What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-08 compared with 2025-05-09 · 382 added, 303 removed, 1100 unchanged (38% of the section changed)

16 unchanged sentences

• changes in real estate values, unemployment levels, general economic trends, and the level and direction of loan delinquencies and charge-offs may require changes in the estimates of the adequacy of the ACL and may adversely affect our business;

• increases in classified and/or non-performing assets, which may require the Bank to increase the ACL, charge-off loans and incur elevated collection and carrying costs related to such non-performing assets;

• increases in classified and/or non-performing assets, which may require the Bank to increase the ACL, charge-off loans and incur elevated collection and carrying costs, or not recognize income for a period of time, related to such non-performing assets;

• results of examinations of the Bank and the Company by their respective primary federal banking regulators, including the possibility that the regulators may, among other things, require us to increase our ACL;

40 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 $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.

The Company recognized net income of $49.2 million, or $0.38 per share, for the current year period, compared to net income of $26.0 million, or $0.20 per share, for the prior year period.

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

See additional discussion regarding the securities strategy in the "Securities Strategy to Improve Earnings" section below.

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

The increase in EPS excluding the effects of the net loss associated with the securities strategy was due primarily to higher net interest income in the current year six month period.

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.

Excluding the effects of the net loss associated with the securities strategy, EPS would have been $0.28 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 15 basis points, from 1.77% for the prior year period to 1.92% for the current year period.

The increase was due mainly to higher yields on the loan portfolio due to the continued shift of loan balances from the one- to four-family loan portfolio to the higher yielding commercial loan portfolio, which outpaced the increase in the cost of deposits, largely in high yield savings accounts and retail certificates of deposit.

The Bank continues to transition from a retail oriented financial institution to one with an increasing focus on commercial customers by strategically growing all aspects of commercial banking through the alignment of technology, people, products, and services.

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 $2.96 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%.

For additional discussion, see the "Strategic Banking Initiatives" section below.

The Company's efficiency ratio was 58.89% for the current year period compared to 69.77% for the prior year period.

Excluding the net losses from the securities strategy, the efficiency ratio would have been 62.87% for the prior year 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 period.

The Company's operating expense ratio (annualized) for the current year period was 1.20% compared to 1.18% for the prior year period, due mainly to higher non-interest expense, largely related to increased expenses due to higher salaries and employee benefits.

Total assets were $9.69 billion at June 30, 2025, a $165.1 million increase from September 30, 2024, due mainly to increases in loans and securities which were funded by excess operating cash and deposit growth, largely in the Bank's high yield savings account offering.

The loans receivable portfolio was $8.02 billion at June 30, 2025, a $116.2 million increase from September 30, 2024 due to a $402.9 million increase in commercial loans, attributable primarily to commercial real estate loan growth, partially offset by a decrease in one- to four-family loans of $286.2 million.

Total deposits were $6.43 billion at June 30, 2025, a $301.2 million increase from September 30, 2024.

The increase during the current year period was due primarily to a $311.8 million increase in the Bank's high yield savings account offering and a $98.3 million, or 37.8%, increase in commercial non-maturity deposits.

The increases were partially offset by an $85.4 million decrease in retail certificates of deposit and a $60.6 million decrease in retail money market accounts.

Management has continued to focus on retaining and growing retail deposits through the Bank's high yield savings account product, which as of June 30, 2025, had an annual percentage yield of 4.00% for accounts meeting the account criteria, including a $10 thousand balance minimum.

The annual percentage yield decreased during the current quarter from 4.30% as of March 31, 2025.

Total borrowings were $2.07 billion at June 30, 2025, a $108.0 million decrease from September 30, 2024.

The decrease was due to principal payments made on the Bank's amortizing FHLB advances, along with borrowings that matured but were not replaced.

Management estimates that the Bank had $2.97 billion in liquidity available at June 30, 2025 based on the Bank's blanket collateral agreement with FHLB and unencumbered securities.

Stockholders' equity totaled $1.05 billion at June 30, 2025, an increase of $13.9 million from September 30, 2024.

As of June 30, 2025, the Bank's capital ratios exceeded the well-capitalized requirements.

The Bank's community bank leverage ratio ("CBLR") as of June 30, 2025 was 9.7%.

The Bank's asset quality remains strong, reflected in the continued low level of loan delinquency and charge-off ratios.

At March 31, 2025, loans 30 to 89 days delinquent were 0.18% of total loans receivable, net, and loans 90 or more days delinquent or in foreclosure were 0.12% of total loans receivable, net.

See "Asset Quality - Delinquent and nonaccrual loans and OREO" below for additional discussion.

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

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.

At June 30, 2025, loans 30 to 89 days delinquent were 0.20% of total loans receivable, net, and loans 90 or more days delinquent or in foreclosure were 0.10% of total loans receivable, net.

See "Financial Condition - Asset Quality - Delinquent and nonaccrual loans and OREO" below for additional discussion.

During the current year period, net charge-offs ("NCOs") were $132 thousand.

At June 30, 2025 the gap between the Bank's amount of interest-earning assets and interest-bearing liabilities projected to reprice within one year was $(963.3) million, or (9.9)% of total assets, compared to $(1.51) billion, or (15.8)% of total assets, at September 30, 2024.

As of June 30, 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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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.

See additional information regarding the impact of the securities strategy on our financial measurements in "Comparison of Operating Results for the Nine Months Ended June 30, 2025 and 2024 - Average Balance Sheets" below.

The $1.30 billion of securities sold had a weighted average yield of 1.22% and an average duration of 3.6 years.

With the proceeds from the sale of the securities, the Company purchased $632.0 million of securities yielding 5.75%, paid down $500.0 million of borrowings with a weighted average cost of 4.70%, and held the remaining cash at the FRB of Kansas City earning interest at the reserve balance rate until such time as it could be used to fund commercial activity or for other Bank operations.

With the proceeds from the sale of the securities, the Company purchased $632.0 million of

securities yielding 5.75%, paid down $500.0 million of borrowings with a weighted average cost of 4.70%, and held the remaining cash at the FRB earning interest at the reserve balance rate until such time as it could be used to fund commercial activity or for other Bank operations.

Strategic Banking Initiatives

Management continues to focus on strategically growing commercial banking through the alignment of technology, people, products and services.

Management believes we will be successful in this initiative as we are focusing on the financial needs of growing companies and small businesses and pairing these companies with experienced relationship managers who offer a broad range of customized services, digital platforms and sophisticated cash management tools tailored to their businesses.

The Company continues to strategically grow all aspects of commercial banking through the alignment of technology, people, products and services.

Management believes we have been and will continue to be successful in this initiative as we focus on meeting the financial needs of growing and established companies and small businesses and pairing them with experienced relationship managers who offer a broad range of customized services, digital platforms and sophisticated cash management tools.

Leveraging our new technology and organizational structure to quickly respond to customer needs in the sales pipeline is central to our growth strategy for commercial deposits.

We expect that commercial loan growth will continue to be driven by prospecting for new relationships and maintaining and expanding existing relationships.

Strong credit quality remains a priority for the Bank as it seeks to grow commercial lending, and we are now able to offer a full suite of treasury management products to service these new and existing lending relationships.

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.

While strong credit quality remains a priority, the Bank is now offering a full suite of treasury management products to service new and existing relationships.

During the current quarter, the Bank continued to implement and utilize commercial loan pricing and profitability software which provides pricing and profitability based on the full customer banking relationship.

Management is in the process of implementing additional software modules during the remainder of fiscal year 2025 that 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 in treasury management services, 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.

During the current quarter the Bank successfully launched new checking products and digital banking services specifically designed for our small business customers.

In the quarter ending September 30, 2025 the Bank expects to introduce digital onboarding for these small business customers using industry-leading risk management and screening tools, which will replace many manual verification tasks.

We continue to listen to the needs of our customers as this line of business grows, and as a result of demand within the treasury management pipeline, we are actively evaluating new technology for lockbox services, integrated accounts receivable, integrated accounts payable and purchase cards.

