What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-09 compared with 2025-02-07 · 675 added, 340 removed, 728 unchanged (58% of the section changed)

6 unchanged sentences

• our ability to maintain overhead costs at reasonable levels;

• our ability to generate a sufficient volume of loans in order to maintain the balance of the portfolio at a level desired by management;

• our ability to generate a sufficient volume of loans in order to maintain the loan portfolio balance at a level desired by management;

• our ability to invest funds in wholesale or secondary markets at favorable yields;

14 unchanged sentences

• inflation, interest rate, market, monetary, and currency fluctuations and the effects of a potential economic recession or slower economic growth;

• the potential imposition of new or increased tariffs or changes to existing trade policies that would affect economic activity or specific industry sectors;

• the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor or depositor sentiment;

33 unchanged sentences

The following summary should be read in conjunction with the Management's Discussion and Analysis of Financial Condition and Results of Operations section in its entirety.

The Company recognized net income of $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.

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 $0.10 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.

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.

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.

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.

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.

Total borrowings were $2.16 billion at December 31, 2024, a $15.8 million decrease from September 30, 2024.

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.

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.

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.

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.

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.

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.

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 $2.91 billion in additional liquidity available at December 31, 2024 based on the Bank's blanket collateral agreement with FHLB and unencumbered securities.

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%.

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.

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%.

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.

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 quarter, net recoveries were $7 thousand.

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.

During the current year six month period, net charge-offs were $107 thousand.

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.

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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.

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.

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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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

Financial Condition

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

December 31, September 30, Percent

2024 2024 Change

Annualized Annualized

March 31, December 31, Percent September 30, Percent

2025 2024 Change 2024 Change

(Dollars and shares in thousands)

8 unchanged sentences

Average number of diluted shares outstanding 130,026 129,973 0.2 129,918 0.2

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.

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.

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.

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.

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.

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.

Loans Receivable.

The following table presents the balance and weighted average rate of our loan portfolio as of the dates indicated.

December 31, 2024 September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024 September 30, 2024

Amount Rate Amount Rate Amount Rate

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The renewal balance and rate are included in the ending loan portfolio balance and rate.

For the Three Months Ended

December 31, 2024 December 31, 2023

Amount Rate Amount Rate

For the Three Months Ended For the Six Months Ended

March 31, 2025 March 31, 2025 March 31, 2024

Amount Rate Amount Rate Amount Rate

(Dollars in thousands)

4 unchanged sentences

Repayments (237,346) (486,106) (424,976)

Principal recoveries/ (charge-offs), net 7 (1)

Principal (charge-offs)/recoveries, net (114) (107) (1)

Other — — (225)

Ending balance $ 7,894,620 4.10 $ 7,894,620 4.10 $ 7,892,732 3.86

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.

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, purchases/participations, and refinances are reported together.

For the Three Months Ended

December 31, 2024 December 31, 2023

Loan originations, participations, and refinances are reported together.

For the Six Months Ended

March 31, 2025 March 31, 2024

Amount Rate % of Total Amount Rate % of Total

(Dollars in thousands)

One- to four-family $ 64,912 5.90 % 19.4 % $ 37,167 6.89 % 35.5 %

One- to four-family construction 10,824 5.96 3.2 9,308 6.84 8.9

Real estate 28,494 7.03 8.5 747 7.76 0.7

Commercial real estate

Fixed-rate $ 29,808 7.02 % 6.5 % $ 1,156 7.28 % 0.5 %

Adjustable-rate 141,870 6.82 31.0 15,506 6.13 7.2

171,678 6.85 37.5 16,662 6.21 7.7

Commercial and industrial

Construction 1,135 8.00 0.3 132 9.00 0.1

Home equity 1,744 8.42 0.5 2,630 9.01 2.5

Consumer other 400 7.48 0.1 1,084 6.83 1.0

Total fixed-rate 124,384 6.44 37.0 53,673 7.01 51.2

Fixed-rate 21,632 7.40 4.7 12,432 6.98 5.8

Adjustable-rate 11,040 7.37 2.4 7,983 7.69 3.7

32,672 7.39 7.1 20,415 7.26 9.5

Commercial construction

Fixed-rate 1,135 8.00 0.3 3,632 7.07 1.7

Adjustable-rate 93,269 7.40 20.4 36,641 8.23 17.0

94,404 7.40 20.7 40,273 8.12 18.7

Total commercial

Fixed-rate 52,575 7.19 11.5 17,220 7.02 8.0

Adjustable-rate 246,179 7.06 53.8 60,130 7.61 27.9

298,754 7.08 65.3 77,350 7.48 35.9

One- to four-family

One- to four-family construction 2,881 6.63 0.9 8,040 6.60 7.7

Real estate 119,055 6.79 35.5 9,350 5.00 8.9

Commercial and industrial 9,811 7.28 2.9 3,555 7.88 3.4

Construction 65,906 7.47 19.6 3,947 8.41 3.8

Home equity 8,979 8.67 2.7 7,179 9.39 6.8

Consumer other 1,577 6.07 0.5 669 4.65 0.6

Total adjustable-rate 211,137 7.09 63.0 51,226 6.92 48.8

Total originated, refinanced and purchased/participations $ 335,521 6.85 100.0 % $ 104,899 6.96 100.0 %

Purchased and participation loans included above:

Correspondent purchased - one- to four-family $ — — $ 2,978 6.43

Participations and purchases - commercial 24,500 7.00 — —

Total fixed-rate purchased/participations 24,500 7.00 2,978 6.43

Fixed-rate 108,697 6.06 23.8 77,119 6.66 35.8

Adjustable-rate 26,223 6.25 5.7 37,726 6.42 17.5

Correspondent purchased - one- to four-family — — 519 2.93

Participations and purchases - commercial 45,290 7.32 — —

Total adjustable-rate purchased/participations 45,290 7.32 519 2.93

Total purchased/participation loans $ 69,790 7.21 $ 3,497 5.91

One- to Four-Family Loans - The following table presents, for our portfolio of one- to four-family loans, the amount, percent of total, weighted average rate, weighted average credit score, weighted average LTV ratio, and average balance per loan as of December 31, 2024.

