Executive Summary

Q4 FY2025 EPS was $0.14, matching consensus, with “Revenue” (SPGI definition) modestly above expectations; net income was $18.8M, and net interest margin expanded 11 bps q/q to 2.09% as the loan mix tilted further toward higher-yielding commercial assets .
Balance sheet momentum continued: deposits +$160.3M q/q and +$461.5M y/y (helped by high-yield savings), borrowings -$120.8M q/q, and commercial loans reached 26% of total loans vs 19% a year ago .
Management guided FY2026 non-interest expense up ~7% (salaries +9%, IT +15%), expects lower deposit interest expense if FRB cuts materialize, stable-to-higher loan yields from continued remix, and likely asset growth past $10B in coming fiscal years .
Capital returns: dividend maintained at $0.085/quarter and resumed buybacks (618k shares in Q4; $71.1M authorization remaining; FRB non‑objection through Feb 2026), potential support for the stock pending operating execution and rate path .

What Went Well and What Went Wrong

What Went Well
- Margin and efficiency improved: NIM rose to 2.09% (+11 bps q/q) and efficiency ratio improved to 56.84% on higher net interest income .
- Commercial banking build-out delivered: FY2025 commercial loan originations closed at $901.9M (vs $350.6M prior year), with the portfolio now 26% of total loans; CEO highlighted “a more diversified balance sheet, expanded income streams, and diligent credit risk management” .
- Funding mix improved: deposits +$160.3M q/q (high-yield savings +$364.5M y/y), borrowings down, and estimated liquidity of $2.92B at 9/30/25 .
What Went Wrong
- Credit metrics normalized higher from very low levels: nonaccrual loans rose to 0.59% of loans (from 0.13% y/y) and NPAs to 0.49% of assets, largely tied to hotel participation loans moved to substandard/nonaccrual (though with ~45% combined LTV) .
- Expense pressure: non-interest expense increased q/q with higher salaries, regulatory/outside services, and advertising, nudging the operating expense ratio up to 1.27% (from 1.23% in Q3) .
- Provision turned positive: a $0.5M provision in Q4 (vs a release in Q3) as the ACL rose with commercial growth, partly offset by a release on off‑balance‑sheet exposures .

Financial Results

Actuals vs estimates (SPGI consensus) and trend

Metric	Q4 2024	Q2 2025	Q3 2025	Q4 2025
EPS (Actual)	$0.09	$0.12	$0.14	$0.14
EPS (Consensus Mean)*	$0.08	$0.11	$0.12	$0.14
Revenue (Actual, $M)*	$46.25	$48.79	$51.20	$54.06
Revenue (Consensus Mean, $M)*	$45.85	$47.81	$50.51	$53.24

Values with asterisks (*) retrieved from S&P Global.

Quarterly bank P&L/KPIs

Metric	Q4 2024	Q2 2025	Q3 2025	Q4 2025
Net Income ($M)	$12.06	$15.40	$18.38	$18.81
Net Interest Income ($M)	$40.82	$43.84	$45.46	$48.78
Non‑interest Income ($M)	$4.79	$4.95	$5.29	$5.79
Provision for Credit Losses ($M)	($0.64)	$0.00	($0.45)	$0.52
Net Interest Margin (%)	1.80	1.92	1.98	2.09
Efficiency Ratio (%)	59.29	60.54	58.26	56.84
Operating Expense Ratio (%)	1.13	1.23	1.23	1.27

Balance sheet and credit

Metric	Q4 2024	Q3 2025	Q4 2025
Total Assets ($B)	$9.53	$9.69	$9.78
Deposits ($B)	$6.13	$6.43	$6.59
Borrowings ($B)	$2.18	$2.07	$1.95
Commercial Loans (% of loans)	19.0%	23.8%	26.0%
Nonaccrual Loans (% of loans)	0.13%	0.60%	0.59%
NPAs (% of assets)	0.11%	0.50%	0.49%
ACL / Loans (%)	0.29%	0.28%	0.30%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Non-interest expense growth	FY2026	None specified	~+7% y/y (Salaries +9%; IT +15%)	New detail; upward
Net interest margin drivers	FY2026	“NIM to continue to improve” (FY2025 outlook)	Expect lower deposit interest expense if FRB cuts; loan yields stable-to-higher from remix	Updated directional
Effective tax rate	FY2026	FY2025: 19%–20%	19%–20%	Maintained (new year)
Asset size trajectory	Multi‑year	N/A	Likely to surpass $10B in coming fiscal years	New directional
Dividend policy	FY2026	Intend $0.085/quarter ($0.34/year) in FY2025	Intend $0.085/quarter in FY2026	Maintained
Holding company dividends from bank	FY2026	Avoid FY2025 due to tax recapture	Anticipate earnings distributions in FY2026 now that E&P positive	Improved capacity

Earnings Call Themes & Trends

Note: No Q4 FY2025 earnings call transcript was available; the company posted an earnings release without a transcript on its IR events page. Analysis below reflects themes from Q2–Q4 company materials.

