Capitol Federal Financial, Inc. 10-Q

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The Company and the Bank may from time to time make written or oral "forward-looking statements," including statements contained in documents filed or furnished by the Company with the SEC. These forward-looking statements may be included in this Quarterly Report on Form 10-Q and the exhibits attached to it, in the Company's reports to stockholders, in the Company's press releases, and in other communications by the Company, which are made in good faith pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements about our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, which are subject to significant risks and uncertainties, and are subject to change based on various factors, some of which are beyond our control. The words "may," "could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan" and similar expressions are intended to identify forward-looking statements. The following factors, among others, could cause our future results to differ materially from the beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions expressed in the forward-looking statements: • our ability to maintain overhead costs at reasonable levels; • our ability to generate a sufficient volume of loans in order to maintain the loan portfolio balance at a level desired by management; • our ability to invest funds in wholesale or secondary markets at favorable yields; • our ability to access cost-effective funding and maintain sufficient liquidity; • our ability to extend our commercial banking and trust asset management expertise across our market areas; • fluctuations in deposit flows; • transactions or activities that would result in the recapture of base-year, tax basis bad debt reserves; • the future earnings and capital levels of the Bank, the impact of the pre-1988 bad debt recapture and the continued non-objection by our primary federal banking regulators, to the extent required, to distribute capital from the Bank to the Company, which could affect the Company's income tax expense and the Company's ability to pay dividends in accordance with its dividend policy and/or repurchase shares; • the strength of the U.S. economy in general and the strength and/or the availability of labor in the local economies in which we conduct operations, including areas where we have purchased large amounts of correspondent loans, originated commercial loans, and entered into commercial loan participations; • changes in real estate values, unemployment levels, general economic trends, and the level and direction of loan delinquencies and charge-offs may require changes in the estimates of the adequacy of the ACL and 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, or not recognize income for a period of time, related to such non-performing assets; • results of examinations of the Bank and the Company by their respective primary federal banking regulators, including the possibility that the regulators may, among other things, require us to increase our ACL; • changes in accounting principles, policies, or guidelines; • the effects of, and changes in, monetary and interest rate policies of the Board of Governors of the Federal Reserve System ("FRB"); • the effects of, and changes in, trade and fiscal policies and laws of the United States government; • the effects of, and changes in, foreign and military policies of the United States government; • inflation, interest rate, market, monetary, and currency fluctuations and the effects of a potential economic recession or slower economic growth; • the potential imposition of new or increased tariffs or changes to existing trade policies that would affect economic activity or specific industry sectors; • the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor or depositor sentiment; • the timely development and acceptance of new products and services and the perceived overall value of these products and services by users, including the features, pricing, and quality compared to competitors' products and services; • the willingness of users to substitute competitors' products and services for our products and services; • our success in gaining regulatory approval of our products and services and branching locations, when required; • the impact of interpretations of, and changes in, financial services laws and regulations, including laws concerning taxes, banking, securities, consumer protection, trust and insurance and the impact of other governmental initiatives affecting the financial services industry; • the ability to attract and retain skilled employees; • implementing business initiatives may be more difficult or expensive than anticipated; • significant litigation; • technological changes; 34 • our ability to maintain the security of our financial, accounting, technology, and other operating systems and facilities, including the ability to withstand cyberattacks; • changes in consumer spending, borrowing and saving habits; and • our success at managing the risks involved in our business. This list of factors is not all inclusive. For a discussion of risks and uncertainties related to our business that could adversely impact our operations and/or financial results, see "Part I, Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024 and Part II, Item 1A. Risk Factors within this Quarterly Report on Form 10-Q. We do not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company or the Bank. As used in this Form 10-Q, unless we specify or the context indicates otherwise, "the Company," "we," "us," and "our" refer to Capitol Federal Financial, Inc. a Maryland corporation, and its subsidiaries. "Capitol Federal Savings," and "the Bank," refer to Capitol Federal Savings Bank, a federal savings bank and the wholly-owned subsidiary of Capitol Federal Financial, Inc. The following discussion and analysis is intended to assist in understanding the financial condition, results of operations, liquidity, and capital resources of the Company. The Bank comprises almost all of the consolidated assets and liabilities of the Company and the Company is dependent primarily upon the performance of the Bank for the results of its operations. Because of this relationship, references to management actions, strategies and results of actions apply to both the Bank and the Company except where the context indicates otherwise. This discussion and analysis should be read in conjunction with Management's Discussion and Analysis included in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024, filed with the SEC. Available Information Financial and other Company information, including press releases, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports can be obtained free of charge from our investor relations website, https://ir.capfed.com. SEC filings are available on our website immediately after they are electronically filed with or furnished to the SEC, and are also available on the SEC's website at www.sec.gov. Critical Accounting Estimates Our most critical accounting estimate is our methodology used to determine the ACL and reserve for off-balance sheet credit exposures. This estimate is important to the presentation of our financial condition and results of operations, involves a high degree of complexity, and requires management to make difficult and subjective judgments that may require assumptions about highly uncertain matters. The use of different judgments, assumptions, and estimates could affect reported results materially. This critical accounting estimate and its application is reviewed at least annually by the audit committee of our Board of Directors. For a full discussion of our critical accounting estimates, see "Part II, Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024. Executive Summary The following summary should be read in conjunction with the Management's Discussion and Analysis of Financial Condition and Results of Operations section in its entirety. The Company recognized net income of $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 $0.28 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. 35 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 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 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. Quantitative and Qualitative Disclosures About Market Risk." Securities Strategy to Improve Earnings In October 2023, the Company initiated a securities strategy (the "securities strategy") by selling $1.30 billion of securities, representing 94% of its securities portfolio. Since the Company did not have the intent to hold the $1.30 billion of securities to maturity at September 30, 2023, the Company recognized an impairment loss on those securities of $192.6 million which was reflected in the Company's financial statements for the quarter and fiscal year ended September 30, 2023. The securities strategy allowed the Company to improve its earnings stream going forward, beginning in the quarter ended December 31, 2023, by redeploying most of the proceeds into then-current market rate securities and to provide liquidity to deleverage the balance sheet utilizing the remaining proceeds. During the quarter ended December 31, 2023, the Company completed the sale of securities and recognized $13.3 million ($10.0 million net of tax), or $0.08 per share, of additional loss. 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 36 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 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. 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. 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. 