SEC Form 10-Q filed by Capitol Federal Financial Inc.

2/7/24 11:58:12 AM ET

Savings Institutions

Finance

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cffn-20231231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________

Form 10-Q

________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __ to __

Commission File Number: 001-34814

Capitol Federal Financial, Inc.

(Exact name of registrant as specified in its charter)


Maryland			27-2631712
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

700 South Kansas Avenue,	Topeka,	Kansas	66603
(Address of principal executive offices)			(Zip Code)

(785) 235-1341

(Registrant's telephone number, including area code)

_____________________________________

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	CFFN	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐

Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of February 2, 2024, there were 133,732,975 shares of Capitol Federal Financial, Inc. common stock outstanding.


PART I - FINANCIAL INFORMATION		Page Number
Item 1.	Financial Statements (Unaudited)	3
	Consolidated Balance Sheets at December 31 , 2023 and September 30, 202 3	3
	Consolidated Statements of Income for the three months ended December 31 , 2023 and 2022	4
	Consolidated Statements of Comprehensive Income for the three months ended December 31, 2023 and 2022	5
	Consolidated Statements of Stockholders' Equity for the three months ended December 31 , 2023 and 2022	6
	Consolidated Statements of Cash Flows for the three months ended December 31 , 2023 and 2022	7
	Notes to Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	29
	Financial Condition - Loans Receivable	33
	Financial Condition - Asset Quality	38
	Financial Condition - Liabilities	43
	Financial Condition - Stockholders' Equity	46
	Operating Results	47
	Comparison of Operating Results for the three months ended December 31 , 2023 and September 30 , 2023	51
	Comparison of Operating Results for the three months ended December 31, 2023 and 2022	54

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	59
Item 4.	Controls and Procedures	63


PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	64
Item 1A.	Risk Factors	64
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 3.	Defaults Upon Senior Securities	64
Item 4.	Mine Safety Disclosures	64
Item 5.	Other Information	65
Item 6.	Exhibits	65


INDEX TO EXHIBITS		66


SIGNATURES		67

PART I -- FINANCIAL INFORMATION

Item 1. Financial Statements


CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands, except per share amounts)

	December 31,		September 30,
	2023		2023
ASSETS:
Cash and cash equivalents (includes interest-earning deposits of $287,748 and $213,830)	$	320,357	$	245,605

Available-for-sale ("AFS") securities, at estimated fair value (amortized cost of $721,612 and $1,385,992)	740,462		1,384,482

Loans receivable, net (allowance for credit losses ("ACL") of $24,178 and $23,759)	7,947,510		7,970,949
Federal Home Loan Bank Topeka ("FHLB") stock, at cost	110,166		110,714
Premises and equipment, net	91,475		91,531
Income taxes receivable, net	3,939		8,531
Deferred income tax assets, net	34,076		29,605
Other assets	328,079		336,044
TOTAL ASSETS	$	9,576,064	$	10,177,461

LIABILITIES:
Deposits	$	6,021,595	$	6,051,220
Borrowings	2,373,064		2,879,125

Advances by borrowers	24,839		62,993


Other liabilities	122,445		140,069
Total liabilities	8,541,943		9,133,407

STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 100,000,000 shares authorized, no shares issued or outstanding	—		—
Common stock, $.01 par value; 1,400,000,000 shares authorized, 133,908,375 and 135,936,375 shares issued and outstanding as of December 31, 2023 and September 30, 2023, respectively	1,339		1,359
Additional paid-in capital	1,154,655		1,166,643
Unearned compensation, Employee Stock Ownership Plan ("ESOP")	(27,671)		(28,083)
Retained earnings	(113,357)		(104,565)
Accumulated other comprehensive income ("AOCI"), net of tax	19,155		8,700
Total stockholders' equity	1,034,121		1,044,054
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	9,576,064	$	10,177,461


See accompanying notes to consolidated financial statements.


CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share amounts)

	For the Three Months Ended
	December 31,
	2023		2022
INTEREST AND DIVIDEND INCOME:
Loans receivable	$	75,941	$	64,819
Mortgage-backed securities ("MBS")	5,859		4,811
Cash and cash equivalents	4,778		16,671
FHLB stock	2,586		4,158
Investment securities	2,528		881
Total interest and dividend income	91,692		91,340
INTEREST EXPENSE:
Deposits	32,443		11,904
Borrowings	19,656		33,608

Total interest expense	52,099		45,512
NET INTEREST INCOME	39,593		45,828
PROVISION FOR CREDIT LOSSES	123		3,660

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES	39,470		42,168
NON-INTEREST INCOME:
Deposit service fees	2,575		3,461
Insurance commissions	863		795


Net loss from securities transactions	(13,345)		—
Other non-interest income	1,013		1,096
Total non-interest income	(8,894)		5,352
NON-INTEREST EXPENSE:
Salaries and employee benefits	12,992		13,698
Information technology and related expense	5,369		5,070
Occupancy, net	3,372		3,474
Federal insurance premium	1,860		812
Regulatory and outside services	1,643		1,533
Advertising and promotional	988		833
Deposit and loan transaction costs	542		611
Office supplies and related expense	361		633


Other non-interest expense	1,381		1,109
Total non-interest expense	28,508		27,773
INCOME BEFORE INCOME TAX (BENEFIT) EXPENSE	2,068		19,747
INCOME TAX (BENEFIT) EXPENSE	(475)		3,507
NET INCOME	$	2,543	$	16,240

Basic earnings per share ("EPS")	$	0.02	$	0.12
Diluted EPS	$	0.02	$	0.12

Basic weighted average common shares	132,353,313		134,640,932
Diluted weighted average common shares	132,353,313		134,640,932

See accompanying notes to consolidated financial statements.


CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(Dollars in thousands)

	For the Three Months Ended
	December 31,
	2023		2022
Net income	$	2,543	$	16,240
Other comprehensive income, net of tax:
Unrealized gains on AFS securities arising during the period, net of taxes of $(5,350) and $(4,211)	16,581		13,050
Reclassification adjustment for gross gains on AFS securities included in net income, net of taxes of $383 and $0	(1,188)		—
Unrealized gains (losses) on cash flow hedges arising during the period, net of taxes of $967 and $(232)	(2,998)		715
Reclassification adjustment for cash flow hedge amounts included in net income, net of taxes of $626 and $237	(1,940)		(734)
Comprehensive income	$	12,998	$	29,271

See accompanying notes to consolidated financial statements.


CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
(Dollars in thousands, except per share amounts)

	For the Three Months Ended December 31, 2023
			Additional		Unearned						Total
	Common		Paid-In		Compensation		Retained				Stockholders'
	Stock		Capital		ESOP		Earnings		AOCI		Equity
Balance at September 30, 2023	$	1,359	$	1,166,643	$	(28,083)	$	(104,565)	$	8,700	$	1,044,054

Net income							2,543				2,543
Cumulative effect of adopting Accounting Standards Update ("ASU") 2022-02, net of tax							(27)				(27)
Other comprehensive income, net of tax									10,455		10,455

ESOP activity			(190)		412						222
Restricted stock activity, net			(6)								(6)
Stock-based compensation			87								87
Repurchase of common stock	(20)		(11,879)								(11,899)

Cash dividends to stockholders ($0.085 per share)							(11,308)				(11,308)
Balance at December 31, 2023	$	1,339	$	1,154,655	$	(27,671)	$	(113,357)	$	19,155	$	1,034,121






	For the Three Months Ended December 31, 2022
			Additional		Unearned						Total
	Common		Paid-In		Compensation		Retained				Stockholders'
	Stock		Capital		ESOP		Earnings		AOCI		Equity
Balance at September 30, 2022	$	1,388	$	1,190,213	$	(29,735)	$	80,266	$	(145,633)	$	1,096,499


Net income							16,240				16,240
Other comprehensive income, net of tax									13,031		13,031

ESOP activity			(72)		413						341

Stock-based compensation			89								89
Repurchase of common stock	(27)		(22,169)								(22,196)

Cash dividends to stockholders ($0.365 per share)							(49,209)				(49,209)
Balance at December 31, 2022	$	1,361	$	1,168,061	$	(29,322)	$	47,297	$	(132,602)	$	1,054,795

























See accompanying notes to consolidated financial statements.


CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)
	For the Three Months Ended
	December 31,
	2023	2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	2,543	16,240
Adjustments to reconcile net income to net cash provided by operating activities:
FHLB stock dividends	(2,586)	(4,158)
Provision for credit losses	123	3,660
Originations of loans receivable held-for-sale ("LHFS")	(425)	—
Proceeds from sales of LHFS	433	—
Amortization and accretion of premiums and discounts on securities	(2,771)	837
Depreciation and amortization of premises and equipment	2,040	2,298
Amortization of intangible assets	199	274
Amortization of deferred amounts related to FHLB advances, net	383	459
Common stock committed to be released for allocation - ESOP	222	341
Stock-based compensation	87	89


Net loss from securities transactions	13,345	—
Changes in:
Unrestricted cash collateral from derivative counterparties, net	(6,830)	530
Other assets, net	461	(2,527)
Income taxes payable/receivable, net	4,584	1,117
Deferred income tax liabilities, net	(7,836)	(245)
Other liabilities	(9,306)	(4,314)
Net cash (used in) provided by operating activities	(5,334)	14,601

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of AFS securities	(668,310)	—

Proceeds from calls, maturities and principal reductions of AFS securities	49,604	51,045

Proceeds from sale of AFS securities	1,272,512	—
Proceeds from the redemption of FHLB stock	3,134	90,423
Purchase of FHLB stock	—	(109,760)
Net change in loans receivable	22,815	(327,583)
Proceeds from sale of participating interest in loans receivable	—	5,563
Purchase of premises and equipment	(1,261)	(1,093)
Proceeds from sale of other real estate owned ("OREO")	—	296





Net cash provided by (used in) investing activities	678,494	(291,109)


		(Continued)


CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)
	For the Three Months Ended
	December 31,
	2023		2022
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid	(11,308)		(49,209)
Net change in deposits	(29,625)		(120,317)
Proceeds from borrowings	175,100		2,000,100
Repayments on borrowings	(682,521)		(1,487,518)

Change in advances by borrowers	(38,154)		(43,860)

Repurchase of common stock	(11,900)		(22,196)



Net cash (used in) provided by financing activities	(598,408)		277,000

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	74,752		492

CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
Beginning of period	245,605		49,194
End of period	$	320,357	$	49,686














See accompanying notes to consolidated financial statements.			(Concluded)

Notes to Consolidated Financial Statements (Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation - The consolidated financial statements include the accounts of Capitol Federal Financial, Inc.® (the "Company") and its wholly-owned subsidiary, Capitol Federal Savings Bank (the "Bank"). The Bank has two wholly-owned subsidiaries, Capitol Funds, Inc. and Capital City Investments, Inc. Capitol Funds, Inc. has a wholly-owned subsidiary, Capitol Federal Mortgage Reinsurance Company. Capital City Investments, Inc. is a real estate and investment holding company. All intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2023, filed with the Securities and Exchange Commission ("SEC"). Interim results are not necessarily indicative of results for a full year.

Cash, Cash Equivalents and Restricted Cash - Cash, cash equivalents and restricted cash reported in the statement of cash flows consisted entirely of cash and cash equivalents at December 31, 2023 and September 30, 2023, respectively. At times, the Company holds restricted cash, which is reported in other assets on the consolidated balance sheet, related to collateral postings to/from the Bank's derivative counterparties associated with the Bank's interest rate swaps. There was no restricted cash at December 31, 2023 or September 30, 2023. See additional discussion regarding the interest rate swaps in Note 5. Borrowed Funds.

Net Presentation of Cash Flows Related to Borrowings - At times, the Bank enters into FHLB advances with contractual maturities of 90 days or less. Cash flows related to these advances are reported on a net basis in the consolidated statements of cash flows.

Recent Accounting Pronouncements - In March 2022, the Financial Accounting Standards Board ("FASB") issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings ("TDRs") and Vintage Disclosures. This ASU eliminates the accounting guidance for TDRs by creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Additionally, this ASU requires that an entity disclose current-period gross write-offs by year of origination for financing receivables within the scope of Accounting Standards Codification ("ASC") 326-20, Financial Instruments-Credit Losses-Measured at Amortized Cost. The Company adopted the ASU on October 1, 2023 on a prospective basis, except for the amendments impacting the measurement of the ACL for TDRs, which were adopted on a modified retrospective approach. Upon adoption, the Company recorded a $20 thousand increase in ACL, a $16 thousand increase in reserves for off-balance sheet exposures, and a cumulative effect-adjustment to retained earnings of $27 thousand, net of tax. The adjustments are attributable to including TDRs in the ACL model, as of October 1 2023. The new disclosure requirements associated with this ASU are included below and in Note 4. Loans Receivable and Allowance for Credit Losses.

The following significant accounting policies have been updated since the Company's 2023 Annual Report on Form 10-K to reflect the adoption of ASU 2022-02.

Troubled debt restructurings - Prior to the Company's adoption of ASU 2022-02, a loan was accounted for as a TDR if the Bank granted a concession to a borrower experiencing financial difficulties. Such concessions generally involve extensions of loan maturity dates, the granting of periods during which reduced payment amounts are required, and/or reductions in interest rates. The Bank does not forgive principal or interest, nor does it commit to lend additional funds to these borrowers, except for situations generally involving the capitalization of delinquent interest and/or escrow on one- to four-family loans and consumer loans, not to exceed the original loan amount. In the case of commercial loans, the Bank generally does not forgive principal or interest or commit to lend additional funds unless the borrower provides additional collateral or other enhancements to improve the credit quality.

Loan modifications - The TDR policy outlined above regarding Bank concessions to a borrower experiencing financial difficulty continues to apply for loan modifications upon adoption of ASU 2022-02 on October 1, 2023. If the change in the loan terms resulting from the modification is deemed to be more than minor, all existing unamortized deferred loan origination fees and costs are recognized at the time of modification. Modifications of loans to borrowers experiencing financial difficulty that are in the form of principal forgiveness, interest rate reductions, other-than-insignificant payment delays, or a term extension (or a combination thereof) require disclosure in the Company's footnotes. The Company's modification disclosures are included in Note 4. Loans Receivable and Allowance for Credit Losses. Modified loans are included in the Company's ACL model based on the risk characteristics of the loan. If a modified loan is deemed uncollectible and no longer shares similar risk characteristics within the respective loan pool in the ACL model, the loan is evaluated on an individual basis and any loss is charged-off against the related ACL.

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative. This ASU incorporates a variety of Topics into the Codification that are currently included in SEC Regulations S-X and S-K. The ASU is intended to align the accounting standards of GAAP with SEC Regulations S-X and S-K. Each amendment in the ASU will only become effective for the Company if the SEC removes the related disclosure or presentation requirement from its existing regulations by June 30, 2027. This may result in disclosures currently presented outside of the Company's financial statements being relocated to the Company's financial statements. The amendments will be applied prospectively by the Company. The ASU is not expected to have a material impact to the Company's disclosures as the Company is currently subject to SEC Regulations S-X and S-K.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures. This ASU requires enhanced disclosures of segment information for all public entities, including those that have a single reportable segment, primarily in the area of segment revenues and expenses. Entities that have a single reportable segment, like the Company, will be required to provide all the disclosures required by this ASU and all existing segment disclosures requirements in ASC 280, Segment Reporting. This ASU is effective for the Company on October 1, 2024. The Company is currently evaluating the effect this ASU will have on the Company's segment disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. This ASU requires public entities to provide additional annual disclosures regarding specific categories of the income tax rate reconciliation and additional information for reconciling items within the income tax rate reconciliation that meet a certain quantitative threshold. This ASU is effective for the Company on October 1, 2025. The Company is currently evaluating the effect this ASU will have on the Company's income tax disclosures.

2. EARNINGS PER SHARE

Shares acquired by the ESOP are not included in basic average shares outstanding until the shares are committed for allocation or vested to an employee's individual account. Unvested shares awarded pursuant to the Company's restricted stock benefit plans are treated as participating securities in the computation of EPS pursuant to the two-class method as they contain nonforfeitable rights to dividends. The two-class method is an earnings allocation that determines EPS for each class of common stock and participating security.


	For the Three Months Ended
	December 31,
	2023		2022
	(Dollars in thousands, except per share amounts)
Net income	$	2,543	$	16,240
Income allocated to participating securities	(2)		(7)
Net income available to common stockholders	$	2,541	$	16,233

Total basic average common shares outstanding	132,353,313		134,640,932
Effect of dilutive stock options	—		—
Total diluted average common shares outstanding	132,353,313		134,640,932

Net EPS:
Basic	$	0.02	$	0.12
Diluted	$	0.02	$	0.12

Antidilutive stock options, excluded from the diluted average
common shares outstanding calculation	335,461		378,026

3. SECURITIES

The following tables reflect the amortized cost, estimated fair value, and gross unrealized gains and losses of AFS securities at the dates presented.


	December 31, 2023
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(Dollars in thousands)

MBS	$	503,912	$	19,599	$	291	$	523,220
U.S. Treasury bills	213,700		58		—		213,758

Corporate bonds	4,000		—		516		3,484

	$	721,612	$	19,657	$	807	$	740,462


	September 30, 2023
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(Dollars in thousands)

MBS	$	901,440	$	113	$	819	$	900,734
Government-sponsored enterprise ("GSE") debentures	479,610		—		182		479,428
Corporate bonds	4,000		—		622		3,378
Municipal bonds	942		—		—		942
	$	1,385,992	$	113	$	1,623	$	1,384,482

The following tables summarize the estimated fair value and gross unrealized losses of those AFS securities on which an unrealized loss at the dates presented was reported and the continuous unrealized loss position for less than 12 months and equal to or greater than 12 months as of the dates presented.


	December 31, 2023
	Less Than 12 Months				Equal to or Greater Than 12 Months
	Estimated		Unrealized		Estimated		Unrealized
	Fair Value		Losses		Fair Value		Losses
	(Dollars in thousands)

MBS	$	14,485	$	13	$	24,191	$	278

Corporate bonds	—		—		3,484		516

	$	14,485	$	13	$	27,675	$	794


	September 30, 2023
	Less Than 12 Months				Equal to or Greater Than 12 Months
	Estimated		Unrealized		Estimated		Unrealized
	Fair Value		Losses		Fair Value		Losses
	(Dollars in thousands)

MBS	$	6,179	$	109	$	34,555	$	710
GSE debentures	—		—		24,818		182
Corporate bonds	—		—		3,378		622

	$	6,179	$	109	$	62,751	$	1,514

The unrealized losses at December 31, 2023 were a result of an increase in market yields from the time the securities were purchased. In general, as market yields rise, the fair value of securities will decrease; as market yields fall, the fair value of securities will increase. Management did not record an ACL on securities in an unrealized loss position at December 31, 2023 because scheduled coupon payments have been made, management anticipates that the entire principal balance will be collected as scheduled, and neither does the Company intend to sell the securities, nor is it more likely than not that the Company will be required to sell the securities before the recovery of the remaining amortized cost amount, which could be at maturity.