Topic	Previous Mentions (Q2 & Q3 FY2025)	Current Period (Q4 FY2025)	Trend
Commercial lending growth/mix	Ongoing remix from 1–4 family to commercial; strong originations, price/profitability tools; commercial loans 23.8% at 6/30/25	Commercial loans 26% at 9/30/25; $901.9M originations FY25	Accelerating
Treasury mgmt & small business	New TM products; SMB digital onboarding planned	TM team and BDOs growing deposits; more products slated (lockbox, cards) in CY2026	Building
Digital banking	New onboarding (Nov 2024) and card wallet enhancements slated	Continued platform integration; consumer/small business/commercial enhancements	Ongoing
Private banking/wealth	Hiring underway post Q3 to launch offering	Private banking experts added; first clients expected in Q1 FY2026	Launching
Funding/cost of deposits	Emphasis on high‑yield savings; deposit mix management	Expect FRB cuts to reduce deposit costs; HY savings APY 4.00% at 9/30/25	Potential tailwind
Credit quality focus	Very low charge‑offs; heightened CRE monitoring	Nonaccrual uptick (hotel participations), but low LTVs/recourse; ACL calibrated	Mixed: risk pockets but mitigants
Capital management	Dividend continuity; buybacks limited by holdco cash	Resumed buybacks; $71.1M authorization remaining; intent to keep dividend	More active

Management Commentary

“We are delivering value to stockholders through a more diversified balance sheet, expanded income streams, and diligent credit risk management.” — John B. Dicus, Chairman & CEO .
“We are focused and committed to prudently growing our commercial banking operations as we transform our business to provide a full‑service community oriented commercial bank for our customers.” .
FY2026 operating outlook highlights include salary and benefits +~9%, IT +~15%, non‑interest expense +~7%, with lower deposit costs expected if the FRB continues to reduce rates and loan yields stable to improving from ongoing remix; likely to surpass $10B in assets in coming fiscal years .

Q&A Highlights

No Q4 FY2025 earnings call transcript was posted; the company provided an earnings release without a published call or transcript on its IR site.

Estimates Context

Q4 FY2025: EPS $0.14 met consensus; “Revenue” $54.06M* vs $53.24M* estimate. Q3 FY2025: EPS beat ($0.14 vs $0.12*); “Revenue” $51.20M* vs $50.51M* estimate. Q2 FY2025: EPS beat ($0.12 vs $0.11*); “Revenue” $48.79M* vs $47.81M* estimate. Q4 FY2024: EPS beat ($0.09 vs $0.08*); “Revenue” $46.25M* vs $45.85M* estimate. Values with asterisks (*) retrieved from S&P Global.

Key Takeaways for Investors

Margin uptrend intact: NIM rose to 2.09% (+29 bps vs Q4’24) on mix shift toward commercial lending; efficiency improved to 56.84% .
Funding tailwinds possible: management expects FRB rate cuts to lower deposit costs; deposits grew +$461.5M y/y with high‑yield savings +$364.5M y/y .
Commercial scale/profitability: commercial loans at 26% of total up from 19% y/y, with pricing/profitability tools and TM/SMB deposit franchises maturing into 2026 .
Credit watch items contained by structure: nonaccruals rose to 0.59% of loans, concentrated in hotel participations; low LTVs (≈45%–50%) and recourse provide downside protection; ACL/loans at 0.30% .
Capital returns re-engaging: $0.085 quarterly dividend maintained and buybacks resumed (618k shares; $71.1M authorization remaining; FRB non‑objection through Feb 2026) .
2026 opex step-up is a watchpoint: guided ~+7% non‑interest expense (IT +15%) to fund growth; execution and revenue scaling should offset to protect efficiency .
Milestone ahead: likely to surpass $10B in assets in coming fiscal years—monitor regulatory threshold implications and operating leverage from scale .

Appendices

Selected operating details

High‑yield savings APY: 4.00% at 9/30/25 .
Ending balances at 9/30/25: assets $9.78B, deposits $6.59B, borrowings $1.95B, equity $1.05B .
Q4 FY2025 net interest income $48.78M; non‑interest income $5.79M; provision $0.52M .
Dividend declaration (10/28/25): $0.085 per share, payable 11/21/25 .

Footnote: Values with asterisks (*) retrieved from S&P Global.

Capitol Federal Financial, Inc. (CFFN)·Q4 2025 Earnings Summary