TOPEKA, Kan., May 5 /PRNewswire-FirstCall/ -- Capitol Federal Financial
(Nasdaq: CFFN) today announces results for the March 31, 2004 quarter.
Detailed results of the quarter are available on Form 10-Q which will be filed
today and on our web-site, www.capfed.com/html/relations.html . Points for
the quarter include:
-- net income of $9.6 million,
-- diluted earnings per share of $0.13 compared to $0.06 for the quarter
ended December 31, 2003,
-- efficiency ratio of 53.71%,
-- the Board of Directors declared a $0.50 per share dividend at its
meeting on April 27, 2004 to holders of record on May 7, 2004, payable
on May 21, 2004.
For the Quarter Ended March 31, 2004Capitol Federal Financial (the "Company") reported net income of
$9.6 million up $5.0 million from the quarter ended December 31, 2003, while
down from $12.4 million for the same period one year ago. The increase from
the quarter ended December 31, 2003 was primarily due to an increase in our
net interest margin of 37 basis points to 1.40%.
The average yield on our portfolio of loans for the three months ended
March 31, 2004 decreased 97 basis points from the same period one year ago.
The average yield on our mortgage-related securities for the current quarter
decreased 75 basis points from the same period one year ago. The low interest
rate environment experienced by all financial institutions during the past
several years has caused borrowers to take advantage of the low borrowing
rates. This resulted in a decrease in the yield we earn on our mortgage-
related portfolios as a result of reinvesting cash flows related to
refinancing activity into lower, current market rate loans and mortgage-
related securities. The average yield on our investments for the current
quarter increased 89 basis points from the same period one year ago.
The average cost of deposits for the three months ended March 31, 2004
decreased 86 basis points from the same period one year ago. The average cost
of FHLB advances for the three months ended March 31, 2004 decreased from one
year ago by 64 basis points due to interest rate swaps entered into as hedge
against some of our FHLB advances.
For the Six Months Ended March 31, 2004
The Company reported net income of $14.2 million, down from $41.5 million
for the same period one year ago. The decrease was primarily due to the
decrease in our net interest margin of 51 basis points, no gain on sale of
single family loans during the current year compared to the prior year, and an
increase in other expense primarily due to compensation expense related to
stock based compensation plans and amortization and impairment charges on
mortgage servicing rights.
The average yield on our portfolio of loans for the six months ended March
31, 2004 decreased 116 basis points from the same period one year ago. The
average yield on our mortgage-related securities for the six months ended
March 31, 2004 decreased 121 basis points from the same period one year ago.
The average yield on our investments for the six months ended March 31, 2004
decreased 10 basis points from the same period one year ago.
The average cost of deposits for the six months ended March 31, 2004
decreased 88 basis points from the same period one year ago. The average cost
of FHLB advances for the six months ended March 31, 2004 decreased from one
year ago by 37 basis points as a result of interest rate swaps against certain
FHLB advances.
Financial Condition as of March 31, 2004
Total assets decreased $116.4 million from September 30, 2003. Our
portfolio of loans increased $60.0 million since September 30, 2003.
Originations and purchases of loans totaled $526.4 million for the six months
ended March 31, 2004, down from $895.6 million for the same period one year
ago. Loan modifications for the first six months of fiscal year 2004 totaled
$147.0 million, down from $1.11 billion one year ago. The portfolio of
mortgage-related securities increased $46.1 million since September 30, 2003.
Purchases of mortgage-related securities totaled $594.1 million since
September 30, 2003, compared to $1.83 billion for the same period one year
ago. Investment securities decreased $283.6 million from September 30, 2003.
Our balance of non-performing assets remained low, with non-performing assets
representing 0.14% of total assets, down 1 basis point from September 30,
2003.
The balance of deposits decreased $93.0 million from September 30, 2003.
The decrease in deposits occurred in our portfolio of certificates of deposit,
a decrease of $133.2 million, while all other deposit categories increased in
balance. The Company issued $53.6 million in trust preferred securities
during the quarter ended March 31, 2004. The primary reason for issuing these
securities was to provide long-term support for general corporate purposes and
capital management strategies, which may include the payment of future
dividends.
Stockholders' equity decreased $5.0 million to $971.4 million at March 31,
2004, down from $976.4 million at September 30, 2003.