As part of this growth strategy, we are creating a seamless digital banking experience for all customers, which we believe will better enable the Bank to attract and retain deposits.

This includes a new deposit account onboarding platform implemented in November 2024 and digital banking enhancements for debit cardholders that will allow customers to begin using their card immediately online and in digital wallets without waiting for the physical card in the mail which is projected to be implemented in the fourth quarter of fiscal year 2025.

We are building a suite of private banking products and services.

Subsequent to June 30, 2025, the Bank hired several seasoned and well-connected wealth management professionals to allow us to round out our product offerings, begin managing our first private banking relationships, and transform our trust and wealth management business.

With this, private banking will be a new offering to our customer base.

Financial Condition

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Annualized Annualized

March 31, December 31, Percent September 30, Percent

June 30, March 31, Percent September 30, Percent

2025 2025 Change 2024 Change

9 unchanged sentences

Average number of diluted shares outstanding 130,081 130,026 0.2 129,918 0.2

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.

Loans receivable, net increased $147.6 million, or 7.5% annualized, during the current quarter.

The loan portfolio mix continued to shift from one- to four-family loans to commercial loans.

The commercial loan portfolio grew $243.5 million during the current quarter, due mainly to a $221.2 million increase in the commercial real estate portfolio, partially offset by a $99.3 million decrease in one- to four-family loans.

As of June 30, 2025, the Bank also had $146.2 million of commercial real estate loan commitments which are expected to fund early during the September 30, 2025 quarter.

As a result of continued high interest rates and a lack of housing inventory, which has reduced housing market transactions, our one- to four-family origination and refinance activity has slowed which directly impacts the Bank's one- to four-family loan portfolio.

In addition, the Bank suspended its one- to four-family correspondent lending channels during fiscal year 2024 for the foreseeable future.

Management expects the Bank's one- to four-family originated loan portfolio will continue to decrease as the affordability of housing remains challenging and there is 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.

It is expected that excess repayment cash flows generated from the one- to four-family portfolio will continue to be used to fund commercial loan growth.

Borrowings decreased $71.4 million, or 13.3% annualized, due to a $50.0 million borrowing that matured during the current quarter but was not replaced, along with principal payments made on the Bank's amortizing FHLB advances.

Deposits increased $58.6 million during the current quarter.

Commercial non-maturity deposits increased $44.7 million, or 14.3%, during the current quarter, to $358.0 million as of June 30, 2025, as management continues to find commercial deposit growth opportunities.

Management has also maintained its focus on retaining retail deposits through the Bank's high yield savings account product, which increased $123.9 million during the current quarter to $408.0 million at June 30, 2025.

The increase in high yield savings accounts was partially offset by a $49.7 million decrease in retail money market accounts and a $45.8 million decrease in retail certificates of deposits.

Loans Receivable.

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

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

June 30, 2025 March 31, 2025 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 For the Six Months Ended

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

For the Three Months Ended For the Nine Months Ended

June 30, 2025 June 30, 2025 June 30, 2024

Amount Rate Amount Rate Amount Rate

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Loan originations, participations, and refinances are reported together.

For the Six Months Ended

March 31, 2025 March 31, 2024

For the Nine Months Ended

June 30, 2025 June 30, 2024

Amount Rate % of Total Amount Rate % of Total

36 unchanged sentences

$ 92,479 7.13 $ 30,715 8.17

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 March 31, 2025.

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

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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

As of June 30, 2025, the Bank had one- to four-family loan and refinance commitments totaling $57.9 million at a weighted average rate of 6.45%.

For the Three Months Ended For the Nine Months Ended

June 30, 2025 June 30, 2025

Credit Credit

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$ 86,769 6.23 % 75 % 767 $ 221,689 6.15 % 74 % 767

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 for the time periods presented.

Commercial Loans - The table below presents commercial loan origination and participation activity for the time periods presented, along with weighted average LTV and weighted average DSCR.

For commercial real estate and commercial construction loans, the LTV ratio is calculated using the gross loan amount (composed of unpaid principal and undisbursed amounts) and the collateral value at the time of origination.

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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

For the Three Months Ended June 30, 2025

Originated Participation Total Weighted Weighted

5 unchanged sentences

$ 317,310 7.12 $ 22,689 6.91 $ 339,999 7.11 58 1.58

For the Six Months Ended March 31, 2025

For the Nine Months Ended June 30, 2025

Originated Participation Total Weighted Weighted

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$ 546,274 7.09 $ 92,479 7.13 $ 638,753 7.10 61 1.79

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

The following table presents commercial loan disbursements, excluding lines of credit, during the nine months ended June 30, 2025.

(Dollars in thousands)

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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

June 30, 2025 March 31, 2025 September 30, 2024

Unpaid Undisbursed Gross Loan Gross Loan Gross Loan

2 unchanged sentences

Hotel 26 $ 533,192 $ 51,888 $ 585,080 $ 445,485 $ 323,396

Multi-family 34 204,276 152,792 357,068 386,341 359,707

Senior housing 36 340,142 17,431 357,573 344,497 332,334

Multi-family 34 235,815 120,532 356,347 357,068 359,707

Retail building 131 279,729 40,648 320,377 319,780 316,261

2 unchanged sentences

Warehouse/manufacturing 48 52,283 4,704 56,987 43,564 34,656

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

Land 25 34,396 332 34,728 34,855 32,943

Single use building 27 33,847 262 34,109 35,466 43,438

Other 36 25,524 1,185 26,709 29,375 29,070

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Weighted average rate 5.82 % 6.90 % 5.96 % 5.76 % 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.

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

June 30, 2025 March 31, 2025 September 30, 2024

(Dollars in thousands)

Non-owner occupied $ 1,135,243 $ 1,014,987 $ 886,101

Owner occupied $ 163,745 $ 163,378 $ 165,334

The following table presents management's funding expectations for the Bank's commercial real estate and commercial construction undisbursed amounts and commitments outstanding as of June 30, 2025.

Due to the nature of a revolving line of credit, management is unable to project funding expectations for those balances so those amounts are presented separately 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

The majority of the $146.2 million of commitments expected to fund early during the September 30, 2025 quarter are related to senior housing loans.

Projected Disbursements for the Quarters Ending

September 30,

2025 December 31,

2025 March 31,

2026 Thereafter Revolving Lines of Credit Total

(Dollars in thousands)

4 unchanged sentences

The following table summarizes the Bank's commercial real estate and commercial construction loans by state as of the dates indicated.

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

June 30, 2025 March 31, 2025 September 30, 2024

Unpaid Undisbursed Gross Loan Gross Loan Gross Loan

4 unchanged sentences

Missouri 129 271,326 39,243 310,569 299,085 313,146

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

Arizona 6 101,650 20,784 122,434 36,441 15,452

New York 2 110,000 — 110,000 60,000 60,000

California 4 84,735 10,583 95,318 95,430 15,040

Colorado 10 57,319 3,601 60,920 55,134 50,017

1 unchanged sentence

Nebraska 6 11,227 27,139 38,366 38,658 32,422

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

Arkansas 2 29,475 — 29,475 36,322 36,588

1 unchanged sentence

759 $ 1,727,451 $ 244,404 $ 1,971,855 $ 1,802,424 $ 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 March 31, 2025.

The LTV ratio is calculated using the gross loan amount (composed of unpaid principal and undisbursed amounts) as of March 31, 2025 and the most current collateral value available, which is most often the value at origination/purchase.

The LTV is calculated using the gross loan amount (composed of unpaid principal and undisbursed amounts) as of June 30, 2025 and the most current collateral value available, which is most often the value at origination/purchase.

The DSCR is calculated at the time of origination, and is updated at the time of subsequent loan renewals, financial reviews (for applicable loans and lending relationships), and any other time management is aware of changes that may impact the DSCR.

The DSCR presented in the table below is based on the DSCR at the time of origination unless an updated DSCR has been calculated.