37 Financial Condition The following table summarizes the Company's financial condition at the dates indicated. Annualized Annualized June 30, March 31, Percent September 30, Percent 2025 2025 Change 2024 Change (Dollars and shares in thousands) Total assets $ 9,692,739 $ 9,718,184 (1.0) % $ 9,527,608 2.3 % AFS securities 956,229 961,417 (2.2) 856,266 15.6 Loans receivable, net 8,023,554 7,875,905 7.5 7,907,338 2.0 Deposits 6,431,137 6,372,545 3.7 6,129,982 6.6 Borrowings 2,071,585 2,142,956 (13.3) 2,179,564 (6.6) Stockholders' equity 1,046,158 1,037,110 3.5 1,032,270 1.8 Equity to total assets at end of period 10.8 % 10.7 % 10.8 % Average number of basic shares outstanding 130,081 130,026 0.2 129,918 0.2 Average number of diluted shares outstanding 130,081 130,026 0.2 129,918 0.2 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. 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. 38 Loans Receivable. The following table presents the balance and weighted average rate of our loan portfolio as of the dates indicated. June 30, 2025 March 31, 2025 September 30, 2024 Amount Rate Amount Rate Amount Rate (Dollars in thousands) One- to four-family: Originated $ 3,828,171 3.74 % $ 3,863,882 3.68 % $ 3,941,952 3.60 % Correspondent purchased 2,058,749 3.49 2,117,232 3.48 2,212,587 3.48 Bulk purchased 116,706 3.30 119,914 3.09 127,161 2.80 Construction 14,860 6.27 16,782 6.53 22,970 6.05 Total 6,018,486 3.65 6,117,810 3.61 6,304,670 3.55 Commercial: Commercial real estate 1,561,691 5.76 1,340,539 5.50 1,191,624 5.43 Commercial and industrial 184,390 6.94 135,884 6.74 129,678 6.66 Construction 165,760 6.39 191,904 6.12 187,676 6.40 Total 1,911,841 5.93 1,668,327 5.67 1,508,978 5.65 Consumer loans: Home equity 103,564 8.17 99,049 8.12 99,988 8.90 Other 9,109 5.83 9,434 5.87 9,615 5.72 Total 112,673 7.99 108,483 7.93 109,603 8.62 Total loans receivable 8,043,000 4.25 7,894,620 4.10 7,923,251 4.02 Less: ACL 22,808 23,970 23,035 Deferred loan fees/discounts 31,159 30,276 30,336 Premiums/deferred costs (34,521) (35,531) (37,458) Total loans receivable, net $ 8,023,554 $ 7,875,905 $ 7,907,338 Loan Activity - The following table summarizes activity in the loan portfolio, along with weighted average rates where applicable, for the periods indicated, excluding changes in ACL, deferred loan fees/discounts, and premiums/deferred costs. Loans that were paid off as a result of refinances are included in repayments. Loan endorsements are not included in the activity in the following table because a new loan is not generated at the time of the endorsement. The endorsed balance and rate are included in the ending loan portfolio balance and rate. Commercial loan renewals are not included in the activity presented in the following table unless new funds are disbursed at the time of renewal. The renewal balance and rate are included in the ending loan portfolio balance and rate. For the Three Months Ended For the Nine Months Ended June 30, 2025 June 30, 2025 June 30, 2024 Amount Rate Amount Rate Amount Rate (Dollars in thousands) Beginning balance $ 7,894,620 4.10 % $ 7,923,251 4.02 % $ 7,984,381 3.76 % Originated and refinanced 422,501 6.99 810,222 6.89 511,845 7.29 Purchased and participations 22,689 6.91 92,479 7.13 34,212 7.94 Change in undisbursed loan funds (26,387) (26,316) 126,191 Repayments (268,493) (754,599) (685,068) Principal (charge-offs)/recoveries, net (25) (132) (58) Other (1,905) (1,905) (20,225) Ending balance $ 8,043,000 4.25 $ 8,043,000 4.25 $ 7,951,278 3.96 39 The following table presents loan origination, refinance, and participation activity for the periods indicated, excluding endorsement activity, along with associated weighted average rates and percent of total. Commercial loan renewals are not included in the activity in the following table except to the extent new funds are disbursed at the time of renewal. Loan originations, participations, and refinances are reported together. For the Nine Months Ended June 30, 2025 June 30, 2024 Amount Rate % of Total Amount Rate % of Total (Dollars in thousands) Commercial: Commercial real estate Fixed-rate $ 51,682 6.94 % 5.7 % $ 4,601 7.62 % 0.8 % Adjustable-rate 289,492 6.92 32.1 82,937 7.50 15.2 341,174 6.92 37.8 87,538 7.51 16.0 Commercial and industrial Fixed-rate 86,908 7.25 9.6 20,169 6.96 3.7 Adjustable-rate 59,053 7.47 6.6 47,010 7.61 8.6 145,961 7.34 16.2 67,179 7.41 12.3 Commercial construction Fixed-rate 11,135 6.88 1.2 3,632 7.07 0.7 Adjustable-rate 140,483 7.28 15.6 131,772 8.04 24.1 151,618 7.25 16.8 135,404 8.01 24.8 Total commercial Fixed-rate 149,725 7.12 16.6 28,402 7.08 5.2 Adjustable-rate 489,028 7.09 54.2 261,719 7.79 47.9 638,753 7.10 70.8 290,121 7.72 53.1 Consumer: One- to four-family Fixed-rate 144,638 6.14 16.0 158,014 6.56 28.9 Adjustable-rate 77,051 6.17 8.5 58,172 6.40 10.7 221,689 6.15 24.5 216,186 6.52 39.6 Home equity and other Fixed-rate 6,068 8.13 0.7 8,593 8.52 1.6 Adjustable-rate 36,191 8.29 4.0 31,157 9.07 5.7 42,259 8.27 4.7 39,750 8.95 7.3 Total consumer Fixed-rate 150,706 6.22 16.7 166,607 6.66 30.5 Adjustable-rate 113,242 6.85 12.5 89,329 7.33 16.4 263,948 6.49 29.2 255,936 6.89 46.9 Total commercial and consumer Fixed-rate 300,431 6.67 33.3 195,009 6.72 35.7 Adjustable-rate 602,270 7.04 66.7 351,048 7.67 64.3 $ 902,701 6.92 100.0 % $ 546,057 7.33 100.0 % Commercial participations included above: Fixed-rate 34,500 6.93 3,500 7.00 Adjustable-rate 57,979 7.26 27,215 8.33 $ 92,479 7.13 $ 30,715 8.17 40 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 June 30, 2025. Credit scores were updated in September 2024 from a nationally recognized consumer rating agency. The LTV ratios were based on the current loan balance and either the lesser of the purchase price or original appraisal, or the most recent Bank appraisal, if available. In most cases, the most recent appraisal was obtained at the time of origination. % of Credit Average Amount Total Rate Score LTV Balance (Dollars in thousands) Originated $ 3,828,171 63.6 % 3.74 % 771 58 % $ 170 Correspondent purchased 2,058,749 34.2 3.49 767 61 394 Bulk purchased 116,706 2.0 3.30 773 53 275 Construction 14,860 0.2 6.27 773 39 270 $ 6,018,486 100.0 % 3.65 770 59 213 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. 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 Amount Rate LTV Score Amount Rate LTV Score (Dollars in thousands) $ 86,769 6.23 % 75 % 767 $ 221,689 6.15 % 74 % 767 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. For existing real estate, the "as is" value is used. If the property is to be constructed, the "as completed" value of the collateral is utilized. The DSCR is calculated based on historical borrower performance, or projected borrower performance for newly formed entities with no performance history. For the Three Months Ended June 30, 2025 Originated Participation Total Weighted Weighted Amount Rate Amount Rate Amount Rate LTV DSCR (Dollars in thousands) Commercial real estate $ 160,574 7.00 % $ 8,922 6.95 % $ 169,496 7.00 % 51 % 1.55x Commercial and industrial 112,389 7.32 900 7.25 113,289 7.32 N/A 1.73 Commercial construction 44,347 7.04 12,867 6.86 57,214 7.00 77 1.34 $ 317,310 7.12 $ 22,689 6.91 $ 339,999 7.11 58 1.58 For the Nine Months Ended June 30, 2025 Originated Participation Total Weighted Weighted Amount Rate Amount Rate Amount Rate LTV DSCR (Dollars in thousands) Commercial real estate $ 305,448 6.91 % $ 35,726 7.02 % $ 341,174 6.92 % 55 % 1.68x Commercial and industrial 145,061 7.34 900 7.25 145,961 7.34 N/A 2.23 Commercial construction 95,765 7.28 55,853 7.21 151,618 7.25 76 1.59 $ 546,274 7.09 $ 92,479 7.13 $ 638,753 7.10 61 1.79 41 The following table presents commercial loan disbursements, excluding lines of credit, during the nine months ended June 30, 2025. Amount Rate (Dollars in thousands) Commercial real estate $ 353,217 6.76 % Commercial and industrial 86,105 7.38 Commercial construction 162,673 6.58 $ 601,995 6.80 The following table presents the Bank's commercial real estate and commercial construction loans by type of primary collateral as of the dates indicated. Management anticipates fully funding the majority of the undisbursed amounts, as most are not cancellable by the Bank. June 30, 2025 March 31, 2025 September 30, 2024 Unpaid Undisbursed Gross Loan Gross Loan Gross Loan Count Principal Amount Amount Amount Amount (Dollars in thousands) Hotel 26 $ 533,192 $ 51,888 $ 585,080 $ 445,485 $ 323,396 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 Office building 76 126,410 2,887 129,297 127,157 127,961 One- to four-family property 320 66,113 4,535 70,648 65,177 63,416 Warehouse/manufacturing 48 52,283 4,704 56,987 43,564 34,656 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 29,070 759 $ 1,727,451 $ 244,404 $ 1,971,855 $ 1,802,424 $ 1,663,182 Weighted average rate 5.82 % 6.90 % 5.96 % 5.76 % 5.77 % 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 $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) Undisbursed amounts $ 91,308 $ 69,138 $ 40,227 $ 39,322 $ 4,409 $ 244,404 Commitments 146,182 2,750 5,250 5,680 1,374 161,236 $ 237,490 $ 71,888 $ 45,477 $ 45,002 $ 5,783 $ 405,640 Weighted average rate 6.49 % 7.01 % 6.99 % 6.81 % 7.45 % 6.69 % 42 The following table summarizes the Bank's commercial real estate and commercial construction loans by state as of the dates indicated. June 30, 2025 March 31, 2025 September 30, 2024 Unpaid Undisbursed Gross Loan Gross Loan Gross Loan Count Principal Amount Amount Amount Amount (Dollars in thousands) Kansas 557 $ 631,395 $ 91,797 $ 723,192 $ 709,289 $ 713,437 Texas 21 291,223 27,261 318,484 319,151 348,066 Missouri 129 271,326 39,243 310,569 299,085 313,146 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 Tennessee 3 39,899 540 40,439 40,601 35,973 Nebraska 6 11,227 27,139 38,366 38,658 32,422 Arkansas 2 29,475 — 29,475 36,322 36,588 Other 19 99,202 23,456 122,658 112,313 43,041 759 $ 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 and weighted average DSCR as of June 30, 2025. 