of % of % of Amount Rate Total Amount Rate Total Amount Rate Total (Dollars in thousands) Total retail deposits $ 5,806,912 2.35 % 93.6 % $ 5,735,494 2.46 % 93.6 % $ 5,604,089 2.19 % 93.1 % Total commercial deposits 340,723 1.72 5.5 317,993 1.84 5.2 297,222 1.50 4.9 Public unit certificates of deposit 58,482 4.48 0.9 76,495 4.62 1.2 120,284 4.54 2.0 Total $ 6,206,117 2.34 100.0 % $ 6,129,982 2.45 100.0 % $ 6,021,595 2.20 100.0 % Borrowings The following table presents the maturity of term borrowings, which consist of FHLB advances, along with associated weighted average contractual and effective rates as of December 31, 2024. Amortizing FHLB advances are presented based on their maturity dates versus their quarterly scheduled repayment dates. Maturity by Contractual Effective Fiscal Year Amount Rate Rate(1) (Dollars in thousands) 2025 $ 450,000 3.07 % 2.76 % 2026 575,000 2.81 2.95 2027 525,000 3.25 3.35 2028 355,738 4.59 4.16 2029 158,750 4.45 4.45 2030 100,000 4.20 4.20 $ 2,164,488 3.45 3.37 (1) The effective rate includes the impact of interest rate swaps and the amortization of deferred prepayment penalties resulting from FHLB advances previously prepaid. The following table presents borrowing activity for the period shown. The borrowings presented in the table have original contractual terms of one year or longer or are tied to interest rate swaps with original contractual terms of one year or longer. Line of credit borrowings and finance leases are excluded from the table. The effective rate is shown as a weighted average and includes the impact of interest rate swaps and the amortization of deferred prepayment penalties resulting from FHLB advances previously prepaid. The weighted average maturity ("WAM") is the remaining weighted average contractual term in years. The beginning and ending WAMs represent the remaining maturity as of the first and last days of the period presented. For the Three Months Ended December 31, 2024 Effective Amount Rate WAM (Dollars in thousands) Beginning balance $ 2,180,656 3.29 % 1.6 Maturities and repayments (216,168 ) 3.42 New FHLB borrowings 200,000 4.27 3.7 Ending balance $ 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, 2024. March 31, June 30, September 30, December 31, 2025 2025 2025 2025 Total (Dollars in thousands) Retail/Commercial Certificates: Amount $ 631,527 $ 675,472 $ 373,511 $ 447,877 $ 2,128,387 Repricing Rate 4.54 % 4.60 % 4.27 % 3.95 % 4.39 % Public Unit Certificates: Amount $ 17,856 $ 8,341 $ 9,961 $ 9,735 $ 45,893 Repricing Rate 4.90 % 4.51 % 4.46 % 3.92 % 4.53 % Non-Amortizing FHLB Advances: Amount $ 150,000 $ 200,000 $ 100,000 $ 200,000 $ 650,000 Repricing Rate 1.93 % 3.27 % 2.97 % 2.89 % 2.80 % Total Amount $ 799,383 $ 883,813 $ 483,472 $ 657,612 $ 2,824,280 Repricing Rate 4.06 % 4.30 % 4.01 % 3.63 % 4.03 % The following table sets forth the WAM information for our certificates of deposit, in years, as of December 31, 2024. Retail certificates of deposit 0.8 Commercial certificates of deposit 0.6 Public unit certificates of deposit 0.6 Total certificates of deposit 0.8 Average Rates and Lives 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. The change in the one-year gap amount was due to an increase in the amount of projected liability cash flows coming due in one year, as of December 31, 2024, partially offset by an increase in the amount of projected asset cash flows during the same time period, as compared to September 30, 2024. The increase in liability cash flows was due primarily to a net increase in non-maturity deposits between periods. The increase in projected asset cash flows was due primarily to an increase in the balance of adjustable-rate loans, partially offset by a decrease in the balance of cash and a decrease in the projected amount of fixed-rate mortgage-related asset cash flows due to a decrease in projected prepayment speeds from September 30, 2024, as a result of an increase in intermediate and long-term interest and mortgage rates. The amount of interest-bearing liabilities expected to reprice in a given period is not typically significantly impacted by changes in interest rates because the Bank's borrowings and certificate of deposit portfolios have contractual maturities and generally cannot be terminated early without a prepayment penalty. If interest rates were to increase 200 basis points, as of December 31, 2024, the Bank's one-year gap would have been projected to be $(1.75) billion, or (18.4)% of total assets. If interest rates were to decrease 200 basis points, as of December 31, 2024, the Bank's one-year gap would have been projected to be $(1.17) billion, or (12.3)% of total assets. The changes in the gap amounts compared to when there is no change in rates was due to changes in the anticipated net cash flows primarily as a result of projected prepayments on mortgage-related assets in each rate environment. In higher rate environments, prepayments on mortgage-related assets are projected to be lower, and in lower rate environments, prepayments are projected to be higher. This compares to a projected one-year gap of $(1.71) billion, or (17.9)% of total assets, if interest rates were to have increased 200 basis points as of September 30, 2024, and a projected one-year gap of $(1.19) billion, or (12.5)% of total assets, if interest rates were to have decreased 200 basis points as of the same date. The following table presents the weighted average yields/rates and WALs (in years), after applying prepayment, call assumptions, and decay rates for our interest-earning assets and interest-bearing liabilities as of December 31, 2024. Yields presented for interest-earning assets include the amortization of fees, costs, premiums and discounts, which are considered adjustments to the yield. The interest rate presented for term borrowings is the effective rate, which includes the impact of interest rate swaps and the amortization of deferred prepayment penalties resulting from FHLB advances previously prepaid. The WAL presented for term borrowings includes the effect of interest rate swaps. Amount Yield/Rate WAL % of Category % of Total (Dollars in thousands) Securities $ 861,501 5.62 % 3.7 9.5 % Loans receivable: Fixed-rate one- to four-family 5,303,313 3.44 6.8 66.5 % 58.2 Fixed-rate commercial 519,277 4.96 2.8 6.5 5.7 All other fixed-rate loans 37,899 7.06 7.3 0.5 0.4 Total fixed-rate loans 5,860,489 3.60 6.4 73.5 64.3 Adjustable-rate one- to four-family 891,372 4.21 4.5 11.2 9.8 Adjustable-rate commercial 1,127,216 6.03 5.1 14.1 12.4 All other adjustable-rate loans 93,952 8.10 3.1 1.2 1.0 Total adjustable-rate loans 2,112,540 5.35 4.8 26.5 23.2 Total loans receivable 7,973,029 4.06 6.0 100.0 % 87.5 FHLB stock 100,364 9.47 1.9 1.1 Cash and cash equivalents 170,324 3.62 — 1.9 Total interest-earning assets $ 9,105,218 4.26 5.6 100.0 % Non-maturity deposits $ 2,735,138 0.88 5.6 48.4 % 35.0 % Retail certificates of deposit 2,799,418 4.14 0.8 49.6 35.8 Commercial certificates of deposit 56,564 4.26 0.6 1.0 0.7 Public unit certificates of deposit 58,482 4.48 0.6 1.0 0.8 Total interest-bearing deposits 5,649,602 2.57 3.1 100.0 % 72.3 Term borrowings 2,165,561 3.37 1.6 27.7 Total interest-bearing liabilities $ 7,815,163 2.79 2.7 100.0 %

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

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