The DSCR presented in the table below is based on the DSCR at the time of origination unless an updated DSCR has been calculated or the loan has reached the end of its stabilization period.

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

Kansas Texas Missouri California Other Total LTV DSCR

Kansas Texas Missouri New York Arizona California Other Total

(Dollars in thousands)

Hotel $ 42,855 $ 140,564 $ 9,518 $ 80,563 $ 119,461 $ 392,961 54.9 % 1.43x

Hotel $ 45,029 $ 142,565 $ 9,441 $ 110,000 $ 97,804 $ 81,943 $ 46,410 $ 533,192

Senior housing 175,176 — 108,632 — — — 56,334 340,142

4 unchanged sentences

Warehouse/manufacturing 32,361 — 16,698 — — — 3,224 52,283

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

Land 6,450 900 308 — — — 26,738 34,396

Single use building 12,309 — 18,371 — 375 2,792 — 33,847

Other 11,835 — 4,852 — — — 8,837 25,524

1 unchanged sentence

Weighted LTV 65 % 53 % 67 % 47 % 53 % 49 % 65 % 61 %

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 March 31, 2025.

For loans and commitments over $50.0 million, $267.4 million was related to hotels in Arizona, California, New York, and Texas, $143.1 million was related to multi-family properties in Kansas, and $60.0 million was related to an office building in Texas.

and Commitment Average Weighted Weighted

Count Amounts Amount LTV DSCR

Weighted DSCR 1.83x 1.41x 1.70x 1.55x 1.44x 1.50x 1.69x 1.66x

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

Unpaid Weighted Weighted Weighted

Count Principal Rate LTV DSCR

(Dollars in thousands)

Hotel 26 $ 533,192 6.50 % 53 % 1.32x

Senior housing 36 340,142 4.68 71 1.42

Retail building 131 279,729 5.25 62 2.03

Multi-family 34 235,815 6.05 64 1.41

Office building 76 126,410 6.30 55 1.83

One- to four-family property 320 66,113 6.00 58 2.45

Warehouse/manufacturing 48 52,283 6.26 65 2.37

Land 25 34,396 6.65 71 4.18

Single use building 27 33,847 6.15 62 1.93

Other 36 25,524 5.82 54 2.07

759 $ 1,727,451 5.82 61 1.66

The following table presents the Bank's commercial real estate and commercial construction loans, including unpaid principal and undisbursed amounts, along with outstanding loan commitments as of June 30, 2025, categorized by aggregate gross loan and commitment amounts and average loan amount.

For loans over $50.0 million, there were $267.0 million related to hotels in Arizona, California, New York, and Texas, $143.1 million related to multi-family properties in Kansas, and $59.7 million related to an office building in Texas.

and Commitment Average Weighted Weighted Weighted

Count Amounts Amount Rate LTV DSCR

(Dollars in thousands)

Greater than $50 million 7 $ 469,830 $ 67,119 6.33 % 54 % 1.37x

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The following table summarizes the Bank's commercial and industrial loans by loan purpose as of the dates indicated.

As of March 31, 2025, the Bank also had four commercial and industrial loan commitments totaling $4.2 million, at a weighted average rate of 7.00%.

March 31, 2025 December 31,

The commercial and industrial gross loan amount increased $96.6 million, or 52%, during the current quarter.

During the current quarter, the Bank originated three loans to two borrower relationships that accounted for $85.3 million of the increase in this portfolio.

Of the $281.2 million of commercial and industrial loans at June 30, 2025, 58%, or $164.5 million, had a gross loan balance of $5.0 million or more.

The largest commercial and industrial lending relationship at June 30, 2025 had a gross loan balance of $81.8 million, which represented 29% of the gross loan balance at June 30, 2025.

In addition, the Bank had three commercial and industrial loan commitments totaling $42.0 million, with a weighted average rate of 6.79%, at June 30, 2025, which are not reflected in the table below.

The recent growth in this portfolio aligns with the Bank's strategy to grow all aspects of commercial banking.

Management anticipates growth will continue in the commercial and industrial loan portfolio but it will likely fluctuate over time due to the nature of these loans.

June 30, 2025 March 31,

2025 September 30,

3 unchanged sentences

Working capital 200 $ 68,721 $ 82,921 $ 151,642 $ 85,213 $ 74,097

Purchase equipment 68 46,902 8,744 55,646 23,019 15,457

Purchase/refinance business assets 48 39,641 504 40,145 41,228 37,950

Finance/lease vehicle 211 23,994 2,775 26,769 27,773 28,318

Purchase equipment 66 13,440 9,579 23,019 23,472 15,457

Other 19 5,132 1,861 6,993 7,329 7,735

1 unchanged sentence

Weighted average rate 6.94 % 7.21 % 7.03 % 6.86 % 6.89 %

The following table summarizes the Bank's commercial and industrial loans by state as of June 30, 2025.

Unpaid Undisbursed Gross Loan

Principal Amount Amount

(Dollars in thousands)

Kansas $ 118,040 $ 93,544 $ 211,584

Missouri 37,768 786 38,554

California 8,009 2,000 10,009

Utah 8,506 — 8,506

Texas 6,129 51 6,180

Other 5,938 424 6,362

$ 184,390 $ 96,805 $ 281,195

The following table presents the Bank's commercial and industrial loan portfolio, including unpaid principal and undisbursed amounts, along with outstanding loan commitments as of June 30, 2025, categorized by aggregate gross loan and commitment amounts and average loan amount.

For loans and commitments over $15.0 million, there were $79.7 million related to working capital loans in Kansas with a weighted DSCR of 1.63x and $30.6 million related to a loan to purchase equipment in Missouri with a DSCR of 1.56x.

and Commitment Average

Count Amounts Amount

(Dollars in thousands)

Greater than $15 million 4 $ 110,268 $ 27,567

>$10 to $15 million 3 36,286 12,095

>$5 to $10 million 7 54,911 7,844

>$1 to $5 million 26 59,042 2,271

>$500 thousand to $1 million 28 20,176 721

Less than $500 thousand 481 42,512 88

549 $ 323,195 589

Asset Quality

Delinquent and nonaccrual loans and OREO.

The following table presents the Company's 30 to 89 day delinquent loans at the dates indicated.

The following table presents the Bank's 30 to 89 day delinquent loans at the dates indicated.

The amounts in the table represent the unpaid principal balance of the loans less related charge-offs, if any.

Of the loans 30 to 89 days delinquent at 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.

Of the loans 30 to 89 days delinquent at June 30, 2025, 71% were 59 days or less delinquent.

Loans Delinquent for 30 to 89 Days at:

March 31, December 31, September 30,

June 30, March 31, September 30,

2025 2025 2024

11 unchanged sentences

to total loans receivable, net 0.20 % 0.18 % 0.20 %

The following table presents the Company's nonaccrual loans and OREO at the dates indicated.

The following table presents the Bank's nonaccrual loans and OREO at the dates indicated.

The amounts in the table represent the unpaid principal balance of the loans less related charge-offs, if any.

2 unchanged sentences

Non-performing assets include nonaccrual loans and OREO.

The increase in nonaccrual commercial real estate loans as of June 30, 2025 was due primarily to two participation loans related to the same borrowing relationship that were moved to substandard during the current quarter.

See the asset classification discussion below for additional information regarding these loans.

Nonaccrual Loans and OREO at:

March 31, December 31, September 30,

June 30, March 31, September 30,

2025 2025 2024

21 unchanged sentences

1 $ 92 — $ — 1 $ 55

1 92 — — 1 55

Total non-performing assets 63 $ 48,545 81 $ 10,833 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 March 31, 2025.

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

The following table presents the states where the properties securing ten percent or more of the total amount of the Bank's one- to four-family loans are located and the corresponding balance of loans 30 to 89 days delinquent, 90 or more days delinquent or in foreclosure, and weighted average LTV for loans 90 or more days delinquent or in foreclosure at June 30, 2025.

The LTVs were based on the current loan balance and either the lesser of the purchase price or original appraisal, or the most recent Bank appraisal, if available.