The amortized cost and estimated fair value of AFS debt securities as of December 31, 2023, by contractual maturity, are shown below. Actual principal repayments may differ from contractual maturities due to prepayment or early call privileges by the issuer. In the case of MBS, borrowers on the underlying loans generally have the right to prepay their loans without penalty. For this reason, MBS are not included in the maturity categories.



	Amortized		Estimated
	Cost		Fair Value
	(Dollars in thousands)
One year or less	$	213,700	$	213,758

Five years through ten years	4,000		3,484

	217,700		217,242
MBS	503,912		523,220
	$	721,612	$	740,462

The following table presents the taxable and non-taxable components of interest income on investment securities for the periods presented.



	For the Three Months Ended
	December 31,
	2023		2022
	(Dollars in thousands)
Taxable	$	2,526	$	874
Non-taxable	2		7
	$	2,528	$	881

The following table summarizes the carrying value of securities pledged as collateral for the obligations indicated below as of the dates presented.



	December 31, 2023		September 30, 2023
	(Dollars in thousands)
Public unit deposits	$	148,330	$	178,396
Federal Reserve Bank of Kansas City ("FRB of Kansas City") borrowings	124,292		519,195



	$	272,622	$	697,591

During the quarter ended December 31, 2023, the Bank sold $1.30 billion of AFS securities. The Bank received gross proceeds of $1.27 billion from the sale and realized gross losses of $14.9 million and gross gains of $1.6 million, resulting in a net loss of $13.3 million on the sale during the quarter.

4. LOANS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES

Loans receivable, net at the dates presented is summarized as follows:


	December 31, 2023		September 30, 2023
	(Dollars in thousands)
One- to four-family:
Originated	$	3,986,479	$	3,978,837
Correspondent purchased	2,360,843		2,405,911
Bulk purchased	134,504		137,193
Construction	43,631		69,974
Total	6,525,457		6,591,915
Commercial:
Commercial real estate	1,019,431		995,788
Commercial and industrial	113,686		112,953
Construction	196,493		178,746
Total	1,329,610		1,287,487
Consumer:
Home equity	96,952		95,723
Other	9,670		9,256
Total	106,622		104,979

Total loans receivable	7,961,689		7,984,381

Less:
ACL	24,178		23,759
Deferred loan fees/discounts	30,653		31,335
Premiums/deferred costs	(40,652)		(41,662)
	$	7,947,510	$	7,970,949

Lending Practices and Underwriting Standards - Originating one- to four-family loans is the Bank's primary lending business. The Bank also purchases one- to four-family loans from correspondent lenders and originates consumer loans primarily secured by one- to four-family residential properties and originates and participates in commercial loans. The Bank has a loan concentration in one- to four-family loans and a geographic concentration of these loans in Kansas and Missouri.

One- to four-family loans - Full documentation to support an applicant's credit and income, and sufficient funds to cover all applicable fees and reserves at closing, are required on all loans. Properties securing one- to four-family loans are appraised by either staff appraisers or fee appraisers, both of which are independent of the loan origination function.

The underwriting standards for loans purchased from correspondent lenders are generally similar to the Bank's internal underwriting standards. The underwriting of loans purchased from correspondent lenders on a loan-by-loan basis is performed by the Bank's underwriters.

The Bank also originates owner-occupied construction-to-permanent loans secured by one- to four-family residential real estate. Construction draw requests and the supporting documentation are reviewed and approved by designated personnel. The Bank also performs regular documented inspections of the construction project to ensure the funds are being used for the intended purpose and the project is being completed according to the plans and specifications provided.

Commercial loans - The Bank's commercial real estate and commercial construction loans are originated by the Bank or in participation with a lead bank. When underwriting a commercial real estate or commercial construction loan, several factors are considered, such as the income producing potential of the property, cash equity provided by the borrower, the financial strength of the borrower, managerial expertise of the borrower or tenant, feasibility studies, lending experience with the borrower and the marketability of the property. For commercial real estate and commercial construction participation loans, the Bank performs the same underwriting procedures as if the loan

was being originated by the Bank. At the time of origination, loan-to-value ("LTV") ratios on commercial real estate loans generally do not exceed 85% of the appraised value of the property securing the loans and the minimum debt service coverage ratio is generally 1.15. For commercial construction loans, LTV ratios generally do not exceed 80% of the projected appraised value of the property securing the loans and the minimum debt service coverage ratio is generally 1.15, but it applies to the projected cash flows, and the borrower must have successful experience with the construction and operation of properties similar to the subject property. Appraisals on properties securing these loans are performed by independent state certified fee appraisers.

The Bank's commercial and industrial loans are generally made in the Bank's market areas and are underwritten on the basis of the borrower's ability to service the debt from income. Working capital loans are primarily collateralized by short-term assets whereas term loans are primarily collateralized by long-term assets. In general, commercial and industrial loans involve more credit risk than commercial real estate loans due to the type of collateral securing commercial and industrial loans. As a result of these additional complexities, variables and risks, commercial and industrial loans generally require more thorough underwriting and servicing than other types of loans.

Consumer loans - The Bank offers a variety of consumer loans, the majority of which are home equity loans and lines of credit for which the Bank also has the first mortgage or the first lien position.

The underwriting standards for consumer loans include a determination of an applicant's payment history on other debts and an assessment of an applicant's ability to meet existing obligations and payments on the proposed loan. Although creditworthiness of an applicant is a primary consideration, the underwriting process also includes a comparison of the value of the security in relation to the proposed loan amount.

Credit Quality Indicators - Based on the Bank's lending emphasis and underwriting standards, management has segmented the loan portfolio into three segments: (1) one- to four-family; (2) consumer; and (3) commercial. These segments are further divided into classes for purposes of providing disaggregated credit quality information about the loan portfolio. The classes are: one- to four-family - originated, one- to four-family - correspondent purchased, one- to four-family - bulk purchased, consumer - home equity, consumer - other, commercial - commercial real estate, and commercial - commercial and industrial. One- to four-family construction loans are included in the originated class and commercial construction loans are included in the commercial real estate class. As part of the on-going monitoring of the credit quality of the Company's loan portfolio, management tracks certain credit quality indicators including trends related to loan classification and delinquency status.

Loan Classification - In accordance with the Bank's asset classification policy, management regularly reviews the problem loans in the Bank's portfolio to determine whether any require classification. Loan classifications are defined as follows:

•Special mention - These loans are performing loans on which known information about the collateral pledged or the possible credit problems of the borrower(s) have caused management to have doubts as to the ability of the borrower(s) to comply with present loan repayment terms and which may result in the future inclusion of such loans in the nonaccrual loan categories.

•Substandard - A loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard loans include those characterized by the distinct possibility the Bank will sustain some loss if the deficiencies are not corrected.

•Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses present make collection or liquidation in full on the basis of currently existing facts and conditions and values highly questionable and improbable.

•Loss - Loans classified as loss are considered uncollectible and of such little value that their continuance as assets on the books is not warranted.

The following tables set forth, as of the dates indicated, the amortized cost of loans by class of financing receivable, year of origination or most recent credit decision, and loan classification. All revolving lines of credit and revolving lines of credit converted to term loans are presented separately, regardless of origination year. Loans classified as doubtful or loss are individually evaluated for loss. At December 31, 2023 and September 30, 2023, there were no loans classified as doubtful, and all loans classified as loss were fully charged-off.


	December 31, 2023
															Revolving
															Line of
	Current		Fiscal		Fiscal		Fiscal		Fiscal				Revolving		Credit
	Fiscal		Year		Year		Year		Year		Prior		Line of		Converted
	Year		2023		2022		2021		2020		Years		Credit		to Term		Total
	(Dollars in thousands)
One- to four-family:
Originated
Pass	$	50,552	$	323,563	$	599,827	$	858,168	$	556,619	$	1,600,122	$	—	$	—	$	3,988,851
Special Mention	—		—		2,102		1,893		992		9,101		—		—		14,088
Substandard	—		—		—		691		1,051		9,809		—		—		11,551
Correspondent purchased
Pass	1,718		343,733		505,493		597,360		242,658		685,581		—		—		2,376,543
Special Mention	—		939		916		2,018		420		1,203		—		—		5,496
Substandard	—		—		1,562		—		—		6,299		—		—		7,861
Bulk purchased
Pass	—		—		—		—		—		131,789		—		—		131,789
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		3,180		—		—		3,180
	52,270		668,235		1,109,900		1,460,130		801,740		2,447,084		—		—		6,539,359
Commercial:
Commercial real estate
Pass	124,327		398,195		313,127		148,827		80,194		131,801		11,725		—		1,208,196
Special Mention	—		2,473		—		—		—		—		—		—		2,473
Substandard	—		67		—		—		594		474		—		—		1,135
Commercial and industrial
Pass	3,795		31,101		21,344		10,790		2,711		3,039		28,209		—		100,989
Special Mention	—		12,593		—		—		—		—		—		—		12,593
Substandard	—		—		—		—		—		82		—		—		82
	128,122		444,429		334,471		159,617		83,499		135,396		39,934		—		1,325,468
Consumer:
Home equity
Pass	2,552		5,341		5,444		1,723		1,031		2,724		71,875		5,995		96,685
Special Mention	—		—		46		—		—		16		43		226		331
Substandard	—		—		—		—		—		3		58		114		175
Other
Pass	1,551		4,181		2,439		640		253		191		412		—		9,667
Special Mention	—		—		—		—		3		—		—		—		3
Substandard	—		—		—		—		—		—		—		—		—
	4,103		9,522		7,929		2,363		1,287		2,934		72,388		6,335		106,861

Total	$	184,495	$	1,122,186	$	1,452,300	$	1,622,110	$	886,526	$	2,585,414	$	112,322	$	6,335	$	7,971,688


	September 30, 2023
															Revolving
															Line of
	Fiscal		Fiscal		Fiscal		Fiscal		Fiscal				Revolving		Credit
	Year		Year		Year		Year		Year		Prior		Line of		Converted
	2023		2022		2021		2020		2019		Years		Credit		to Term		Total
	(Dollars in thousands)
One- to four-family:
Originated
Pass	$	318,569	$	597,298	$	874,518	$	568,081	$	251,773	$	1,398,616	$	—	$	—	$	4,008,855
Special Mention	—		1,883		1,468		767		1,863		8,067		—		—		14,048
Substandard	292		155		221		564		939		7,954		—		—		10,125
Correspondent purchased
Pass	346,084		517,976		607,968		246,926		62,744		643,520		—		—		2,425,218
Special Mention	308		674		1,674		420		357		1,133		—		—		4,566
Substandard	—		—		—		564		—		5,402		—		—		5,966
Bulk purchased
Pass	—		—		—		—		—		134,464		—		—		134,464
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		3,208		—		—		3,208
	665,253		1,117,986		1,485,849		817,322		317,676		2,202,364		—		—		6,606,450
Commercial:
Commercial real estate
Pass	403,269		301,164		208,942		81,478		82,027		79,170		10,448		—		1,166,498
Special Mention	2,483		—		—		—		—		—		—		—		2,483
Substandard	67		—		—		594		219		255		—		—		1,135
Commercial and industrial
Pass	30,206		23,166		11,740		3,228		2,693		748		27,104		—		98,885
Special Mention	13,191		—		—		—		—		—		699		—		13,890
Substandard	—		—		—		73		—		82		—		—		155
	449,216		324,330		220,682		85,373		84,939		80,255		38,251		—		1,283,046
Consumer:
Home equity
Pass	5,501		5,624		1,955		1,069		746		2,224		72,119		6,205		95,443
Special Mention	—		46		—		—		—		21		62		195		324
Substandard	—		—		—		—		—		15		125		48		188
Other
Pass	4,758		2,693		787		338		133		129		412		—		9,250
Special Mention	—		—		—		4		—		—		—		1		5
Substandard	2		—		—		—		—		—		—		—		2
	10,261		8,363		2,742		1,411		879		2,389		72,718		6,449		105,212

Total	$	1,124,730	$	1,450,679	$	1,709,273	$	904,106	$	403,494	$	2,285,008	$	110,969	$	6,449	$	7,994,708

Delinquency Status - The following tables set forth, as of the dates indicated, the amortized cost of current loans, loans 30 to 89 days delinquent, and loans 90 or more days delinquent or in foreclosure ("90+/FC"), by class of financing receivable and year of origination or most recent credit decision as of the dates indicated. All revolving lines of credit and revolving lines of credit converted to term loans are presented separately, regardless of origination year.


	December 31, 2023
															Revolving
															Line of
	Current		Fiscal		Fiscal		Fiscal		Fiscal				Revolving		Credit
	Fiscal		Year		Year		Year		Year		Prior		Line of		Converted
	Year		2023		2022		2021		2020		Years		Credit		to Term		Total
	(Dollars in thousands)
One- to four-family:
Originated
Current	$	50,552	$	323,563	$	601,737	$	859,737	$	557,404	$	1,610,031	$	—	$	—	$	4,003,024
30-89	—		—		192		544		769		6,220		—		—		7,725
90+/FC	—		—		—		471		489		2,781		—		—		3,741
Correspondent purchased
Current	1,718		343,899		505,799		596,983		243,078		688,058		—		—		2,379,535
30-89	—		773		610		2,395		—		2,362		—		—		6,140
90+/FC	—		—		1,562		—		—		2,663		—		—		4,225
Bulk purchased
Current	—		—		—		—		—		133,440		—		—		133,440
30-89	—		—		—		—		—		587		—		—		587
90+/FC	—		—		—		—		—		942		—		—		942
	52,270		668,235		1,109,900		1,460,130		801,740		2,447,084		—		—		6,539,359
Commercial:
Commercial real estate
Current	123,381		399,539		313,127		148,827		80,136		130,629		11,475		—		1,207,114
30-89	946		1,129		—		—		58		1,191		250		—		3,574
90+/FC	—		67		—		—		594		455		—		—		1,116
Commercial and industrial
Current	3,795		43,463		21,344		10,790		2,711		3,039		28,209		—		113,351
30-89	—		231		—		—		—		—		—		—		231
90+/FC	—		—		—		—		—		82		—		—		82
	128,122		444,429		334,471		159,617		83,499		135,396		39,934		—		1,325,468
Consumer:
Home equity
Current	2,552		5,341		5,452		1,706		1,031		2,676		71,483		6,207		96,448
30-89	—		—		38		17		—		64		473		35		627
90+/FC	—		—		—		—		—		3		20		93		116
Other
Current	1,551		4,146		2,368		618		250		190		407		—		9,530
30-89	—		35		71		22		6		1		5		—		140
90+/FC	—		—		—		—		—		—		—		—		—
	4,103		9,522		7,929		2,363		1,287		2,934		72,388		6,335		106,861

Total	$	184,495	$	1,122,186	$	1,452,300	$	1,622,110	$	886,526	$	2,585,414	$	112,322	$	6,335	$	7,971,688


	September 30, 2023
															Revolving
															Line of
	Fiscal		Fiscal		Fiscal		Fiscal		Fiscal				Revolving		Credit
	Year		Year		Year		Year		Year		Prior		Line of		Converted
	2023		2022		2021		2020		2019		Years		Credit		to Term		Total
	(Dollars in thousands)
One- to four-family:
Originated
Current	$	318,211	$	598,283	$	875,563	$	567,975	$	253,546	$	1,407,090	$	—	$	—	$	4,020,668
30-89	358		898		644		1,437		820		5,960		—		—		10,117
90+/FC	292		155		—		—		209		1,587		—		—		2,243
Correspondent purchased
Current	346,084		518,650		608,573		247,346		62,652		643,739		—		—		2,427,044
30-89	308		—		1,069		564		449		2,862		—		—		5,252
90+/FC	—		—		—		—		—		3,454		—		—		3,454
Bulk purchased
Current	—		—		—		—		—		136,577		—		—		136,577
30-89	—		—		—		—		—		153		—		—		153
90+/FC	—		—		—		—		—		942		—		—		942
	665,253		1,117,986		1,485,849		817,322		317,676		2,202,364		—		—		6,606,450
Commercial:
Commercial real estate
Current	404,867		301,164		208,942		81,478		82,027		79,188		10,448		—		1,168,114
30-89	36		—		—		—		—		—		—		—		36
90+/FC	916		—		—		594		219		237		—		—		1,966
Commercial and industrial
Current	43,397		23,166		11,740		3,228		2,690		748		27,684		—		112,653
30-89	—		—		—		—		2		—		57		—		59
90+/FC	—		—		—		73		1		82		62		—		218
	449,216		324,330		220,682		85,373		84,939		80,255		38,251		—		1,283,046
Consumer:
Home equity
Current	5,428		5,631		1,955		990		746		2,195		71,986		6,312		95,243
30-89	73		39		—		79		—		50		239		125		605
90+/FC	—		—		—		—		—		15		81		11		107
Other
Current	4,737		2,613		765		338		132		129		412		—		9,126
30-89	17		80		22		4		1		—		—		1		125
90+/FC	6		—		—		—		—		—		—		—		6
	10,261		8,363		2,742		1,411		879		2,389		72,718		6,449		105,212

Total	$	1,124,730	$	1,450,679	$	1,709,273	$	904,106	$	403,494	$	2,285,008	$	110,969	$	6,449	$	7,994,708

Gross Charge-Offs - Upon adoption of ASU 2022-02 on October 1, 2023, the Company is required to present gross charge-offs by class of financing receivable and year of origination or most recent credit decision. The following table sets forth the required gross charge-off information for the three months ended December 31, 2023.


															Revolving
															Lines
	Current		Fiscal		Fiscal		Fiscal		Fiscal				Revolving		of Credit
	Fiscal		Year		Year		Year		Year		Prior		Lines of		Converted to
	Year		2023		2022		2021		2020		Years		Credit		Term		Total
	(Dollars in thousands)
One- to four-family:
Originated	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Correspondent purchased	—		—		—		—		—		—		—		—		—
Bulk purchased	—		—		—		—		—		—		—		—		—
	—		—		—		—		—		—		—		—		—

Commercial:
Commercial real estate	—		—		—		—		—		—		—		—		—
Commercial and Industrial	—		—		—		—		—		—		—		—		—
	—		—		—		—		—		—		—		—		—

Consumer:
Home Equity	1		1		—		—		—		—		—		—		2
Other	—		5		—		—		—		—		—		—		5
	1		6		—		—		—		—		—		—		7

Total	$	1	$	6	$	—	$	—	$	—	$	—	$	—	$	—	$	7

Delinquent and Nonaccrual Loans - The following tables present the amortized cost, at the dates indicated, by class, of loans 30 to 89 days delinquent, loans 90 or more days delinquent or in foreclosure, total delinquent loans, current loans, and total loans. At December 31, 2023 and September 30, 2023, all loans 90 or more days delinquent were on nonaccrual status. The increase in correspondent and bulk purchased one- to four-family loans 30 to 89 days delinquent and in nonaccrual one- to four-family loans was due mainly to delinquencies returning to more historical levels as government payment assistance programs expired. The increase in commercial loans 30 to 89 days delinquent was a mix of several different borrowers and property types. There was not one underlying reason for the increase in commercial loan delinquencies from September 30, 2023. Management is working closely with the borrowers to address payment issues.


