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CF

Capitol Federal Financial, Inc. (CFFN)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 FY25 delivered steady profitability: net income $15.4M, EPS $0.12, and net interest margin (NIM) up 6 bps to 1.92% versus Q1; efficiency ratio rose to 60.54% on higher non-interest expense .
  • Results beat S&P Global consensus modestly: EPS $0.12 vs $0.11* and revenue $48.79M vs $47.81M*; beats were driven by lower deposit costs and stable net interest income growth (vs Q1), partially offset by higher opex .
  • Management reiterated FY25 dividend intent at $0.34 per share ($0.085 quarterly) and expects NIM to continue to improve as deposit costs decline and loan yields rise .
  • Strategic repositioning continues: shift from one‑to‑four‑family to commercial loans, commercial commitments of $186.6M with ~$136.5M expected to fund in April; deposit growth led by high‑yield savings (+$112.4M QoQ) .
  • Asset quality remains solid: NPLs at 0.14% of loans; ACL-to-loans 0.30%; commercial CRE ACL ratio stays above peers, reflecting conservative stance .

What Went Well and What Went Wrong

What Went Well

  • NIM expanded to 1.92% (+6 bps QoQ) driven by lower deposit costs, particularly retail CDs, and higher average cash balances supporting near-term funding needs .
  • Deposit growth accelerated: total deposits +$166.4M QoQ (10.7% annualized), with high‑yield savings up $112.4M to $284.1M, supporting balance sheet funding flexibility .
  • Commercial pipeline robust: $186.6M in CRE/construct commitments (weighted avg rate 7.06%), with ~$234.9M expected funding in the June quarter and staged fundings through FY25–FY26 .

What Went Wrong

  • Efficiency ratio deteriorated to 60.54% (from 57.86%) as non‑interest expense rose (IT/software, regulatory/outside services, transaction costs, fraud losses, OREO costs) .
  • Loan portfolio shrank QoQ: net loans -$77.6M, with one‑to‑four‑family declining $96.0M as housing affordability and inventory headwinds persist; commercial growth (+$21.8M) didn’t fully offset .
  • Mixed revenue drivers within interest income: loan interest modestly lower as average balances fell; borrowings expense increased on higher rates, partially offsetting deposit expense declines .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
EPS (Basic/Diluted) ($)$0.09 $0.12 $0.12
Operating Revenue ($USD Millions)$46.25*$46.25*$48.79*
Net Interest Income ($USD Millions)$40.82 $42.23 $43.84
Non‑Interest Income ($USD Millions)$4.79 $4.69 $4.95
Net Interest Margin (%)1.80% 1.86% 1.92%
Efficiency Ratio (%)59.29% 57.86% 60.54%
Income Tax Expense ($USD Millions)$7.15 $3.85 $3.85

Note: Operating Revenue = Net Interest Income + Non‑Interest Income; Estimates entries marked with * are from S&P Global and include the SPGI disclaimer below.

YoY context (Q2 2024 → Q2 2025):

MetricQ2 2024Q2 2025
EPS ($)$0.11 $0.12
Operating Revenue ($USD Millions)$45.66*$48.79*
Net Interest Margin (%)1.82% 1.92%

Segment/mix indicators:

Portfolio Mix (% of Total Loans)Q4 2024Q2 2025
One‑to‑Four‑Family79.6% 77.5%
Commercial (CRE/C&I/Construction)19.0% 21.1%
Consumer1.4% 1.4%

KPIs:

KPIQ4 2024Q1 2025Q2 2025
ROAA (annualized)0.51% 0.65% 0.64%
ROAE (annualized)4.69% 5.98% 5.96%
Equity / Assets (%)10.8% 10.8% 10.7%
NPLs / Loans (%)0.12% 0.13% 0.14%
NPAs / Assets (%)0.11% 0.12% 0.11%
ACL / Loans (%)0.29% 0.31% 0.30%

SPGI disclaimer: Values marked with * are retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Margin trajectoryFY25Improving as leverage/securities strategy effects normalize (qualitative) “Anticipated to continue to improve” assuming decreasing deposit costs and increasing loan yields (qualitative) Maintained; directional improvement
Dividend per shareFY25Intend $0.34 ($0.085 quarterly) Intend $0.34 ($0.085 quarterly); April dividend declared $0.085 Maintained
Balance sheet fundingFY25Focus on shorter-term CDs/high-yield savings; staged borrowings management Continued focus on deposit retention/growth via high‑yield savings; blend‑and‑extend refinancing of $200M advances in April Operational updates (neutral)

Earnings Call Themes & Trends

Note: A Q2 FY25 earnings call transcript was not available in our document set or standard sources; themes below reflect press release commentary.