Loans 30 to 89 Loans 90 or More Days Delinquent

6 unchanged sentences

$ 6,018,486 100.0 % $ 12,575 100.0 % $ 4,043 100.0 % 50

The following table presents the unpaid principal balance of commercial real estate loans, aggregated by state, that were 30 to 89 days delinquent, 90 or more days delinquent or in foreclosure, and the weighted average LTV and weighted average DSCR for loans 90 or more days delinquent or in foreclosure at June 30, 2025.

See additional discussion regarding the Bank's commercial real estate loan DSCRs and LTVs in the "Financial Condition - Loans Receivable - Commercial Loans" section above.

Loans 30 to 89 Loans 90 or More Days Delinquent

Days Delinquent or in Foreclosure

State Amount % of Total Amount % of Total LTV DSCR

(Dollars in thousands)

Kansas $ 1,654 100.0 % $ 3,171 93.6 % 47 % 2.02x

Other states — — 216 6.4 19 1.84

$ 1,654 100.0 % $ 3,387 100.0 % 45 2.01

Classified loans.

The following table presents the amortized cost of loans classified as special mention or substandard at the dates presented.

The increase in commercial real estate substandard loans at March 31, 2025 and December 31, 2024 compared to September 30, 2024 was due mainly to a participation loan for $39.0 million as of March 31, 2025 related to a hotel in Texas.

The property is taking longer than projected to stabilize and the borrower is not meeting the debt service coverage loan covenant required by the loan agreement.

The borrower projects improved occupancy and cash flow during the remainder of calendar year 2025 and expects the project to fully stabilize during calendar year 2026.

As of March 31, 2025, the LTV on this loan was 47% and the loan was not delinquent.

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

The increase in commercial real estate substandard loans at June 30, 2025 compared to March 31, 2025 was due mainly to two participation loans related to the same borrowing relationship, totaling $40.2 million as of June 30, 2025 and secured by a hotel.

The borrower is working on a recapitalization plan, which is anticipated to be completed later in calendar year 2025, and the Bank entered into an agreement with the borrower during the current quarter which allows the borrower to not make payments during this period.

Therefore, these loans were considered nonaccrual at June 30, 2025 and classified as substandard.

The loans were not considered delinquent at June 30, 2025 due to the terms of the agreement.

As of June 30, 2025, the combined Bank LTV on the loans was 45% based on an appraisal completed in the past three months.

The increase in commercial real estate substandard loans since September 30, 2024 has been related to the $40.2 million of participation loans discussed above, along with another $38.9 million participation loan also secured by a hotel.

In regard to the $38.9 million participation loan, the property is taking longer than anticipated to stabilize and the borrower is not meeting the debt service coverage loan covenant required by the loan agreement.

The borrower projects improved occupancy and cash flow during the remainder of calendar year 2025 and expects to be fully stabilized during calendar year 2026.

As of June 30, 2025, the loan was not delinquent and the Bank LTV was 47% based on an appraisal completed approximately two years ago.

The Bank has had a participation relationship with the lead bank for all three commercial real estate substandard participation loans discussed above for ten years, and the Bank holds the same percentage interest in these loans as the lead bank.

These loans are recourse with a personal guaranty and have strong LTVs.

Both borrower groups (developers, owners and guarantors) are seasoned commercial real estate developers with over 40 years of experience each.

These loans were individually evaluated for loss as of June 30, 2025.

There have been no charge-offs with these loans nor has management set aside a specific valuation allowance associated with these loans as of June 30, 2025 due to the strong LTVs.

June 30, 2025 March 31, 2025 September 30, 2024

Special Mention Substandard Special Mention Substandard Special Mention Substandard

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Allowance for Credit Losses.

The Bank utilizes a discounted cash flow approach for estimating expected credit losses for pooled loans and loan commitments.

The Bank utilizes a discounted cash flow model for estimating expected credit losses for pooled loans and loan commitments.

Expected credit losses are determined by calculating projected future loss rates which are dependent upon forecasted economic indices and applying qualitative factors when deemed appropriate by management.

At 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.

At June 30, 2025, management applied qualitative factors to account for large dollar commercial real estate loan concentrations and potential risk of loss in market value for newer one- to four-family loans.

These qualitative factors were applied to account for credit risks not fully reflected in the discounted cash flow model.

In order to model the probabilities of default used in the discounted cash flow model, the model pairs the results of a regression analysis with an economic forecast for each loan pool in the model.

The regression analyses are determined by comparing historical loss rates to related economic indices.

The historical loss rates are determined by using the Company's historical loss experience, or peer data when the Company's own historical loss rates are not reflective of future loss expectations.

During the current quarter, the Company updated the regression analyses used in the model which resulted in some changes to the amounts and levels of ACL calculated by the model for commercial loans.

The regression analyses were updated in order to assist management in estimating expected credit losses in the commercial loan portfolio due to growth in this portfolio, including growth in market areas outside of the Bank's local market footprint.

Management applied a qualitative factor for large dollar commercial real estate loan concentrations.

The Company's commercial real estate loans generally have low LTVs and strong DSCRs which serve as indicators that losses in the commercial real estate loan portfolios might be unlikely;

however, because there is uncertainty surrounding the nature, timing and amount of expected losses, management believes that in the event of a realized loss within the large dollar commercial real estate loan pool, the magnitude of such a loss could be significant.

The large dollar commercial real estate loan concentration qualitative factor addresses the risk associated with a large dollar relationship deteriorating due to a loss event.

As part of its analysis, management considered external data including historical commercial real estate price index trending information from a variety of sources to help determine the amount of this qualitative factor.

For one- to four-family loans, management believes there is potential risk of loss in market value in an economic downturn related to, in particular, newer originations where property values have not experienced price appreciation like more seasoned loans in our portfolio and applied a qualitative factor to account for this risk.

To determine the appropriate amount of the one- to four-family loan qualitative factor as of June 30, 2025, management considered external historical home price index trending information, along with historical loan loss experience and portfolio balance trending, the one-to four-family loan portfolio composition with regard to loan size, and management's knowledge of the Bank's loan portfolio and the one- to four-family lending industry.

See "Part II, Item 8.

Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 1.

Summary of Significant Accounting Policies" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024 and "Part 1, Item 1.

Summary of Significant Accounting Policies" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024 and "Part I, Item 1.

Loans Receivable and Allowance for Credit Losses" within this Quarterly Report on Form 10-Q for additional information related to the key assumptions used in the discounted cash flow model and the qualitative factors.

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

The decrease in the 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.

The decrease in the ratio of the ACL to total loans as of June 30, 2025 from March 31, 2025 was due primarily to a decrease in the commercial real estate ACL to total loans.

The changes in the commercial ratios in the current quarter from the prior quarters were due primarily to the regression analyses update discussed above.

Based on management's evaluation of the credit risk within the Bank's commercial real estate loan portfolio, taking into consideration DSCRs and LTVs, management believes the Bank's ACL ratio for commercial real estate loans is appropriate for the credit risk.

See additional discussion regarding the Bank's commercial real estate loan DSCRs and LTVs in the "Financial Condition - Loans Receivable - Commercial Loans" section above.

Distribution of ACL Ratio of ACL to Loans Receivable

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

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

2025 2025 2024 2025 2025 2024

12 unchanged sentences

Total $ 22,808 $ 23,970 $ 23,035 0.28 0.30 0.29

Historically, the Bank has maintained very low delinquency ratios and net charge-off ("NCO") rates.

Historically, the Bank has maintained very low delinquency ratios and NCO rates.

Over the past two years, the Bank's highest ratio of commercial loans 90 days or more delinquent to total commercial loans at a quarter end was 0.22%.

The highest such ratio for one- to four-family originated and correspondent loans, combined, was 0.12%.

The amount of total NCOs during the current quarter and current year six month period was $114 thousand and $107 thousand, respectively, the majority of which related to one one- to four- family bulk purchased loan.