	December 31, 2023
			90 or More Days		Total				Total
	30 to 89 Days		Delinquent or		Delinquent		Current		Amortized
	Delinquent		in Foreclosure		Loans		Loans		Cost
	(Dollars in thousands)
One- to four-family:
Originated	$	7,725	$	3,741	$	11,466	$	4,003,024	$	4,014,490
Correspondent purchased	6,140		4,225		10,365		2,379,535		2,389,900
Bulk purchased	587		942		1,529		133,440		134,969
Commercial:
Commercial real estate	3,574		1,116		4,690		1,207,114		1,211,804
Commercial and industrial	231		82		313		113,351		113,664
Consumer:
Home equity	627		116		743		96,448		97,191
Other	140		—		140		9,530		9,670
	$	19,024	$	10,222	$	29,246	$	7,942,442	$	7,971,688


	September 30, 2023
			90 or More Days		Total				Total
	30 to 89 Days		Delinquent or		Delinquent		Current		Amortized
	Delinquent		in Foreclosure		Loans		Loans		Cost
	(Dollars in thousands)
One- to four-family:
Originated	$	10,117	$	2,243	$	12,360	$	4,020,668	$	4,033,028
Correspondent purchased	5,252		3,454		8,706		2,427,044		2,435,750
Bulk purchased	153		942		1,095		136,577		137,672
Commercial:
Commercial real estate	36		1,966		2,002		1,168,114		1,170,116
Commercial and industrial	59		218		277		112,653		112,930
Consumer:
Home equity	605		107		712		95,243		95,955
Other	125		6		131		9,126		9,257
	$	16,347	$	8,936	$	25,283	$	7,969,425	$	7,994,708

The amortized cost of mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process as of December 31, 2023 and September 30, 2023 was $2.8 million and $2.5 million, respectively, which is included in loans 90 or more days delinquent or in foreclosure in the tables above. The carrying value of residential OREO held as a result of obtaining physical possession upon completion of a foreclosure or through completion of a deed in lieu of foreclosure was $444 thousand at December 31, 2023 and $219 thousand at September 30, 2023.

The following table presents the amortized cost at December 31, 2023 and September 30, 2023, by class, of loans classified as nonaccrual. Additionally, the amortized cost of nonaccrual loans that had no related ACL is presented, all of which were individually evaluated for loss and any identified losses have been charged off.


	December 31, 2023				September 30, 2023
	Nonaccrual Loans		Nonaccrual Loans with No ACL		Nonaccrual Loans		Nonaccrual Loans with No ACL
	(Dollars in thousands)
One- to four-family:
Originated	$	3,741	$	157	$	2,457	$	471
Correspondent purchased	4,225		—		3,739		285
Bulk purchased	942		630		942		630
Commercial:
Commercial real estate	1,135		446		1,984		446
Commercial and industrial	82		83		218		155
Consumer:
Home equity	116		—		107		3
Other	—		—		6		—
	$	10,241	$	1,316	$	9,453	$	1,990

Loan Modifications - The following table presents the amortized cost basis of loans as of December 31, 2023 that were both experiencing financial difficulties and modified during the three months ended December 31, 2023, by class of financing receivable and by type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers experiencing financial difficulties as compared to the amortized cost basis of each class of financing receivable is also presented below. During the three months ended December 31, 2023, the Company did not charge-off any amounts related to the loans presented in the table below. The Company has not committed to lend additional amounts to borrowers included in this table.


									Combination-				Total
									Term Extension				Class of
	Principal		Interest Rate		Payment		Term		and				Financing
	Forgiveness		Reduction		Delay		Extension		Payment Delay		Total		Receivable
	(Dollars in thousands)
One- to four-family:
Originated	$	—	$	—	$	—	$	—	$	4,405	$	4,405	0.11	%
Correspondent	—		—		—		—		1,247		1,247		0.05
Purchased	—		—		—		—		—		—		—
	—		—		—		—		5,652		5,652		0.09
Commercial:
Commercial real estate	—		—		—		—		—		—		—
Commercial and industrial	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
Consumer loans:
Home equity	—		—		—		—		—		—		—
Other	—		—		—		—		—		—		—
	—		—		—		—		—		—		—

Total	$	—	$	—	$	—	$	—	$	5,652	$	5,652	0.07

Financial effect of loan modifications - All loan modifications during the three months ended December 31, 2023 were a combination of term extensions and payment delays of one- to four-family originated loans or one- to four-family correspondent loans. The weighted average length of the term extensions was 23 months for one- to four-family originated loans and 12 months for one- to four-family correspondent loans. The weighted average payment delay was four months for both one- to four-family originated loans and one- to four-family correspondent loans.

Performance of loan modifications - None of the loans modified during the three months ended December 31, 2023 defaulted through December 31, 2023. The Company considers "default" to mean 90 days or more past due under the modified terms. Of the loans modified during the three months ended December 31, 2023, $231 thousand of one-to four-family originated loans were 30-89 days delinquent at December 31, 2023. All other loans modified during the three months ended December 31, 2023 were current at December 31, 2023.

TDRs - Prior to the adoption of ASU 2022-02 on October 1, 2023, loans were accounted for as TDRs if the Bank granted a concession to a borrower experiencing financial difficulties. There were no loans restructured during the three months ended December 31, 2022. During the three months ended December 31, 2022, there was one one-to four-family originated TDR with an amortized cost of $8 thousand that became delinquent within 12 months after being restructured.

Allowance for Credit Losses - The following is a summary of ACL activity, by loan portfolio segment, for the periods presented.


	For the Three Months Ended December 31, 2023
	One- to Four-Family
			Correspondent		Bulk
	Originated		Purchased		Purchased		Total		Commercial		Consumer		Total
	(Dollars in thousands)
Beginning balance	$	2,149	$	2,972	$	207	$	5,328	$	18,180	$	251	$	23,759
Adoption of ASU 2022-02	3		1		14		18		2		—		20
Balance at October 1, 2023	2,152		2,973		221		5,346		18,182		251		23,779
Charge-offs	—		—		—		—		—		(7)		(7)
Recoveries	5		—		—		5		1		—		6
Provision for credit losses	(63)		(25)		(15)		(103)		495		8		400
Ending balance	$	2,094	$	2,948	$	206	$	5,248	$	18,678	$	252	$	24,178


	For the Three Months Ended December 31, 2022
	One- to Four-Family
			Correspondent		Bulk
	Originated		Purchased		Purchased		Total		Commercial		Consumer		Total
	(Dollars in thousands)
Beginning balance	$	2,066	$	2,734	$	206	$	5,006	$	11,120	$	245	$	16,371
Charge-offs	—		—		—		—		—		(4)		(4)
Recoveries	1		—		—		1		—		1		2
Provision for credit losses	92		253		10		355		2,464		1		2,820
Ending balance	$	2,159	$	2,987	$	216	$	5,362	$	13,584	$	243	$	19,189

The key assumptions in the Company's ACL model include the economic forecast, the forecast and reversion to mean time periods, and prepayment and curtailment assumptions. Management also considered certain qualitative factors when evaluating the adequacy of the ACL at December 31, 2023. The key assumptions utilized in estimating the Company's ACL at December 31, 2023 are discussed below.

•Economic Forecast - Management considered several economic forecasts provided by a third party and selected an economic forecast that was the most appropriate considering the facts and circumstances at December 31, 2023. The forecasted economic indices applied to the model at December 31, 2023 were the national unemployment rate, changes in commercial real estate price index, changes in home values, and changes in the U.S. gross domestic product. The economic index most impactful to all loan pools within the model at December 31, 2023 was the national unemployment rate. The forecasted national unemployment rate in the economic scenario selected by management at December 31, 2023 had the national unemployment rate gradually increasing to 4.0% by December 31, 2024, which was the end of our four-quarter forecast time period.

•Forecast and reversion to mean time periods - The forecasted time period and the reversion to mean time period were each four quarters for all of the economic indices at December 31, 2023.

•Prepayment and curtailment assumptions - The assumptions used at December 31, 2023 were generally based on actual historical prepayment and curtailment speeds, adjusted by management as deemed necessary. The prepayment and curtailment assumptions vary for each respective loan pool in the model.

•Qualitative factors - The qualitative factors applied by management at December 31, 2023 included the following:

◦The economic uncertainties related to the unemployment rate, the labor force composition, and the labor participation rate that are not captured in the third-party economic forecast scenarios; and

◦Other management considerations related to commercial loans to account for credit risks not fully reflected in the discounted cash flow model.

Reserve for Off-Balance Sheet Credit Exposures - The following is a summary of the changes in reserve for off-balance sheet credit exposures during the periods indicated. At December 31, 2023 and September 30, 2023, the Bank's off-balance sheet credit exposures totaled $803.0 million and $837.7 million, respectively.


	For the Three Months Ended
	December 31, 2023		December 31, 2022
	(Dollars in thousands)
Beginning balance	$	4,095	$	4,751
Adoption of ASU 2022-02	16		—
Balance at October 1, 2023	4,111		4,751
(Release)/provision for credit losses	(277)		840
Ending balance	$	3,834	$	5,591

5. BORROWED FUNDS

Borrowings - Borrowings at December 31, 2023 consisted of $2.38 billion in FHLB advances, of which $2.01 billion were fixed-rate advances and $365.0 million were variable-rate advances, and $974 thousand in finance leases. Borrowings at September 30, 2023 consisted of $2.38 billion in FHLB advances, of which $2.02 billion were fixed-rate advances and $365.0 million were variable-rate advances, and $500.0 million of borrowings from the Federal Reserve's Bank Term Funding Program ("BTFP"). During the current quarter, the Bank paid off the $500.0 million of BTFP borrowings.

As of December 31, 2023 and September 30, 2023, the Bank held interest rate swap agreements with an aggregate notional amount of $365.0 million in order to hedge the variable cash flows associated with $365.0 million of adjustable-rate FHLB advances. At December 31, 2023 and September 30, 2023, the interest rate swap agreements had an average remaining term to maturity of 1.8 years and 2.1 years, respectively. The interest rate swaps were designated as cash flow hedges and involved the receipt of variable amounts from a counterparty in exchange for the Bank making fixed-rate payments over the life of the interest rate swap agreements. At December 31, 2023 and September 30, 2023, the interest rate swaps were in a gain position with a total fair value of $6.5 million and $13.0 million respectively, which was reported in other assets on the consolidated balance sheet. During the three month periods ended December 31, 2023 and December 31, 2022, $1.9 million and $734 thousand, respectively, was reclassified from AOCI as a decrease to interest expense. At December 31, 2023, the Company estimated that $5.2 million of interest expense associated with the interest rate swaps would be reclassified from AOCI as a decrease to interest expense on FHLB borrowings during the next 12 months. The Bank has minimum collateral posting thresholds with its derivative counterparties and posts collateral on a daily basis. The Bank held cash collateral of $7.2 million and $14.0 million at December 31, 2023 and September 30, 2023, respectively, in compliance with its minimum posting requirements.

At times, the Bank has utilized a leverage strategy to increase earnings which entails entering into short-term FHLB advances and depositing the proceeds from the borrowings, net of the required FHLB stock holdings, at the FRB of Kansas City. The borrowings are repaid prior to quarter end, or earlier if the strategy is suspended. The leverage strategy was not in place during the current quarter due to the strategy being unprofitable, but it was in place at points during the September 30, 2023 quarter. When the leverage strategy is in place, it reduces the net interest margin due to the amount of earnings from the transaction in comparison to the size of the transaction. Management continues to monitor the net interest rate spread and overall profitability of the leverage strategy.

6. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair Value Measurements - The Company uses fair value measurements to record fair value adjustments to certain financial instruments and to determine fair value disclosures in accordance with ASC 820 and ASC 825. The Company's AFS securities and interest rate swaps are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other financial instruments on a non-recurring basis, such as OREO and loans individually evaluated for impairment. These non-recurring fair value adjustments involve the application of lower of cost or fair value accounting or write-downs of individual financial instruments.

The Company groups its financial instruments at fair value in three levels based on the markets in which the financial instruments are traded and the reliability of the assumptions used to determine fair value. These levels are:

•Level 1 - Valuation is based upon quoted prices for identical instruments traded in active markets.

•Level 2 - Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

•Level 3 - Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect the Company's own estimates of assumptions that market participants would use in pricing the financial instrument. Valuation techniques include the use of option pricing models, discounted cash flow models, and similar techniques. The results cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the financial instrument.

The Company bases the fair value of its financial instruments on the price that would be received from the sale of an instrument in an orderly transaction between market participants at the measurement date under current market conditions. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.

The following is a description of valuation methodologies used for financial instruments measured at fair value on a recurring basis.

AFS Securities - The Company's AFS securities portfolio is carried at estimated fair value. The Company primarily uses prices obtained from third party pricing services to determine the fair value of its securities. On a quarterly basis, management corroborates a sample of prices obtained from the third party pricing service for Level 2 securities by comparing them to an independent source. If

the price provided by the independent source varies by more than a predetermined percentage from the price received from the third party pricing service, then the variance is researched by management. The Company did not have to adjust prices obtained from the third party pricing service when determining the fair value of its securities during the three months ended December 31, 2023 or during fiscal year 2023. The Company's major security types, based on the nature and risks of the securities, are:

•U.S. Treasury bills - Estimated fair values are based on pricing data from active primary and secondary markets, and inter-dealer brokers. (Level 1)

•GSE debentures - Estimated fair values are based on a discounted cash flow method. Cash flows are determined by taking any embedded options into consideration and are discounted using current market yields for similar securities. (Level 2)

•MBS - The majority of these securities are issued by GSEs. Estimated fair values are based on a discounted cash flow method. Cash flows are determined based on prepayment projections of the underlying mortgages and are discounted using current market yields for benchmark securities. (Level 2)

•Corporate Bonds and Municipal Bonds - Estimated fair values are based on a discounted cash flow method. Cash flows are determined by taking any embedded options into consideration and are discounted using current market yields for securities with similar credit profiles. (Level 2)

Interest Rate Swaps - The Company's interest rate swaps are designated as cash flow hedges and are reported at fair value in other assets on the consolidated balance sheet if in a gain position, and in other liabilities if in a loss position, with any unrealized gains and losses, net of taxes, reported as AOCI in stockholders' equity. See "Note 5. Borrowed Funds" for additional information. The estimated fair values of the interest rates swaps are obtained from the counterparty and are determined by a discounted cash flow analysis using observable market-based inputs. On a quarterly basis, management corroborates the estimated fair values by internally calculating the estimated fair value using a discounted cash flow analysis with independent observable market-based inputs from a third party. No adjustments were made to the estimated fair values obtained from the counterparty during the three months ended December 31, 2023 or during fiscal year 2023. (Level 2)

The following tables provide the level of valuation assumption used to determine the carrying value of the Company's financial instruments measured at fair value on a recurring basis at the dates presented. The Company did not have any Level 3 financial instruments measured at fair value on a recurring basis at December 31, 2023 or September 30, 2023.


	December 31, 2023
			Quoted Prices		Significant		Significant
			in Active Markets		Other Observable		Unobservable
	Carrying		for Identical Assets		Inputs		Inputs
	Value		(Level 1)		(Level 2)		(Level 3)
	(Dollars in thousands)
Assets:
AFS Securities:
MBS	$	523,220	$	—	$	523,220	$	—
U.S. Treasury bills	213,758		213,758		—		—

Corporate bonds	3,484		—		3,484		—

	740,462		213,758		526,704		—
Interest rate swaps	6,487		—		6,487		—
	$	746,949	$	213,758	$	533,191	$	—


	September 30, 2023
			Quoted Prices		Significant		Significant
			in Active Markets		Other Observable		Unobservable
	Carrying		for Identical Assets		Inputs		Inputs
	Value		(Level 1)		(Level 2)		(Level 3)
	(Dollars in thousands)
Assets:
AFS Securities:
MBS	$	900,734	$	—	$	900,734	$	—
GSE debentures	479,428		—		479,428		—
Corporate bonds	3,378		—		3,378		—
Municipal bonds	942		—		942		—
	1,384,482		—		1,384,482		—
Interest rate swaps	13,018		—		13,018		—
	$	1,397,500	$	—	$	1,397,500	$	—

The following is a description of valuation methodologies used for significant financial instruments measured at fair value on a non-recurring basis. The significant unobservable inputs used in the determination of the fair value of assets classified as Level 3 have an inherent measurement uncertainty that, if changed, could result in higher or lower fair value measurements of these assets as of the reporting date.

Loans Receivable - Collateral dependent assets are assets evaluated on an individual basis. Those collateral dependent assets that are evaluated on an individual basis are considered financial assets measured at fair value on a non-recurring basis. The fair value of collateral dependent loans/loans individually evaluated for loss on a non-recurring basis during the three months ended December 31, 2023 and 2022 that were still held in the portfolio as of December 31, 2023 and 2022 was $1.1 million and $4.1 million, respectively. Fair values of collateral dependent loans/loans individually evaluated for loss cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the loan and, as such, are classified as Level 3.

The one- to four-family loans included in this amount were individually evaluated to determine if the carrying value of the loan was in excess of the fair value of the collateral, less estimated selling costs of 10%. Fair values were estimated through current appraisals. Management does not adjust or apply a discount to the appraised value of one- to four-family loans, except for the estimated sales cost noted above, and the primary unobservable input for these loans was the appraisal.

For commercial loans, if the most recent appraisal or book value of the collateral does not reflect current market conditions due to the passage of time and/or other factors, management will adjust the existing appraised or book value based on knowledge of local market conditions, recent transactions, and estimated selling costs, if applicable. Adjustments to appraised or book values are generally based on assumptions not observable in the marketplace. The primary significant unobservable inputs for commercial loans individually evaluated during the three months ended December 31, 2023 and December 31, 2022 were downward adjustments to the book value of the collateral for lack of marketability. During the three months ended December 31, 2023, the adjustments ranged from 5% to 100%, with a weighted average of 17%. During the three months ended December 31, 2022, the adjustments ranged from 8% to 100%, with a weighted average of 21%. The basis utilized in calculating the weighted averages for these adjustments was the original unadjusted value of each collateral item.