134,920 6.10 29.5 114,845 6.58 53.3

Home equity and other

Fixed-rate 4,008 8.19 0.9 5,660 8.46 2.6

Adjustable-rate 19,829 8.27 4.3 17,810 9.12 8.2

23,837 8.25 5.2 23,470 8.96 10.8

Total consumer

Fixed-rate 112,705 6.14 24.6 82,779 6.78 38.4

Adjustable-rate 46,052 7.12 10.1 55,536 7.29 25.7

158,757 6.42 34.7 138,315 6.98 64.1

Total commercial and consumer

Fixed-rate 165,280 6.47 36.1 99,999 6.82 46.4

Adjustable-rate 292,231 7.07 63.9 115,666 7.46 53.6

$ 457,511 6.85 100.0 % $ 215,665 7.16 100.0 %

Commercial participations included above:

Fixed-rate 24,500 7.00 3,500 7.00

Adjustable-rate 45,290 7.32 20,947 8.27

$ 69,790 7.21 $ 24,447 8.09

Credit scores were updated in September 2024 from a nationally recognized consumer rating agency.

9 unchanged sentences

$ 6,117,810 100.0 % 3.61 770 59 213

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.

Amount Rate LTV Score

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.

For the Three Months Ended For the Six Months Ended

March 31, 2025 March 31, 2025

Credit Credit

Amount Rate LTV Score Amount Rate LTV Score

(Dollars in thousands)

$ 53,375 6.32 % 74 % 769 $ 134,920 6.10 % 73 % 767

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.

The following table presents the amount and weighted average rate of one- to four-family loan origination and refinance commitments as of March 31, 2025.

(Dollars in thousands)

$ 49,489 6.46 %

Commercial Loans - The table below presents commercial loan origination and purchase activity during the three months ended December 31, 2024.

Originated Participation Total

Amount Rate Amount Rate Amount Rate

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.

For the Three Months Ended March 31, 2025

Originated Participation Total Weighted Weighted

Amount Rate Amount Rate Amount Rate LTV DSCR

(Dollars in thousands)

Commercial real estate $ 120,745 6.79 % $ 26,804 7.04 % $ 147,549 6.84 %

Commercial and industrial 26,686 7.41 — — 26,686 7.41

Commercial real estate $ 24,128 6.94 % $ — — % $ 24,128 6.94 % 67.6 % 1.52x

Commercial and industrial 5,987 7.29 — — 5,987 7.29 N/A 3.91

Commercial construction 27,363 7.23 — — 27,363 7.23 66.8 2.00

$ 57,478 7.11 $ — — $ 57,478 7.11 67.2 1.99

The following table presents commercial loan disbursements, excluding lines of credit, during the three months ended December 31, 2024.

For the Six Months Ended March 31, 2025

Originated Participation Total Weighted Weighted

Amount Rate Amount Rate Amount Rate LTV DSCR

(Dollars in thousands)

Commercial real estate $ 144,873 6.81 % $ 26,804 7.04 % $ 171,677 6.85 % 58.2 % 1.81x

Commercial and industrial 32,673 7.39 — — 32,673 7.39 N/A 3.96

Commercial construction 51,418 7.48 42,986 7.31 94,404 7.40 75.4 1.75

$ 228,964 7.05 $ 69,790 7.21 $ 298,754 7.08 64.3 2.02

The following table presents commercial loan disbursements, excluding lines of credit, during the six months ended March 31, 2025.

(Dollars in thousands)

Commercial real estate $ 179,930 6.61 %

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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.

December 31, 2024 September 30, 2024 December 31, 2023

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.

March 31, 2025 December 31, 2024 September 30, 2024

Unpaid Undisbursed Gross Loan Gross Loan Gross Loan

7 unchanged sentences

One- to four-family property 316 60,169 5,008 65,177 63,879 63,416

Single use building 31 39,799 262 40,061 43,438 43,815

Warehouse/manufacturing 49 36,822 6,742 43,564 34,569 34,656

Single use building 28 35,204 262 35,466 40,061 43,438

Land 26 34,662 193 34,855 15,615 32,943

Other 37 28,189 1,186 29,375 30,110 29,070

1 unchanged sentence

Weighted average rate 5.58 % 6.82 % 5.76 % 5.75 % 5.77 %

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.

Projected Disbursements for the Quarters Ending Revolving

June 30, 2025 September 30, 2025 December 31, 2025 Thereafter Lines of Credit Total

(Dollars in thousands)

Undisbursed amounts $ 98,394 $ 82,063 $ 49,769 $ 35,696 $ 4,059 $ 269,981

Commitments 136,516 5,750 13,500 20,400 10,419 186,585

$ 234,910 $ 87,813 $ 63,269 $ 56,096 $ 14,478 $ 456,566

Weighted average rate 6.84 % 6.89 % 7.10 % 7.01 % 7.06 % 6.92 %

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 December 31, 2023

March 31, 2025 December 31, 2024 September 30, 2024

Unpaid Undisbursed Gross Loan Gross Loan Gross Loan

5 unchanged sentences

California 4 83,441 11,989 95,430 81,451 15,040

Colorado 10 46,060 14,745 60,805 50,017 49,428

New York 1 60,000 — 60,000 60,000 60,000

Nebraska 8 32,262 27,144 59,406 32,422 37,799

Colorado 9 44,953 10,181 55,134 60,805 50,017

Tennessee 3 39,248 1,353 40,601 40,782 35,973

Nebraska 7 11,519 27,139 38,658 59,406 32,422

Arizona 5 10,778 25,663 36,441 36,446 15,452

Arkansas 4 36,322 — 36,322 36,491 36,588

Other 17 95,930 16,383 112,313 92,918 43,041

759 $ 1,532,443 $ 269,981 $ 1,802,424 $ 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 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.

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.

Weighted Weighted

6 unchanged sentences

Office building 57,220 60,358 8,700 — 339 126,617 51.7 1.89

One- to four-family property 44,345 — 6,438 — 9,386 60,169 55.9 2.71

Warehouse/manufacturing 31,116 — 2,442 — 3,264 36,822 58.1 3.02

Single use building 13,488 — 18,463 2,878 375 35,204 61.5 1.87

Land 6,286 900 738 — 26,738 34,662 70.6 3.97

Other 12,136 — 4,897 — 11,156 28,189 56.8 2.00

2 unchanged sentences

Weighted DSCR 1.88x 1.69x 1.70x 1.50x 1.58x 1.73x

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.

Average Weighted Weighted

Count Amount Amount LTV DSCR

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.

and Commitment Average Weighted Weighted

Count Amounts Amount LTV DSCR

(Dollars in thousands)

9 unchanged sentences

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%.

December 31, 2024 September 30,

2024 December 31,

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%.

March 31, 2025 December 31,

2024 September 30,

Unpaid Undisbursed Gross Loan Gross Loan Gross Loan

7 unchanged sentences

531 $ 135,884 $ 48,678 $ 184,562 $ 186,522 $ 163,557

6.66 % 7.23 % 6.83 % 6.89 % 6.90 %

Weighted average rate 6.74 % 7.19 % 6.86 % 6.83 % 6.89 %

Asset Quality

2 unchanged sentences

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.

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.

Loans Delinquent for 30 to 89 Days at:

December 31, September 30,

Number Amount Number Amount

March 31, December 31, September 30,

2025 2024 2024

Number Amount Number Amount Number Amount

(Dollars in thousands)

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Nonaccrual Loans and OREO at:

December 31, September 30,

Number Amount Number Amount

March 31, December 31, September 30,

2025 2024 2024

Number Amount Number Amount Number Amount

(Dollars in thousands)

18 unchanged sentences

Originated (2)

— $ — — $ — 1 $ 55

Total non-performing assets 81 $ 10,833 77 $ 11,361 77 $ 10,147

2 unchanged sentences

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

The following table presents the states where the properties securing ten percent or more of the total amount of our one- to four-family loans are located and the corresponding balance of loans 30 to 89 days delinquent, 90 or more days delinquent or in foreclosure, and weighted average LTV ratios for loans 90 or more days delinquent or in foreclosure at December 31, 2024.

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.

At December 31, 2024, potential losses, after taking into consideration anticipated private mortgage insurance proceeds and estimated selling costs, have been charged-off.

At March 31, 2025, potential losses, after taking into consideration anticipated private mortgage insurance proceeds and estimated selling costs, have been charged-off.

Loans 30 to 89 Loans 90 or More Days Delinquent

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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 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 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.

December 31, 2024 September 30, 2024

Special Mention Substandard Special Mention Substandard

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.

March 31, 2025 December 31, 2024 September 30, 2024

Special Mention Substandard Special Mention Substandard Special Mention Substandard

(Dollars in thousands)

6 unchanged sentences

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.

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.

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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.

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.

Distribution of ACL Ratio of ACL to Loans Receivable

December 31, September 30, December 31, September 30,

March 31, December 31, September 30, March 31, December 31, September 30,

2025 2024 2024 2025 2024 2024

15 unchanged sentences

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.

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.

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 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.

Average December

Average March

2023 September

5 unchanged sentences

Asset Size 1.17 % 1.18 % 1.22 % 1.15 % 1.15 % 1.16 % 1.18 % 1.18 % N/A

Median December

2023 September

9 unchanged sentences

The Company applied a modified retrospective approach when adopting ASU 2022-02, resulting in a cumulative-effect adjustment which is reflected in the table below ("ASU 2022-02 Adoption").

At or For the Three Months Ended

December 31, 2024 December 31, 2023

At or For the Six Months Ended

March 31, 2025 March 31, 2024

(Dollars in thousands)

10 unchanged sentences

ACL to loans receivable, net at end of period 0.30 0.31

ACL at end of period to NCOs during the period (annualized) N/M (1)

(1) This ratio is not presented due to loan recoveries exceeding loan charge-offs during the period.

The ratio of NCOs to average non-performing assets was 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.

ACL at end of period to NCOs during the period (annualized) 112x 10,971x

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.

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.

The following table presents NCOs, average loans, and NCOs as a percentage of average loans, by loan type, for the periods indicated.

For the Three Months Ended

December 31, 2024 December 31, 2023

For the Six Months Ended

March 31, 2025 March 31, 2024

NCOs Average Loans % of Average Loans NCOs Average Loans % of Average Loans

19 unchanged sentences

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.

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.

December 31, 2024 September 30, 2024

Amount Yield WAL Amount Yield WAL

March 31, 2025 December 31, 2024 September 30, 2024

Amount Yield WAL Amount Yield WAL Amount Yield WAL

(Dollars in thousands)

6 unchanged sentences

The beginning and ending WALs are the estimated remaining principal repayment terms (in years) after three month historical prepayment speeds and projected call option assumptions have been applied.

For the Three Months Ended

December 31, 2024 December 31, 2023

For the Six Months Ended

March 31, 2025 March 31, 2024

Amount Yield WAL Amount Yield WAL

8 unchanged sentences

Ending balance - carrying value $ 961,417 5.46 5.6 $ 842,950 5.63 5.4

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.

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.

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.

December 31, 2024 September 30, 2024 December 31, 2023

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.