During the 10-year period ended March 31, 2025, the Bank recognized $1.2 million of total NCOs.

As of March 31, 2025, the ACL balance was $24.0 million and the reserve for off-balance sheet credit exposures totaled $5.6 million, which management believes is adequate for the risk characteristics in our loan portfolio.

The Bank's commercial real estate ACL ratios in aggregate, continue to be higher than those of our peers.

The following tables present the average and median commercial real estate ACL ratios for the Bank and two of the Bank's peer groups for the periods noted.

The Office of the Comptroller of the Currency ("OCC") peer group consists of all savings banks with greater than $1 billion in assets, and the asset size peer group consists of all banks between $5 billion and $15 billion in asset size.

The peer group information is sourced from the respective peers' Call Reports.

Average March

2023 September

2023 December

2024 September

2024 December

Bank 1.28 % 1.45 % 1.57 % 1.58 % 1.60 % 1.57 % 1.32 % 1.32 % 1.27 %

OCC 1.21 % 1.22 % 1.21 % 1.14 % 1.10 % 1.11 % 1.10 % 1.12 % N/A

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

2023 September

2023 December

2024 September

2024 December

Bank 1.28 % 1.45 % 1.57 % 1.58 % 1.60 % 1.57 % 1.32 % 1.32 % 1.27 %

OCC 1.00 % 0.98 % 1.03 % 1.00 % 0.98 % 1.02 % 0.99 % 1.06 % N/A

Asset Size 1.12 % 1.11 % 1.12 % 1.08 % 1.10 % 1.06 % 1.08 % 1.09 % N/A

The amount of total NCOs during the current quarter and current year period was $25 thousand and $132 thousand, respectively.

The majority of the NCOs during the current year period related to one single-family bulk purchased loan.

During the 10-year period ended June 30, 2025, the Bank recognized $1.1 million of total NCOs.

As of June 30, 2025, the ACL balance was $22.8 million and the reserve for off-balance sheet credit exposures totaled $6.3 million, which management believes is adequate for the credit risk characteristics in our loan portfolio.

The following table presents ACL activity and related ratios at the dates and for the periods indicated.

2 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 Six Months Ended

March 31, 2025 March 31, 2024

At or For the Nine Months Ended

June 30, 2025 June 30, 2024

(Dollars in thousands)

11 unchanged sentences

ACL at end of period to NCOs during the period (annualized) 129x 332x

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 ratio of NCOs to average non-performing assets was lower at June 30, 2025 compared to June 30, 2024, due to an increase in average non-performing assets in the current year period compared to the prior year period, which was partially offset by higher NCOs.

As noted above, the majority of the NCOs in the current year period related to one single-family bulk purchased loan and the increase in average non-performing assets was due primarily to two commercial participation loans that were nonaccrual at June 30, 2025, as discussed above, and thereby considered non-performing assets.

The ratio of ACL to nonaccrual loans was lower at the end of the current year period compared to the end of the prior year period due mainly to a higher balance of nonaccrual loans in the current year period compared to the prior year period, largely related to two commercial participation loans that were nonaccrual at June 30, 2025 as discussed above, along with a lower ACL balance at June 30, 2025.

The ratio of ACL to loans receivable, net was lower at the end of the current year period compared to the end of the prior year period due primarily to a reduction in the ACL/loan ratio for commercial real estate loans due mainly to the regression analyses update discussed above.

See "Part I, Item 1.

Loans Receivable and Allowance for Credit Losses" within this Quarterly Report on Form 10-Q 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 period, due primarily to higher NCOs in the current year period, partially offset by a lower ACL balance at June 30, 2025.

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

For the Six Months Ended

March 31, 2025 March 31, 2024

For the Nine Months Ended

June 30, 2025 June 30, 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 92% of our securities portfolio at March 31, 2025.

Overall, fixed-rate securities comprised 92% of our securities portfolio at June 30, 2025.

The weighted average life ("WAL") is the estimated remaining maturity (in years) after three month historical prepayment speeds and projected call option assumptions have been applied.

Weighted average yields on tax-exempt securities are not calculated on a fully tax-equivalent basis.

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

June 30, 2025 March 31, 2025 September 30, 2024

Amount Yield WAL Amount Yield WAL Amount Yield WAL

7 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 Six Months Ended

March 31, 2025 March 31, 2024

For the Nine Months Ended

June 30, 2025 June 30, 2024

Amount Yield WAL Amount Yield WAL

8 unchanged sentences

Ending balance - carrying value $ 956,229 5.47 4.6 $ 801,953 5.68 5.7

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.

Total liabilities were $8.65 billion at June 30, 2025, compared to $8.50 billion at September 30, 2024.

The increase was due primarily to a $301.2 million increase in deposits, partially offset by a $108.0 million decrease in borrowings due to principal payments made on the Bank's amortizing advances, along with borrowings that matured but were not replaced.

The following table presents the amount, weighted average rate and percent of total for the components of our deposit portfolio at the dates presented.

The decrease in the deposit portfolio rate at March 31, 2025 compared to December 31, 2024 and September 30, 2024 was due mainly to lower rates on retail certificates of deposit.

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

The decrease in the deposit portfolio rate at June 30, 2025 compared to March 31, 2025 and September 30, 2024 was due mainly to lower rates on retail certificates of deposit.

June 30, 2025 March 31, 2025 September 30, 2024

% of % of % of

9 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.

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

Total deposits increased $301.2 million, or 4.9%, from September 30, 2024.

The increase was primarily in retail non-maturity deposits which increased $246.6 million, or 8.5%, due mainly to an increase in high yield savings accounts, along with a $98.3 million, or 37.8%, increase in commercial non-maturity deposits, and a $40.2 million, or 52.5%, increase in public unit certificates from September 30, 2024.

The increases noted above were partially offset by an $85.4 million, or 3.0%, decrease in retail certificates of deposit from September 30, 2024.

June 30, 2025 March 31, 2025 September 30, 2024

% of % of % of

21 unchanged sentences

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

June 30, 2025 March 31, 2025 September 30, 2024

% of % of % of

5 unchanged sentences

$ 6,431,137 2.24 100.0 % $ 6,372,545 2.28 100.0 % $ 6,129,982 2.45 100.0 %

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.

As of June 30, 2025, approximately $899.4 million (or approximately 14%) of the Bank's Call Report deposit balance was uninsured, of which approximately $509.4 million (or approximately 8% of the Bank's Call Report deposit balance) related to commercial and retail deposit accounts, with the remainder mainly comprised of fully collateralized public unit deposits and intercompany accounts.

The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank's regulatory reporting requirements.

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.

Total borrowings at June 30, 2025 were $2.07 billion, which was comprised of $1.87 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 June 30, 2025.

Amortizing FHLB advances totaling $297.2 million as of June 30, 2025 are presented based on their maturity dates versus their quarterly scheduled repayment dates.

Maturity by Contractual Effective

14 unchanged sentences

The weighted average maturity ("WAM") is the remaining weighted average contractual term in years.

The beginning and ending WAMs represent the remaining maturity at each date presented.

During the prior year six month period, Federal Reserve's Bank Term Funding Program ("BTFP") borrowings were paid off with the proceeds received from the securities strategy.

For the Three Months Ended For the Six Months Ended

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

The beginning and ending WAMs represent the remaining maturity as of the first and last days of the period presented.

During the current quarter, the Bank prepaid fixed-rate FHLB advances with a weighted average remaining term of 0.6 years totaling $200.0 million and a weighted average contractual interest rate of 4.70%, and replaced these advances with $200.0 million of fixed-rate FHLB advances with a weighted average contractual interest rate of 3.83% and a weighted average term of 2.5 years.

The weighted average effective interest rate of the new advances was 3.93%, which includes the impact of deferred prepayment penalties being recognized over the life of the new advances.

This activity is reflected in the table below.

During the prior year period, Federal Reserve's Bank Term Funding Program ("BTFP") borrowings were paid off with a portion of the proceeds received from the securities strategy.