OREO - OREO primarily represents real estate acquired as a result of foreclosure or by deed in lieu of foreclosure and is carried at the lower of cost or fair value. The fair value for one- to four-family OREO is estimated through current appraisals or listing prices, less estimated selling costs of 10%. Management does not adjust or apply a discount to the appraised value or listing price, except for the estimated sales costs noted above. The primary significant unobservable input for one- to four-family OREO was the appraisal or listing price. For commercial OREO, if the most recent appraisal or book value of the collateral does not reflect current market conditions due to the passage of time and/or other factors, management will adjust the existing appraised or book value based on knowledge of local market conditions, recent transactions, and estimated selling costs, if applicable. Adjustments to appraised or book values are generally based on assumptions not observable in the marketplace. The primary significant unobservable input for commercial OREO is downward adjustments to book value of the collateral for lack of marketability. Fair values of foreclosed property cannot be determined with precision and may not be realized in an actual sale of the property and, as such, are classified as Level 3. There was $219 thousand and $93 thousand of one- to four-family OREO measured on a non-recurring basis during the three months ended December 31, 2023 and December 31, 2022, respectively. The carrying value of the properties equaled the fair value of the properties at December 31, 2023 and 2022. There was no commercial OREO measured on a non-recurring basis during the three months ended December 31, 2023 or 2022.

Fair Value Disclosures - The Company estimated fair value amounts using available market information and a variety of valuation methodologies as of the dates presented. Considerable judgment is required to interpret market data to develop the estimates of fair value. The estimates presented are not necessarily indicative of amounts the Company would realize from a current market exchange at subsequent dates.

The carrying amounts and estimated fair values of the Company's financial instruments by fair value hierarchy, at the dates presented, were as follows:


	December 31, 2023
	Carrying		Estimated Fair Value
	Amount		Total		Level 1		Level 2		Level 3
	(Dollars in thousands)
Assets:
Cash and cash equivalents	$	320,357	$	320,357	$	320,357	$	—	$	—
AFS securities	740,462		740,462		213,758		526,704		—

Loans receivable	7,947,510		7,561,055		—		—		7,561,055

FHLB stock	110,166		110,166		110,166		—		—

Interest rate swaps	6,487		6,487		—		6,487		—
Liabilities:
Deposits	6,021,595		6,003,615		3,282,768		2,720,847		—
Borrowings	2,373,064		2,331,484		—		2,331,484		—



	September 30, 2023
	Carrying		Estimated Fair Value
	Amount		Total		Level 1		Level 2		Level 3
	(Dollars in thousands)
Assets:
Cash and cash equivalents	$	245,605	$	245,605	$	245,605	$	—	$	—
AFS securities	1,384,482		1,384,482		—		1,384,482		—

Loans receivable	7,970,949		7,358,462		—		—		7,358,462

FHLB stock	110,714		110,714		110,714		—		—

Interest rate swaps	13,018		13,018		—		13,018		—
Liabilities:
Deposits	6,051,220		6,004,975		3,321,028		2,683,947		—
Borrowings	2,879,125		2,802,849		—		2,802,849		—

7. INCOME TAXES

At September 30, 2023, the Company recorded a deferred income tax asset of $47.0 million related to the net loss on a securities transaction. The related securities were sold during the current quarter which resulted in the Company reversing the $47.0 million deferred tax asset at September 30, 2023 and recognizing a $45.0 million net operating loss deferred income tax asset as of December 31, 2023. Additionally, the Company recorded a $4.6 million deferred tax asset at December 31, 2023 related to low income housing tax credits.

The Company assesses the available positive and negative evidence surrounding the recoverability of its deferred tax assets and applies its judgment in estimating the amount of valuation allowance necessary under the circumstances. At December 31, 2023, the Company does not believe a valuation allowance is necessary on the deferred income tax assets recorded during the current quarter as it is more likely than not that these amounts will be realized through the reversal of the Company's existing taxable temporary differences and projected future taxable income.

8. ACCUMULATED OTHER COMPREHENSIVE INCOME

The following tables present the changes in the components of AOCI, net of tax, for the periods indicated.


	For the Three Months Ended December 31, 2023
	Unrealized	Unrealized
	Gains (Losses)	Gains (Losses)
	on AFS	on Cash Flow	Total
	Securities	Hedges	AOCI
	(Dollars in thousands)
Beginning balance	(1,142)	9,842	8,700

Other comprehensive income (loss), before reclassifications	16,581	(2,998)	13,583
Amount reclassified from AOCI, net of taxes of $626	—	(1,940)	(1,940)
Reclassification adjustment for gross gains on AFS securities included in net income, net of taxes of $383	(1,188)	—	(1,188)
Other comprehensive income (loss)	15,393	(4,938)	10,455

Ending balance	14,251	4,904	19,155


	For the Three Months Ended December 31, 2022
	Unrealized		Unrealized
	Gains (Losses)		Gains (Losses)
	on AFS		on Cash Flow		Total
	Securities		Hedges		AOCI
	(Dollars in thousands)
Beginning balance	$	(155,119)	$	9,486	$	(145,633)

Other comprehensive income (loss), before reclassifications	13,050		715		13,765
Amount reclassified from AOCI, net of taxes of $237	—		(734)		(734)
Other comprehensive income (loss)	13,050		(19)		13,031

Ending balance	$	(142,069)	$	9,467	$	(132,602)

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 originate and purchase a sufficient volume of one- to four-family loans in order to maintain the balance of that portfolio at a level desired by management;

•our ability to invest funds in wholesale or secondary markets at favorable yields compared to the related funding source;

•our ability to access cost-effective funding and maintain sufficient liquidity;

•the expected synergies and other benefits from our acquisition activities might not be realized to the extent anticipated, within the anticipated time frames, or at all;

•our ability to extend our commercial banking and trust asset management expertise across our market areas;

•fluctuations in deposit flows;

•the future earnings and capital levels of the Bank 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 ability of the Company to pay dividends in accordance with its dividend policy;

•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 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 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;

•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, 2023 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, 2023, filed with the SEC.

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.

During the current quarter, the Company completed a strategic securities transaction ("securities strategy") by selling $1.30 billion of securities with a weighted average yield of 1.22% and an average duration of 3.6 years and purchased $632.0 million of securities yielding 5.75% and paid down $500.0 million of borrowings with a cost of 4.70%. The Company plans to hold the remaining cash associated with the securities strategy at the FRB of Kansas City earning interest at the reserve balances rate, until such time as it can be used to fund commercial loan activity or other Bank operations. The Company recognized net interest margin benefits in the current quarter associated with the securities strategy and total assets were reduced below $10.0 billion at December 31, 2023.

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, $192.6 million of which was reflected in the Company's financial statements for the quarter ended September 30, 2023. During the current quarter, $10.0 million after tax, or $0.08 per share, of additional loss related to the sale of the securities was recorded, which reflected the market value loss on these securities from October 1, 2023 until the sale of such securities.

The Company recognized net income of $2.5 million, or $0.02 per share, for the current quarter compared to net income of $16.2 million, or $0.12 per share, for the prior year quarter. The lower net income in the current quarter was primarily a result of the $13.3 million net loss associated with the securities strategy, along with higher interest expense, partially offset by lower provision for credit losses and an income tax benefit in the current quarter. Excluding the effects of the securities strategy, EPS would have been $0.10 for the current quarter.

The net interest margin was 1.71% for the current quarter, an increase of ten basis points from 1.61% for the prior year quarter. Excluding the effects of the leverage strategy discussed in the "Financial Condition - Borrowings" section below, the net interest margin decreased 17 basis points, from 1.88% for the prior year quarter to 1.71% for the current quarter. The decrease in the net interest margin excluding the effects of the leverage strategy was due mainly to an increase in the cost of deposits and borrowings, which exceeded the increase in yields on securities and loans.

The Company's efficiency ratio was 92.86% for the current quarter compared to 54.27% for the prior year quarter. Excluding the net losses from the securities strategy, the efficiency ratio would have been 64.73% for the current quarter. The change in the efficiency ratio, excluding the securities strategy, was due primarily to lower net interest income in the current quarter compared to the prior year quarter. The Company's operating expense ratio for the current quarter was 1.18% compared to 0.96% for the prior year quarter, due mainly to lower average assets in the current quarter.

Total assets were $9.58 billion at December 31, 2023, a $601.4 million decrease from September 30, 2023, due primarily to the securities strategy. The loan portfolio was $7.95 billion at December 31, 2023, a $23.4 million decrease from September 30, 2023. The loan portfolio mix continued to shift from one- to four-family loans to commercial loans during the current quarter.

Total deposits were $6.02 billion at December 31, 2023, a decrease of $29.6 million from September 30, 2023. The decrease in deposits was primarily in non-maturity deposits and public unit certificates of deposit, partially offset by an increase in retail

certificates of deposit. The increase in retail certificates of deposit was in certificates with terms of 14 months as management continues to competitively price certain short-term retail certificate of deposit products so that if rates were to decrease in the near future, the Bank would be able to more quickly reprice those balances to lower market rates at maturity.

Total borrowings were $2.37 billion at December 31, 2023, a decrease of $506.1 million from September 30, 2023. The decrease was due primarily to $500.0 million of borrowings under the BTFP that were paid off during the current quarter in conjunction with the securities strategy. Management estimates that the Bank had $2.70 billion in additional liquidity available at December 31, 2023, based on the Bank's blanket collateral agreement with FHLB and unencumbered securities.

The Bank's asset quality remained strong, reflected in low delinquency and charge-off ratios. At December 31, 2023, loans 30 to 89 days delinquent were 0.24% of total loans receivable, net, and loans 90 or more days delinquent or in foreclosure were 0.13% of total loans receivable, net. During the current quarter, net charge-offs ("NCOs") were $1 thousand.

At December 31, 2023, the Bank's gap between the amount of interest-earning assets and interest-bearing liabilities projected to reprice within one year was $(679.7) million, or (7.1)% of total assets, compared to $(1.19) billion, or (11.7)% of total assets, at September 30, 2023. The change in the one-year gap amount was due to both an increase in the amount of interest-earning assets cash flows coming due in one year at December 31, 2023 and a decrease in the amount of liability cash flows coming due in one year, compared to September 30, 2023. These changes were due, in part, to the securities strategy, which decreased the amount of borrowings coming due in one year, increased the balance of cash, and increased the amount of securities projected to reprice within one year, partially offset by an increase in the amount of certificates of deposit scheduled to mature within one year, as management continues to competitively price certain short-term retail certificate of deposit products.

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, http://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 estimates are the methodologies used to determine the ACL and reserve for off-balance sheet credit exposures and fair value measurements. These estimates are important to the presentation of our financial condition and results of operations, involve a high degree of complexity, and require 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. These critical accounting estimates and their application are 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, 2023.

Financial Condition

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


							Annualized
	December 31,			September 30,			Percent
	2023			2023			Change
	(Dollars and shares in thousands)
Total assets	$	9,576,064		$	10,177,461		(23.6)	%
AFS securities	740,462			1,384,482			(186.1)
Loans receivable, net	7,947,510			7,970,949			(1.2)
Deposits	6,021,595			6,051,220			(2.0)
Borrowings	2,373,064			2,879,125			(70.3)
Stockholders' equity	1,034,121			1,044,054			(3.8)
Equity to total assets at end of period	10.8		%	10.3		%
Average number of basic shares outstanding	132,353			133,225			(2.6)
Average number of diluted shares outstanding	132,353			133,225			(2.6)

During the current quarter, total assets decreased $601.4 million, to $9.58 billion at December 31, 2023, due primarily to the securities strategy. The loan portfolio decreased $23.4 million, or 1.2% annualized, during the current quarter. The loan portfolio mix continued to shift from one- to four-family loans to commercial loans during the current quarter, with a $66.4 million decrease in one- to four-family loans, including a $45.1 million decrease in one- to four-family correspondent loans, partially offset by a $42.1 million increase in commercial loans. The Bank continues to reduce purchases of correspondent loans, with the intention of minimizing correspondent purchases, which will continue to decrease the balance of that portfolio.

Total liabilities decreased $591.5 million during the current quarter as $500.0 million of BTFP borrowings were paid off as part of the securities strategy, along with a $38.1 million decrease in advances by borrowers due to the payment of property taxes during the current quarter and a $29.6 million decrease in deposits. The decrease in deposits was primarily in non-maturity deposits and public unit certificates of deposit, partially offset by an increase in retail certificates of deposit.

Loans Receivable. The following table presents the balance and weighted average rate of our loan portfolio as of the dates indicated. The loan portfolio rate increased six basis points during the current quarter due primarily to originations at higher market rates and one- to four-family adjustable-rate loans repricing to higher market interest rates, as well as disbursements on commercial construction loans at rates higher than the overall portfolio rate.


	December 31, 2023				September 30, 2023
	Amount		Rate		Amount		Rate
	(Dollars in thousands)
One- to four-family:
Originated	$	3,986,479	3.44	%	$	3,978,837	3.39	%
Correspondent purchased	2,360,843		3.45		2,405,911		3.44
Bulk purchased	134,504		2.10		137,193		1.85
Construction	43,631		4.47		69,974		3.68
Total	6,525,457		3.42		6,591,915		3.38
Commercial:
Commercial real estate	1,019,431		5.27		995,788		5.29
Commercial and industrial	113,686		6.46		112,953		6.36
Construction	196,493		5.41		178,746		5.01
Total	1,329,610		5.39		1,287,487		5.35
Consumer loans:
Home equity	96,952		8.84		95,723		8.83
Other	9,670		5.32		9,256		5.20
Total	106,622		8.52		104,979		8.51
Total loans receivable	7,961,689		3.82		7,984,381		3.76

Less:
ACL	24,178				23,759
Deferred loan fees/discounts	30,653				31,335
Premiums/deferred costs	(40,652)				(41,662)
Total loans receivable, net	$	7,947,510			$	7,970,949

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. The decrease in the amount of loans originated and refinanced as well as purchased and participations in the current quarter was driven by the decrease in single family loan volume in our local markets and our minimizing single-family loan purchases. The change in undisbursed loan funds between periods was due to disbursements on construction loans outpacing new construction loan activity during the current quarter, while new construction loan activity outpaced construction loan disbursements on existing loans during the quarter ended December 31, 2022.



	For the Three Months Ended
	December 31, 2023			December 31, 2022
		Amount		Rate		Amount		Rate
		(Dollars in thousands)
Beginning balance		$	7,984,381	3.76	%	$	7,471,670	3.33	%
Originated and refinanced		101,402		7.00		364,387		5.13
Purchased and participations		3,497		5.91		335,305		5.30
Change in undisbursed loan funds		83,246				(121,235)
Repayments		(210,611)				(252,799)
Principal (charge-offs)/recoveries, net		(1)				(2)
Other		(225)				(5,656)
Ending balance		$	7,961,689	3.82		$	7,791,670	3.47

The following table presents loan origination, refinance, and purchase activity for the periods indicated, excluding endorsement activity, along with associated weighted average rates and percent of total. Commercial loan renewals are not included in the activity in the following table except to the extent new funds are disbursed at the time of renewal. Loan originations, purchases, and refinances are reported together.


	For the Three Months Ended
	December 31, 2023						December 31, 2022
	Amount		Rate		% of Total		Amount		Rate		% of Total
	(Dollars in thousands)
Fixed-rate:
One- to four-family	$	37,167	6.89	%	35.5	%	$	167,439	5.10	%	23.9	%
One- to four-family construction	9,308		6.84		8.9		14,914		5.23		2.1
Commercial:
Real estate	747		7.76		0.7		4,903		5.25		0.7
Commercial and industrial	2,605		7.06		2.5		7,895		5.94		1.1
Construction	132		9.00		0.1		68,600		4.87		9.8
Home equity	2,630		9.01		2.5		1,381		7.06		0.2
Other	1,084		6.83		1.0		1,165		6.58		0.2
Total fixed-rate	53,673		7.01		51.2		266,297		5.09		38.0

Adjustable-rate:
One- to four-family	18,486		6.65		17.6		136,603		4.62		19.6
One- to four-family construction	8,040		6.60		7.7		7,023		4.48		1.0
Commercial:
Real estate	9,350		5.00		8.9		163,621		5.08		23.4
Commercial and industrial	3,555		7.88		3.4		19,017		7.04		2.7
Construction	3,947		8.41		3.8		91,079		5.99		13.0
Home equity	7,179		9.39		6.8		15,632		7.34		2.2
Other	669		4.65		0.6		420		3.62		0.1
Total adjustable-rate	51,226		6.92		48.8		433,395		5.28		62.0

Total originated, refinanced and purchased	$	104,899	6.96		100.0	%	$	699,692	5.21		100.0	%

Purchased and participation loans included above:
Fixed-rate:
Correspondent purchased - one- to four-family	$	2,978	6.43				$	101,958	5.11

Participations and purchases - commercial	—		—				870		6.60

Total fixed-rate purchased/participations	2,978		6.43				102,828		5.12

Adjustable-rate:
Correspondent purchased - one- to four-family	519		2.93				97,513		4.62

Participations and purchases - commercial	—		—				134,964		5.93

Total adjustable-rate purchased/participations	519		2.93				232,477		5.38
Total purchased/participation loans	$	3,497	5.91				$	335,305	5.30

One- to Four-Family Loans - The following table presents, for our portfolio of one- to four-family loans, excluding construction loans, the amount, percent of total, weighted average rate, weighted average credit score, weighted average LTV ratio, and average balance per loan as of December 31, 2023. Credit scores are updated at least annually, with the latest update in September 2023, 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	$	3,986,479	61.5	%	3.44	%	771	60	%	$	165
Correspondent purchased	2,360,843		36.4		3.45		767	64		412
Bulk purchased	134,504		2.1		2.10		771	55		287
	$	6,481,826	100.0	%	3.42		770	61		214

The following table presents originated and correspondent purchased activity in our one- to four-family loan portfolio, excluding endorsement activity, along with associated weighted average rates, weighted average LTVs and weighted average credit scores for the period indicated. The majority of the correspondent loans purchased during the current quarter were from applications in the pipeline at September 30, 2023, as the Bank continues to minimize correspondent purchases.


	For the Three Months Ended
	December 31, 2023
								Credit
		Amount		Rate		LTV		Score
		(Dollars in thousands)
Originated		$	69,504	6.83	%	75	%	765
Correspondent purchased		3,497		5.91		70		765

		$	73,001	6.79		74		765

As of December 31, 2023 the Bank had one- to four-family loan origination and refinance commitments of $20.7 million at a weighted average rate of 6.75%. There were no one- to four-family correspondent loan purchase commitments at December 31, 2023.

Commercial Loans - During the quarter ended December 31, 2023, the Bank originated $20.3 million of commercial loans. The Bank did not enter into any commercial loan participations during the current quarter. The Bank also processed commercial loan disbursements, excluding lines of credit, during the quarter ended December 31, 2023 of $64.6 million at a weighted average rate of 6.27%.

As of December 31, 2023, September 30, 2023, and December 31, 2022, the Bank's commercial and industrial gross loan amounts (unpaid principal plus undisbursed amounts) totaled $157.2 million, $158.5 million and $113.2 million, respectively, and commitments totaled $2.4 million, $2.6 million and $5.1 million, respectively.