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 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. Kansas Texas Missouri New York Arizona California Other Total (Dollars in thousands) 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 Retail building 84,899 67,842 46,770 — — — 80,218 279,729 Multi-family 161,336 19,781 51,078 — — — 3,620 235,815 Office building 57,327 60,135 8,801 — 147 — — 126,410 One- to four-family property 44,673 — 6,375 — 3,324 — 11,741 66,113 Warehouse/manufacturing 32,361 — 16,698 — — — 3,224 52,283 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 $ 631,395 $ 291,223 $ 271,326 $ 110,000 $ 101,650 $ 84,735 $ 237,122 $ 1,727,451 Weighted LTV 65 % 53 % 67 % 47 % 53 % 49 % 65 % 61 % Weighted DSCR 1.83x 1.41x 1.70x 1.55x 1.44x 1.50x 1.69x 1.66x 43 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. Gross Loan 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 >$30 to $50 million 9 332,654 36,962 5.97 66 1.38 >$20 to $30 million 15 364,893 24,326 6.23 66 1.31 >$15 to $20 million 9 154,917 17,213 6.23 64 1.28 >$10 to $15 million 13 155,458 11,958 6.16 73 1.94 >$5 to $10 million 35 247,502 7,071 5.40 69 1.83 $1 to $5 million 122 286,097 2,345 5.34 63 1.97 Less than $1 million 570 121,740 214 6.18 53 3.18 780 $ 2,133,091 2,735 5.99 63 1.63 44 The following table summarizes the Bank's commercial and industrial loans by loan purpose as of the dates indicated. 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, 2024 Unpaid Undisbursed Gross Loan Gross Loan Gross Loan Count Principal Amount Amount Amount Amount (Dollars in thousands) 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 Other 19 5,132 1,861 6,993 7,329 7,735 546 $ 184,390 $ 96,805 $ 281,195 $ 184,562 $ 163,557 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. Gross Loan 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 45 Asset Quality Delinquent and nonaccrual loans and OREO. The following table presents the Bank's 30 to 89 day delinquent loans at the dates indicated. The amounts in the table represent the unpaid principal balance of the loans less related charge-offs, if any. Of the loans 30 to 89 days delinquent at June 30, 2025, 71% were 59 days or less delinquent. Loans Delinquent for 30 to 89 Days at: June 30, March 31, September 30, 2025 2025 2024 Number Amount Number Amount Number Amount (Dollars in thousands) One- to four-family: Originated 77 $ 9,617 73 $ 8,072 69 $ 8,884 Correspondent purchased 13 2,802 9 2,928 12 3,049 Bulk purchased 2 156 3 179 2 68 Commercial: Commercial real estate 6 1,654 5 2,472 11 2,996 Commercial and industrial 8 1,166 2 348 4 391 Consumer 27 634 24 441 35 642 133 $ 16,029 116 $ 14,440 133 $ 16,030 Loans 30 to 89 days delinquent to total loans receivable, net 0.20 % 0.18 % 0.20 % 46 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. Nonaccrual loans are loans that are 90 or more days delinquent or in foreclosure and other loans required to be reported as nonaccrual pursuant to accounting and/or regulatory reporting requirements and/or internal policies, even if the loans are current. At all dates presented, there were no loans 90 or more days delinquent that were still accruing interest. 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: June 30, March 31, September 30, 2025 2025 2024 Number Amount Number Amount Number Amount (Dollars in thousands) Loans 90 or More Days Delinquent or in Foreclosure: One- to four-family: Originated 23 $ 2,168 30 $ 2,814 29 $ 2,274 Correspondent purchased 5 1,741 7 1,965 8 4,024 Bulk purchased 1 134 3 620 5 1,535 Commercial: Commercial real estate 12 3,387 11 3,315 7 1,163 Commercial and industrial 5 412 4 376 2 82 Consumer 12 176 19 473 20 436 58 8,018 74 9,563 71 9,514 Loans 90 or more days delinquent or in foreclosure as a percentage of total loans 0.10 % 0.12 % 0.12 % Nonaccrual loans less than 90 Days Delinquent: (1) Commercial: Commercial real estate 3 $ 40,338 5 $ 1,128 3 $ 326 Commercial and industrial 1 97 2 142 2 252 4 40,435 7 1,270 5 578 Total nonaccrual loans 62 48,453 81 10,833 76 10,092 Nonaccrual loans as a percentage of total loans 0.60 % 0.14 % 0.13 % OREO: One- to four-family: Originated (2) 1 $ 92 — $ — 1 $ 55 1 92 — — 1 55 Total non-performing assets 63 $ 48,545 81 $ 10,833 77 $ 10,147 Non-performing assets as a percentage of total assets 0.50 % 0.11 % 0.11 % (1) Includes loans required to be reported as nonaccrual pursuant to internal policies, even if the loans are current. (2) Real estate-related consumer loans where we also hold the first mortgage are included in the one- to four-family category as the underlying collateral is one- to four-family property. 47 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 One- to Four-Family Days Delinquent or in Foreclosure State Amount % of Total Amount % of Total Amount % of Total LTV (Dollars in thousands) Kansas $ 3,367,703 56.0 % $ 7,854 62.4 % $ 2,300 56.9 % 45 % Missouri 1,035,760 17.2 3,188 25.4 139 3.4 72 Other states 1,615,023 26.8 1,533 12.2 1,604 39.7 54 $ 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 48 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 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 (Dollars in thousands) One- to four-family $ 12,583 $ 21,524 $ 11,793 $ 20,340 $ 17,528 $ 22,715 Commercial: Commercial real estate 8,111 84,771 8,352 45,961 16,169 2,302 Commercial and industrial 882 1,201 899 1,054 413 335 Consumer 365 323 162 566 326 487 $ 21,941 $ 107,819 $ 21,206 $ 67,921 $ 34,436 $ 25,839 Allowance for Credit Losses. The Bank utilizes a discounted cash flow model for estimating expected credit losses for pooled loans and loan commitments. Expected credit losses are determined by calculating projected future loss rates which are dependent upon forecasted economic indices and applying qualitative factors when deemed appropriate by management. At 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. 49 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 I, Item 1. Note 4. Loans Receivable and Allowance for Credit Losses" within this Quarterly Report on Form 10-Q for additional information related to the key assumptions used in the discounted cash flow model and the qualitative factors. The distribution of our ACL and the ratio of ACL to loans receivable, by loan type, at the dates indicated is summarized below. The decrease in the 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 June 30, March 31, September 30, June 30, March 31, September 30, 2025 2025 2024 2025 2025 2024 (Dollars in thousands) One- to four-family: Originated $ 1,949 $ 1,980 $ 1,650 0.05 % 0.05 % 0.04 % Correspondent purchased 1,451 1,446 1,861 0.07 0.07 0.08 Bulk purchased 114 121 146 0.10 0.10 0.11 Construction 18 15 16 0.12 0.09 0.07 Total 3,532 3,562 3,673 0.06 0.06 0.06 Commercial: Real estate 14,362 16,998 15,719 0.92 1.27 1.32 Commercial and industrial 2,441 1,171 1,186 1.32 0.86 0.91 Construction 2,236 2,007 2,249 1.35 1.05 1.20 Total 19,039 20,176 19,154 1.00 1.21 1.27 Consumer 237 232 208 0.21 0.21 0.19 Total $ 22,808 $ 23,970 $ 23,035 0.28 0.30 0.29 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 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. 50 The following table presents ACL activity and related ratios at the dates and for the periods indicated. On October 1, 2023, the Bank adopted ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures ("ASU 2022-02"), which eliminated the accounting guidance for troubled debt restructurings by creditors. 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 Nine Months Ended June 30, 2025 June 30, 2024 (Dollars in thousands) Balance at beginning of period $ 23,035 $ 23,759 ASU 2022-02 Adoption 20 Charge-offs (169) (101) Recoveries 37 43 Net (charge-offs) recoveries (132) (58) Provision for credit losses (95) 2,133 Balance at end of period $ 22,808 $ 25,854 Ratio of NCOs during the period to average non-performing assets 0.45 % 0.64 % ACL to nonaccrual loans at end of period 47.07 300.52 ACL to loans receivable, net at end of period 0.28 0.33 ACL at end of period to NCOs during the period (annualized) 129x 332x 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. Note 4. 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. 51 The following table presents NCOs, average loans, and NCOs as a percentage of average loans, by loan type, for the periods indicated. For the Nine Months Ended June 30, 2025 June 30, 2024 NCOs Average Loans % of Average Loans NCOs Average Loans % of Average Loans (Dollars in thousands) One- to four-family: Originated $ (7) $ 3,863,012 — % $ (25) $ 3,958,194 — % Correspondent — 2,164,263 — — 2,367,032 — Bulk purchased 113 122,228 0.09 — 133,783 — Construction — 18,126 — — 36,500 — Total 106 6,167,629 — (25) 6,495,509 — Commercial: Real estate (20) 1,379,009 — 60 1,038,727 0.01 Commercial and industrial (3) 135,511 — (3) 116,424 — Construction — 174,518 — — 188,090 — Total (23) 1,689,038 — 57 1,343,241 — Consumer: Home equity 45 101,178 0.04 15 97,016 0.02 Other 4 9,356 0.04 11 9,654 0.11 Total 49 110,534 0.04 26 106,670 0.02 $ 132 $ 7,967,201 — $ 58 $ 7,945,420 — While management utilizes its best judgment and information available, the adequacy of the ACL and reserve for off-balance sheet credit exposures is determined by certain factors outside of the Company's control, such as the performance of our loan portfolio, changes in the economic environment including economic uncertainty, changes in interest rates, and the view of regulatory authorities toward classification of assets and the level of ACL and reserve for off-balance sheet credit exposures. Additionally, the level of ACL and reserve for off-balance sheet credit exposures may fluctuate based on the balance and mix of the loan portfolio and off-balance sheet credit exposures. If actual results differ significantly from our assumptions, our ACL and reserve for off-balance sheet credit exposures may not be sufficient to cover inherent losses in our loan portfolio, resulting in additions to our ACL and an increase in the provision for credit losses. Securities. The following table presents the distribution of our securities portfolio, at amortized cost, at the dates indicated. The