For the Three Months Ended For the Nine Months Ended

June 30, 2025 June 30, 2025 June 30, 2024

Effective Effective Effective

6 unchanged sentences

Ending balance $ 2,072,152 3.52 1.7 $ 2,072,152 3.52 1.7 $ 2,293,074 3.24 1.7

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 March 31, 2025.

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

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

2025 2025 2026 2026 Total

11 unchanged sentences

Repricing Rate 4.00 % 3.56 % 3.19 % 3.63 % 3.61 %

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

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

Retail certificates of deposit 0.9

3 unchanged sentences

Stockholders' Equity.

Stockholders' equity totaled $1.04 billion at March 31, 2025, an increase of $4.8 million from September 30, 2024.

Stockholders' equity totaled $1.05 billion at June 30, 2025, an increase of $13.9 million from September 30, 2024.

Consistent with our goal to operate a sound and profitable financial organization, we actively seek to maintain a well-capitalized status for the Bank in accordance with regulatory standards.

As of March 31, 2025, the Bank's capital ratios exceeded the well-capitalized requirements and the Bank exceeded internal policy thresholds for sensitivity to changes in interest rates.

As of June 30, 2025, the Bank's capital ratios exceeded the well-capitalized requirements and the Bank exceeded internal policy thresholds for sensitivity to changes in interest rates.

See "Liquidity and Capital Resources" below for additional information regarding the Bank's regulatory capital requirements.

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

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.

As of June 30, 2025, the Bank's CBLR was 9.7%.

During the nine months ended June 30, 2025, the Company paid regular quarterly cash dividends totaling $33.2 million, or $0.255 per share.

On July 22, 2025, the Company announced a regular quarterly cash dividend of $0.085 per share, or approximately $11.1 million, payable on August 15, 2025 to stockholders of record as of the close of business on August 1, 2025.

At June 30, 2025, Capitol Federal Financial, Inc., at the holding company level, had $16.1 million in cash on deposit at the Bank.

For fiscal year 2025, it is the intention of the Company's Board of Directors to pay out the regular quarterly cash dividend of $0.085 per share, totaling $0.34 per share for the year.

1 unchanged sentence

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.

Through the payment of the True Blue dividend in prior years, the Company was able to reduce its excess capital.

Management and the Board of Directors believe that the current capital levels are appropriate.

The last True Blue dividend occurred in fiscal year 2022.

It has been 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.

3 unchanged sentences

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.

There were no share repurchases during the current year 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 the holding company has a sufficient cash balance.

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 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.

For the quarter ended September 30, 2025, the amount presented represents the dividend payable on August 15, 2025 to stockholders of record as of the close of business on August 1, 2025.

Calendar Year

11 unchanged sentences

For the Three Months Ended

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

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

2025 2025 2024 2024 2024

23 unchanged sentences

Diluted EPS 0.14 0.12 0.12 0.09 0.07

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.

Comparison of Operating Results for the Three Months Ended June 30, 2025 and March 31, 2025

For the quarter ended June 30, 2025, the Company recognized net income of $18.4 million, or $0.14 per share, compared to net income of $15.4 million, or $0.12 per share, for the quarter ended March 31, 2025.

The higher net income in the current quarter was due primarily to higher net interest income and lower tax expense.

The net interest margin increased six basis points, from 1.92% for the prior quarter to 1.98% for the current quarter due mainly to an increase in the average balance of commercial loans as the loan portfolio continued to shift from one- to four-family loans to commercial loans.

Interest and Dividend Income

1 unchanged sentence

For the Three Months Ended

March 31, December 31, Change Expressed in:

June 30, March 31, Change Expressed in:

2025 2025 Dollars Percent

7 unchanged sentences

Total interest and dividend income $ 99,678 $ 98,175 $ 1,503 1.5

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.

The increase in interest income on loans receivable was due mainly to an increase in the average balance of the commercial loan portfolio as the loan portfolio continued to shift from one-to four-family loans to commercial loans.

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.

The increase in interest income on MBS was due to a higher average balance compared to the prior quarter due to securities purchases between periods.

The decrease in interest income on cash and cash equivalents was due to a decrease in the average balance as operating cash was utilized during the current quarter to accommodate funding needs for commercial loan activities and to repay borrowings.

The decrease in interest income on investment securities was due mainly to a lower average balance compared to the prior quarter, primarily as a result of investments that matured or were called and not replaced.

Interest Expense

1 unchanged sentence

For the Three Months Ended

March 31, December 31, Change Expressed in:

June 30, March 31, Change Expressed in:

2025 2025 Dollars Percent

4 unchanged sentences

Total interest expense $ 54,220 $ 54,335 $ (115) (0.2)

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.

Within the deposit portfolio, the increased interest expense associated with the Bank's high yield savings account, which was the result of growth in these accounts, was almost entirely offset by a decrease in the cost of retail certificates of deposits due to a decrease in the weighted average rate and balance of that portfolio.

Management has continued to focus on retaining and growing deposits through its high yield savings account product.

See additional discussion in "Financial Condition - Deposits" above.

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.

The Company recorded a release of provision for credit losses of $451 thousand during the current quarter.

The release was comprised of a $1.1 million decrease in the ACL for loans, partially offset by a $686 thousand increase in the reserve for off-balance sheet credit exposures.

The $1.1 million decrease in the ACL was mainly related to the commercial loan portfolio as the increase in ACL related to growth in this portfolio was more than offset by an update to the ACL model's regression analyses implemented during the current quarter which also mainly impacted the commercial loan portfolio.

See additional details in the "Financial Condition - Allowance for Credit Losses" discussion above.

The increase in the reserve for off-balance sheet credit exposures was due primarily to an increase in commercial and industrial off-balance sheet credit exposures.

The Company did not record a provision for credit losses during the prior quarter as the decrease in the ACL was entirely offset by the increase in the reserve for off-balance sheet credit exposures.

Non-Interest Income

1 unchanged sentence

For the Three Months Ended

March 31, December 31, Change Expressed in:

June 30, March 31, Change Expressed in:

2025 2025 Dollars Percent

5 unchanged sentences

Total non-interest income $ 5,288 $ 4,953 $ 335 6.8

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.

The increase in deposit service fees was due primarily to an increase in debit card usage, which generated additional interchange and service charge income in the current quarter.

Non-Interest Expense

1 unchanged sentence

For the Three Months Ended

March 31, December 31, Change Expressed in:

June 30, March 31, Change Expressed in:

2025 2025 Dollars Percent

11 unchanged sentences

Total non-interest expense $ 29,564 $ 29,540 $ 24 0.1

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 increase in advertising and promotional expense was due primarily to the timing of seasonal sponsorships and campaigns compared to the prior quarter.

The decrease in other non-interest expense was due primarily to lower customer fraud losses in the current quarter, along with lower costs associated with a loss on a property acquired in 2018, which was sold during the prior quarter, and OREO property.

The Company's efficiency ratio was 58.26% for the current quarter compared to 60.54% 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 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 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.

A lower value generally indicates that it is costing the financial institution less money to generate revenue.

The Company's operating expense ratio (annualized) for the current quarter was 1.23%, unchanged from the prior quarter.

Income Tax Expense

1 unchanged sentence

For the Three Months Ended

March 31, December 31, Change Expressed in:

June 30, March 31, Change Expressed in:

2025 2025 Dollars Percent

4 unchanged sentences

Effective Tax Rate 15.0 % 20.0 %

During the current quarter, the State of Kansas enacted a change in the tax law that is effective October 1, 2027 for the Company and the Bank.

The State of Kansas is changing the way it attributes taxable income to the State, specifically changing from a three-factor apportionment (property, payroll and receipts) to a single, revenue-based method.

Most of the Bank's property and payroll are located in Kansas, though a large amount of its revenue generating activities, predominantly loan interest income, are outside of Kansas.

Therefore, the Bank is expecting a decrease in income apportioned to Kansas starting in fiscal year 2028 due to the tax law change.