The following table presents the Bank's commercial real estate and commercial construction loans by type of primary collateral as of the dates indicated. As of December 31, 2023, the Bank had seven commercial real estate and commercial construction loan commitments, totaling $100.4 million, at a weighted average rate of 7.52%. Because the commitments to pay out undisbursed funds are not cancellable by the Bank, unless the loan is in default, we generally anticipate fully funding the related projects. Of the total commercial real estate and commercial construction undisbursed amounts and commitments outstanding as of December 31, 2023, management anticipates funding approximately $94 million during the March 2024 quarter, $84 million during the June 2024 quarter, $77 million during the September 2024 quarter, and $137 million during the December 2024 quarter or later.


	December 31, 2023										September 30, 2023
		Unpaid			Undisbursed			Gross Loan			Gross Loan
	Count	Principal			Amount			Amount			Amount
		(Dollars in thousands)
Retail building	139	$	269,399		$	79,629		$	349,028		$	352,499
Senior housing	36	317,630			12,447			330,077			331,207
Multi-family	42	105,657			197,251			302,908			308,846
Hotel	13	214,082			17,905			231,987			233,012
Office building	79	127,741			1,607			129,348			130,921
One- to four-family property	360	60,016			5,567			65,583			70,265
Single use building	30	36,260			7,555			43,815			47,193
Other	111	85,139			3,110			88,249			88,995
	810	$	1,215,924		$	325,071		$	1,540,995		$	1,562,938

Weighted average rate		5.29		%	6.01		%	5.44		%	5.47		%

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


	December 31, 2023							September 30, 2023
		Unpaid		Undisbursed		Gross Loan		Gross Loan
	Count	Principal		Amount		Amount		Amount
		(Dollars in thousands)
Kansas	602	$	486,440	$	176,316	$	662,756	$	670,498
Texas	17	280,034		67,791		347,825		348,707
Missouri	159	275,153		51,440		326,593		332,610
Colorado	8	43,223		6,205		49,428		49,385
Tennessee	2	26,132		13,437		39,569		42,136
Nebraska	8	36,678		1,121		37,799		37,609
Other	14	68,264		8,761		77,025		81,993
	810	$	1,215,924	$	325,071	$	1,540,995	$	1,562,938

The following table presents the Bank's commercial loan portfolio and outstanding loan commitments, categorized by gross loan amount (unpaid principal plus undisbursed amounts) or outstanding loan commitment amount, as of December 31, 2023.


	Count	Amount
	(Dollars in thousands)
Greater than $30 million	10	$	493,952
>$15 to $30 million	20	417,774
>$10 to $15 million	12	142,942
>$5 to $10 million	30	222,228
$1 to $5 million	142	340,059
Less than $1 million	1,201	184,112
	1,415	$	1,801,067

Asset Quality

Delinquent and nonaccrual loans and OREO. The following table presents the Company's 30 to 89 day delinquent loans at the dates indicated. The amounts in the table represent the unpaid principal balance of the loans less related charge-offs, if any. Of the loans 30 to 89 days delinquent at December 31, 2023, 82% were 59 days or less delinquent. The increase in correspondent and bulk purchased one- to four-family loans 30 to 89 days delinquent and in nonaccrual one- to four-family loans was due mainly to delinquencies returning to more historical levels as government payment assistance programs expired. The increase in commercial loans 30 to 89 days delinquent was a mix of several different borrowers and property types. There was not one underlying reason for the increase in commercial loan delinquencies from September 30, 2023. Management is working closely with the borrowers to address payment issues.


	Loans Delinquent for 30 to 89 Days at:
	December 31,				September 30,
	2023				2023
	Number	Amount			Number	Amount
	(Dollars in thousands)
One- to four-family:
Originated	77	$	7,746		88	$	9,078
Correspondent purchased	16	6,049			17	5,192
Bulk purchased	4	583			1	149
Construction	—	—			4	1,123
Commercial	14	3,809			5	94
Consumer	40	766			30	730
	151	$	18,953		145	$	16,366

Loans 30 to 89 days delinquent
to total loans receivable, net		0.24		%		0.21		%

The following table presents the Company'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.


	Nonaccrual Loans and OREO at:
	December 31,				September 30,
	2023				2023
	Number	Amount			Number	Amount
	(Dollars in thousands)
Loans 90 or More Days Delinquent or in Foreclosure:
One- to four-family:
Originated	29	$	3,749		24	$	2,246
Correspondent purchased	10	4,164			9	3,410
Bulk purchased	2	942			2	942
Commercial	8	1,198			12	2,183
Consumer	5	116			9	113
	54	10,169			56	8,894

Loans 90 or more days delinquent or in foreclosure
as a percentage of total loans		0.13		%		0.11		%

Nonaccrual loans less than 90 Days Delinquent:(1)
One- to four-family:
Originated	—	$	—		2	$	215
Correspondent purchased	—	—			1	282
Bulk purchased	—	—			—	—
Commercial	1	18			1	18
Consumer	—	—			—	—
	1	18			4	515
Total nonaccrual loans	55	10,187			60	9,409

Nonaccrual loans as a percentage of total loans		0.13		%		0.12		%

OREO:
One- to four-family:
Originated(2)	2	$	225		—	$	—
Correspondent purchased	1	219			1	219




	3	444			1	219
Total non-performing assets	58	$	10,631		61	$	9,628

Non-performing assets as a percentage of total assets		0.11		%		0.09		%

(1)Includes 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.

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

The following table presents the states where the properties securing ten percent or more of the total amount of our one- to four-family loans are located and the corresponding balance of loans 30 to 89 days delinquent, 90 or more days delinquent or in foreclosure, and weighted average LTV ratios for loans 90 or more days delinquent or in foreclosure at December 31, 2023. The LTV ratios were based on the current loan balance and either the lesser of the purchase price or original appraisal, or the most recent Bank appraisal, if available. At December 31, 2023, potential losses, after taking into consideration anticipated private mortgage insurance proceeds and estimated selling costs, have been charged-off.


					Loans 30 to 89				Loans 90 or More Days Delinquent
	One- to Four-Family				Days Delinquent				or in Foreclosure
State	Amount		% of Total		Amount		% of Total		Amount		% of Total		LTV
	(Dollars in thousands)
Kansas	$	3,531,138	54.5	%	$	6,519	45.3	%	$	2,506	28.3	%	54	%
Missouri	1,117,487		17.2		3,082		21.5		2,070		23.4		65

Other states	1,833,201		28.3		4,777		33.2		4,279		48.3		55



	$	6,481,826	100.0	%	$	14,378	100.0	%	$	8,855	100.0	%	57

Classified loans. The following table presents loans classified as special mention or substandard at the dates presented. The amounts in the table represent the unpaid principal balance of the loans less related charge-offs, if any.


	December 31, 2023				September 30, 2023
	Special Mention		Substandard		Special Mention		Substandard
	(Dollars in thousands)
One- to four-family	$	19,601	$	22,659	$	18,603	$	19,314
Commercial	15,097		1,221		16,407		1,293
Consumer	335		175		327		190
	$	35,033	$	24,055	$	35,337	$	20,797

Allowance for Credit Losses. The distribution of our ACL and the ratio of ACL to loans receivable, by loan type, at the dates indicated is summarized below. See "Note 4. Loans Receivable and Allowance for Credit Losses" for additional information related to the calculation of ACL as of December 31, 2023.


	Distribution of ACL				Ratio of ACL to Loans Receivable
	December 31,		September 30,			December 31,		September 30,
	2023		2023			2023		2023
	(Dollars in thousands)
One- to four-family:
Originated	$	2,055	$	2,084		0.05	%	0.05	%
Correspondent purchased	2,948		2,972			0.12		0.12
Bulk purchased	206		207			0.15		0.15
Construction	39		65			0.09		0.09
Total	5,248		5,328			0.08		0.08
Commercial:
Real estate	16,152		15,589			1.58		1.57
Commercial and industrial	973		1,104			0.86		0.98
Construction	1,553		1,487			0.79		0.83
Total	18,678		18,180			1.40		1.41
Consumer	252		251			0.24		0.24
Total	$	24,178	$	23,759		0.30		0.30

The following table presents ACL activity and related ratios at the dates and for the periods indicated. On October 1, 2023, the Company adopted ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures ("ASU 2022-02"), which eliminates the accounting guidance for TDRs by creditors. The Company applied ASU 2022-02 on a prospective basis, except for the amendments impacting the measurement of the ACL for TDRs, which were adopted on a modified retrospective basis, resulting in a cumulative-effect adjustment that is reflected in the table below ("ASU 2022-02 Adoption"). See "Note 1. Summary of Significant Accounting Policies" for additional information regarding the adoption of ASU 2022-02.


	At or For the Three Months Ended
	December 31, 2023			December 31, 2022
	(Dollars in thousands)
Balance at beginning of period	$	23,759		$	16,371
ASU 2022-02 Adoption	20			—
Charge-offs	(7)			(4)
Recoveries	6			2
Net (charge-offs) recoveries	(1)			(2)
Provision for credit losses	400			2,820
Balance at end of period	$	24,178		$	19,189

Ratio of NCOs during the period
to average non-performing assets	0.01		%	0.02		%

ACL to nonaccrual loans at end of period	237.34			233.07

ACL to loans receivable, net at end of period	0.30			0.25

ACL to NCOs (annualized)	6,474x			3,032x

The ratio of ACL to nonaccrual loans was higher at the end of the current quarter compared to the end of the prior year quarter due mainly to higher ACL at December 31, 2023, partially offset by a higher balance of nonaccrual loans compared to the prior year quarter. The ratio of ACL to loans receivable, net was higher at the end of the current quarter compared to the end of the prior year quarter due to a higher commercial loan ACL balance at December 31, 2023. The ratio of ACL to NCOs was higher for the end of the current quarter compared to the end of the prior year quarter due mainly to lower net charge-offs, along with a higher ACL balance. See "Note 4. Loans Receivable and Allowance for Credit Losses" for additional information related to ACL activity by specific loan categories.

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


	For the Three Months Ended
	December 31, 2023						December 31, 2022
	NCOs		Average Loans		% of Average Loans		NCOs		Average Loans		% of Average Loans
	(Dollars in thousands)
One- to four-family:
Originated	$	(5)	$	3,985,425	—	%	$	(1)	$	3,984,609	—	%
Correspondent	—		2,413,900		—		—		2,305,362		—
Bulk purchased	—		136,609		—		—		147,091		—
Construction	—		40,114		—		—		65,181		—
Total	(5)		6,576,048		—		(1)		6,502,243		—
Commercial:
Real estate	—		1,015,756		—		—		780,366		—
Commercial and industrial	(1)		114,561		—		—		78,310		—
Construction	—		176,600		—		—		166,726		—
Total	(1)		1,306,917		—		—		1,025,402		—
Consumer:
Home equity	2		96,315		—		3		93,905		—
Other	5		9,643		0.05		—		8,855		—
Total	7		105,958		0.01		3		102,760		—
	$	1	$	7,988,923	—		$	2	$	7,630,405	—

While management utilizes its best judgment and information available, the adequacy of the ACL 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 views of regulatory authorities toward classification of assets and the level of ACL. Additionally, the level of ACL may fluctuate based on the balance and mix of the loan portfolio. If actual results reflect significant underperformance compared to our assumptions and/or if one or more of our assumptions, such as the economic forecast, represents a more negative outlook in a future period, there could be 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 93% of our securities portfolio at December 31, 2023. 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. The change in the portfolio yield at December 31, 2023 compared to September 30, 2023 was primarily related to the securities strategy.


	December 31, 2023					September 30, 2023
	Amount		Yield		WAL	Amount		Yield		WAL
	(Dollars in thousands)
MBS	$	503,912	5.76	%	5.4	$	901,440	1.71	%	4.7
U.S. Treasury bills	213,700		5.48		0.1	—		—		—
GSE debentures	—		—		—	479,610		0.64		1.9
Corporate bonds	4,000		5.12		8.4	4,000		5.12		8.6
Municipal bonds	—		—		—	942		2.55		6.9
	$	721,612	5.67	%	3.9	$	1,385,992	1.35	%	3.8

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 Three Months Ended
	December 31, 2023					December 31, 2022
	Amount		Yield		WAL	Amount		Yield		WAL
	(Dollars in thousands)
Beginning balance - carrying value	$	1,384,482	1.35	%	3.8	$	1,563,307	1.29	%	4.2
Maturities and repayments	(49,604)					(51,045)
Proceeds from sale	(1,272,512)					—
Net amortization of (premiums)/discounts	2,771					(837)
Purchases	668,310		5.72		3.8	—		—		—
Net loss from securities transactions	(13,345)					—
Change in valuation on AFS securities	20,360					17,261
Ending balance - carrying value	$	740,462	5.67		3.9	$	1,528,686	1.31		4.3

Liabilities. Total liabilities were $8.54 billion at December 31, 2023, compared to $9.13 billion at September 30, 2023. The decrease was due primarily to $500.0 million of BTFP borrowings that were paid off in the current quarter as part of the securities strategy, along with a $38.1 million decrease in advances by borrowers due to the payment of property taxes during the current quarter and a $29.6 million decrease in deposits.

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 $29.6 million decrease in deposits during the current quarter was mainly in public unit certificates of deposit and money market account balances, partially offset by an increase in the retail certificate of deposit portfolio. The weighted average rate on the deposit portfolio increased 13 basis points during the current quarter due mainly to higher rates on retail certificates of deposit.


	December 31, 2023						September 30, 2023
					% of						% of
	Amount		Rate		Total		Amount		Rate		Total
	(Dollars in thousands)
Non-interest-bearing checking	$	555,382	—	%	9.2	%	$	558,326	—	%	9.2	%
Interest-bearing checking	895,665		0.17		14.9		901,994		0.19		14.9
Savings	471,372		0.12		7.8		480,091		0.12		7.9
Money market	1,360,349		1.96		22.6		1,380,617		1.96		22.8
Retail certificates of deposit	2,569,391		3.75		42.7		2,533,954		3.47		41.9
Commercial certificates of deposit	49,152		3.80		0.8		48,751		3.56		0.8
Public unit certificates of deposit	120,284		4.54		2.0		147,487		4.44		2.5
	$	6,021,595	2.20		100.0	%	$	6,051,220	2.07		100.0	%

Borrowings. Total borrowings at December 31, 2023 were $2.37 billion, which was comprised of $2.01 billion in fixed-rate FHLB advances, $365.0 million in variable-rate advances tied to interest rate swaps, and $974 thousand in finance leases.

The following table presents the maturity of term borrowings, which consist of FHLB advances, along with associated weighted average contractual and effective rates as of December 31, 2023. Amortizing FHLB advances are presented based on their maturity dates versus their quarterly scheduled repayment dates.



Maturity by			Contractual		Effective
Fiscal Year	Amount		Rate		Rate(1)
	(Dollars in thousands)

2024	$	340,000	4.15	%	2.61	%
2025	650,000		3.31		2.96
2026	575,000		2.81		2.95
2027	485,000		3.15		3.25
2028	325,410		4.94		4.19

	$	2,375,410	3.50		3.13

(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 at each date presented. During the current quarter, BTFP borrowings were paid off with the proceeds received from the securities strategy.


	For the Three Months Ended
	December 31, 2023			December 31, 2022
				Effective					Effective
		Amount		Rate		WAM	Amount		Rate		WAM
		(Dollars in thousands)
Beginning balance		$	2,882,828	3.34	%	1.8	$	2,062,500	2.44	%	2.5
Maturities and repayments		(157,418)		3.46			(7,418)		4.13
New FHLB borrowings		150,000		4.66		3.7	450,000		4.45		3.3
BTFP, net		(500,000)		4.70		—	—		—		—
Ending balance		$	2,375,410	3.13		2.0	$	2,505,082	2.80		2.4

Leverage Strategy

At times, the Bank has utilized a leverage strategy to increase earnings which entails entering into short-term FHLB advances and depositing the proceeds from the borrowings, net of the required FHLB stock holdings, at the FRB of Kansas City. The borrowings are repaid prior to quarter end, or earlier if the strategy is suspended. The leverage strategy was not in place during the current quarter due to the strategy being unprofitable, but it was in place at points during the September 2023 quarter and December 2022 quarter. When the leverage strategy is in place, it reduces the net interest margin due to the amount of earnings from the transaction in comparison to the size of the transaction. Management continues to monitor the net interest rate spread and overall profitability of the leverage strategy.

Maturities of Interest-Bearing Liabilities. The following table presents the maturity and weighted average repricing rate, which is also the weighted average effective rate, of certificates of deposit, split between retail/commercial and public unit amounts, and non-amortizing FHLB advances for the next four quarters as of December 31, 2023.


	March 31,			June 30,			September 30,			December 31,
	2024			2024			2024			2024			Total
	(Dollars in thousands)
Retail/Commercial Certificates:
Amount	$	270,858		$	423,200		$	424,691		$	480,918		$	1,599,667
Repricing Rate	2.90		%	3.86		%	4.37		%	4.24		%	3.95		%
Public Unit Certificates:
Amount	$	17,174		$	31,563		$	34,985		$	29,025		$	112,747
Repricing Rate	4.30		%	4.42		%	4.63		%	4.67		%	4.53		%
Term Borrowings:
Amount	$	65,000		$	100,000		$	175,000		$	200,000		$	540,000
Repricing Rate	2.72		%	1.98		%	2.93		%	3.35		%	2.88		%
Total
Amount	$	353,032		$	554,763		$	634,676		$	709,943		$	2,252,414
Repricing Rate	2.94		%	3.55		%	3.99		%	4.01		%	3.72		%

The following table sets forth the WAM information for our certificates of deposit, in years, as of December 31, 2023.


Retail certificates of deposit			1.1
Commercial certificates of deposit			0.8
Public unit certificates of deposit			0.6
Total certificates of deposit			1.1

Stockholders' Equity. Stockholders' equity totaled $1.03 billion at December 31, 2023, a decrease of $9.9 million from September 30, 2023. The decrease in stockholders' equity during the current quarter was due to a $12.0 million decrease in additional paid-in capital, due mainly to share repurchases, and a $8.8 million decrease in retained earnings, due primarily to dividend payments, partially offset by a $10.5 million increase in accumulated other comprehensive income. During the quarter ended December 31, 2023, the Company paid a regular quarterly cash dividend totaling $11.3 million, or $0.085 per share. On January 23, 2024, the Company announced a regular quarterly cash dividend of $0.085 per share, or approximately $11.1 million, payable on February 16, 2024 to stockholders of record as of the close of business on February 2, 2024.

Consistent with our goal to operate a sound and profitable financial organization, we actively seek to maintain a well-capitalized status for the Bank in accordance with regulatory standards. As of December 31, 2023, the Bank's capital ratios exceeded the well-capitalized requirements and the Bank exceeded all internal policy thresholds for sensitivity to changes in interest rates. See "Liquidity and Capital Resources" below for additional information regarding the Bank's regulatory capital requirements. As of December 31, 2023, the Bank's tier 1 leverage ratio was 8.9%, which exceeded the minimum requirement.