majority of our securities are government guaranteed or issued by GSEs. Overall, fixed-rate securities comprised 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. June 30, 2025 March 31, 2025 September 30, 2024 Amount Yield WAL Amount Yield WAL Amount Yield WAL (Dollars in thousands) MBS $ 874,360 5.49 % 4.5 $ 867,585 5.48 % 5.8 $ 756,775 5.63 % 5.7 GSE debentures 55,000 5.16 5.3 70,000 5.25 2.5 69,077 5.63 0.4 Corporate bonds 4,000 5.12 6.9 4,000 5.12 7.1 4,000 5.12 7.6 $ 933,360 5.47 % 4.6 $ 941,585 5.46 % 5.6 $ 829,852 5.63 % 5.2 52 The following table summarizes the activity in our securities portfolio for the periods presented. The weighted average yields for the beginning and ending balances are as of the first and last days of the periods presented and are generally derived from recent prepayment activity on the securities in the portfolio. The beginning and ending WALs are the estimated remaining principal repayment terms (in years) after three month historical prepayment speeds and projected call option assumptions have been applied. For the Nine Months Ended June 30, 2025 June 30, 2024 Amount Yield WAL Amount Yield WAL (Dollars in thousands) Beginning balance - carrying value $ 856,266 5.63 % 5.2 $ 1,384,482 1.35 % 3.8 Maturities and repayments (147,190) (373,739) Proceeds from sale — (1,272,512) Net amortization of (premiums)/discounts 2,491 7,327 Purchases 248,207 4.97 7.5 1,059,833 5.59 4.5 Net loss from securities sales — (13,345) Change in valuation on AFS securities (3,545) 9,907 Ending balance - carrying value $ 956,229 5.47 4.6 $ 801,953 5.68 5.7 Liabilities. 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. Deposits. The following table presents the amount, weighted average rate and percent of total for the components of our deposit portfolio at the dates presented. The decrease in the deposit portfolio rate at 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 Amount Rate Total Amount Rate Total Amount Rate Total (Dollars in thousands) Non-interest-bearing checking $ 579,595 — % 9.0 % $ 574,940 — % 9.0 % $ 549,596 — % 9.0 % Interest-bearing checking 884,838 0.24 13.8 905,922 0.22 14.2 847,542 0.23 13.8 High yield savings 408,018 3.88 6.4 284,097 4.09 4.5 96,241 4.09 1.6 Other savings 433,188 0.07 6.7 448,034 0.07 7.0 444,331 0.11 7.2 Money market 1,203,917 1.22 18.7 1,247,106 1.21 19.6 1,226,962 1.46 20.0 Certificates of deposit 2,921,581 3.81 45.4 2,912,446 3.99 45.7 2,965,310 4.25 48.4 $ 6,431,137 2.24 100.0 % $ 6,372,545 2.28 100.0 % $ 6,129,982 2.45 100.0 % 53 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. 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 Amount Rate Total Amount Rate Total Amount Rate Total (Dollars in thousands) Retail non-maturity deposits: Non-interest-bearing checking $ 415,066 — % 6.5 % $ 442,379 — % 6.9 % $ 418,790 — % 6.8 % Interest-bearing checking 810,027 0.09 12.6 837,294 0.09 13.1 799,407 0.10 13.0 High yield savings 408,018 3.88 6.4 284,097 4.09 4.5 96,241 4.09 1.6 Other savings 429,778 0.07 6.6 444,681 0.07 7.0 441,265 0.11 7.2 Money market 1,088,623 1.07 16.9 1,138,281 1.08 17.9 1,149,212 1.37 18.7 Total 3,151,512 0.91 49.0 3,146,732 0.79 49.4 2,904,915 0.73 47.4 Commercial non-maturity deposits: Non-interest-bearing checking 164,529 — 2.5 132,561 — 2.1 130,806 — 2.1 Interest-bearing checking 74,811 1.89 1.2 68,628 1.83 1.1 48,135 2.40 0.8 Savings 3,410 0.05 0.1 3,353 0.05 0.1 3,066 0.05 0.1 Money market 115,294 2.58 1.8 108,825 2.57 1.7 77,750 2.72 1.3 Total 358,044 1.23 5.6 313,367 1.29 4.9 259,757 1.26 4.2 Certificates of deposit: Retail certificates of deposit 2,745,213 3.80 42.7 2,790,993 3.99 43.8 2,830,579 4.23 46.2 Commercial certificates of deposit 59,695 3.69 0.9 58,545 3.90 0.9 58,236 4.40 1.0 Public unit certificates of deposit 116,673 4.12 1.8 62,908 4.22 1.0 76,495 4.62 1.2 Total 2,921,581 3.81 45.4 2,912,446 3.99 45.7 2,965,310 4.25 48.4 $ 6,431,137 2.24 100.0 % $ 6,372,545 2.28 100.0 % $ 6,129,982 2.45 100.0 % The following table presents the amount, weighted average rate, and percent of total for total retail deposits, commercial deposits, and public unit certificates of deposit at the dates noted. June 30, 2025 March 31, 2025 September 30, 2024 % of % of % of Amount Rate Total Amount Rate Total Amount Rate Total (Dollars in thousands) Total retail deposits $ 5,896,725 2.25 % 91.7 % $ 5,937,725 2.30 % 93.2 % $ 5,735,494 2.46 % 93.6 % Total commercial deposits 417,739 1.58 6.5 371,912 1.70 5.8 317,993 1.84 5.2 Public unit certificates of deposit 116,673 4.12 1.8 62,908 4.22 1.0 76,495 4.62 1.2 $ 6,431,137 2.24 100.0 % $ 6,372,545 2.28 100.0 % $ 6,129,982 2.45 100.0 % 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. 54 Borrowings. 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 Fiscal Year Amount Rate Rate (1) (Dollars in thousands) 2025 $ 100,000 4.69 % 3.03 % 2026 425,000 2.11 2.30 2027 745,000 3.49 3.56 2028 570,902 4.37 4.14 2029 141,250 4.45 4.45 2030 90,000 4.20 4.20 $ 2,072,152 3.60 3.52 (1) The effective rate includes the impact of interest rate swaps and the amortization of deferred prepayment penalties resulting from FHLB advances previously prepaid. The following table presents borrowing activity for the periods shown. The borrowings presented in the table have original contractual terms of one year or longer or are tied to interest rate swaps with original contractual terms of one year or longer. Line of credit borrowings and finance leases are excluded from the table. The effective rate is shown as a weighted average and includes the impact of interest rate swaps and the amortization of deferred prepayment penalties resulting from FHLB advances previously prepaid. The weighted average maturity ("WAM") is the remaining weighted average contractual term in years. The beginning and ending WAMs represent the remaining maturity 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 Amount Rate WAM Amount Rate WAM Amount Rate WAM (Dollars in thousands) Beginning balance $ 2,143,320 3.54 % 1.6 $ 2,180,656 3.29 % 1.6 $ 2,882,828 3.34 % 1.8 Maturities and repayments (371,168) 3.93 (758,504) 3.40 (339,754) 2.91 New FHLB borrowings 300,000 3.93 2.5 650,000 4.13 2.9 250,000 4.55 4.2 BTFP, net — — — — — — (500,000) 4.70 — Ending balance $ 2,072,152 3.52 1.7 $ 2,072,152 3.52 1.7 $ 2,293,074 3.24 1.7 55 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 June 30, 2025. September 30, December 31, March 31, June 30, 2025 2025 2026 2026 Total (Dollars in thousands) Retail/Commercial Certificates: Amount $ 453,811 $ 618,835 $ 302,603 $ 556,155 $ 1,931,404 Repricing Rate 4.20 % 3.95 % 3.59 % 3.82 % 3.91 % Public Unit Certificates: Amount $ 10,983 $ 14,329 $ 43,110 $ 9,001 $ 77,423 Repricing Rate 4.42 % 3.87 % 4.13 % 4.22 % 4.13 % Term Borrowings: Amount $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 400,000 Repricing Rate 3.03 % 1.09 % 1.60 % 2.51 % 2.06 % Total Amount $ 564,794 $ 733,164 $ 445,713 $ 665,156 $ 2,408,827 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 June 30, 2025. Retail certificates of deposit 0.9 Commercial certificates of deposit 0.7 Public unit certificates of deposit 0.9 Total certificates of deposit 0.9 56 Stockholders' Equity. 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 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 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. To the extent that earnings in fiscal year 2025 exceed $0.34 per share, the Board of Directors will consider the payment of additional dividends. Dividend payments depend upon a number of factors, including the Company's financial condition and results of operations, regulatory capital requirements, regulatory limitations on the Bank's ability to make capital distributions to the Company, the Bank's tax current earnings and accumulated earnings and profits, and the amount of cash at the holding company level. 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. The Company currently has $75.0 million authorized under an existing stock repurchase plan. Shares may be repurchased from time to time based upon market conditions, available liquidity and other factors. This plan has no expiration date; however, the FRB's current approval for the Company to repurchase shares expires in February 2026. There were no share repurchases during the current year 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 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 2025 2024 2023 Amount Per Share Amount Per Share Amount Per Share (Dollars in thousands, except per share amounts) Regular quarterly dividends paid Quarter ended March 31 $ 11,062 $ 0.085 $ 11,127 $ 0.085 $ 11,319 $ 0.085 Quarter ended June 30 11,063 0.085 11,044 0.085 11,321 0.085 Quarter ended September 30 11,065 0.085 11,043 0.085 11,323 0.085 Quarter ended December 31 — — 11,061 0.085 11,308 0.085 Calendar year-to-date dividends paid $ 33,190 $ 0.255 $ 44,275 $ 0.340 $ 45,271 $ 0.340 57 Operating Results The following table presents selected income statement and other information for the quarters indicated. For the Three Months Ended June 30, March 31, December 31, September 30, June 30, 2025 2025 2024 2024 2024 (Dollars in thousands, except per share data) Interest and dividend income: Loans receivable $ 82,914 $ 80,867 $ 81,394 $ 79,841 $ 76,803 MBS 12,163 11,264 11,024 10,412 9,585 FHLB stock 2,197 2,285 2,352 2,418 2,477 Cash and cash equivalents 1,620 2,729 1,871 2,562 3,875 Investment securities 784 1,030 981 1,634 2,255 Total interest and dividend income 99,678 98,175 97,622 96,867 94,995 Interest expense: Borrowings 18,360 18,482 18,047 18,585 18,438 Deposits 35,860 35,853 37,345 37,458 36,233 Total interest expense 54,220 54,335 55,392 56,043 54,671 Net interest income 45,458 43,840 42,230 40,824 40,324 Provision for credit losses (451) — 677 (637) 1,472 Net interest income (after provision for credit losses) 45,909 43,840 41,553 41,461 38,852 Non-interest income 5,288 4,953 4,693 4,786 4,709 Non-interest