As a result, as of June 30, 2025, the Bank remeasured its state deferred tax assets and liabilities expected as of October 1, 2027.

The Bank recorded an $857 thousand reduction in net state income tax expense related to this law change, which is the primary reason for the lower effective tax rate and income tax expense for the current quarter as compared to the prior quarter.

Management anticipates the effective tax rate for fiscal year 2025 will be 18% to 19% which is lower than was originally expected primarily due to the Kansas law change.

Average Balance Sheet

5 unchanged sentences

For the Three Months Ended

March 31, 2025 December 31, 2024

June 30, 2025 March 31, 2025

Average Interest Average Interest

51 unchanged sentences

(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.

(3) There were no nontaxable securities included in the average balance of investment securities for the quarters ended June 30, 2025 or March 31, 2025.

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

13 unchanged sentences

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 three months ended March 31, 2025 to the three months ended December 31, 2024.

The table below presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities, comparing the three months ended June 30, 2025 to the three months ended March 31, 2025.

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.

1 unchanged sentence

For the Three Months Ended

March 31, 2025 vs.

December 31, 2024

June 30, 2025 vs.

March 31, 2025

Increase (Decrease) Due to

16 unchanged sentences

Net change in net interest income $ 1,579 $ 39 $ 1,618

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

Comparison of Operating Results for the Nine Months Ended June 30, 2025 and 2024

The Company recognized net income of $49.2 million, or $0.38 per share, for the current year period, compared to net income of $26.0 million, or $0.20 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.

The lower net income in the prior year 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 "Executive Summary - Securities Strategy to Improve Earnings" section above.

3 unchanged sentences

The net interest margin increased 15 basis points, from 1.77% for the prior year period to 1.92% 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 Six Months Ended

March 31, Change Expressed in:

For the Nine Months Ended

June 30, Change Expressed in:

2025 2024 Dollars Percent

8 unchanged sentences

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.

See additional discussion regarding the composition of the loan portfolio in the "Financial Condition - Loans Receivable" 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.

The higher weighted average yield was due mainly to the securities strategy, as the proceeds from 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.

4 unchanged sentences

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 Six Months Ended

March 31, Change Expressed in:

For the Nine Months Ended

June 30, Change Expressed in:

2025 2024 Dollars Percent

4 unchanged sentences

Total interest expense $ 163,947 $ 158,739 $ 5,208 3.3

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 increase in interest expense on deposits was due primarily to an increase in the weighted average rate paid on savings accounts, specifically the high yield savings account product, and retail certificates of deposit.

To a lesser extent, an increase in the average balance of retail certificates of deposit also increased interest expense on deposits.

The increases were partially offset by a decrease in the weighted average rate paid on and in the average balance of money market accounts.

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 decrease in the average balance of borrowings was due mainly to FHLB borrowings that matured between periods and were not renewed, along with a decrease in borrowings under the Federal Reserve's BTFP, which were repaid during the prior year period using a portion 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

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.

The Company recorded a provision for credit losses of $226 thousand during the current year period compared to a provision for credit losses of $1.9 million for the prior year period.

The provision for credit losses in the current year period was comprised of a $321 thousand increase in the reserve for off-balance sheet credit exposures, partially offset by a $95 thousand decrease in the ACL for loans.

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 Six Months Ended

March 31, Change Expressed in:

For the Nine Months Ended

June 30, Change Expressed in:

2025 2024 Dollars Percent

6 unchanged sentences

Total non-interest income $ 14,934 $ 458 $ 14,476 3,160.7

The increase in deposit service fees was due mainly to growth in treasury management service fees, along with modest increases in interchange revenue and retail service fees.

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

The change in other non-interest income between periods mainly related to the prior year including a net loss on a financial derivative related to a commercial lending relationship and no such loss in the current year period due to the loan being paid off in the prior year.

Non-Interest Expense

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

For the Six Months Ended

March 31, Change Expressed in:

For the Nine Months Ended

June 30, Change Expressed in:

2025 2024 Dollars Percent

11 unchanged sentences

Total non-interest expense $ 86,252 $ 84,903 $ 1,349 1.6

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 increase in salaries and employee benefits was mainly attributable to an increase in the number of employees between periods, merit increases and salary adjustments to remain market competitive, and a higher accrual of incentive compensation during the current year 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.

1 unchanged sentence

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 decrease in other non-interest expense was due mainly to lower customer fraud losses in the current year period compared to 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 58.89% for the current year period compared to 69.77% for the prior year period.

Excluding the net losses from the securities strategy, the efficiency ratio would have been 62.87% 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.

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 period.

The Company's operating expense ratio (annualized) for the current year period was 1.20% compared to 1.18% for the prior year period, due mainly to higher non-interest expense, largely attributable to higher salaries and employee benefits.

Income Tax Expense

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

For the Six Months Ended

March 31, Change Expressed in:

For the Nine Months Ended

June 30, Change Expressed in:

2025 2024 Dollars Percent

4 unchanged sentences

Effective Tax Rate 18.0 % 25.6 %

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.

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

The effective tax rate was higher in the prior year period due mainly to the income tax associated with the pre-1988 bad debt recapture.

Average Balance Sheets

4 unchanged sentences

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

For the Nine Months Ended

June 30, 2025 June 30, 2024

Average Interest Average Interest

51 unchanged sentences

(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.

(3) There were no nontaxable securities in the average balance securities for the nine month period ended June 30, 2025.

The average balance of investment securities includes an average balance of nontaxable securities of $68 thousand for the nine month period ended June 30, 2024.

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

16 unchanged sentences

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

For the Six Months Ended

March 31, 2024

For the Nine Months Ended

June 30, 2024

Actual Securities Strategy

10 unchanged sentences

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

For the Nine Months Ended

June 30, 2025 vs.

June 30, 2024

Increase (Decrease) Due to

16 unchanged sentences

Net change in net interest income $ 9,581 $ 710 $ 10,291

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.

Comparison of Operating Results for the Three Months Ended June 30, 2025 and 2024

For the quarter ended June 30, 2025, the Company recognized net income of $18.4 million, or $0.14 per share, compared to net income of $9.6 million, or $0.07 per share for the quarter ended June 30, 2024.

The increase in net income was due primarily to an increase in net interest income and lower income tax expense, partially offset by higher non-interest expense.

The net interest margin increased 21 basis points, from 1.77% for the prior year quarter to 1.98% for the current year quarter, due primarily to an increase in the average balance of higher yielding commercial loans as the loan portfolio continued to shift from one- to four-family loans to commercial loans between periods.

Interest and Dividend Income

1 unchanged sentence

For the Three Months Ended

March 31, Change Expressed in:

June 30, Change Expressed in:

2025 2024 Dollars Percent

8 unchanged sentences

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 cash was due mainly to a decrease in the average balance, along with lower yields compared to the prior year quarter.

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.

2 unchanged sentences

For the Three Months Ended

March 31, Change Expressed in:

June 30, Change Expressed in:

2025 2024 Dollars Percent

4 unchanged sentences

Total interest expense $ 54,220 $ 54,671 $ (451) (0.8)

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.

The decrease in interest expense on deposits was due mainly to a decrease in the weighted average rate paid on retail certificates of deposit and retail checking accounts, which more than offset the increase in the weighted average rate paid on savings accounts, specifically the high yield savings account product.

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 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.

The Company recorded a release of provision for credit losses of $451 thousand during the current quarter compared to a provision for credit losses during the prior year quarter of $1.5 million.

See "Comparison of Operating Results for the Three Months Ended June 30, 2025 and March 31, 2025" 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

March 31, Change Expressed in:

June 30, Change Expressed in:

2025 2024 Dollars Percent

5 unchanged sentences

Total non-interest income $ 5,288 $ 4,709 $ 579 12.3

The increase in deposit service fees was due mainly to growth in treasury management service fees compared to the prior year quarter.

The increase in other non-interest income was due primarily to an increase in BOLI income due to changes in rates and an increase in the crediting rate as a result of an agreement associated with certain existing policies that was executed during the current quarter.

