Capitol Federal Financial, Inc.CFFN
Capitol Federal Financial, Inc. Debt Disclosure
DEPOSITS AND BORROWED FUNDS
Deposits - Non-interest-bearing deposits totaled $601.4 million and $549.6 million as of September 30, 2025 and 2024, respectively. Certificates of deposit with a minimum denomination of $250 thousand were $584.1 million and $516.3 million as of September 30, 2025 and 2024, respectively. Deposits in excess of $250 thousand may not be fully insured by the Federal Deposit Insurance Corporation.
Borrowings - Borrowings at September 30, 2025 consisted of $1.95 billion in FHLB advances, of which $1.85 billion were fixed-rate advances and $100.0 million were variable-rate advances, and $1.1 million in finance leases. Borrowings at September 30, 2024 consisted of $2.18 billion in FHLB advances, of which $1.98 billion were fixed-rate advances and $200.0 million were variable-rate advances, and $1.1 million in finance leases. There were no borrowings against the variable-rate FHLB line of credit at September 30, 2025 or 2024. Additionally, the Bank is authorized to borrow from the FRB of Kansas City's "discount window," but there were no such borrowings at September 30, 2025 or 2024. The Bank is a member of the American Finance Exchanges ("AFX") through which it may borrow funds on an overnight or short-term basis with other member institutions. The availability of funds changes daily. At September 30, 2025 and 2024, the Bank did not have any such borrowings outstanding through the AFX.
FHLB advances at September 30, 2025 and 2024 were comprised of the following:
| 2025 | 2024 | ||||||||||
| (Dollars in thousands) | |||||||||||
| FHLB advances | $ | 1,950,984 | $ | 2,180,656 | |||||||
| Deferred prepayment penalty - FHLB advances | (1,277) | (2,173) | |||||||||
| $ | 1,949,707 | $ | 2,178,483 | ||||||||
| Weighted average contractual interest rate on FHLB advances | 3.53 | % | 3.41 | % | |||||||
Weighted average effective interest rate on FHLB advances(1) | 3.54 | 3.29 | |||||||||
(1)The effective interest rate includes the net impact of deferred amounts and interest rate swaps related to the adjustable-rate FHLB advances.
FHLB borrowings are secured by certain qualifying loans pursuant to a blanket collateral agreement with FHLB and certain securities, when necessary. Per FHLB's lending guidelines, total FHLB borrowings cannot exceed 40% of a borrowing institution's regulatory total assets without the pre-approval of FHLB senior management. The Bank's borrowing limit approved by FHLB senior management was 45% as of September 30, 2025, and became 44% starting November 1, 2025. The borrowing limit as of November 1, 2025 was calculated based on a FHLB collateral analysis that is part of FHLB's overall borrowing capacity framework. At September 30, 2025, the ratio of the par value of the Bank's FHLB borrowings to the Bank's Call Report total assets was 20%.
At September 30, 2025 and 2024, the Bank had entered into interest rate swap agreements with a total notional amount of $100.0 million and $200.0 million, respectively, in order to hedge the variable cash flows associated with $100.0 million and $200.0 million, respectively, of adjustable-rate FHLB advances. At September 30, 2025 and 2024, the interest rate swap agreements had an average remaining term to maturity of 2.7 years and 2.3 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 September 30, 2025 and September 30, 2024, the interest rate swaps were in a gain position with a total fair value of $926 thousand and $2.1 million, respectively, which was reported in on the consolidated balance sheet. During fiscal year 2025 and 2024, $2.3 million and $6.1 million, respectively, was reclassified from AOCI as a decrease to interest expense. At September 30, 2025, the Company estimated that $641 thousand 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 $920 thousand at September 30, 2025 and $2.1 million at September 30, 2024.
During the year ended September 30, 2025, the Bank prepaid fixed-rate FHLB advances totaling $200.0 million with a weighted average contractual interest rate of 4.70% and a weighted average remaining term of 0.6 years, and replaced these advances with fixed-rate FHLB advances totaling $200.0 million with a weighted average contractual interest rate of 3.83% and a weighted average term of 2.5 years. The Bank paid penalties of $547 thousand to FHLB as a result of prepaying these advances. The prepayment penalties are being recognized in interest expense over the life of the new FHLB advances. The weighted average effective interest rate of the new advances was 3.93%.
In October 2025, the Bank refinanced a $50.0 million fixed-rate advance with a weighted average effective rate of 4.03% and a weighted average life ("WAL") of 0.5 years, and replaced it with a $50.0 million fixed-rate advance with a weighted average effective rate of 3.64% and a WAL of 2.0 years. This transaction resulted in prepayment fees of $11 thousand which will be recognized in interest expense over the life of the new FHLB advance.
Periodically, management has utilized a leverage strategy to increase earnings which entails entering into short-term FHLB borrowings and depositing the proceeds from these FHLB borrowings, net of the cost to purchase FHLB stock to meet FHLB stock holding requirements, at the FRB of Kansas City ("leverage strategy"). The leverage strategy is not a core operating business for the Company. It provides the Company the ability to utilize excess capital to generate earnings. Additionally, it is a strategy that can be exited quickly without additional costs. Leverage strategy borrowings are repaid prior to each quarter end. The leverage strategy was not in place during the current fiscal year or prior fiscal year due to the strategy being unprofitable, but it was in place at points during the fiscal year 2023. 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.
Scheduled Repayment of Borrowed Funds and Maturity of Certificates of Deposit - The following table presents the scheduled repayment of term borrowings, at par, and the maturity of certificates of deposit as of September 30, 2025, by fiscal year. With the exception of amortizing FHLB advances, FHLB advances are payable at maturity. Amortizing FHLB advances are presented based on their maturity dates versus their quarterly scheduled repayment dates. At September 30, 2025, the Bank's FHLB advances had maturities ranging from October 2025 to October 2029.
| Certificates | |||||||||||
| of Deposit | |||||||||||
| Borrowings | Amount | ||||||||||
| (Dollars in thousands) | |||||||||||
| 2026 | $ | 425,000 | $ | 2,169,268 | |||||||
| 2027 | 742,500 | 671,257 | |||||||||
| 2028 | 565,984 | 129,097 | |||||||||
| 2029 | 132,500 | 31,939 | |||||||||
| 2030 | 85,000 | 10,856 | |||||||||
| Thereafter | — | 263 | |||||||||
| $ | 1,950,984 | $ | 3,012,680 | ||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 26, 2025 | Showing above |
| 2024 | Nov 27, 2024 | |
| 2023 | Nov 29, 2023 | |
| 2022 | Nov 23, 2022 | |
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.