expense 29,564 29,540 27,148 27,040 27,950 Income tax expense 3,251 3,854 3,667 7,150 5,963 Net income $ 18,382 $ 15,399 $ 15,431 $ 12,057 $ 9,648 Efficiency ratio 58.26 % 60.54 % 57.86 % 59.29 % 62.07 % Operating expense ratio (annualized) 1.23 % 1.23 % 1.14 % 1.13 % 1.17 % Basic EPS $ 0.14 $ 0.12 $ 0.12 $ 0.09 $ 0.07 Diluted EPS 0.14 0.12 0.12 0.09 0.07 58 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 The following table presents the components of interest and dividend income for the time periods presented, along with the change measured in dollars and percent. For the Three Months Ended June 30, March 31, Change Expressed in: 2025 2025 Dollars Percent (Dollars in thousands) INTEREST AND DIVIDEND INCOME: Loans receivable $ 82,914 $ 80,867 $ 2,047 2.5 % MBS 12,163 11,264 899 8.0 FHLB stock 2,197 2,285 (88) (3.9) Cash and cash equivalents 1,620 2,729 (1,109) (40.6) Investment securities 784 1,030 (246) (23.9) Total interest and dividend income $ 99,678 $ 98,175 $ 1,503 1.5 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 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 The following table presents the components of interest expense for the time periods presented, along with the change measured in dollars and percent. For the Three Months Ended June 30, March 31, Change Expressed in: 2025 2025 Dollars Percent (Dollars in thousands) INTEREST EXPENSE: Deposits $ 35,860 $ 35,853 $ 7 — % Borrowings 18,360 18,482 (122) (0.7) Total interest expense $ 54,220 $ 54,335 $ (115) (0.2) 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. 59 Provision for Credit Losses 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 The following table presents the components of non-interest income for the time periods presented, along with the change measured in dollars and percent. For the Three Months Ended June 30, March 31, Change Expressed in: 2025 2025 Dollars Percent (Dollars in thousands) NON-INTEREST INCOME: Deposit service fees $ 2,867 $ 2,596 $ 271 10.4 % Insurance commissions 884 927 (43) (4.6) Other non-interest income 1,537 1,430 107 7.5 Total non-interest income $ 5,288 $ 4,953 $ 335 6.8 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 The following table presents the components of non-interest expense for the time periods presented, along with the change measured in dollars and percent. For the Three Months Ended June 30, March 31, Change Expressed in: 2025 2025 Dollars Percent (Dollars in thousands) NON-INTEREST EXPENSE: Salaries and employee benefits $ 15,277 $ 14,938 $ 339 2.3 % Information technology and related expense 5,163 4,924 239 4.9 Occupancy, net 3,270 3,502 (232) (6.6) Regulatory and outside services 1,261 1,469 (208) (14.2) Federal insurance premium 1,072 1,095 (23) (2.1) Advertising and promotional 1,453 760 693 91.2 Deposit and loan transaction costs 715 879 (164) (18.7) Office supplies and related expense 370 437 (67) (15.3) Other non-interest expense 983 1,536 (553) (36.0) Total non-interest expense $ 29,564 $ 29,540 $ 24 0.1 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. 60 The Company's efficiency ratio was 58.26% for the current quarter compared to 60.54% for the prior quarter. The improvement in the efficiency ratio was due to higher net interest income during the current quarter. The efficiency ratio is a measure of a financial institution's total non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. A lower value generally indicates that it is costing the financial institution less money to generate revenue. The Company's operating expense ratio (annualized) for the current quarter was 1.23%, unchanged from the prior quarter. Income Tax Expense The following table presents pretax income, income tax expense, and net income for the time periods presented, along with the change measured in dollars and percent and the effective tax rate. For the Three Months Ended June 30, March 31, Change Expressed in: 2025 2025 Dollars Percent (Dollars in thousands) Income before income tax expense $ 21,633 $ 19,253 $ 2,380 12.4 % Income tax expense 3,251 3,854 (603) (15.6) Net income $ 18,382 $ 15,399 $ 2,983 19.4 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. 61 Average Balance Sheet The following table presents the average balances of our assets, liabilities, and stockholders' equity, and the related annualized weighted average yields and rates on our interest-earning assets and interest-bearing liabilities for the periods indicated, as well as selected performance ratios and other information for the periods shown. Weighted average yields are derived by dividing annualized income by the average balance of the related assets, and weighted average rates are derived by dividing annualized expense by the average balance of the related liabilities, for the periods shown. Average outstanding balances are derived from average daily balances. The weighted average yields and rates include amortization of fees, costs, premiums and discounts, which are considered adjustments to yields/rates. Weighted average yields on tax-exempt securities are not calculated on a fully taxable equivalent basis. For the Three Months Ended June 30, 2025 March 31, 2025 Average Interest Average Interest Outstanding Earned/ Yield/ Outstanding Earned/ Yield/ Amount Paid Rate Amount Paid Rate Assets: (Dollars in thousands) Interest-earning assets: One- to four-family loans: Originated $ 3,838,361 $ 36,340 3.79 % $ 3,879,115 $ 36,311 3.74 % Correspondent purchased 2,114,381 17,434 3.30 2,165,595 17,788 3.29 Bulk purchased 118,487 1,020 3.44 122,058 1,044 3.42 Total one- to four-family loans 6,071,229 54,794 3.61 6,166,768 55,143 3.58 Commercial loans 1,814,455 25,925 5.65 1,646,347 23,591 5.73 Consumer loans 110,809 2,195 7.95 110,126 2,133 7.86 Total loans receivable (1) 7,996,493 82,914 4.13 7,923,241 80,867 4.08 MBS (2) 884,321 12,163 5.50 811,013 11,264 5.56 Investment securities (2)(3) 60,319 784 5.19 76,497 1,030 5.39 FHLB stock 96,564 2,197 9.13 98,231 2,285 9.43 Cash and cash equivalents 145,579 1,620 4.40 248,063 2,729 4.40 Total interest-earning assets 9,183,276 99,678 4.33 9,157,045 98,175 4.29 Other non-interest-earning assets 455,441 454,295 Total assets $ 9,638,717 $ 9,611,340 Liabilities and stockholders' equity: Interest-bearing liabilities: Checking $ 883,428 497 0.23 $ 879,218 485 0.22 High yield savings 352,815 3,606 4.10 227,677 2,335 4.16 Other savings 438,821 77 0.07 442,773 77 0.07 Money market 1,220,567 3,700 1.22 1,239,709 3,694 1.21 Retail certificates 2,739,886 26,481 3.88 2,789,206 27,981 4.07 Commercial certificates 59,586 557 3.75 56,580 572 4.10 Wholesale certificates 91,645 942 4.12 66,249 709 4.34 Total deposits 5,786,748 35,860 2.49 5,701,412 35,853 2.55 Borrowings 2,085,696 18,360 3.53 2,150,917 18,482 3.48 Total interest-bearing liabilities 7,872,444 54,220 2.76 7,852,329 54,335 2.81 Non-interest-bearing deposits 564,913 551,549 Other non-interest-bearing liabilities 159,035 173,700 Stockholders' equity 1,042,325 1,033,762 Total liabilities and stockholders' equity $ 9,638,717 $ 9,611,340 Net interest income (4) $ 45,458 $ 43,840 Net interest-earning assets $ 1,310,832 $ 1,304,716 Net interest margin (5) 1.98 1.92 Ratio of interest-earning assets to interest-bearing liabilities 1.17x 1.17x Selected performance ratios: Return on average assets (annualized) (6) 0.76 % 0.64 % Return on average equity (annualized) (7) 7.05 5.96 Average equity to average assets 10.81 10.76 Operating expense ratio (annualized) (8) 1.23 1.23 Efficiency ratio (9) 58.26 60.54 62 (1) Balances are adjusted for unearned loan fees and deferred costs. Loans that are 90 or more days delinquent are included in the loans receivable average balance with a yield of zero percent. (2) AFS security yields are based upon amortized cost which is adjusted for premiums and discounts. (3) There were no nontaxable securities 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. Net interest income depends on the average balance of interest-earning assets and interest-bearing liabilities, and the interest rates earned or paid on them. (5) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets. Management believes the net interest margin is important to investors as it is a profitability measure for financial institutions. (6) Return on average assets represents annualized net income as a percentage of total average assets. Management believes that the return on average assets is important to investors as it shows the Company's profitability in relation to the Company's average assets. (7) Return on average equity represents annualized net income as a percentage of total average equity. Management believes that the return on average equity is important to investors as it shows the Company's profitability in relation to the Company's average equity. (8) The operating expense ratio represents annualized non-interest expense as a percentage of average assets. Management believes the operating expense ratio is important to investors as it provides insight into how efficiently the Company is managing its expenses in relation to its assets. It is a financial measurement ratio that does not take into consideration changes in interest rates. (9) The efficiency ratio represents non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. Management believes the efficiency ratio is important to investors as it is a measure of a financial institution's total non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. A higher value generally indicates that it is costing the financial institution more money to generate revenue, related to its net interest margin and non-interest income. 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 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. 