Non-Interest Expense

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For the Three Months Ended

March 31, Change Expressed in:

June 30, Change Expressed in:

2025 2024 Dollars Percent

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Total non-interest expense $ 29,564 $ 27,950 $ 1,614 5.8

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 increase in salaries and employee benefits was mainly attributable to raises and salary adjustments to remain market competitive, 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, and an increase in the number of employees between periods.

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 increase in advertising and promotional expense was due primarily to the timing of campaigns compared to the prior year quarter.

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

The Company's efficiency ratio was 58.26% for the current quarter compared to 62.07% 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 improvement in the efficiency ratio was due primarily to higher net interest income in the current year 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 1.17% for the prior year quarter, due mainly to higher non-interest expense.

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For the Three Months Ended

March 31, Change Expressed in:

June 30, Change Expressed in:

2025 2024 Dollars Percent

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Effective Tax Rate 15.0 % 38.2 %

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

Income tax expense and the effective tax rate was lower in the current year quarter compared to the prior year quarter due mainly to the income tax expense associated with the pre-1988 bad debt recapture that was recorded in the prior year quarter.

Additionally, during the current quarter, the State of Kansas enacted a change in the tax law that resulted in an $857 thousand reduction in net state income tax expense for the Company.

See additional information regarding the tax law change in "Comparison of Operating Results for the Three Months Ended June 30, 2025 and March 31, 2025" above.

Average Balance Sheet

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For the Three Months Ended

March 31, 2025 March 31, 2024

June 30, 2025 June 30, 2024

Average Interest Average Interest

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(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.

(3) There were no nontaxable securities included in the average balance of investment securities for the three months ended June 30, 2025 or June 30, 2024.

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

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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 three months ended June 30, 2025 to the three months ended June 30, 2024.

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 March 31,

For the Three Months Ended June 30,

Increase (Decrease) Due to

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Per FHLB's lending guidelines, total FHLB borrowings cannot exceed 40% of Bank Call Report total assets without the pre-approval of FHLB senior management.

The Bank's FHLB borrowing limit was 45% of Bank Call Report total assets as of March 31, 2025, as approved by FHLB senior management.

The Bank was below the FHLB borrowing limit as of March 31, 2025.

The Bank's FHLB borrowing limit was 45% of Bank Call Report total assets as of June 30, 2025, as approved by FHLB senior management.

The Bank was below the FHLB borrowing limit as of June 30, 2025.

See additional discussion below.

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The amount that can be borrowed from the FRB of Kansas City's discount window is based upon the fair value of securities pledged as collateral.

At March 31, 2025, the amount of securities pledged for the discount window was $99.9 million.

At March 31, 2025, there were no borrowings from the FRB of Kansas City's discount window.

At June 30, 2025, the amount of securities pledged for the discount window was $95.3 million.

At June 30, 2025, there were no borrowings from the FRB of Kansas City's discount window.

Management tests the Bank's access to the FRB of Kansas City's discount window at least annually with a nominal overnight borrowing.

If management observes unusual trends in the amount and frequency of line of credit utilization and/or short-term borrowings that is not in conjunction with a planned strategy the Bank will likely utilize long-term wholesale borrowing sources such as FHLB advances and/or repurchase agreements to provide long-term, fixed-rate funding.

If management observes unusual trends in the amount and frequency of line of credit utilization and/or short-term borrowings that are not in conjunction with a planned strategy the Bank will likely utilize long-term wholesale borrowing sources such as FHLB advances and/or repurchase agreements to provide long-term, fixed-rate funding.

The maturities of these long-term borrowings are generally staggered in order to mitigate the risk of a highly negative cash flow position at maturity.

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The Bank's internal policy limits total borrowings to 55% of total assets.

At March 31, 2025, the Bank had total borrowings, at par, of $2.14 billion, or approximately 22% of the Bank's Call Report total assets.

At June 30, 2025, the Bank had total borrowings, at par, of $2.07 billion, or approximately 21% of the Bank's Call Report total assets.

The borrowings balance was composed primarily of FHLB advances, of which, $484.7 million is scheduled to be repaid (amortizing advances) or mature in the next 12 months.

Management estimated 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.

At March 31, 2025, the Bank had no repurchase agreements.

Management estimated that the Bank had $2.97 billion in liquidity available at June 30, 2025 based on the Bank's blanket collateral agreement with FHLB and unencumbered securities.

At June 30, 2025, the Bank had no repurchase agreements.

The Bank may enter into repurchase agreements as management deems appropriate, not to exceed 15% of total assets, and subject to the total borrowings internal policy limit of 55% as discussed above.

The Bank has the ability to utilize the repayment and maturity of outstanding loans, MBS, and other investments for liquidity needs rather than reinvesting such funds into the related portfolios.

At March 31, 2025, the Bank had $869.6 million of securities that were eligible but unused as collateral for borrowing or other liquidity needs.

At June 30, 2025, the Bank had $798.6 million of securities that were eligible but unused as collateral for borrowing or other liquidity needs.

The Bank also has access to other sources of funds for liquidity purposes, such as brokered and public unit certificates of deposit.

As of March 31, 2025, the Bank's policy allowed for combined brokered and public unit certificates of deposit up to 15% of total deposits.

At March 31, 2025, the Bank did not have any brokered certificates of deposit, and public unit certificates of deposit were approximately 1% of total deposits.

The Bank had pledged securities with an estimated fair value of $88.9 million as collateral for public unit certificates of deposit at March 31, 2025.

As of June 30, 2025, the Bank's policy allowed for combined brokered and public unit certificates of deposit up to 15% of total deposits.

At June 30, 2025, the Bank did not have any brokered certificates of deposit, and public unit certificates of deposit were approximately 2% of total deposits.

The Bank had pledged securities with an estimated fair value of $154.8 million as collateral for public unit certificates of deposit at June 30, 2025.

The securities pledged as collateral for public unit certificates of deposit are held under joint custody with FHLB and generally will be released upon deposit maturity.

At March 31, 2025, $1.99 billion of the Bank's certificate of deposit portfolio was scheduled to mature within the next 12 months, including $41.7 million of public unit certificates of deposit and $47.4 million of commercial certificates of deposit.

At June 30, 2025, $2.01 billion of the Bank's certificate of deposit portfolio was scheduled to mature within the next 12 months, including $77.4 million of public unit certificates of deposit and $49.8 million of commercial certificates of deposit.

Based on our deposit retention experience and our current pricing strategy, we anticipate the majority of the maturing retail certificates of deposit will renew or transfer to other deposit products of the Bank at prevailing rates, although no assurance can be given in this regard.

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Limitations on Dividends and Other Capital Distributions

OCC regulations impose restrictions on savings institutions with respect to their ability to make distributions of capital, which include dividends and other transactions charged to the capital account.

Office of the Comptroller of the Currency ("OCC") regulations impose restrictions on savings institutions with respect to their ability to make distributions of capital, which include dividends and other transactions charged to the capital account.

Under FRB and OCC safe harbor regulations, savings institutions generally may make capital distributions during any calendar year equal to earnings of the previous two calendar years and current year-to-date earnings (to the extent not previously distributed).

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Qualifying institutions that elect to use the CBLR framework, such as the Bank and the Company, that maintain the required minimum leverage ratio of 9.0% will be considered to have satisfied the generally applicable risk-based and leverage capital requirements in the regulatory agencies' capital rules, and to have met the capital requirements for the well-capitalized category under the agencies' PCA framework.

As of March 31, 2025, the Bank's CBLR was 9.5% and the Company's CBLR was 10.1%, which exceeded the minimum requirements.

The Bank's risk-based tier 1 capital ratio at March 31, 2025 was 16.5%.

As of June 30, 2025, the Bank's CBLR was 9.7% and the Company's CBLR was 10.2%, which exceeded the minimum requirements.

The Bank's risk-based tier 1 capital ratio at June 30, 2025 was 16.2%.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis