Executive Summary

Q1 FY2025 EPS was $0.12, a beat vs Wall Street consensus of $0.11; “net revenue” (net interest income after provision + non-interest income) was ~$46.2M vs ~$45.6M consensus; both modest beats were driven by NIM expansion and commercial loan growth .
Net interest margin expanded 6 bps sequentially to 1.86% on a continued loan mix shift toward higher-yielding commercial loans; net income rose 28% q/q to $15.4M as bad-debt recapture taxes seen in Q4 did not recur .
Deposits grew $76.1M q/q (to $6.21B) led by high-yield savings growth, while borrowings fell $15.8M; liquidity remained strong at an estimated $2.91B .
Management reiterated FY2025 priorities: no Bank-to-HoldCo distributions to avoid pre‑1988 bad debt recapture taxes, intent to pay the $0.085 quarterly dividend ($0.34 for FY2025), and expected ~4% y/y increase in non-interest expense (OpEx) .

What Went Well and What Went Wrong

What Went Well

NIM widened to 1.86% (+6 bps q/q; +15 bps y/y), reflecting higher yields and mix shift to commercial; net income improved on lower tax burden vs Q4 (“no similar tax expense in the current quarter”) .
Deposit franchise proved resilient: total deposits +$76.1M q/q, with high‑yield savings at $171.7M (vs $96.2M in Q4) as targeted pricing drove inflows; borrowings declined .
Efficiency continued to improve: ratio fell to 57.86% from 59.29% q/q (and 92.86% a year ago, which included securities losses) .

Selected management quotes:

“It is the intention of management and the Board of Directors to not make distributions from the Bank to the Company during fiscal year 2025…” .
“Overall, management is expecting a 4.0% increase in non‑interest expenses for fiscal year 2025…” .
“Management has continued to focus on retaining and growing deposits through its high‑yield savings account…” .

What Went Wrong

Credit cost turned to a provision of $0.68M (from a $0.64M release in Q4), largely reflecting growth in commercial loans and related ACL build .
Deposit mix remains rate sensitive: CDs are 46.9% of deposits (4.15% avg rate), with ~$2.13B repricing over the next year; while rates edged down modestly q/q, repricing remains a headwind if cuts are slower than expected .
Watchlist migration in CRE: substandard CRE increased to $42.2M, including a $39.1M Texas hotel (47.5% LTV) not meeting DSCR covenant; mgmt expects stabilization as occupancy rises and rates fall on the adjustable loan .

Financial Results

Metric	Q1 FY2024	Q4 FY2024	Q1 FY2025
EPS ($)	$0.02	$0.09	$0.12
Net Income ($M)	$2.54	$12.06	$15.43
Net Interest Margin (%)	1.71	1.80	1.86
Net Interest Income ($M)	$39.59	$40.82	$42.23
Provision for Credit Losses ($M)	$0.12	$(0.64)	$0.68
Non‑interest Income ($M)	$(8.89)	$4.79	$4.69
Efficiency Ratio (%)	92.86	59.29	57.86
Net Revenue ($M, NII after provision + Non‑interest income)	$30.58	$46.25	$46.25

Notes: Net revenue is computed as net interest income after provision for credit losses + total non‑interest income, matching common “revenue” definitions for banks used by third‑party aggregators .

Consensus vs. Actual (Third‑party references)

Metric	Consensus	Actual	Surprise
EPS ($)	$0.11	$0.12	+$0.01
“Revenue” ($M, net of provision)	$45.61	$46.17	+$0.56

KPIs and Balance Sheet

KPI	Q1 FY2024	Q4 FY2024	Q1 FY2025
Deposits ($B)	$6.02	$6.13	$6.21
Borrowings ($B)	$2.88	$2.18	$2.16
Loans Receivable, Net ($B)	$7.95	$7.91	$7.95
Commercial Loans (Gross, $B)	$1.33	$1.51	$1.65
High‑Yield Savings Balance ($M)	$0.52	$96.2	$171.7
Nonaccrual Loans (% of total)	0.13%	0.13%	0.14%
ACL / Loans (%)	0.30%	0.29%	0.31%
Liquidity ($B, est.)	N/A	$2.93	$2.91

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Effective tax rate	FY2025	19%–20% (from Q4 FY2024 update)	Reiterated implied by no Bank→HoldCo distributions in FY2025	Maintained
OpEx growth	FY2025	N/A	~+4% y/y expected	New/Initiated
Dividend	FY2025	$0.085/qtr planned ($0.34/yr)	Intent to pay $0.085/qtr; $0.34/yr in FY2025	Maintained
Capital return (buybacks)	Near term	$75M authorized; FRB approval exp. Feb 2025	$75M authorized; extension in process	Maintained/pending
Balance sheet mix	FY2025	Shift to commercial	Continued commercial growth expected (not at recent pace); 1‑4 family portfolio to decline	Maintained directional

Earnings Call Themes & Trends

No earnings call transcript was available; themes reflect press release commentary and prior quarter releases.