At December 31, 2023, Capitol Federal Financial, Inc., at the holding company level, had $63.2 million in cash on deposit at the Bank. For fiscal year 2024, it is the intention of the 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 2024 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, and the amount of cash at the holding company level.

During the current quarter, the Company repurchased 2,034,000 shares of common stock at an average price of $5.79 per share. Subsequent to December 31, 2023 and through February 2, 2024, the Company repurchased 199,400 shares at an average price of $6.53 per share. There remains $8.1 million authorized under the existing stock repurchase plan for additional purchases of the Company's common stock. 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 of Kansas City's existing approval for the Company to repurchase shares expires in August 2024.


	Calendar Year
	2024				2023				2022
	Amount		Per Share		Amount		Per Share		Amount		Per Share
	(Dollars in thousands, except per share amounts)
Regular quarterly dividends paid
Quarter ended March 31	$	11,129	$	0.085	$	11,319	$	0.085	$	11,535	$	0.085
Quarter ended June 30	—		—		11,321		0.085		11,534		0.085
Quarter ended September 30	—		—		11,323		0.085		11,534		0.085
Quarter ended December 31	—		—		11,308		0.085		11,508		0.085
True-up dividends paid	—		—		—		—		37,701		0.280
True Blue Capitol dividends paid	—		—		—		—		27,143		0.200
Calendar year-to-date dividends paid	$	11,129	$	0.085	$	45,271	$	0.340	$	110,955	$	0.820

Operating Results

The following table presents selected income statement and other information for the quarters indicated.


	For the Three Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
	2023			2023			2023			2023			2022
	(Dollars in thousands, except per share data)
Interest and dividend income:
Loans receivable	$	75,941		$	74,031		$	71,918		$	69,319		$	64,819
MBS	5,859			4,399			4,562			4,748			4,811
Cash and cash equivalents	4,778			6,139			10,009			10,977			16,671
FHLB stock	2,586			2,796			3,260			3,607			4,158
Investment securities	2,528			894			895			895			881
Total interest and dividend income	91,692			88,259			90,644			89,546			91,340

Interest expense:
Borrowings	19,656			27,746			31,449			31,447			33,608
Deposits	32,443			29,778			24,445			16,140			11,904

Total interest expense	52,099			57,524			55,894			47,587			45,512

Net interest income	39,593			30,735			34,750			41,959			45,828

Provision for credit losses	123			963			1,324			891			3,660

Net interest income
(after provision for credit losses)	39,470			29,772			33,426			41,068			42,168

Non-interest income	(8,894)			(187,704)			5,814			5,083			5,352
Non-interest expense	28,508			28,194			29,336			28,631			27,773
Income tax (benefit) expense	(475)			(45,736)			1,602			3,331			3,507
Net income (loss)	$	2,543		$	(140,390)		$	8,302		$	14,189		$	16,240

Efficiency ratio	92.86		%	(17.96		%)	72.32		%	60.86		%	54.27		%

Basic EPS	$	0.02		$	(1.05)		$	0.06		$	0.11		$	0.12
Diluted EPS	0.02			(1.05)			0.06			0.11			0.12

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
	December 31, 2023						September 30, 2023						December 31, 2022
	Average		Interest				Average		Interest				Average		Interest
	Outstanding		Earned/		Yield/		Outstanding		Earned/		Yield/		Outstanding		Earned/		Yield/
	Amount		Paid		Rate		Amount		Paid		Rate		Amount		Paid		Rate
Assets:	(Dollars in thousands)
Interest-earning assets:
One- to four-family loans:
Originated	$	4,025,539	$	35,060	3.48	%	$	4,036,609	$	34,584	3.43	%	$	4,049,790	$	33,364	3.29	%
Correspondent purchased	2,413,900		19,660		3.26		2,454,407		19,794		3.23		2,305,362		17,261		2.99
Bulk purchased	136,609		694		2.03		138,922		524		1.51		147,091		434		1.18
Total one- to four-family loans	6,576,048		55,414		3.37		6,629,938		54,902		3.31		6,502,243		51,059		3.14
Commercial loans	1,306,917		18,267		5.47		1,249,498		16,930		5.30		1,025,402		11,993		4.58
Consumer loans	105,958		2,260		8.46		104,252		2,199		8.37		102,760		1,767		6.82
Total loans receivable(1)	7,988,923		75,941		3.78		7,983,688		74,031		3.69		7,630,405		64,819		3.38
MBS(2)	526,733		5,859		4.45		1,078,957		4,399		1.63		1,221,035		4,811		1.58
Investment securities(2)(3)	266,873		2,528		3.79		524,574		894		0.68		525,081		881		0.67
FHLB stock(4)	108,648		2,586		9.44		120,159		2,796		9.23		197,577		4,158		8.35
Cash and cash equivalents(5)	346,220		4,778		5.40		453,486		6,139		5.30		1,801,493		16,671		3.62
Total interest-earning assets	9,237,397		91,692		3.95		10,160,864		88,259		3.45		11,375,591		91,340		3.19
Other non-interest-earning assets	466,084						271,074						248,022
Total assets	$	9,703,481					$	10,431,938					$	11,623,613

Liabilities and stockholders' equity:
Interest-bearing liabilities:
Checking	$	886,530	445		0.20		$	900,526	449		0.20		$	1,007,569	289		0.11
Savings	472,819		138		0.12		492,737		145		0.12		545,885		100		0.07
Money market	1,364,565		6,737		1.96		1,404,496		6,913		1.95		1,759,804		3,035		0.68
Retail certificates	2,555,375		23,199		3.60		2,498,839		20,268		3.22		2,064,929		7,767		1.49
Commercial certificates	49,558		463		3.70		30,735		273		3.53		34,298		104		1.20
Wholesale certificates	130,857		1,461		4.43		158,598		1,730		4.33		97,828		609		2.47
Total deposits	5,459,704		32,443		2.36		5,485,931		29,778		2.15		5,510,313		11,904		0.86
Borrowings(6)	2,467,410		19,656		3.15		3,150,179		27,746		3.48		4,260,685		33,608		3.10
Total interest-bearing liabilities	7,927,114		52,099		2.61		8,636,110		57,524		2.64		9,770,998		45,512		1.84
Non-interest-bearing deposits	537,144						540,607						576,519
Other non-interest-bearing liabilities	202,743						191,978						191,474
Stockholders' equity	1,036,480						1,063,243						1,084,622
Total liabilities and stockholders' equity	$	9,703,481					$	10,431,938					$	11,623,613

Net interest income(7)			$	39,593					$	30,735					$	45,828
Net interest-earning assets	$	1,310,283					$	1,524,754					$	1,604,593
Net interest margin(8)(9)					1.71						1.21						1.61
Ratio of interest-earning assets to interest-bearing liabilities					1.17x						1.18x						1.16x

Selected performance ratios:
Return on average assets (annualized)(9)					0.10	%					(5.38	%)					0.56	%
Return on average equity (annualized)(9)					0.98						(52.82)						5.99
Average equity to average assets					10.68						10.19						9.33
Operating expense ratio (annualized)(10)					1.18						1.08						0.96
Efficiency ratio(9)(11)					92.86						(17.96)						54.27
Pre-tax yield on leverage strategy(12)					—						0.07						0.20

(1)Balances are adjusted for unearned loan fees and deferred costs. Loans that are 90 or more days delinquent are included in the loans receivable average balance with a yield of zero percent.

(2)AFS securities are adjusted for unamortized purchase premiums or discounts.

(3)The average balance of investment securities includes an average balance of nontaxable securities of $201 thousand, $1.0 million and $1.1 million for the quarters ended December 31, 2023, September 30, 2023, and December 31, 2022, respectively.

(4)There was no FHLB stock related to the leverage strategy for the quarter ended December 31, 2023. Included in this line, for the quarters ended September 30, 2023 and December 31, 2022, respectively, is FHLB stock related to the leverage strategy with an average outstanding balance of $10.8 million and $84.3 million, respectively, and dividend income of $251 thousand and $1.8 million, respectively, at a weighted average yield of 9.25% and 8.49%, respectively. Included in this line for the quarters ended December 31, 2023, September 30, 2023, and December 31, 2022, respectively, is FHLB stock not related to the leverage strategy with an average outstanding balance of $108.6 million, $109.4 million and $113.3 million, respectively, and dividend income of $2.6 million, $2.5 million, and $2.4 million respectively, at a weighted average yield of 9.44%, 9.23%, and 8.24%, respectively.

(5)There was no cash and cash equivalents related to the leverage strategy during the quarter ended December 31, 2023. The average balance of cash and cash equivalents includes an average balance of cash related to the leverage strategy of $228.4 million and $1.79 billion during the quarters ended September 30, 2023 and December 31, 2022, respectively.

(6)There were no borrowings related to the leverage strategy during the quarter ended December 31, 2023. Included in this line, for the quarters ended September 30, 2023 and December 31, 2022, are FHLB borrowings related to the leverage strategy with an average outstanding balance of $239.1 million and $1.87 billion, respectively, and interest paid of $3.3 million and $17.3 million, respectively, at a weighted average rate of 5.33% and 3.61% respectively. Included in this line for the quarters ended December 31, 2023, September 30, 2023, and December 31, 2022 were borrowings not related to the leverage strategy with an average outstanding balance of $2.47 billion, $2.91 billion, and $2.39 billion respectively, and interest paid of $19.7 million, $24.5 million, and $16.3 million respectively, at a weighted average rate of 3.15%, 3.33%, and 2.70% respectively. The FHLB advance amounts and rates included in this line include the effect of interest rate swaps and are net of deferred prepayment penalties.

(7)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.

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

(9)The table below provides a reconciliation between performance measures presented in accordance with GAAP and the same performance measures excluding the effects of the leverage strategy and the securities strategy, which are not presented in accordance with GAAP. Management believes it is important for comparability purposes to provide the performance measures without the leverage strategy because of the unique nature of the leverage strategy and without the securities transactions due to the non-recurring nature of the securities strategy. The leverage strategy reduces some of our performance measures due to the amount of earnings associated with the transaction in comparison to the size of the transaction, while increasing our net income. The leverage strategy was not in place for the quarter ended December 31, 2023. The Excluding Leverage Strategy (Non-GAAP) columns and the Excluding Securities Strategy (Non-GAAP) columns each begin with Actual (GAAP) before applying the respective strategy adjustments.


	For the Three Months Ended
	December 31, 2023			September 30, 2023													December 31, 2022
							Excluding								Excluding					Excluding							Excluding
							Securities								Leverage					Securities							Leverage
	Actual			Securities			Strategy			Actual			Leverage		Strategy		Securities			Strategy			Actual		Leverage		Strategy
	(GAAP)			Strategy			(Non-GAAP)			(GAAP)			Strategy		(Non-GAAP)		Strategy			(Non-GAAP)			(GAAP)		Strategy		(Non-GAAP)
Yield on interest-earning assets	3.95		%							3.45		%	0.05	%	3.40	%							3.19	%	0.13	%	3.06	%
Cost of interest-bearing liabilities	2.61									2.64			0.08		2.56								1.84		0.42		1.42
Return on average assets	0.10			(0.42)		%	0.52		%	(5.38)			0.13		(5.51)		(5.58)		%	0.20		%	0.56		(0.07)		0.63
Return on average equity	0.98			(3.89)			4.87			(52.82)			0.01		(52.83)		(54.79)			1.97			5.99		0.28		5.71
Net interest margin	1.71									1.21			(0.03)		1.24								1.61		(0.27)		1.88
Efficiency ratio	92.86			28.13			64.73			(17.96)			(0.03)		(17.93)		(97.04)			79.08			54.27		(0.87)		55.14
EPS	$	0.02		$	(0.08)		$	0.10		$	(1.05)						$	(1.09)		$	0.04

(10)The operating expense ratio represents annualized non-interest expense as a percentage of average assets.

(11)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.

(12)The pre-tax yield on the leverage strategy represents annualized pre-tax income resulting from the transaction as a percentage of the average interest-earning assets associated with the transaction.

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 Three Months Ended
	December 31, 2023 vs. September 30, 2023						December 31, 2023 vs. December 31, 2022
	Increase (Decrease) Due to						Increase (Decrease) Due to
	Volume		Rate		Total		Volume		Rate		Total
	(Dollars in thousands)
Interest-earning assets:
Loans receivable	$	371	$	1,539	$	1,910	$	4,190	$	6,932	$	11,122
MBS	(3,141)		4,601		1,460		(3,921)		4,969		1,048
Investment securities	(633)		2,267		1,634		(626)		2,273		1,647
FHLB stock	(273)		63		(210)		(2,061)		489		(1,572)
Cash and cash equivalents	(1,478)		117		(1,361)		(17,580)		5,687		(11,893)
Total interest-earning assets	(5,154)		8,587		3,433		(19,998)		20,350		352

Interest-bearing liabilities:
Checking	(7)		3		(4)		(38)		194		156
Savings	(6)		(1)		(7)		(15)		53		38
Money market	(197)		21		(176)		(818)		4,521		3,703
Certificates of deposit	401		2,451		2,852		2,512		14,130		16,642
Borrowings	(8,361)		271		(8,090)		(16,482)		2,530		(13,952)
Total interest-bearing liabilities	(8,170)		2,745		(5,425)		(14,841)		21,428		6,587

Net change in net interest income	$	3,016	$	5,842	$	8,858	$	(5,157)	$	(1,078)	$	(6,235)

Comparison of Operating Results for the Three Months Ended December 31, 2023 and September 30, 2023

For the quarter ended December 31, 2023, the Company recognized net income of $2.5 million, or $0.02 per share, compared to a net loss of $140.4 million, or $(1.05) per share, for the quarter ended September 30, 2023. The net loss for the prior quarter was due to the securities strategy. Excluding the securities strategy, EPS would have been $0.10 for the current quarter and $0.04 for the prior quarter. The increase in EPS, excluding the securities strategy, was due primarily to an increase in the net interest margin resulting from securities and borrowings activity related to the securities strategy. The net interest margin increased 50 basis points, from 1.21% for the prior quarter to 1.71% for the current quarter. Excluding the effects of the leverage strategy during the prior quarter, the net interest margin increased 47 basis points, from 1.24% for the prior quarter to 1.71% for the current quarter. The leverage strategy was in place during a portion of the prior quarter and was not in place during the current quarter.

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. The weighted average yield on MBS increased 282 basis points and the weighted average yield on investment securities increased 311 basis points compared to the prior quarter as a result of the securities strategy.


	For the Three Months Ended
	December 31,		September 30,		Change Expressed in:
	2023		2023		Dollars		Percent
	(Dollars in thousands)
INTEREST AND DIVIDEND INCOME:
Loans receivable	$	75,941	$	74,031	$	1,910	2.6	%
MBS	5,859		4,399		1,460		33.2
Cash and cash equivalents	4,778		6,139		(1,361)		(22.2)
FHLB stock	2,586		2,796		(210)		(7.5)
Investment securities	2,528		894		1,634		182.8
Total interest and dividend income	$	91,692	$	88,259	$	3,433	3.9

The increase in interest income on loans receivable was due to an increase in the weighted average yield of the portfolio, along with an increase in the average balance of commercial loans, which also contributed to the increase in the overall portfolio yield. The increase in the weighted average yield was due primarily to originations at higher market rates and one- to four-family adjustable-rate loans repricing to higher market interest rates, as well as disbursements on commercial construction loans at rates higher than the overall portfolio rate. The increase in interest income on MBS and investment securities was due to an increase in the weighted average yield of the portfolios due to the securities strategy, partially offset by a decrease in the average balance as not all of the proceeds from the securities sales were reinvested into the securities portfolio. The decrease in interest income on cash and cash equivalents and FHLB stock was due mainly to the leverage strategy being in place for a portion of the prior quarter, and not being in place during the current quarter. Excluding the leverage strategy, the average balance of cash and cash equivalents increased during the current quarter as a result of the securities strategy.

Interest Expense

The following table presents the components of interest expense for the time periods presented, along with the change measured in dollars and percent. The weighted average rate paid on deposits increased 21 basis points and the weighted average rate paid on borrowings not associated with the leverage strategy decreased 18 basis points compared to the prior quarter.


	For the Three Months Ended
	December 31,		September 30,		Change Expressed in:
	2023		2023		Dollars		Percent
	(Dollars in thousands)
INTEREST EXPENSE:
Deposits	$	32,443	$	29,778	$	2,665	8.9	%
Borrowings	19,656		27,746		(8,090)		(29.2)
Total interest expense	$	52,099	$	57,524	$	(5,425)	(9.4)

The increase in interest expense on deposits was due almost entirely to increases in the weighted average rate paid and the average balance of the retail certificate of deposit portfolio. The growth in the retail certificate of deposit portfolio was in certificates with terms of 14 months. During the current quarter, interest expense on borrowings not associated with the leverage strategy decreased

$4.9 million, due primarily to the pay down of $500.0 million of borrowings under the BTFP, as part of the securities strategy. Interest expense on borrowings associated with the leverage strategy decreased $3.2 million due to the leverage strategy being in place during a portion of the prior quarter and not being in place during the current quarter.

Provision for Credit Losses

For the quarter ended December 31, 2023, the Bank recorded a provision for credit losses of $123 thousand, compared to a provision for credit losses of $963 thousand for the prior quarter. The provision for credit losses in the current quarter was comprised of a $400 thousand increase in the ACL for loans, partially offset by a $277 thousand decrease in the reserve for off-balance sheet credit exposures. The provision for credit losses associated with the ACL was due primarily to commercial loan growth. The release of provision for credit losses associated with the reserve for off-balance sheet credit exposures was due primarily to commercial construction loans converting to permanent 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 Three Months Ended
	December 31,		September 30,		Change Expressed in:
	2023		2023		Dollars		Percent
	(Dollars in thousands)
NON-INTEREST INCOME:
Deposit service fees	$	2,575	$	2,758	$	(183)	(6.6)	%
Insurance commissions	863		927		(64)		(6.9)


Net loss from securities transactions	(13,345)		(192,622)		179,277		93.1
Other non-interest income	1,013		1,233		(220)		(17.8)
Total non-interest income	$	(8,894)	$	(187,704)	$	178,810	95.3

The net loss from securities transactions in the current quarter and prior quarter relate to the securities strategy. The decrease in other non-interest income was due mainly to a decrease in loan fees during the current quarter, along with several other miscellaneous non-interest income items.