March 31, 2025 December 31, 2024 September 30, 2024

% of % of % of

3 unchanged sentences

Interest-bearing checking 905,922 0.22 14.2 888,287 0.22 14.3 847,542 0.23 13.8

Savings 611,063 1.21 9.9 540,572 0.82 8.8 471,372 0.12 7.8

High yield savings 284,097 4.09 4.5 171,656 4.14 2.8 96,241 4.09 1.6

Other savings 448,034 0.07 7.0 439,407 0.07 7.1 444,331 0.11 7.2

Money market 1,247,106 1.21 19.6 1,235,788 1.19 19.9 1,226,962 1.46 20.0

2 unchanged sentences

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

March 31, 2025 December 31, 2024 September 30, 2024

% of % of % of

4 unchanged sentences

Interest-bearing checking 837,294 0.09 13.1 819,644 0.09 13.2 799,407 0.10 13.0

Savings 607,803 1.22 9.8 537,506 0.83 8.8 468,003 0.12 7.8

High yield savings 284,097 4.09 4.5 171,656 4.14 2.8 96,241 4.09 1.6

Other savings 444,681 0.07 7.0 436,147 0.07 7.0 441,265 0.11 7.2

Money market 1,138,281 1.08 17.9 1,145,615 1.09 18.5 1,149,212 1.37 18.7

12 unchanged sentences

$ 6,372,545 2.28 100.0 % $ 6,206,117 2.34 100.0 % $ 6,129,982 2.45 100.0 %

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

December 31, 2024 September 30, 2024 December 31, 2023

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.

March 31, 2025 December 31, 2024 September 30, 2024

% of % of % of

5 unchanged sentences

$ 6,372,545 2.28 100.0 % $ 6,206,117 2.34 100.0 % $ 6,129,982 2.45 100.0 %

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.

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.

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.

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.

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.

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.

Maturity by Contractual Effective

15 unchanged sentences

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.

For the Three Months Ended

December 31, 2024 December 31, 2023

Effective Effective

Amount Rate WAM Amount Rate WAM

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.

For the Three Months Ended For the Six Months Ended

March 31, 2025 March 31, 2025 March 31, 2024

Effective Effective Effective

Amount Rate WAM Amount Rate WAM Amount Rate WAM

(Dollars in thousands)

4 unchanged sentences

Ending balance $ 2,143,320 3.54 1.6 $ 2,143,320 3.54 1.6 $ 2,352,992 3.16 1.9

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.

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,

June 30, September 30, December 31, March 31,

2025 2025 2025 2026 Total

11 unchanged sentences

Repricing Rate 4.30 % 4.00 % 3.70 % 3.03 % 3.88 %

The following table sets forth the WAM information for our certificates of deposit, in years, as of December 31, 2024.

The following table sets forth the WAM information for our certificates of deposit, in years, as of March 31, 2025.

Retail certificates of deposit 0.9

3 unchanged sentences

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.

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 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 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 December 31, 2024, the Bank's CBLR was 9.4%.

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.

The Company has notified the FRB of its intent to extend the stock repurchase plan another year, through February 2026.

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.

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.

Given the amount of cash at the holding company level, and in an effort to limit the tax associated with the pre-1988 bad debt recapture, it is currently the intention of management and the Board of Directors to not distribute earnings from the Bank to the Company during fiscal year 2025.

See additional information regarding the pre-1988 bad debt recapture in "Comparison of Operating Results for the Three Months Ended December 31, 2024 and September 30, 2024 - Income Tax Expense" below.

It is currently anticipated that the Bank will have sufficient taxable income during fiscal year 2025 to replenish tax accumulated earnings and profits to a positive level, allowing the Bank to make earnings distributions to the Company during fiscal year 2026 and not be taxed on those distributions.

As of March 31, 2025, the Bank's CBLR was 9.5%.

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.

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 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.

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.

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 which is related to the Bank's tax accumulated earnings and profits.

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.

The Company currently has $75.0 million authorized under an existing stock repurchase plan.

Shares may be repurchased from time to time based upon market conditions, available liquidity and other factors.

This plan has no expiration date;

however, the FRB's current approval for the Company to repurchase shares expires in February 2026.

There were no share repurchases during the current year six month period.

Because the cash at the holding company is limited based on our capital management plan, the Company does not expect to repurchase shares until such time that an excess cash balance is rebuilt at the holding company level, which might occur as early as the beginning of fiscal year 2026.

The following table presents regular quarterly cash dividends and special cash dividends paid in calendar years 2025, 2024, and 2023.

The amounts represent cash dividends paid during each period.

For the quarter ended March 31, 2025, the amount presented represents the dividend payable on February 21, 2025 to stockholders of record as of the close of business on February 7, 2025.

For the quarter ended June 30, 2025, the amount presented represents the dividend payable on May 16, 2025 to stockholders of record as of the close of business on May 2, 2025.

Calendar Year

11 unchanged sentences

For the Three Months Ended

December 31, September 30, June 30, March 31, December 31,

March 31, December 31, September 30, June 30, March 31,

2025 2024 2024 2024 2024

17 unchanged sentences

Non-interest expense 29,540 27,148 27,040 27,950 28,445

Income tax (benefit) expense 3,667 7,150 5,963 3,455 (475)

Income tax expense 3,854 3,667 7,150 5,963 3,455

Net income $ 15,399 $ 15,431 $ 12,057 $ 9,648 $ 13,762

3 unchanged sentences

Diluted EPS 0.12 0.12 0.09 0.07 0.11

Average Balance Sheets

Comparison of Operating Results for the Three Months Ended March 31, 2025 and December 31, 2024

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.

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

March 31, December 31, Change Expressed in:

2025 2024 Dollars Percent

(Dollars in thousands)

INTEREST AND DIVIDEND INCOME:

Loans receivable $ 80,867 $ 81,394 $ (527) (0.6 %)

MBS 11,264 11,024 240 2.2

FHLB stock 2,285 2,352 (67) (2.8)

Cash and cash equivalents 2,729 1,871 858 45.9

Investment securities 1,030 981 49 5.0

Total interest and dividend income $ 98,175 $ 97,622 $ 553 0.6

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.