Topic	Q3 FY2024 (Q-2)	Q4 FY2024 (Q-1)	Q1 FY2025 (Current)	Trend
Loan mix shift	Commercial growth +$115M; 1–4 family declining	Continued CRE/C&I growth; 1–4 family declining	+$137.5M commercial q/q; 1–4 family down; growth to continue but slower	Positive shift to higher yield
NIM trajectory	1.77% (–5 bps q/q)	1.80% (+3 bps q/q)	1.86% (+6 bps q/q)	Improving
Deposits/pricing	Competitive CDs; new high‑yield savings $58M	CDs WAM ~10 months; HY savings $96.2M	Deposits +$76M; HY savings $171.7M	Stabilizing with tactical pricing
Taxes/bad debt recapture	Higher ETR (pre‑1988 recapture)	FY25 ETR 19–20% if no distributions	No distributions planned in FY25	Lower ETR path
Asset quality	Low NPLs; ACL up with mix	NPLs ~0.13%; ACL 0.29%	NPLs 0.14%; ACL 0.31%; one hotel substandard	Stable; monitor CRE
Liquidity	$3.0B available	$2.93B	$2.91B	Strong
Operating efficiency	62.07%	59.29%	57.86%	Improving

Management Commentary

Strategic focus: “It is the intention of management and the Board of Directors to not make distributions from the Bank to the Company during fiscal year 2025 to limit the tax associated with the pre‑1988 bad debt recapture.”
Expense outlook: “Overall, management is expecting a 4.0% increase in non‑interest expenses for fiscal year 2025 compared to fiscal year 2024.”
Loan growth: “Management does not expect that rate of commercial loan growth to continue, but does expect continued growth during the current fiscal year.”
Deposits: “Management has continued to focus on retaining and growing deposits through its high‑yield savings account… [balance] $171.7 million as of December 31, 2024.”
Liquidity and capital: “Management estimates that the Bank had $2.91 billion in additional liquidity available at December 31, 2024…” and plans to pay the regular $0.085 quarterly dividend in FY2025 .

Q&A Highlights

No earnings call transcript or Q&A was available for Q1 FY2025; no call details were found on the investor site or in filings [ListDocuments: 0 earnings-call-transcript] .

Estimates Context

S&P Global (Capital IQ) consensus data could not be retrieved due to API request limits; therefore, Wall Street comparisons are sourced from third‑party outlets. EPS consensus was $0.11 vs actual $0.12; “revenue” consensus ~$45.61M vs ~$46.17M actual (third‑party definitions generally treat bank “revenue” as net interest income after provision plus non‑interest income) .
Given the beat on EPS and net revenue, estimate revisions may bias modestly upward, particularly if NIM tailwinds from loan mix and deposit repricing persist; however, we lack S&P Global revision data to quantify changes.

Key Takeaways for Investors

Quality beat: EPS and “net revenue” both topped consensus; NIM inflected higher to 1.86% as commercial mix shift continues, supporting core earnings momentum .
Operating leverage improving: Efficiency ratio declined to 57.86% with scope for further gains if NIM expands and OpEx growth (~4% FY2025) is contained .
Deposit strategy working: Growth in high‑yield savings and stable total deposits reduce reliance on higher‑cost wholesale funding; monitor CD repricing cadence across $2.13B maturing over the next four quarters .
Tax overhang fading: No Bank→HoldCo distributions planned in FY2025 implies a lower ETR path (19–20% framework from Q4), removing a prior EPS drag .
Credit watchpoints: Overall asset quality remains strong at low NPL ratios, but the substandard Texas hotel exposure highlights pocket risk in CRE; current metrics (LTV/DSCR) provide cushion .
Capital returns: Regular dividend ($0.085/qtr) affirmed; buyback authorization remains ($75M) with FRB approval extension in process—deployment likely paced by earnings, liquidity, and regulatory/tax considerations .
Trading lens: Narrative skew is positive on NIM/efficiency and lower tax, tempered by CD repricing and selective CRE risk; watch forward NIM trajectory, deposit mix shifts, and any updates on buyback approval to gauge stock catalysts in coming weeks .

Sources: Q1 FY2025 8‑K press release and supplemental tables (Jan 29, 2025) ; Q4 FY2024 8‑K (Oct 23, 2024) for prior trends and guidance ; Q3 FY2024 8‑K (Jul 24, 2024) for prior trends . Consensus references: MarketBeat and Yahoo Finance .

Capitol Federal Financial, Inc. (CFFN)·Q1 2025 Earnings Summary