Non-Interest Expense

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


	For the Three Months Ended
	December 31,		September 30,		Change Expressed in:
	2023		2023		Dollars		Percent
	(Dollars in thousands)
NON-INTEREST EXPENSE:
Salaries and employee benefits	$	12,992	$	11,804	$	1,188	10.1	%
Information technology and related expense	5,369		6,448		(1,079)		(16.7)
Occupancy, net	3,372		3,638		(266)		(7.3)
Federal insurance premium	1,860		1,167		693		59.4
Regulatory and outside services	1,643		1,765		(122)		(6.9)
Advertising and promotional	988		692		296		42.8
Deposit and loan transaction costs	542		778		(236)		(30.3)
Office supplies and related expense	361		689		(328)		(47.6)

Other non-interest expense	1,381		1,213		168		13.8
Total non-interest expense	$	28,508	$	28,194	$	314	1.1

The increase in salaries and employee benefits was mainly related to accruals associated with the Bank's short-term performance plan for fiscal year 2024 as the prior quarter included a reversal of the entire fiscal year 2023 accrual because the plan does not allow for the payment of incentive compensation if, as was the case for fiscal year 2023, the Company has a net loss for the fiscal year. The decrease in information technology and related expense was due primarily to a reduction in IT professional services and software

maintenance expenses due mainly to costs associated with the Company's implementation of a new core processing system ("digital transformation") during the prior quarter. The increase in the federal insurance premium was due mainly to an increase in the Federal Deposit Insurance Corporation ("FDIC") assessment rate as a result of the way the rate is adjusted for the occurrence of a net loss. The increase in advertising and promotional expense was due mainly to the timing of campaigns. The decrease in deposit and loan transaction costs was due primarily to lower electronic banking expenses due mainly to non-recurring fees paid during the prior quarter associated with the digital transformation. The decrease in office supplies and related expense was due mainly to postage expense associated with the digital transformation mailings in the prior quarter.

The Company's efficiency ratio was 92.86% for the current quarter compared to (17.96)% for the prior quarter. Excluding the net losses from the securities strategy, the efficiency ratio would have been 64.73% for the current quarter and 79.08% for the prior quarter. The improvement in the efficiency ratio, excluding the securities strategy, was due primarily to higher net interest income. The efficiency ratio is a measure of a financial institution's total non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. A higher value generally indicates that it is costing the financial institution more money to generate revenue, relative to its net interest income and non-interest income.

Income Tax Expense

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


	For the Three Months Ended
	December 31,			September 30,			Change Expressed in:
	2023			2023			Dollars		Percent
	(Dollars in thousands)
Income (loss) before income tax (benefit)	$	2,068		$	(186,126)		$	188,194	(101.1)	%
Income tax (benefit)	(475)			(45,736)			45,261		(99.0)
Net income (loss)	$	2,543		$	(140,390)		$	142,933	(101.8)

Effective Tax Rate	(23.0		%)	24.6		%

The income tax benefit in the current quarter was a result of treating the $13.3 million net loss associated with the securities strategy as a discrete tax benefit in the current quarter. The tax benefit related to the net loss was $3.3 million. Excluding the $3.3 million benefit, income tax expense would have been $2.8 million and the effective tax rate, excluding the $13.3 million net loss, would have been 18.0% for the current quarter. The income tax benefit in the prior quarter was a result of the pretax loss. The pretax loss, combined with the Company's permanent differences, contributed to the increase in the effective tax rate. Generally, the Company's permanent differences lower the effective tax rate when the Company has pretax income and tax expense, but as a result of the prior quarter pretax loss, the Company's permanent differences have the impact of raising the effective tax rate.

Comparison of Operating Results for the Three Months Ended December 31, 2023 and 2022

The Company recognized net income of $2.5 million, or $0.02 per share, for the current quarter, compared to net income of $16.2 million, or $0.12 per share, for the prior year quarter. The lower net income for the current quarter was primarily a result of the $13.3 million net loss associated with securities strategy, along with higher interest expense, partially offset by a lower provision for credit losses and the income tax benefit in the current quarter. Excluding the effects of the securities strategy, EPS would have been $0.10 for the current quarter. The net interest margin increased ten basis points, from 1.61% for the prior year quarter to 1.71% for the current quarter. The leverage strategy was in place during the prior year quarter and not in place during the current quarter. When the leverage strategy is in place, it reduces the net interest margin due to the amount of earnings from the transaction in comparison to the size of the transaction. Excluding the effects of the leverage strategy, the net interest margin decreased 17 basis points, from 1.88% for the prior year quarter to 1.71% for the current quarter. The decrease in the net interest margin excluding the effects of the leverage strategy was due mainly to an increase in the cost of deposits and borrowings, which exceeded the increase in yields on securities and 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
	December 31,				Change Expressed in:
	2023		2022		Dollars		Percent
	(Dollars in thousands)
INTEREST AND DIVIDEND INCOME:
Loans receivable	$	75,941	$	64,819	$	11,122	17.2	%
MBS	5,859		4,811		1,048		21.8
Cash and cash equivalents	4,778		16,671		(11,893)		(71.3)
FHLB stock	2,586		4,158		(1,572)		(37.8)
Investment securities	2,528		881		1,647		186.9
Total interest and dividend income	$	91,692	$	91,340	$	352	0.4

The increase in interest income on loans receivable was due to an increase in the weighted average yield and the average balance of the loan portfolio. The increase in the weighted average yield was due primarily to originations and purchases at higher market yields between periods, as well as disbursements on commercial construction loans at rates higher than the overall portfolio rate and upward repricing of existing adjustable-rate loans due to higher market interest rates. The increase in the average balance was mainly in the commercial real estate and correspondent one-to four-family loan portfolios. The increase in interest income on MBS and investment securities was due mainly to an increase in the weighted average yield, partially offset by a decrease in the average balance, both a result of the securities strategy. The decrease in interest income on cash and cash equivalents and the decrease in dividend income on FHLB stock was due mainly to the leverage strategy being utilized during the prior year quarter and not being utilized during the current quarter. Excluding the leverage strategy, the average balance of cash and cash equivalents increased during the current quarter as a result of the securities strategy.

Interest Expense

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


	For the Three Months Ended
	December 31,				Change Expressed in:
	2023		2022		Dollars		Percent
	(Dollars in thousands)
INTEREST EXPENSE:
Deposits	$	32,443	$	11,904	$	20,539	172.5	%
Borrowings	19,656		33,608		(13,952)		(41.5)
Total interest expense	$	52,099	$	45,512	$	6,587	14.5

The increase in interest expense on deposits was due almost entirely to an increase in the weighted average rate paid on the deposit portfolio, specifically retail certificates of deposit and money market accounts. Interest expense on borrowings associated with the leverage strategy decreased $17.3 million compared to the prior year quarter due to the leverage strategy being in place during the

prior year quarter and not being in place during the current quarter. Interest expense on borrowings not associated with the leverage strategy increased $3.3 million due to new borrowings being added between periods, at market interest rates higher than the overall portfolio rate, to replace maturing advances and to fund operational needs.

Provision for Credit Losses

The Bank recorded a provision for credit losses during the current quarter of $123 thousand, compared to a provision for credit losses of $3.7 million during the prior year quarter. See "Comparison of Operating Results for the Three Months Ended December 31, 2023 and September 30, 2023" above for additional information regarding the provision for credit losses for the current quarter.

Non-Interest Income

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


	For the Three Months Ended
	December 31,				Change Expressed in:
	2023		2022		Dollars		Percent
	(Dollars in thousands)
NON-INTEREST INCOME:
Deposit service fees	$	2,575	$	3,461	$	(886)	(25.6)	%
Insurance commissions	863		795		68		8.6


Net loss from securities transactions	(13,345)		—		(13,345)		N/A
Other non-interest income	1,013		1,096		(83)		(7.6)
Total non-interest income	$	(8,894)	$	5,352	$	(14,246)	(266.2)

The decrease in deposit service fees was due primarily to a change in the fee structure of certain deposit products after the digital transformation. The net loss from securities transactions relates to the securities strategy.

Non-Interest Expense

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


	For the Three Months Ended
	December 31,				Change Expressed in:
	2023		2022		Dollars		Percent
	(Dollars in thousands)
NON-INTEREST EXPENSE:
Salaries and employee benefits	$	12,992	$	13,698	$	(706)	(5.2)	%
Information technology and related expense	5,369		5,070		299		5.9
Occupancy, net	3,372		3,474		(102)		(2.9)
Federal insurance premium	1,860		812		1,048		129.1
Regulatory and outside services	1,643		1,533		110		7.2
Advertising and promotional	988		833		155		18.6
Deposit and loan transaction costs	542		611		(69)		(11.3)
Office supplies and related expense	361		633		(272)		(43.0)


Other non-interest expense	1,381		1,109		272		24.5
Total non-interest expense	$	28,508	$	27,773	$	735	2.6

The decrease in salaries and employee benefits was a result of a decrease in full-time equivalent employees between the two quarter ends as a result of management's decision to not backfill non-critical employees through natural attrition. During fiscal year 2023, the Bank moved to a new branch staffing model comprised of decision makers and well-rounded employees that is intended to add an elevated experience for customers who choose in-person banking activities. The increase in information technology and related expenses was due mainly to higher software licensing expenses resulting from new agreements associated with the digital transformation, partially offset by lower software maintenance and third-party project management expenses provided in association with the Bank's digital transformation project during the prior year quarter. The increase in the federal insurance premium was due to an increase in the FDIC assessment rate as a result of the way the rate is adjusted for the occurrence of a net loss, along with an FDIC

rule that increased the FDIC initial base deposit assessment rate two basis points on January 1, 2023. The increase in advertising and promotional expense was due to the timing of campaigns. The decrease in office supplies and related expense was due primarily to the write-off of the Bank's remaining inventory of unissued non-contactless debit cards during the prior year quarter, which had become obsolete, along with lower postage expense. The increase in other non-interest expense was due mainly to an increase in fraud losses and other miscellaneous expenses.

Income Tax Expense

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


	For the Three Months Ended
	December 31,						Change Expressed in:
	2023			2022			Dollars		Percent
	(Dollars in thousands)
Income before income tax (benefit) expense	$	2,068		$	19,747		$	(17,679)	(89.5)	%
Income tax (benefit) expense	(475)			3,507			(3,982)		(113.5)
Net income	$	2,543		$	16,240		$	(13,697)	(84.3)

Effective Tax Rate	(23.0		%)	17.8		%

Fiscal Year 2024 Outlook

The federal insurance premium is anticipated to be approximately $1.5 million higher in fiscal year 2024 compared to fiscal year 2023 due to the increase in the FDIC assessment rate as discussed above. Management anticipates the effective tax rate for fiscal year 2024 will be approximately 18%.

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, as well as the BTFP through March 2024. 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 50% of Bank Call Report total assets as of December 31, 2023, as approved by the president of FHLB. FHLB borrowings are secured by certain qualifying loans pursuant to a blanket collateral agreement with FHLB. When the leverage strategy is in place, the Bank maintains the resulting excess cash reserves from the FHLB borrowings at the FRB of Kansas City, which can be used to meet any short-term liquidity needs. Additionally, FHLB borrowings may exceed 40% of Bank Call Report total assets if the Bank continues its leverage strategy and FHLB senior management continues to approve the Bank's borrowing limit being in excess of 40% of Call Report total assets. All or a portion of the short-term FHLB borrowings in conjunction with the leverage strategy can be repaid at maturity, if necessary or desired. 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 December 31, 2023, the amount of securities pledged for the discount window was $124.3 million. Management tests the Bank's access to the FRB of Kansas City's discount window annually with a nominal overnight borrowing. The amount that can be borrowed under the BTFP is based upon the par value of securities pledged as collateral, the term can be up to one year in length, and the borrowings can be prepaid without penalty.

If management observes unusual trends in the amount and frequency of line of credit utilization and/or short-term borrowings that is not in conjunction with a planned strategy, such as the leverage 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's internal policy limits total borrowings to 55% of total assets. At December 31, 2023, the Bank had total borrowings, at par, of $2.38 billion, or approximately 25% of total assets. The borrowings balance was composed of FHLB advances. Of this amount, $362.3 million is scheduled to mature in the next 12 months. Management estimated that the Bank had $2.70 billion in additional liquidity available at December 31, 2023 based on the Bank's blanket collateral agreement with FHLB and unencumbered securities.

At December 31, 2023, 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 December 31, 2023, the Bank had $467.8 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 December 31, 2023, the Bank's policy allowed for combined brokered and public unit certificates of deposit up to 15% of total deposits. At December 31, 2023, 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 $148.3 million as collateral for public unit certificates of deposit at December 31, 2023. 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 December 31, 2023, $1.71 billion of the Bank's certificate of deposit portfolio was scheduled to mature within the next 12 months, including $112.7 million of public unit certificates of deposit and $35.4 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.

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, stock redemptions or repurchases, cash-out mergers 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.

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"). As of December 31, 2023, the Bank and Company exceeded all regulatory capital requirements. The following table presents the regulatory capital ratios of the Bank and Company at December 31, 2023.


							Regulatory
							Requirement For
					Minimum		Well-Capitalized
	Bank		Company		Regulatory		Status of Bank
	Ratios		Ratios		Requirement		Under PCA Provisions
Tier 1 leverage ratio	8.9	%	9.9	%	4.0	%	5.0	%
Common equity tier 1 capital ratio	15.9		17.7		4.5		6.5
Tier 1 capital ratio	15.9		17.7		6.0		8.0
Total capital ratio	16.4		18.3		8.0		10.0

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Asset and Liability Management and Market Risk

For a complete discussion of the Bank's asset and liability management policies, as well as the potential impact of interest rate changes upon the market value of the Bank's portfolios, see "Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2023. The analysis presented in the tables below reflects the level of market risk at the Bank, including the cash the holding company has on deposit at the Bank.

The rates of interest the Bank earns on its assets and pays on its liabilities are generally established contractually for a period of time. Fluctuations in interest rates have a significant impact not only upon our net income, but also upon the cash flows and market values of our assets and liabilities. Our results of operations, like those of other financial institutions, are impacted by changes in interest rates and the interest rate sensitivity of our interest-earning assets and interest-bearing liabilities. Risk associated with changes in interest rates on the earnings of the Bank and the market value of its financial assets and liabilities is known as interest rate risk. Interest rate risk is our most significant market risk, and our ability to adapt to changes in interest rates is known as interest rate risk management.

The general objective of our interest rate risk management program is to determine and manage an appropriate level of interest rate risk while maximizing net interest income in a manner consistent with our policy to manage, to the extent practicable, the exposure of net interest income to changes in market interest rates. The Board of Directors and Asset and Liability Management Committee ("ALCO") regularly review the Bank's interest rate risk exposure by forecasting the impact of hypothetical, alternative interest rate environments on net interest income and the market value of portfolio equity ("MVPE") at various dates. The MVPE is defined as the net of the present value of cash flows from existing assets, liabilities, and off-balance sheet instruments. The present values are determined based upon market conditions as of the date of the analysis, as well as in alternative interest rate environments providing potential changes in the MVPE under those alternative interest rate environments. Net interest income is projected in the same alternative interest rate environments with both a static balance sheet and one with management strategies considered. The MVPE and net interest income analyses are also conducted to estimate our sensitivity to rates for future time horizons based upon market conditions as of the date of the analysis. The MVPE ratio continues to be an important measurement for management as we consider the changes in market rates, liquidity needs, and portfolio balances. MVPE represents a long-term view of the interest sensitivity of the Bank's balance sheet while our net interest income projections inform management of the short-term impacts of pricing decisions. In addition to the interest rate environments presented below, management also reviews the impact of non-parallel rate shock scenarios on a quarterly basis. These scenarios consist of flattening and steepening the yield curve by changing short-term and long-term interest rates independent of each other, and simulating cash flows and determining valuations as a result of these hypothetical changes in interest rates to identify rate environments that pose the greatest risk to the Bank. This analysis helps management quantify the Bank's exposure to changes in the shape of the yield curve.

Qualitative Disclosure about Market Risk

Gap Table. The following gap table summarizes the anticipated maturities or repricing periods of the Bank's interest-earning assets and interest-bearing liabilities based on the information and assumptions set forth in the notes below. Cash flow projections for mortgage-related assets are calculated based in part on prepayment assumptions at current and projected interest rates. Prepayment projections are subjective in nature, involve uncertainties and assumptions and, therefore, cannot be determined with a high degree of accuracy. Although certain assets and liabilities may have similar maturities or periods to repricing, they may react differently to changes in market interest rates. Assumptions may not reflect how actual yields and costs respond to market interest rate changes. The interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types of assets and liabilities may lag behind changes in market interest rates. Certain assets, such as adjustable-rate loans, have features that restrict changes in interest rates on a short-term basis and over the life of the asset. In the event of a change in interest rates, prepayment rates would likely deviate significantly from those assumed in calculating the gap table below. A positive gap generally means more cash flows from assets are expected to reprice than cash flows from liabilities and suggests, in a rising rate environment, that earnings should increase. A negative gap generally means more cash flows from liabilities are expected to reprice than cash flows from assets and suggests, in a rising rate environment, that earnings should decrease. For additional information regarding the impact of changes in interest rates, see the following Change in Net Interest Income and Change in MVPE discussions and tables.


				More Than			More Than
	Within			One Year to			Three Years			Over
	One Year			Three Years			to Five Years			Five Years			Total
Interest-earning assets:	(Dollars in thousands)
Loans receivable(1)	$	1,586,804		$	1,780,614		$	1,359,266		$	3,234,782		$	7,961,466
Securities(2)	364,481			155,412			83,018			118,701			721,612
Other interest-earning assets	291,395			—			—			—			291,395
Total interest-earning assets	2,242,680			1,936,026			1,442,284			3,353,483			8,974,473

Interest-bearing liabilities:
Non-maturity deposits(3)	635,855			401,306			345,767			1,963,050			3,345,978
Certificates of deposit	1,715,316			896,365			126,977			169			2,738,827
Borrowings(4)	571,214			1,287,580			524,864			26,999			2,410,657
Total interest-bearing liabilities	2,922,385			2,585,251			997,608			1,990,218			8,495,462

Excess (deficiency) of interest-earning assets over
interest-bearing liabilities	$	(679,705)		$	(649,225)		$	444,676		$	1,363,265		$	479,011

Cumulative excess (deficiency) of interest-earning assets over
interest-bearing liabilities	$	(679,705)		$	(1,328,930)		$	(884,254)		$	479,011

Cumulative excess (deficiency) of interest-earning assets over interest-bearing
liabilities as a percent of total Bank assets at:
December 31, 2023	(7.1)		%	(13.9)		%	(9.2)		%	5.0		%
September 30, 2023	(11.7)




Cumulative one-year gap - interest rates +200 bps at:
December 31, 2023	(8.3)
September 30, 2023	(11.9)

(1)Adjustable-rate loans are included in the period in which the rate is next scheduled to adjust or in the period in which repayments are expected to occur, or prepayments are expected to be received, prior to their next rate adjustment, rather than in the period in which the loans are due. Fixed-rate loans are included in the periods in which they are scheduled to be repaid, based on scheduled amortization and prepayment assumptions. Balances are net of undisbursed amounts and deferred fees and exclude loans 90 or more days delinquent or in foreclosure.

(2)MBS reflect projected prepayments at amortized cost. All other securities are presented based on contractual maturities, term to call dates or pre-refunding dates as of December 31, 2023, at amortized cost.