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

March 31, December 31, Change Expressed in:

2025 2024 Dollars Percent

(Dollars in thousands)

INTEREST EXPENSE:

Deposits $ 35,853 $ 37,345 $ (1,492) (4.0) %

Borrowings 18,482 18,047 435 2.4

Total interest expense $ 54,335 $ 55,392 $ (1,057) (1.9)

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.

Provision for Credit Losses

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.

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

March 31, December 31, Change Expressed in:

2025 2024 Dollars Percent

(Dollars in thousands)

NON-INTEREST INCOME:

Deposit service fees $ 2,596 $ 2,707 $ (111) (4.1) %

Insurance commissions 927 776 151 19.5

Other non-interest income 1,430 1,210 220 18.2

Total non-interest income $ 4,953 $ 4,693 $ 260 5.5

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.

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

March 31, December 31, Change Expressed in:

2025 2024 Dollars Percent

(Dollars in thousands)

NON-INTEREST EXPENSE:

Salaries and employee benefits $ 14,938 $ 14,232 $ 706 5.0 %

Information technology and related expense 4,924 4,550 374 8.2

Occupancy, net 3,502 3,333 169 5.1

Regulatory and outside services 1,469 1,113 356 32.0

Federal insurance premium 1,095 1,038 57 5.5

Advertising and promotional 760 822 (62) (7.5)

Deposit and loan transaction costs 879 591 288 48.7

Office supplies and related expense 437 399 38 9.5

Other non-interest expense 1,536 1,070 466 43.6

Total non-interest expense $ 29,540 $ 27,148 $ 2,392 8.8

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.

The Company's efficiency ratio was 60.54% for the current quarter compared to 57.86% for the prior quarter.

The change in the efficiency ratio was due to higher non-interest expense, partially offset by 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 higher value generally indicates that it is costing the financial institution more money to generate revenue.

The Company's operating expense ratio (annualized) for the current quarter was 1.23% compared to 1.14% in the prior quarter, due mainly to higher non-interest expense.

Income Tax Expense

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

For the Three Months Ended

March 31, December 31, Change Expressed in:

2025 2024 Dollars Percent

(Dollars in thousands)

Income before income tax expense $ 19,253 $ 19,098 $ 155 0.8 %

Income tax expense 3,854 3,667 187 5.1

Net income $ 15,399 $ 15,431 $ (32) (0.2)

Effective Tax Rate 20.0 % 19.2 %

Average Balance Sheet

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.

4 unchanged sentences

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

March 31, 2025 December 31, 2024

Average Interest Average Interest

Outstanding Earned/ Yield/ Outstanding Earned/ Yield/

Amount Paid Rate Amount Paid Rate

(Dollars in thousands)

9 unchanged sentences

7,923,241 80,867 4.08 7,981,231 81,394 4.05

MBS(2) 781,252 11,024 5.64 736,695 10,412 5.65 526,733 5,859 4.45

811,013 11,264 5.56 781,252 11,024 5.64

Investment securities (2)(3)

8 unchanged sentences

Checking $ 879,218 485 0.22 $ 865,738 531 0.24

Savings 567,533 1,422 0.99 531,579 972 0.73 472,819 138 0.12

High yield savings 227,677 2,335 4.16 126,047 1,322 4.17

Other savings 442,773 77 0.07 441,486 100 0.09

Money market 1,239,709 3,694 1.21 1,245,714 4,212 1.34

13 unchanged sentences

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

Ratio of interest-earning assets to interest-bearing liabilities 1.17x 1.17x

Selected performance ratios:

2 unchanged sentences

Return on average equity (annualized) (7)

5.98 4.69 0.98

Average equity to average assets 10.76 10.80

Operating expense ratio (8)

1.14 1.13 1.18

Operating expense ratio (annualized) (8)

Efficiency ratio (9)

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 in the average balance 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.

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

(3) There were no nontaxable securities included in the average balance of investment securities for the quarters ended March 31, 2025 or December 31, 2024.

(4) Net interest income represents the difference between interest income earned on interest-earning assets and interest paid on interest-bearing liabilities.

12 unchanged sentences

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 GAAP and the same performance measures absent the impact of the net loss on the securities transactions associated with the securities strategy, which are not presented in accordance with GAAP.

The securities strategy was non-recurring in nature;

therefore, management believes it is meaningful to investors to present certain financial measures without the securities strategy to better evaluate the Company's core operations.

See information regarding the securities strategy in the "Executive Summary" discussion above.

For the Three Months Ended

December 31, 2023

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

$ 0.02 $ (0.08) $ 0.10

(11) EPS is calculated as net income divided by average shares outstanding.

Management believes EPS is an important measure to investors as it shows the Company's earnings in relation to the Company's outstanding shares.

Rate/Volume Analysis

The table below presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities, comparing the periods indicated.

For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (1) changes in volume, which are changes in the average balance multiplied by the previous period's average rate, and (2) changes in rate, which are changes in the average rate multiplied by the average balance from the previous period.

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.

For the Three Months Ended

December 31, 2024 vs.

September 30, 2024 December 31, 2024 vs.

March 31, 2025 vs.

December 31, 2024

Increase (Decrease) Due to Increase (Decrease) Due to

Volume Rate Total Volume Rate Total

Increase (Decrease) Due to

Volume Rate Total

(Dollars in thousands)

14 unchanged sentences

Net change in net interest income $ 1,237 $ 373 $ 1,610

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.

Comparison of Operating Results for the Six Months Ended March 31, 2025 and 2024

The Company recognized net income of $30.8 million, or $0.24 per share, for the current year period, compared to net income of $16.3 million, or $0.12 per share, for the prior year period.

The lower net income in the prior year period was primarily a result of net losses on the sale of securities associated with the securities strategy.