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Commercial mix shiftQ4: Commercial +$43.6M QoQ; one‑to‑four‑family down; pipeline strong . Q1: Commercial +$137.5M QoQ; correspondent channel suspended .Continued shift; one‑to‑four‑family -$96.0M; commercial +$21.8M; commitments $186.6M, ~$136.5M funding in April .Higher commercial mix; staged funding supports NIM.
Deposit strategy (high‑yield savings)Q4: HY savings $96.2M; competitive CD pricing; WAM ~10 months . Q1: HY savings $171.7M; deposit increase +$76.1M .HY savings $284.1M (+$112.4M QoQ); deposits +$166.4M QoQ (annualized 10.7%) .Strengthening retail funding; lowers beta over time.
NIM outlookQ4: NIM +34 bps YoY; leverage strategy no longer in place . Q1: NIM 1.86% (+6 bps QoQ) .NIM 1.92% (+6 bps QoQ); management expects continued improvement .Gradual improvement as deposit costs fall.
Tax/Regulatory itemsQ4: Pre‑1988 bad debt recapture impacted tax; plan to avoid FY25 distributions . Q1: Reiterated intent; lower ETR 19–20% expected .Continued FY25 intent; dividends paid from holdco cash; ETR ~20% in quarter .Stable; distribution strategy mitigating recapture.
Asset quality/ACLQ4: Very low delinquency/charge‑offs; ACL/loans 0.29% . Q1: ACL/loans 0.31%; CRE substandard includes $39M TX hotel (47.5% LTV) .ACL/loans 0.30%; CRE ACL ratios above peers; conservative stance continues .Stable; conservative reserves maintained.

Management Commentary

  • “For the remainder of fiscal year 2025, it is anticipated that the Bank's net interest margin will continue to improve, assuming the continuation of decreasing deposit costs and increasing yields on our loan portfolio.” (Q2 FY25 press release) .
  • “Deposits increased $166.4 million… due mainly to the Bank's high yield savings account offering, which increased $112.4 million during the quarter, to $284.1 million.” .
  • “It is the intention of the Company's Board of Directors to pay out the regular quarterly cash dividend of $0.085 per share, totaling $0.34 per share for the year.” .

Q&A Highlights

A full Q2 FY25 earnings call transcript was not available in our document corpus or typical public sources. Guidance clarifications reflected in the press release emphasize NIM trajectory, deposit strategy via high‑yield savings, and dividend policy continuity .

Estimates Context

ItemConsensusActualBeat/(Miss)
EPS (Q2 2025)$0.11*$0.12*+$0.01*
Revenue (Q2 2025, $USD Millions)$47.81*$48.79*+$0.98*

SPGI disclaimer: Values marked with * are retrieved from S&P Global.

Additional recent consensus/actuals:

  • Q1 2025 EPS $0.105* vs actual $0.12; revenue $46.17M* vs actual $46.25M* .
  • Q4 2024 EPS $0.08* vs actual $0.09; revenue $45.85M* vs actual $46.25M* .

Key Takeaways for Investors

  • NIM expansion is intact and should continue if deposit costs trend lower and commercial loan yields accrete; watch certificate repricing ladder and high‑yield savings growth as key drivers .
  • Funding mix tailwinds: robust deposit growth (HY savings) reduces reliance on wholesale funding and supports margin resilience amid staged CRE funding .
  • Operating discipline needed: rising non‑interest expense (IT/licensing, fraud losses, OREO costs) pressured efficiency; monitor opex trajectory into H2 FY25 .
  • Credit remains conservative with CRE ACL ratios above peers; stable NPLs and minimal net charge‑offs support balance sheet quality during mix shift .
  • Dividend visibility is strong (intent $0.34 FY25), funded by holdco cash while avoiding bank‑to‑holdco distributions and associated recapture tax through FY25 .
  • Near-term trading: modest beat on EPS/revenue and NIM improvement are supportive; watch April/June funding of CRE commitments and deposit cost trends as catalysts .
  • Medium-term thesis: continued pivot to commercial lending, deposit franchise strength, and margin normalization post-securities strategy set a path for gradual earnings improvement with disciplined credit posture .

Sources: Company 8‑K Q2 FY25 earnings press release and supplemental financials ; Q1 FY25 press release ; Q4 FY24 press release ; Dividend press release .

SPGI disclaimer: All consensus estimate and “actual” revenue/EPS values noted with * are retrieved from S&P Global.