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 June 30, 2025 vs. March 31, 2025 Increase (Decrease) Due to Volume Rate Total (Dollars in thousands) Interest-earning assets: Loans receivable $ 1,814 $ 233 $ 2,047 MBS 1,010 (111) 899 Investment securities (211) (35) (246) FHLB stock (30) (58) (88) Cash and cash equivalents (1,111) 2 (1,109) Total interest-earning assets 1,472 31 1,503 Interest-bearing liabilities: Checking 4 7 11 Savings 500 771 1,271 Money market (28) 34 6 Certificates of deposit (168) (1,113) (1,281) Borrowings (415) 293 (122) Total interest-bearing liabilities (107) (8) (115) Net change in net interest income $ 1,579 $ 39 $ 1,618 63 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 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. The securities associated with the securities strategy were sold in the prior year period, and in that period the Company incurred $13.3 million ($10.0 million net of tax) of net losses related to the sale of those securities. Excluding the effects of the net loss associated with the securities strategy, EPS would have been $0.28 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. 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 Nine Months Ended June 30, Change Expressed in: 2025 2024 Dollars Percent (Dollars in thousands) INTEREST AND DIVIDEND INCOME: Loans receivable $ 245,175 $ 228,866 $ 16,309 7.1 % MBS 34,451 23,238 11,213 48.3 FHLB stock 6,834 7,591 (757) (10.0) Cash and cash equivalents 6,220 13,166 (6,946) (52.8) Investment securities 2,795 7,115 (4,320) (60.7) Total interest and dividend income $ 295,475 $ 279,976 $ 15,499 5.5 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 - 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 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. The decrease in interest income on investment securities was due to a decrease in average balance, partially offset by an increase in the weighted average yield. The decrease in the average balance was due primarily to the securities purchased as part of the securities strategy being called or maturing during fiscal year 2024 and not being replaced in their entirety. The increase in the weighted average yield was due to higher yields than the portfolio yields on the securities purchased between periods. 64 Interest Expense The following table presents the components of interest expense for the time periods presented, along with the change measured in dollars and percent. For the Nine Months Ended June 30, Change Expressed in: 2025 2024 Dollars Percent (Dollars in thousands) INTEREST EXPENSE: Deposits $ 109,058 $ 102,091 $ 6,967 6.8 % Borrowings 54,889 56,648 (1,759) (3.1) 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 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 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 $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 Nine Months Ended June 30, Change Expressed in: 2025 2024 Dollars Percent (Dollars in thousands) NON-INTEREST INCOME: Deposit service fees $ 8,170 $ 7,732 $ 438 5.7 % Insurance commissions 2,587 2,503 84 3.4 Net loss from securities transactions — (13,345) 13,345 100.0 Other non-interest income 4,177 3,568 609 17.1 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. 65 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 Nine Months Ended June 30, Change Expressed in: 2025 2024 Dollars Percent (Dollars in thousands) NON-INTEREST EXPENSE: Salaries and employee benefits $ 44,447 $ 39,186 $ 5,261 13.4 % Information technology and related expense 14,637 15,687 (1,050) (6.7) Occupancy, net 10,105 10,116 (11) (0.1) Regulatory and outside services 3,843 4,345 (502) (11.6) Federal insurance premium 3,205 4,939 (1,734) (35.1) Advertising and promotional 3,035 3,210 (175) (5.5) Deposit and loan transaction costs 2,185 2,135 50 2.3 Office supplies and related expense 1,206 1,185 21 1.8 Other non-interest expense 3,589 4,100 (511) (12.5) Total non-interest expense $ 86,252 $ 84,903 $ 1,349 1.6 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. The decrease in regulatory and outside services was due to a reduction in usage related to certain outside services compared to the prior year period. The decrease in the federal insurance premium was due primarily to a decrease in the Federal Deposit Insurance Corporation ("FDIC") assessment rate as a result of the way the assessment rate was adjusted in fiscal year 2024 for the occurrence of the Bank's net loss during the quarter ended September 30, 2023. The decrease in 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 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 Nine Months Ended June 30, Change Expressed in: 2025 2024 Dollars Percent (Dollars in thousands) Income before income tax expense $ 59,984 $ 34,896 $ 25,088 71.9 % Income tax expense 10,772 8,943 1,829 20.5 Net income $ 49,212 $ 25,953 $ 23,259 89.6 Effective Tax Rate 18.0 % 25.6 % 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. 66 Average Balance Sheets The following table presents the average balances of our assets, liabilities, and stockholders' equity, and the related annualized weighted average yields and rates on our interest-earning assets and interest-bearing liabilities for the periods indicated, as well as selected performance ratios and other information for the periods shown. Weighted average yields are derived by dividing annualized income by the average balance of the related assets, and weighted average rates are derived by dividing annualized expense by the average balance of the related liabilities, for the periods shown. Average outstanding balances are derived from average daily balances. The weighted average yields and rates include amortization of fees, costs, premiums and discounts, which are considered adjustments to yields/rates. Weighted average yields on tax-exempt securities are not calculated on a fully taxable equivalent basis. For the Nine Months Ended June 30, 2025 June 30, 2024 Average Interest Average Interest Outstanding Earned/ Yield/ Outstanding Earned/ Yield/ Amount Paid Rate Amount Paid Rate Assets: (Dollars in thousands) Interest-earning assets: One- to four-family loans: Originated $ 3,881,138 $ 109,026 3.75 % $ 3,994,694 $ 105,823 3.53 % Correspondent purchased 2,164,263 53,311 3.28 2,367,032 57,788 3.26 Bulk purchased 122,228 2,959 3.23 133,783 2,160 2.15 Total one- to four-family loans 6,167,629 165,296 3.57 6,495,509 165,771 3.40 Commercial loans 1,689,038 73,272 5.72 1,343,241 56,285 5.51 Consumer loans 110,534 6,607 7.99 106,670 6,810 8.53 Total loans receivable (1) 7,967,201 245,175 4.09 7,945,420 228,866 3.83 MBS (2) 825,420 34,451 5.57 580,178 23,238 5.34 Investment securities (2)(3) 69,778 2,795 5.34 202,392 7,115 4.69 FHLB stock 97,985 6,834 9.32 107,448 7,591 9.44 Cash and cash equivalents 182,456 6,220 4.50 320,398 13,166 5.40 Total interest-earning assets 9,142,840 295,475 4.30 9,155,836 279,976 4.06 Other non-interest-earning assets 457,719 461,030 Total assets $ 9,600,559 $ 9,616,866 Liabilities and stockholders' equity: Interest-bearing liabilities: Checking $ 876,079 1,513 0.23 $ 879,536 1,389 0.21 High yield savings 235,141 7,263 4.13 14,810 453 4.09 Other savings 441,022 254 0.08 465,846 401 0.12 Money market 1,235,352 11,606 1.26 1,322,851 17,702 1.79 Retail certificates 2,780,458 84,217 4.05 2,643,182 76,603 3.87 Commercial certificates 58,013 1,765 4.07 52,961 1,596 4.02 Wholesale certificates 75,805 2,440 4.30 116,590 3,947 4.52 Total deposits 5,701,870 109,058 2.56 5,495,776 102,091 2.48 Borrowings 2,136,105 54,889 3.43 2,375,474 56,648 3.18 Total interest-bearing liabilities 7,837,975 163,947 2.80 7,871,250 158,739 2.69 Non-interest-bearing deposits 553,644 533,454 Other non-interest-bearing liabilities 173,034 179,929 Stockholders' equity 1,035,906 1,032,233 Total liabilities and stockholders' equity $ 9,600,559 $ 9,616,866 Net interest income (4) $ 131,528 $ 121,237 Net interest-earning assets $ 1,304,865 $ 1,284,586 Net interest margin (5) 1.92 1.77 Ratio of interest-earning assets to interest-bearing liabilities 1.17x 1.16x Selected performance ratios: Return on average assets (annualized) (6)(10) 0.68 % 0.36 % Return on average equity (annualized) (7)(10) 6.33 3.35 Average equity to average assets 10.79 10.73 Operating expense ratio (8) 1.20 1.18 Efficiency ratio (9)(10) 58.89 69.77 67 (1) Balances are adjusted for unearned loan fees and deferred costs. Loans that are 90 or more days delinquent are included in the loans receivable average balance with a yield of zero percent. (2) AFS security yields are based upon amortized cost which is adjusted for premiums and discounts. (3) There were no nontaxable securities in the average balance securities for the 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. Net interest income depends on the average balance of interest-earning assets and interest-bearing liabilities, and the interest rates earned or paid on them. (5) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets. Management believes the net interest margin is important to investors as it is a profitability measure for financial institutions. (6) Return on average assets represents annualized net income as a percentage of total average assets. Management believes that the return on average assets is important to investors as it shows the Company's profitability in relation to the Company's average assets. (7) Return on average equity represents annualized net income as a percentage of total average equity. Management believes that the return on average equity is important to investors as it shows the Company's profitability in relation to the Company's average equity. (8) The operating expense ratio represents annualized non-interest expense as a percentage of average assets. Management believes the operating expense ratio is important to investors as it provides insight into how efficiently the Company is managing its expenses in relation to its assets. It is a financial measurement ratio that does not take into consideration changes in interest rates. (9) The efficiency ratio represents non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. Management believes the efficiency ratio is important to investors as it is a measure of a financial institution's total non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. A higher value generally indicates that it is costing the financial institution more money to generate revenue, related to its net interest margin and non-interest income. (10) The table below provides a reconciliation between performance measures presented in accordance with GAAP and the same performance measures absent the impact of the net loss on the securities transactions associated with the securities strategy, which are not presented in accordance with GAAP. The securities strategy was non-recurring in nature; therefore, management believes it is meaningful to investors to present certain financial measures without the securities strategy to better evaluate the Company's core operations. See information regarding the securities strategy in the "Executive Summary" discussion above. For the Nine Months Ended June 30, 2024 Without Securities Actual Securities Strategy (GAAP) Strategy (Non-GAAP) Return on average assets (annualized) 0.36 % (0.14 %) 0.50 % Return on average equity (annualized) 3.35 (1.31) 4.66 Efficiency Ratio 69.77 6.90 62.87 EPS (11) $ 0.20 $ (0.08) $ 0.28 (11) EPS is calculated as net income divided by average shares outstanding. Management believes EPS is an important measure to investors as it shows the Company's earnings in relation to the Company's outstanding shares. 