See additional discussion regarding the securities strategy in the "Executive Summary - Securities Strategy to Improve Earnings" section above.

The securities associated with the securities strategy were sold in the prior year period, and in that period the Company incurred $13.3 million ($10.0 million net of tax) of net losses related to the sale of those securities.

Excluding the effects of the net loss associated with the securities strategy, EPS would have been $0.20 for the prior year 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 period.

The net interest margin increased 13 basis points, from 1.76% for the prior year period to 1.89% for the current year period.

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:

For the Six Months Ended

March 31, Change Expressed in:

2025 2024 Dollars Percent

7 unchanged sentences

Total interest and dividend income $ 195,797 $ 184,981 $ 10,816 5.8

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 "Executive Summary" section above.

The increase in interest income on MBS was due to an increase in average balance primarily as a result of purchases made early in 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.

The increase in interest income on loans receivable was due primarily to the continued shift of loan balances from the one- to four-family loan portfolio to higher yielding commercial loans.

See additional discussion regarding the composition of the loan portfolio in the "Financial Condition" section above.

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 period.

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 period were reinvested into higher yielding securities, and securities purchased between periods were also at higher market yields.

Interest income on cash and cash equivalents decreased due largely to a decrease in the average balance as a result of cash balances being drawn down during the prior fiscal year to fund commercial loans and other operational needs.

The decrease in interest income on investment securities was due to a decrease in average balance, partially offset by an increase in the weighted average yield.

The decrease in the average balance was due primarily to the securities purchased as part of the securities strategy being called or maturing during fiscal year 2024 and not being replaced in their entirety.

The increase in the weighted average yield was due to higher yields than the portfolio yields on the securities purchased between periods.

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:

For the Six Months Ended

March 31, Change Expressed in:

2025 2024 Dollars Percent

4 unchanged sentences

Total interest expense $ 109,727 $ 104,068 $ 5,659 5.4

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.

The increase in interest expense on deposits was due primarily 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.

The decrease in interest expense on borrowings was due to a decrease in the average balance, which was partially offset by a higher weighted average interest rate.

The decrease in the average balance of borrowings was due mainly to FHLB borrowings that matured between periods and were not renewed, along with a decrease in borrowings under the BTFP, which were repaid during the prior year period using some of the proceeds from the securities strategy.

The increase in the weighted average interest rate was due primarily to higher market interest rates on borrowings that matured and were renewed between periods.

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 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 reserve 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.

The Company recorded a provision for credit losses of $677 thousand during the current year period compared to a provision for credit losses of $424 thousand for the prior year period.

The provision for credit losses in the current year period was comprised of a $1.0 million increase in the ACL for loans, partially offset by a $365 thousand decrease in the reserve for off-balance sheet credit exposures.

The increase in ACL was due mainly to commercial loan growth during the current year period, partially offset by an increase in prepayment rates in the current quarter for commercial real estate loans.

The decrease in the reserve for off-balance sheet credit exposures was due primarily to a reduction in the ACL/loan ratio applied to commercial construction off-balance sheet credit exposures, partially offset by an increase in commercial real estate off-balance sheet credit exposures.

Non-Interest Income

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

For the Three Months Ended

December 31, September 30, Change Expressed in:

For the Six Months Ended

March 31, Change Expressed in:

2025 2024 Dollars Percent

3 unchanged sentences

Insurance commissions 1,703 1,598 105 6.6

Net loss from securities transactions — (13,345) 13,345 100.0

Other non-interest income 2,640 2,470 170 6.9

Total non-interest income $ 9,646 $ (4,251) $ 13,897 326.9

The net loss from securities transactions in the prior year period was related to the securities strategy.

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:

For the Six Months Ended

March 31, Change Expressed in:

2025 2024 Dollars Percent

11 unchanged sentences

Total non-interest expense $ 56,688 $ 56,953 $ (265) (0.5)

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.

The increase in salaries and employee benefits was mainly attributable to raises and salary adjustments to remain market competitive, an increase in the number of employees between periods, and a higher accrual of incentive compensation during the current year period than the prior year period related to the Bank's short-term performance plan.

The decrease in information technology and related expense was due mainly to a decrease in usage of third-party professional services along with a decrease in depreciation expense during the current year period.

The decrease in regulatory and outside services was due to a reduction in usage related to certain outside services compared to the prior year period.

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 compared to the prior year period.

The decrease in other non-interest expense was due mainly to higher customer fraud losses in the prior year period and the maturity of an interest rate swap agreement during the current year period which reduced the expense associated with the collateral held in relation to the interest rate swap.

The Company's efficiency ratio was 59.23% for the current year period compared to 74.29% for the prior year period.

Excluding the net losses from the securities strategy, the efficiency ratio would have been 63.28% for the prior year period.

The improvement in the efficiency ratio, excluding net losses from the securities strategy, was due primarily to higher net interest income compared to the prior year period.

The Company's operating expense ratio (annualized) for the current year period was 1.18%, unchanged from the prior year period.

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:

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 Six Months Ended

March 31, Change Expressed in:

2025 2024 Dollars Percent

4 unchanged sentences

Effective Tax Rate 19.6 % 15.5 %

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.

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 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.

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 "Executive Summary - Securities Strategy to Improve Earnings" section above.

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, 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 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.

Included in the prior year period income tax expense and effective tax rate are tax benefits associated with the net loss on the securities strategy.

Absent the tax benefits associated with the net loss on the securities strategy, the effective tax rate would have been 19.1% and income tax expense would have been $6.2 million in the prior year period.

Income tax expense was higher in the current year period compared to the prior year period, excluding the tax benefits associated with the net losses on the securities strategy, due to higher pretax income in the current year period.

Average Balance Sheets

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 Six Months Ended

March 31, 2025 March 31, 2024

Average Interest Average Interest

Outstanding Earned/ Yield/ Outstanding Earned/ Yield/

Amount Paid Rate Amount Paid Rate

(Dollars in thousands)

Interest-earning assets:

One- to four-family loans:

Originated $ 3,902,526 $ 72,686 3.73 % $ 4,006,536 $ 70,211 3.50 %

Correspondent purchased 2,189,204 35,877 3.28 2,391,638 38,934 3.26

Bulk purchased 124,099 1,939 3.12 135,228 1,429 2.11

Total one- to four-family loans 6,215,829 110,502 3.56 6,533,402 110,574 3.38

Commercial loans 1,626,330 47,347 5.76 1,329,123 36,974 5.47

Consumer loans 110,396 4,412 8.01 106,112 4,515 8.51

Total loans receivable (1)

7,952,555 162,261 4.07 7,968,637 152,063 3.80

795,969 22,288 5.60 532,774 13,653 5.13

Investment securities (2)(3)

74,507 2,011 5.40 221,601 4,860 4.39

FHLB stock 98,696 4,637 9.42 108,108 5,114 9.46

Cash and cash equivalents 200,895 4,600 4.53 338,528 9,291 5.40

Total interest-earning assets 9,122,622 195,797 4.28 9,169,648 184,981 4.02

Other non-interest-earning assets 458,858 467,011

Total assets $ 9,581,480 $ 9,636,659

Liabilities and stockholders' equity:

Interest-bearing liabilities:

Checking $ 872,404 1,016 0.23 $ 882,409 883 0.20

High yield savings 176,304 3,657 4.16 4,539 92 4.04

Other savings 442,122 177 0.08 467,495 270 0.12

Money market 1,242,744 7,906 1.28 1,349,997 12,443 1.84

Retail certificates 2,800,744 57,736 4.13 2,589,307 48,496 3.75

Commercial certificates 57,227 1,208 4.23 50,426 973 3.86

Wholesale certificates 67,886 1,498 4.42 121,518 2,701 4.45

Total deposits 5,659,431 73,198 2.59 5,465,691 65,858 2.41

Borrowings 2,161,309 36,529 3.39 2,414,384 38,210 3.16

Total interest-bearing liabilities 7,820,740 109,727 2.81 7,880,075 104,068 2.64

Non-interest-bearing deposits 548,010 532,735

Other non-interest-bearing liabilities 180,034 187,477

Stockholders' equity 1,032,696 1,036,372

Total liabilities and stockholders' equity $ 9,581,480 $ 9,636,659

Net interest income (4)

$ 86,070 $ 80,913

Net interest-earning assets $ 1,301,882 $ 1,289,573

Net interest margin (5)

Ratio of interest-earning assets to interest-bearing liabilities 1.17x 1.16x

Selected performance ratios:

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

0.64 % 0.34 %

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

Average equity to average assets 10.78 10.75

Operating expense ratio (8)

Efficiency ratio (9)(10)

(1) Balances are adjusted for unearned loan fees and deferred costs.

Loans that are 90 or more days delinquent are included in the loans receivable average balance with a yield of zero percent.

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

(3) There were no nontaxable securities in the average balance securities for the six month period ended March 31, 2025.

The average balance of investment securities includes an average balance of nontaxable securities of $101 thousand for the six month period ended March 31, 2024.

(4) Net interest income represents the difference between interest income earned on interest-earning assets and interest paid on interest-bearing liabilities.

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

(5) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.

Management believes 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.

The securities strategy was non-recurring in nature;

therefore, management believes it is meaningful to investors to present certain financial measures without the securities strategy to better evaluate the Company's core operations.

See information regarding the securities strategy in the "Executive Summary" discussion above.

For the Six Months Ended

March 31, 2024

Actual Securities Strategy

(GAAP) Strategy (Non-GAAP)

Return on average assets (annualized) 0.34 % (0.21 %) 0.55 %

Return on average equity (annualized) 3.15 (1.94) 5.09

Efficiency Ratio 74.29 11.01 63.28

$ 0.12 $ (0.08) $ 0.20

(11) EPS is calculated as net income divided by average shares outstanding.

Management believes EPS is an important measure to investors as it shows the Company's earnings in relation to the Company's outstanding shares.

Rate/Volume Analysis

The net changes attributable to the combined impact of both rate and volume have been allocated proportionately to the changes due to volume and the changes due to rate.

For the Six Months Ended

March 31, 2025 vs.

March 31, 2024

Increase (Decrease) Due to

Volume Rate Total

(Dollars in thousands)

Interest-earning assets:

Loans receivable $ 3,008 $ 7,190 $ 10,198

MBS 7,271 1,364 8,635

Investment securities (3,779) 930 (2,849)

FHLB stock (469) (8) (477)

Cash and cash equivalents (3,360) (1,331) (4,691)

Total interest-earning assets 2,671 8,145 10,816

Interest-bearing liabilities:

Checking (10) 143 133

Savings 145 3,328 3,473

Money market (935) (3,602) (4,537)

Certificates of deposit 3,102 5,169 8,271

Borrowings (4,469) 2,788 (1,681)

Total interest-bearing liabilities (2,167) 7,826 5,659

Net change in net interest income $ 4,838 $ 319 $ 5,157

Comparison of Operating Results for the Three Months Ended March 31, 2025 and 2024

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.

Interest and Dividend Income

1 unchanged sentence

For the Three Months Ended

December 31, Change Expressed in:

March 31, Change Expressed in:

2025 2024 Dollars Percent

7 unchanged sentences

Total interest and dividend income $ 98,175 $ 93,289 $ 4,886 5.2

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 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 proceeds from the sale of securities 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.

The increase in interest income on loans receivable was due primarily to the continued shift within the loan portfolio from one- to four-family loans to higher yielding commercial loans.

The increase in interest income on MBS was due to an increase in the average balance compared to the prior year quarter as excess operating cash, cash flows from the investment securities portfolio, and deposit inflows were used to purchase MBS between periods.