(3)Although the Bank's checking, savings, and money market accounts are subject to immediate withdrawal, management considers a substantial amount of these accounts to be core deposits having significantly longer effective maturities. The decay rates (the assumed rates at which the balances of existing accounts decline) used on these accounts are based on assumptions developed from our actual experiences with these accounts. If all of the Bank's checking, savings, and money market accounts had been assumed to be subject to repricing within one year, interest-bearing liabilities estimated to mature or reprice within one year would have exceeded interest-earning assets with comparable characteristics by $3.39 billion, for a cumulative one-year gap of (35.4)% of total assets.

(4)Borrowings exclude deferred prepayment penalty costs. Included in this line item are $365.0 million of FHLB adjustable-rate advances tied to interest rate swaps. The repricing of these liabilities is projected to occur at the maturity date of each interest rate swap.

At December 31, 2023, the Bank's gap between the amount of interest-earning assets and interest-bearing liabilities projected to reprice within one year was $(679.7) million, or (7.1)% of total assets, compared to $(1.19) billion, or (11.7)% of total assets, at September 30, 2023. The change in the one-year gap amount was due to both an increase in the amount of interest-earning asset cash flows coming due in one year at December 31, 2023 and a decrease in the amount of liability cash flows coming due in one year, compared to September 30, 2023. These changes were due, in part, to the securities strategy, which resulted in a decrease in borrowings that were coming due in one year, an increase in the balance of cash, and an increase in the amount of securities projected to reprice within one year. These results were partially offset by an increase in certificates of deposit scheduled to mature within one year as of December 31, 2023, compared to September 30, 2023, as the Bank continued to offer its highest rate on shorter-term certificates of deposit.

The amount of interest-bearing liabilities expected to reprice in a given period is not typically significantly impacted by changes in interest rates because the Bank's borrowings and certificate of deposit portfolios have contractual maturities and generally cannot be terminated early without a prepayment penalty. If interest rates were to increase 200 basis points, as of December 31, 2023, the Bank's one-year gap is projected to be $(789.7) million, or (8.2)% of total assets. The change in the gap compared to when there is no

change in rates was due to lower anticipated net cash flows primarily as a result of lower prepayments on mortgage-related assets in the higher rate environment. This compares to a one-year gap of $(1.21) billion, or (11.9)% of total assets, if interest rates were to have increased 200 basis points as of September 30, 2023.

Change in Net Interest Income. For each date presented in the following table, the estimated change in the Bank's net interest income is based on the indicated instantaneous, parallel and permanent change in interest rates. The change in each interest rate environment represents the difference between estimated net interest income in the zero basis point interest rate environment ("base case," assumes the forward market and product interest rates implied by the yield curve are realized) and the estimated net interest income in each alternative interest rate environment (assumes market and product interest rates have a parallel shift in rates across all maturities by the indicated change in rates). Projected cash flows for each scenario are based upon varying prepayment assumptions to model anticipated customer behavior changes as market rates change. Estimations of net interest income used in preparing the table below were based upon the assumptions that the total composition of interest-earning assets and interest-bearing liabilities does not change materially and that any repricing of assets or liabilities occurs at anticipated product and market rates for the alternative rate environments as of the dates presented. The estimation of net interest income does not include any projected gains or losses related to the sale of loans or securities, or income derived from non-interest income sources, but does include the use of different prepayment assumptions in the alternative interest rate environments. It is important to consider that estimated changes in net interest income are for a cumulative four-quarter period. These do not reflect the earnings expectations of management. Estimates for the -300 basis point scenario were not prepared at September 30, 2023.


Change	Net Interest Income At
(in Basis Points)	December 31, 2023						September 30, 2023
in Interest Rates(1)	Amount ($)		Change ($)		Change (%)		Amount ($)		Change ($)		Change (%)
	(Dollars in thousands)
-300 bp	$	138,290	$	(27,736)	(16.7)	%	N/A		N/A		N/A
-200 bp	148,482		(17,544)		(10.6)		$	126,495	$	(6,963)	(5.2)	%
-100 bp	157,290		(8,736)		(5.3)		130,374		(3,084)		(2.3)
000 bp	166,026		—		—		133,458		—		—
+100 bp	174,408		8,382		5.1		136,147		2,689		2.0
+200 bp	182,567		16,541		10.0		138,804		5,346		4.0
+300 bp	190,904		24,878		15.0		141,494		8,036		6.0

(1)Assumes an instantaneous, parallel, and permanent change in interest rates at all maturities.

The net interest income projection was higher in the base case scenario at December 31, 2023 compared to September 30, 2023, due primarily to the securities strategy, which resulted in a decrease in borrowings, an increase in the balance of cash, and an increase in interest income projections on the Bank's securities portfolio. These increases were partially offset by higher interest expense projections on the Bank's deposit portfolio, primarily on its retail certificates of deposit portfolio, due to increases in both the balance and rate between periods.

In both the rising and declining interest rate scenarios, variability of net interest income projections has become more significant, relative to prior periods, due primarily to the composition of the Bank's balance sheet in this elevated interest rate environment. At December 31, 2023, the Bank's balance of cash and cash equivalents was $320.4 million compared to $245.6 million at September 30, 2023. As a result of the $74.8 million increase in the balance of cash between periods, in each interest rate scenario, there was a greater impact on net interest income at December 31, 2023 compared to September 30, 2023. More generally, however, increases/(decreases) in net interest income in the various interest rate scenarios are due to the degree to which loan repayments that are projected to reprice are greater/(less) than the projected change in deposit and borrowing rates in the next 12 months.

Change in MVPE. The following table sets forth the estimated change in the MVPE for each date presented based on the indicated instantaneous, parallel, and permanent change in interest rates. The change in each interest rate environment represents the difference between the MVPE in the base case (assumes the forward market interest rates implied by the yield curve are realized) and the MVPE in each alternative interest rate environment (assumes market interest rates have a parallel shift in rates). Projected cash flows for each scenario are based upon varying prepayment assumptions to model anticipated customer behavior as market rates change. The estimations of the MVPE used in preparing the table below were based upon the assumption that the total composition of interest-earning assets and interest-bearing liabilities do not change, that any repricing of assets or liabilities occurs at current product or market rates for the alternative rate environments as of the dates presented, and that different prepayment rates were used in each alternative interest rate environment. The estimated MVPE results from the valuation of cash flows from financial assets and liabilities over the anticipated lives of each for each interest rate environment. The table below presents the effects of the changes in interest rates on our assets and liabilities as they mature, repay, or reprice, as shown by the change in the MVPE for alternative interest rates. Estimates for the -300 basis point scenario were not prepared at September 30, 2023.


Change	Market Value of Portfolio Equity At
(in Basis Points)	December 31, 2023						September 30, 2023
in Interest Rates(1)	Amount ($)		Change ($)		Change (%)		Amount ($)		Change ($)		Change (%)
	(Dollars in thousands)
-300 bp	$	1,208,029	$	150,587	14.2	%	N/A		N/A		N/A
-200 bp	1,229,286		171,844		16.3		$	1,302,781	$	283,093	27.8	%
-100 bp	1,157,178		99,736		9.4		1,145,404		125,716		12.3
000 bp	1,057,442		—		—		1,019,688		—		—
+100 bp	953,341		(104,101)		(9.8)		888,642		(131,046)		(12.9)
+200 bp	845,044		(212,398)		(20.1)		757,870		(261,818)		(25.7)
+300 bp	735,851		(321,591)		(30.4)		632,716		(386,972)		(38.0)

(1)Assumes an instantaneous, parallel, and permanent change in interest rates at all maturities.

The Bank's MVPE increased from $1.02 billion at September 30, 2023 to $1.06 billion at December 31, 2023. The increase was due primarily to significant decreases in market interest rates across all medium- and long-term tenors of the yield curve between the two dates, as well as to balance sheet changes resulting from the securities strategy. The decrease in market interest rates, most notably in rates between 3- and 30-years, resulted in an increase in the value of the Bank's longer-term interest-earning assets more than it increased the value of its interest-bearing liabilities.

As interest rates increase, borrowers have less economic incentive to prepay or to refinance their mortgages and agency debt issuers have less economic incentive or opportunity to exercise their call options in order to issue new debt at lower interest rates, resulting in lower projected cash flows on these assets. As interest rates increase in the rising interest rate scenarios, prepayments on mortgage-related assets are more likely to decrease and only be realized through significant changes in borrowers' lives such as divorce, death, job-related relocations, or other events as there is less economic incentive for borrowers to prepay their debt, resulting in an increase in the average life of mortgage-related assets. Similarly, call projections for callable agency debentures decrease as interest rates rise, which results in cash flows related to these assets moving closer to their contractual maturity dates. The longer expected average lives of these assets increases the sensitivity of their market value to changes in interest rates.

In the increasing rate scenarios, the sensitivity reflects the negative impacts of rates on the value of the Bank's loan and securities portfolios more so than on its deposit and borrowings portfolios. In the decreasing interest rate scenarios, the Bank's MVPE increased due to a larger increase in the market value of the Bank's assets than the Bank's liabilities. This is because the Bank's mortgage-related assets continue to have a longer duration in these interest rate scenarios, which results in greater sensitivity in market value as interest rates change.

The following table presents the weighted average yields/rates and WALs (in years), after applying prepayment, call assumptions, and decay rates for our interest-earning assets and interest-bearing liabilities as of December 31, 2023. Yields presented for interest-earning assets include the amortization of fees, costs, premiums and discounts, which are considered adjustments to the yield. The interest rate presented for term borrowings is the effective rate, which includes the impact of interest rate swaps and the amortization of deferred prepayment penalties resulting from FHLB advances previously prepaid. The WAL presented for term borrowings includes the effect of interest rate swaps.


	Amount		Yield/Rate		WAL	% of Category		% of Total
	(Dollars in thousands)
Securities	$	740,462	5.67	%	2.7			8.1	%
Loans receivable:
Fixed-rate one- to four-family	5,556,238		3.32		6.7	69.8	%	60.9
Fixed-rate commercial	469,873		4.50		3.0	5.9		5.1
All other fixed-rate loans	54,351		5.43		6.9	0.7		0.6
Total fixed-rate loans	6,080,462		3.43		6.5	76.4		66.6
Adjustable-rate one- to four-family	925,588		3.86		3.9	11.6		10.1
Adjustable-rate commercial	859,737		5.96		7.5	10.8		9.4
All other adjustable-rate loans	95,902		8.41		2.9	1.2		1.1
Total adjustable-rate loans	1,881,227		5.05		5.5	23.6		20.6
Total loans receivable	7,961,689		3.81		6.2	100.0	%	87.2
FHLB stock	110,166		9.47		2.1			1.2
Cash and cash equivalents	320,357		4.85		—			3.5
Total interest-earning assets	$	9,132,674	4.07		5.7			100.0	%

Non-maturity deposits	$	2,727,386	1.05		6.7	49.9	%	34.8	%
Retail certificates of deposit	2,569,391		3.75		1.1	47.0		32.8
Commercial certificates of deposit	49,152		3.80		0.8	0.9		0.6
Public unit certificates of deposit	120,284		4.54		0.6	2.2		1.5
Total interest-bearing deposits	5,466,213		2.42		3.9	100.0	%	69.7
Term borrowings	2,376,384		3.14		2.0			30.3


Total interest-bearing liabilities	$	7,842,597	2.64		3.3			100.0	%

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, the "Act") as of December 31, 2023. Based upon this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of December 31, 2023, such disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Act is accumulated and communicated to the Company's management (including the Chief Executive Officer and Chief Financial Officer) to allow timely decisions regarding required disclosure, and is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company's internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Act) that occurred during the Company's quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

In the normal course of business, the Company and the Bank are involved as parties to various legal actions. In our opinion, after consultation with legal counsel, we believe it is unlikely that any such pending legal actions will have a material adverse effect on our financial condition, results of operations or liquidity.

On November 2, 2022, the Bank was served a putative class action lawsuit, captioned Jennifer Harding, et al. vs. Capitol Federal Savings Bank (Case No. 2022-CV-00598), filed in the Third Judicial District Court, Shawnee County, Kansas against the Bank, alleging the Bank improperly charged overdraft fees on (1) debit card transactions that were authorized for payment on sufficient funds but later settled against a negative account balance (commonly known as "authorize positive purportedly settle negative" or "APPSN" transactions) and (2) merchant re-presentments of previously rejected payment requests. The complaint asserts a breach of contract claim (including breach of an implied covenant of good faith and fair dealing) for each practice and seeks restitution for alleged improper fees, alleged actual damages, costs and disbursements, and injunction relief. On April 5, 2023, the court granted the Bank's motion to dismiss the complaint, with prejudice. The plaintiffs have appealed this decision.

The Company assesses the liabilities and loss contingencies in connection with pending or threatened legal and regulatory proceedings on at least a quarterly basis and establishes accruals when it is believed to be probable that a loss may be incurred and that the amount of such loss can be reasonably estimated.

Item 1A. Risk Factors

There have been no changes to our risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

See "Liquidity and Capital Resources - Limitations on Dividends and Other Capital Distributions" in "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding OCC restrictions on dividends from the Bank to the Company.

The following table summarizes our stock repurchase activity during the three months ended December 31, 2023 and additional information regarding our stock repurchase program. As of December 31, 2023, the Company had $9.4 million of common stock authorized under its existing stock repurchase plan. There is no expiration for this repurchase plan; however, the Federal Reserve Bank's existing approval for the Company to repurchase shares is through August 2024. Shares may be repurchased from time to time in the open market or in privately negotiated transactions based upon market conditions and available liquidity.


				Total Number of	Approximate Dollar
	Total			Shares Purchased as	Value of Shares
	Number of	Average		Part of Publicly	that May Yet Be
	Shares	Price Paid		Announced Plans	Purchased Under the
	Purchased	per Share		or Programs	Plans or Programs
October 1, 2023 through
October 31, 2023	—	$	—	—	$	21,222,929
November 1, 2023 through
November 30, 2023	1,034,000	5.36		1,034,000	15,685,362
December 1, 2023 through
December 31, 2023	1,000,000	6.25		1,000,000	9,440,117
Total	2,034,000	5.79		2,034,000	9,440,117

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

See Index to Exhibits.

INDEX TO EXHIBITS


Exhibit Number						Document
3(i)						Charter of Capitol Federal Financial, Inc., as filed on May 6, 2010, as Exhibit 3(i) to Capitol Federal Financial, Inc.'s Registration Statement on Form S-1 (File No. 333-166578) and incorporated herein by reference
3(ii)						Bylaws of Capitol Federal Financial, Inc., as amended, filed on March 30, 2020, as Exhibit 3.2 to Form 8-K for Capitol Federal Financial Inc. and incorporated herein by reference
10.1						Form of Amended and Restated Change of Control Agreement with each of John B. Dicus, Kent G. Townsend, Rick C. Jackson, Natalie G. Haag, Robert D. Kobbeman, Anthony S. Barry, and William J. Skrobacz filed on November 29, 2023 as Exhibit 10.1 to the Registrant's September 30, 2023 Form 10-K and incorporated herein by reference
10.2						Capitol Federal Financial's 2000 Stock Option and Incentive Plan (the "Stock Option Plan") filed on April 13, 2000 as Appendix A to Capitol Federal Financial's Revised Proxy Statement (File No. 000-25391) and incorporated herein by reference
10.3						Capitol Federal Financial Deferred Incentive Bonus Plan, as amended, filed on May 8, 2020 as Exhibit 10.3 to the Registrant's March 31, 2020 Form 10-Q and incorporated herein by reference
10.4						Form of Incentive Stock Option Agreement under the Stock Option Plan filed on February 4, 2005 as Exhibit 10.5 to the December 31, 2004 Form 10-Q for Capitol Federal Financial and incorporated herein by reference
10.5						Form of Non-Qualified Stock Option Agreement under the Stock Option Plan filed on February 4, 2005 as Exhibit 10.6 to the December 31, 2004 Form 10-Q for Capitol Federal Financial and incorporated herein by reference
10.6						Description of Director Fee Arrangements, as filed on November 23, 2022 as Exhibit 10.6 to the Registrant's September 30, 2022 Form 10-K and incorporated herein by reference
10.7						Short-term Performance Plan, as amended, filed on May 8, 2020 as Exhibit 10.7 to the Registrant's March 31, 2020 Form 10-Q and incorporated herein by reference
10.8						Capitol Federal Financial, Inc. 2012 Equity Incentive Plan (the "Equity Incentive Plan") filed on December 22, 2011 as Appendix A to Capitol Federal Financial, Inc.'s Proxy Statement (File No. 001-34814) and incorporated herein by reference
10.9						Form of Incentive Stock Option Agreement under the Equity Incentive Plan filed on February 6, 2012 as Exhibit 10.12 to the Registrant's December 31, 2011 Form 10-Q and incorporated herein by reference
10.10						Form of Non-Qualified Stock Option Agreement under the Equity Incentive Plan filed on February 6, 2012 as Exhibit 10.13 to the Registrant's December 31, 2011 Form 10-Q and incorporated herein by reference
10.11						Form of Stock Appreciation Right Agreement under the Equity Incentive Plan filed on February 6, 2012 as Exhibit 10.14 to the Registrant's December 31, 2011 Form 10-Q and incorporated herein by reference
10.12						Form of Restricted Stock Agreement under the Equity Incentive Plan filed on February 6, 2012 as Exhibit 10.15 to the Registrant's December 31, 2011 Form 10-Q and incorporated herein by reference
31.1						Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 made by John B. Dicus, Chairman, President and Chief Executive Officer
31.2						Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 made by Kent G. Townsend, Executive Vice President, Chief Financial Officer and Treasurer
32						Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 made by John B. Dicus, Chairman, President and Chief Executive Officer, and Kent G. Townsend, Executive Vice President, Chief Financial Officer and Treasurer
101						The following information from the Company's Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2023, filed with the Securities and Exchange Commission on February 7, 2024, has been formatted in Inline eXtensible Business Reporting Language ("XBRL"): (i) Consolidated Balance Sheets at December 31, 2023 and September 30, 2023, (ii) Consolidated Statements of Income for the three months ended December 31, 2023 and 2022, (iii) Consolidated Statements of Comprehensive Income for the three months ended December 31, 2023 and 2022, (iv) Consolidated Statements of Stockholders' Equity for the three months ended December 31, 2023 and 2022, (v) Consolidated Statements of Cash Flows for the three months ended December 31, 2023 and 2022, and (vi) Notes to the Unaudited Consolidated Financial Statements.
104						Cover Page Interactive Data File, formatted in Inline XBRL and included in Exhibit 101

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


CAPITOL FEDERAL FINANCIAL, INC.



	Date: February 7, 2024	By:	/s/ John B. Dicus
			John B. Dicus, Chairman, President and Chief Executive Officer

	Date: February 7, 2024	By:	/s/ Kent G. Townsend
			Kent G. Townsend, Executive Vice President,
			Chief Financial Officer and Treasurer

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SEC Form 10-Q filed by Capitol Federal Financial Inc.

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