68 Rate/Volume Analysis The table below presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities, comparing the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (1) changes in volume, which are changes in the average balance multiplied by the previous period's average rate, and (2) changes in rate, which are changes in the average rate multiplied by the average balance from the previous period. The net changes attributable to the combined impact of both rate and volume have been allocated proportionately to the changes due to volume and the changes due to rate. For the Nine Months Ended June 30, 2025 vs. June 30, 2024 Increase (Decrease) Due to Volume Rate Total (Dollars in thousands) Interest-earning assets: Loans receivable $ 6,279 $ 10,030 $ 16,309 MBS 10,198 1,015 11,213 Investment securities (5,197) 877 (4,320) FHLB stock (685) (72) (757) Cash and cash equivalents (5,002) (1,944) (6,946) Total interest-earning assets 5,593 9,906 15,499 Interest-bearing liabilities: Checking (6) 130 124 Savings 477 6,186 6,663 Money market (1,115) (4,981) (6,096) Certificates of deposit 2,875 3,401 6,276 Borrowings (6,219) 4,460 (1,759) Total interest-bearing liabilities (3,988) 9,196 5,208 Net change in net interest income $ 9,581 $ 710 $ 10,291 69 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 The following table presents the components of interest and dividend income for the time periods presented along with the change measured in dollars and percent. For the Three Months Ended June 30, Change Expressed in: 2025 2024 Dollars Percent (Dollars in thousands) INTEREST AND DIVIDEND INCOME: Loans receivable $ 82,914 $ 76,803 $ 6,111 8.0 % MBS 12,163 9,585 2,578 26.9 FHLB stock 2,197 2,477 (280) (11.3) Cash and cash equivalents 1,620 3,875 (2,255) (58.2) Investment securities 784 2,255 (1,471) (65.2) Total interest and dividend income $ 99,678 $ 94,995 $ 4,683 4.9 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, in part, 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 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. Interest Expense The following table presents the components of interest expense for the periods presented, along with the change measured in dollars and percent. For the Three Months Ended June 30, Change Expressed in: 2025 2024 Dollars Percent (Dollars in thousands) INTEREST EXPENSE: Deposits $ 35,860 $ 36,233 $ (373) (1.0 %) Borrowings 18,360 18,438 (78) (0.4) Total interest expense $ 54,220 $ 54,671 $ (451) (0.8) 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 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. 70 Non-Interest Income The following table presents the components of non-interest income for the time periods presented, along with the change measured in dollars and percent. For the Three Months Ended June 30, Change Expressed in: 2025 2024 Dollars Percent (Dollars in thousands) NON-INTEREST INCOME: Deposit service fees $ 2,867 $ 2,706 $ 161 5.9 % Insurance commissions 884 905 (21) (2.3) Other non-interest income 1,537 1,098 439 40.0 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 The following table presents the components of non-interest expense for the time periods presented, along with the change measured in dollars and percent. For the Three Months Ended June 30, Change Expressed in: 2025 2024 Dollars Percent (Dollars in thousands) NON-INTEREST EXPENSE: Salaries and employee benefits $ 15,277 $ 13,307 $ 1,970 14.8 % Information technology and related expense 5,163 5,364 (201) (3.7) Occupancy, net 3,270 3,263 7 0.2 Regulatory and outside services 1,261 1,322 (61) (4.6) Federal insurance premium 1,072 1,352 (280) (20.7) Advertising and promotional 1,453 951 502 52.8 Deposit and loan transaction costs 715 726 (11) (1.5) Office supplies and related expense 370 405 (35) (8.6) Other non-interest expense 983 1,260 (277) (22.0) 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, 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 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 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. 71 Income Tax Expense The following table presents pretax income, income tax expense, and net income for the time periods presented, along with the change measured in dollars and percent and the effective tax rate. For the Three Months Ended June 30, Change Expressed in: 2025 2024 Dollars Percent (Dollars in thousands) Income before income tax expense $ 21,633 $ 15,611 $ 6,022 38.6 % Income tax expense 3,251 5,963 (2,712) (45.5) Net income $ 18,382 $ 9,648 $ 8,734 90.5 Effective Tax Rate 15.0 % 38.2 % 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. 72 Average Balance Sheet The following table presents the average balances of our assets, liabilities, and stockholders' equity, and the related annualized weighted average yields and rates on our interest-earning assets and interest-bearing liabilities for the periods indicated, as well as selected performance ratios and other information for the periods shown. Weighted average yields are derived by dividing annualized income by the average balance of the related assets, and weighted average rates are derived by dividing annualized expense by the average balance of the related liabilities, for the periods shown. Average outstanding balances are derived from average daily balances. The weighted average yields and rates include amortization of fees, costs, premiums and discounts, which are considered adjustments to yields/rates. Weighted average yields on tax-exempt securities are not calculated on a fully taxable equivalent basis. For the Three Months Ended June 30, 2025 June 30, 2024 Average Interest Average Interest Outstanding Earned/ Yield/ Outstanding Earned/ Yield/ Amount Paid Rate Amount Paid Rate Assets: (Dollars in thousands) Interest-earning assets: One- to four-family loans: Originated $ 3,838,361 $ 36,340 3.79 % $ 3,970,881 $ 35,612 3.59 % Correspondent purchased 2,114,381 17,434 3.30 2,317,550 18,854 3.25 Bulk purchased 118,487 1,020 3.44 130,876 731 2.23 Total one- to four-family loans 6,071,229 54,794 3.61 6,419,307 55,197 3.44 Commercial loans 1,814,455 25,925 5.65 1,371,631 19,311 5.57 Consumer loans 110,809 2,195 7.95 107,793 2,295 8.56 Total loans receivable (1) 7,996,493 82,914 4.13 7,898,731 76,803 3.88 MBS (2) 884,321 12,163 5.50 675,506 9,585 5.68 Investment securities (2)(3) 60,319 784 5.19 163,765 2,255 5.51 FHLB stock 96,564 2,197 9.13 106,122 2,477 9.39 Cash and cash equivalents 145,579 1,620 4.40 283,939 3,875 5.40 Total interest-earning assets 9,183,276 99,678 4.33 9,128,063 94,995 4.15 Other non-interest-earning assets 455,441 451,143 Total assets $ 9,638,717 $ 9,579,206 Liabilities and stockholders' equity: Interest-bearing liabilities: Checking $ 883,428 497 0.23 $ 874,477 508 0.23 High yield savings 352,815 3,606 4.10 35,464 361 4.10 Other savings 438,821 77 0.07 459,150 130 0.11 Money market 1,220,567 3,700 1.22 1,268,261 5,259 1.67 Retail certificates 2,739,886 26,481 3.88 2,751,521 28,106 4.11 Commercial certificates 59,586 557 3.75 58,059 623 4.31 Wholesale certificates 91,645 942 4.12 106,680 1,246 4.70 Total deposits 5,786,748 35,860 2.49 5,553,612 36,233 2.62 Borrowings 2,085,696 18,360 3.53 2,297,228 18,438 3.22 Total interest-bearing liabilities 7,872,444 54,220 2.76 7,850,840 54,671 2.80 Non-interest-bearing deposits 564,913 534,901 Other non-interest-bearing liabilities 159,035 169,555 Stockholders' equity 1,042,325 1,023,910 Total liabilities and stockholders' equity $ 9,638,717 $ 9,579,206 Net interest income (4) $ 45,458 $ 40,324 Net interest-earning assets $ 1,310,832 $ 1,277,223 Net interest margin (5) 1.98 1.77 Ratio of interest-earning assets to interest-bearing liabilities 1.17x 1.16x Selected performance ratios: Return on average assets (annualized) (6) 0.76 % 0.40 % Return on average equity (annualized) (7) 7.05 3.77 Average equity to average assets 10.81 10.69 Operating expense ratio (annualized) (8) 1.23 1.17 Efficiency ratio (9) 58.26 62.07 73 (1) Balances are adjusted for unearned loan fees and deferred costs. Loans that are 90 or more days delinquent are included in the loans receivable average balance with a yield of zero percent. (2) AFS security yields are based upon amortized cost which is adjusted for purchase premiums and discounts. (3) There were no nontaxable securities included in the average balance of investment securities for the three months ended 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. Net interest income depends on the average balance of interest-earning assets and interest-bearing liabilities, and the interest rates earned or paid on them. (5) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets. Management believes the net interest margin is important to investors as it is a profitability measure for financial institutions. (6) Return on average assets represents annualized net income as a percentage of total average assets. Management believes that the return on average assets is important to investors as it shows the Company's profitability in relation to the Company's average assets. (7) Return on average equity represents annualized net income as a percentage of total average equity. Management believes that the return on average equity is important to investors as it shows the Company's profitability in relation to the Company's average equity. (8) The operating expense ratio represents annualized non-interest expense as a percentage of average assets. Management believes the operating expense ratio is important to investors as it provides insight into how efficiently the Company is managing its expenses in relation to its assets. It is a financial measurement ratio that does not take into consideration changes in interest rates. (9) The efficiency ratio represents non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. Management believes the efficiency ratio is important to investors as it is a measure of a financial institution's total non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. A higher value generally indicates that it is costing the financial institution more money to generate revenue, related to its net interest margin and non-interest income. 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. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (1) changes in volume, which are changes in the average balance multiplied by the previous year's average rate and (2) changes in rate, which are changes in the average rate multiplied by the average balance from the previous year period. The net changes attributable to the combined impact of both rate and volume have been allocated proportionately to the changes due to volume and the changes due to rate. For the Three Months Ended June 30, 2025 vs. 2024 Increase (Decrease) Due to Volume Rate Total (Dollars in thousands) Interest-earning assets: Loans receivable $ 3,274 $ 2,837 $ 6,111 MBS 2,880 (302) 2,578 Investment securities (1,349) (122) (1,471) FHLB stock (219) (61) (280) Cash and cash equivalents (1,636) (619) (2,255) Total interest-earning assets 2,950 1,733 4,683 Interest-bearing liabilities: Checking 5 (16) (11) Savings 447 2,744 3,191 Money market (191) (1,368) (1,559) Certificates of deposit (256) (1,738) (1,994) Borrowings (1,751) 1,673 (78) Total interest-bearing liabilities (1,746) 1,295 (451) Net change in net interest income $ 4,696 $ 438 $ 5,134 74 Liquidity and Capital Resources Liquidity refers to our ability to generate sufficient cash to fund ongoing operations, to repay maturing certificates of deposit and other deposit withdrawals, to repay maturing borrowings, and to fund loan commitments. Liquidity management is both a daily and long-term function of our business management. The Company's most available liquid assets are represented by cash and cash equivalents and AFS securities. The Bank's primary sources of funds are deposits, FHLB borrowings, repayments and maturities of outstanding loans and MBS and other short-term investments, and funds provided by operations. The Bank's long-term borrowings primarily have been used to manage long-term liquidity needs and the Bank's interest rate risk with the intention to improve the earnings of the Bank while maintaining capital ratios that meet or exceed the regulatory standards for well-capitalized financial institutions. In addition, the Bank's focus on managing risk has provided additional liquidity capacity by maintaining a balance of MBS and investment securities available as collateral for borrowings. We generally intend to manage cash reserves sufficient to meet short-term liquidity needs, which are routinely forecasted for 10, 30, and 365 days. Additionally, on a monthly basis, we perform a liquidity stress test in accordance with the Interagency Policy Statement on Funding and Liquidity Risk Management. The liquidity stress test incorporates both short-term and long-term liquidity scenarios in order to identify and to quantify liquidity risk. Management also monitors key liquidity statistics related to items such as wholesale funding gaps, borrowings capacity, and available unpledged collateral, as well as various liquidity ratios. In the event short-term liquidity needs exceed available cash, the Bank has access to a line of credit at the FHLB, in addition to the FRB of Kansas City's discount window. Per FHLB's lending guidelines, total FHLB borrowings cannot exceed 40% of Bank Call Report total assets without the pre-approval of FHLB senior management. The Bank's FHLB borrowing limit was 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. FHLB borrowings are secured by certain qualifying loans pursuant to a blanket collateral agreement with FHLB. The amount that can be borrowed from the FRB of Kansas City's discount window is based upon the fair value of securities pledged as collateral. At 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 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. The Bank has used fully-amortizing FHLB advances that require periodic payments of principal over the term of the advance. This type of advance allows the Bank the opportunity to start repricing its liability cash flows sooner in a down-rate environment and generally provides for favorable pricing when compared to similar long-term bullet advances with comparable average lives as a result of the current term structure of interest rates. The Bank's internal policy limits total borrowings to 55% of total assets. At 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 $2.97 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 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 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 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. Due to the nature of public unit certificates of deposit and commercial certificates of deposit, retention rates are not as predictable as for retail certificates of deposit. 75 While scheduled payments from the amortization of loans and MBS and payments on short-term investments are relatively predictable sources of funds, deposit flows, prepayments on loans and MBS, and calls of investment securities are greatly influenced by general interest rates, economic conditions, and competition, and are less predictable sources of funds. To the extent possible, the Bank manages the cash flows of its loan and deposit portfolios by the rates it offers customers. We anticipate we will continue to have sufficient funds, through the repayments and maturities of loans and securities, deposits and borrowings, to meet our current commitments. Limitations on Dividends and Other Capital Distributions Office of the Comptroller of the Currency ("OCC") regulations impose restrictions on savings institutions with respect to their ability to make distributions of capital, which include dividends and other transactions charged to the capital account. Under FRB and OCC safe harbor regulations, savings institutions generally may make capital distributions during any calendar year equal to earnings of the previous two calendar years and current year-to-date earnings (to the extent not previously distributed). A savings institution that is a subsidiary of a savings and loan holding company, such as the Company, that proposes to make a capital distribution must submit written notice to the OCC and FRB 30 days prior to such distribution. The OCC and FRB may object to the distribution during that 30-day period based on safety and soundness or other concerns. Savings institutions that desire to make a larger capital distribution, are under special restrictions, or are not, or would not be, sufficiently capitalized following a proposed capital distribution must obtain regulatory non-objection prior to making such a distribution. The long-term ability of the Company to pay dividends to its stockholders is based primarily upon the ability of the Bank to make capital distributions to the Company. So long as the Bank remains well capitalized after each capital distribution (as evidenced by maintaining regulatory capital ratios greater than the required percentages) and operates in a safe and sound manner, it is management's belief that the OCC and FRB will continue to allow the Bank to distribute its earnings to the Company, although no assurance can be given in this regard. Management continues to evaluate the timing and amount of capital distributions to be made from the Bank to the holding company during the remainder of the current fiscal year and in future periods in connection with the tax issues associated with the Bank's pre-1988 bad debt recapture. For additional information regarding capital distributions relating to these tax issues, see "Financial Condition - Stockholders' Equity" above. Regulatory Capital Consistent with our goal to operate a sound and profitable financial organization, we actively seek to maintain a well-capitalized status for the Bank per the regulatory framework for prompt corrective action ("PCA"). Qualifying institutions that elect to use the CBLR framework, such as the Bank and the Company, that maintain the required minimum leverage ratio of 9.0% will be considered to have satisfied the generally applicable risk-based and leverage capital requirements in the regulatory agencies' capital rules, and to have met the capital requirements for the well-capitalized category under the agencies' PCA framework. As of 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%. 76