Capitol Federal Financial Inc

Previous wording

The Bank had $99.2 million in pre-1988 bad debt reserves in accumulated deficit at March 31, 2024, which equates to an unrecorded deferred tax liability of $24.3 million. The Bank is anticipated to have a net loss for tax purposes in the current year due to the sale of securities in October 2023 associated with the securities strategy and will therefore have a negative accumulated earnings and profits for fiscal year 2024. As a result of the negative accumulated earnings and profits, any capital distributions from the Bank to the holding company during fiscal year 2024 would be deemed to be drawn out of the Bank's pre-1988 bad debt reserves and will result in the recognition of income tax expense at the then-current rate by the Bank. This additional tax expense will reduce the amount of earnings that will be available to be distributed to the holding company during the current fiscal year, at a minimum. Management is researching and analyzing the Bank's tax issues associated with the pre-1988 bad debt recapture. Management is also evaluating the timing of capital distributions from the Bank to the holding company during the current fiscal year. See additional discussion regarding the Bank's pre-1988 bad debt recapture in "Comparison of Operating Results for the Three Months Ended March 31, 2024 and December 31, 2023" and "Item 1. Financial Statements - Note 6. Income Taxes".

Current wording

The Bank had $85.5 million in pre-1988 bad debt reserves at June 30, 2024, which equates to an unrecorded deferred tax liability of $18.0 million. The Bank is anticipated to have a net loss for tax purposes in the current year due to the sale of securities in October 2023 associated with the securities strategy and will therefore have a negative accumulated earnings and profits for fiscal year 2024. As a result of the negative accumulated earnings and profits, any capital distributions from the Bank to the holding company during fiscal year 2024 would be deemed to be drawn out of the Bank's pre-1988 bad debt reserves and will result in the recognition of income tax expense at the then-current rate by the Bank. This additional tax expense will reduce the amount of earnings that will be available to be distributed to the holding company during the current fiscal year, at a minimum.

Previous wording

The following table summarizes our stock repurchase activity during the three months ended March 31, 2024 and additional information regarding our stock repurchase program. As of March 31, 2024, the Company had $2.0 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. In February 2024, the Company notified the FRB of its intent to authorize the repurchase of up to $75 million in additional common stock over a period of time, depending upon market conditions, cash balances at the Company level, and after the completion of the Company's existing share repurchase program. This plan has no expiration date; however, the FRB's new approval for the Company to repurchase shares expires in February 2025. Shares may be repurchased from time to time in the open market or in privately negotiated transactions based upon market conditions and available liquidity.

Current wording

The following table summarizes our stock repurchase activity during the three months ended June 30, 2024 and additional information regarding our stock repurchase program. As of June 30, 2024, the Company was authorized to repurchase up to $77.0 million of its common stock under existing stock repurchase plans. These plans have no expiration date; however, the FRB's existing approval for the Company to repurchase shares up to $2.0 million expires in August 2024 and $75.0 million expires in February 2025. Shares may be repurchased from time to time in the open market or in privately negotiated transactions based upon market conditions, available liquidity and other factors.