The decrease in interest income on cash was due mainly to a decrease in the average balance, along with lower yields compared to the prior year period.

The decrease in interest income on investment securities was due to a decrease in average balance as a result of the securities purchased as part of the securities strategy being called or maturing during fiscal year 2024 and 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.

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

For the Three Months Ended

December 31, Change Expressed in:

March 31, Change Expressed in:

2025 2024 Dollars Percent

4 unchanged sentences

Total interest expense $ 54,335 $ 51,969 $ 2,366 4.6

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, an increase in 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 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.

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.

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.

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 Bank recorded a provision for credit losses during the prior year quarter of $301 thousand.

See Comparison of "Operating Results for the Three Months Ended March 31, 2025 and December 31, 2024" above for additional discussion regarding the provision for credit losses during the current quarter.

Non-Interest Income

1 unchanged sentence

For the Three Months Ended

December 31, Change Expressed in:

March 31, Change Expressed in:

2025 2024 Dollars Percent

3 unchanged sentences

Insurance commissions 927 735 192 26.1

Net loss from securities transactions — (13,345) 13,345 100.0

Other non-interest income 1,430 1,457 (27) (1.9)

Total non-interest income $ 4,953 $ 4,643 $ 310 6.7

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

1 unchanged sentence

For the Three Months Ended

December 31, Change Expressed in:

March 31, Change Expressed in:

2025 2024 Dollars Percent

11 unchanged sentences

Total non-interest expense $ 29,540 $ 28,445 $ 1,095 3.8

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 new core system and ancillary systems ("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 during the current year quarter.

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 increase in salaries and employee benefits was mainly attributable to raises and salary adjustments to remain market competitive, an increase in the number of employees between periods, and a higher accrual of incentive compensation during the current year quarter than the prior year quarter related to the Bank's short-term performance plan.

The decrease in the federal insurance premium was due primarily to a decrease in the FDIC assessment rate as a result of the way the assessment rate was adjusted in fiscal year 2024 for the occurrence of the Bank's net loss during the quarter ended September 30, 2023.

The decrease in advertising and promotional expense was due mainly to the timing of campaigns compared to the prior year quarter.

The Company's efficiency ratio was 60.54% for the current quarter compared to 61.89% 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 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.

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.

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, Change Expressed in:

March 31, Change Expressed in:

2025 2024 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

Income before income tax expense $ 19,253 $ 17,217 $ 2,036 11.8 %

Income tax expense 3,854 3,455 399 11.5

Net income $ 15,399 $ 13,762 $ 1,637 11.9

Effective Tax Rate 20.0 % 20.1 %

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.

Income tax expense was higher in the current year quarter due to higher pretax income compared to the prior year quarter.

Average Balance Sheet

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

March 31, 2025 March 31, 2024

Average Interest Average Interest

Outstanding Earned/ Yield/ Outstanding Earned/ Yield/

Amount Paid Rate Amount Paid Rate

(Dollars in thousands)

Interest-earning assets:

One- to four-family loans:

Originated $ 3,879,115 $ 36,311 3.74 % $ 3,987,323 $ 35,151 3.53 %

Correspondent purchased 2,165,595 17,788 3.29 2,369,131 19,274 3.25

Bulk purchased 122,058 1,044 3.42 133,832 735 2.20

Total one- to four-family loans 6,166,768 55,143 3.58 6,490,286 55,160 3.40

Commercial loans 1,646,347 23,591 5.73 1,351,574 18,708 5.48

Consumer loans 110,126 2,133 7.86 106,267 2,254 8.53

Total loans receivable (1)

7,923,241 80,867 4.08 7,948,127 76,122 3.82

811,013 11,264 5.56 538,882 7,794 5.78

Investment securities (2)(3)

76,497 1,030 5.39 175,832 2,332 5.31

FHLB stock 98,231 2,285 9.43 107,562 2,528 9.45

Cash and cash equivalents 248,063 2,729 4.40 330,751 4,513 5.40

Total interest-earning assets 9,157,045 98,175 4.29 9,101,154 93,289 4.09

Other non-interest-earning assets 454,295 467,949

Total assets $ 9,611,340 $ 9,569,103

Liabilities and stockholders' equity:

Interest-bearing liabilities:

Checking $ 879,218 485 0.22 $ 878,243 438 0.20

High yield savings 227,677 2,335 4.16 9,095 91 4.04

Other savings 442,773 77 0.07 462,144 133 0.12

Money market 1,239,709 3,694 1.21 1,335,269 5,706 1.72

Retail certificates 2,789,206 27,981 4.07 2,623,613 25,297 3.88

Commercial certificates 56,580 572 4.10 51,304 510 4.00

Wholesale certificates 66,249 709 4.34 112,077 1,240 4.45

Total deposits 5,701,412 35,853 2.55 5,471,745 33,415 2.46

Borrowings 2,150,917 18,482 3.48 2,360,776 18,554 3.15

Total interest-bearing liabilities 7,852,329 54,335 2.81 7,832,521 51,969 2.67

Non-interest-bearing deposits 551,549 528,278

Other non-interest-bearing liabilities 173,700 172,042

Stockholders' equity 1,033,762 1,036,262

Total liabilities and stockholders' equity $ 9,611,340 $ 9,569,103

Net interest income (4)

$ 43,840 $ 41,320

Net interest-earning assets $ 1,304,716 $ 1,268,633

Net interest margin (5)

Ratio of interest-earning assets to interest-bearing liabilities 1.17x 1.16x

Selected performance ratios:

Return on average assets (annualized) (6)

0.64 % 0.58 %

Return on average equity (annualized) (7)

Average equity to average assets 10.76 10.83

Operating expense ratio (annualized) (8)

Efficiency ratio (9)

(1) Balances are adjusted for unearned loan fees and deferred costs.

Loans that are 90 or more days delinquent are included in the loans receivable average balance with a yield of zero percent.

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

(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.