Management's Discussion of Dividends
Because the Company has a relatively unique corporate structure, the
reporting of certain information under generally accepted accounting
principles in the United States of America ("GAAP") is not necessarily
reflective of the process considered by the Board in connection with its
dividend policy. For the quarter ended March 31, 2004, basic earnings per
share were $0.14 and diluted earnings per share were $0.13. The Company
accounts for the shares held by its Employee Stock Option Plan ("ESOP") in
accordance with SOP 93-6 and the shares granted but not vested under its
Recognition and Retention Plan ("RRP") in a manner similar to the ESOP shares.
Shares held by the ESOP and granted under the RRP, but not vested, are not
considered in the basic average shares outstanding until the shares are
committed for allocation or vested to an employee's individual account. The
following is a reconciliation of the denominators of the basic and diluted
earnings per share calculations.
Three Months Ended Six Months Ended
March 31, March 31,
2004 2003 2004 2003
Net Income
(in thousands) $9,610 $12,378 $14,228 $41,544
Average common shares
outstanding 71,265,583 70,383,007 71,173,534 70,484,306
Average committed
ESOP shares
outstanding 50,964 50,970 25,618 25,482
Total basic average
common shares
Outstanding 71,316,547 70,433,977 71,199,152 70,509,788
Effect of dilutive
RRP shares 244,369 417,959 235,161 398,585
Effect of dilutive
stock options 1,212,387 1,468,091 1,275,911 1,442,955
Total diluted
average common
shares
Outstanding 72,773,303 72,320,027 72,710,224 72,351,328
Net earnings per
share
Basic $0.14 $0.18 $0.20 $0.59
Diluted $0.13 $0.17 $0.19 $0.57
The earnings per share amounts in the above table are presented in
accordance with GAAP. Included in the GAAP earnings per share calculations
are the average shares held by the Company's majority shareholder, Capitol
Federal Savings Bank MHC ("MHC"). MHC has waived its right to receive
dividends from the Company since its formation and intends to continue to do
so.
The inclusion of shares held by MHC understates earnings available to
public shareholders of CFFN stock. The following table is presented to
provide a better understanding of the information the Board of Directors
reviews when considering the amount of dividends to declare. The table
presents basic and diluted earnings per share, excluding shares held by MHC
from the earnings per share calculation. The following information is not
presented in accordance with GAAP.
Three Months Ended Six Months Ended
March 31, March 31,
2004 2003 2004 2003
Net Income
(in thousands) $ 9,610 $12,378 $14,228 $41,544
Basic average common
shares outstanding 71,316,547 70,433,977 71,199,152 70,509,788
Average shares held
by MHC (52,192,817)(52,192,817) (52,192,817) (52,192,817)
Total adjusted basic
average shares held
by public
shareholders 19,123,730 18,241,160 19,006,335 18,316,971
Effect of dilutive
RRP shares 244,369 417,959 235,161 398,585
Effect of dilutive
stock options 1,212,387 1,468,091 1,275,911 1,442,955
Total adjusted diluted
average shares held
by public
shareholders 20,580,486 20,127,210 20,517,407 20,158,511
Net earnings per
public share
Basic $0.50 $0.68 $0.75 $2.27
Diluted $0.47 $0.61 $0.69 $2.06
The following table shows the number of shares eligible for dividends
because of the waiver of dividends by MHC at March 31, 2004:
Total voting shares outstanding at September 30, 2003 73,309,059
RRP grants (net of forfeitures) 5,000
Options exercised 377,808
Total voting shares outstanding at March 31, 2004 73,691,867
Unallocated shares in ESOP (2,016,384)
Shares held by MHC (52,192,817)
Total shares eligible for dividends at March 31, 2004 19,482,666
Capitol Federal Financial is the holding company for Capitol Federal
Savings Bank. Capitol Federal Savings Bank has 35 branch locations in Kansas,
7 of which are in-store branches. Capitol Federal Savings Bank employs 708
full time equivalents in the operation of its business and is the leading
residential lender in the State of Kansas.
Except for the historical information contained in this press release, the
matters discussed may be deemed to be forward-looking statements, within the
meaning of the Private Securities Litigation Reform Act of 1995, that involve
risks and uncertainties, including changes in economic conditions in the
Company's market area, changes in policies by regulatory agencies,
fluctuations in interest rates, demand for loans in the Company's market area,
competition, and other risks detailed from time to time in the Company's SEC
reports. Actual strategies and results in future periods may differ
materially from those currently expected. These forward-looking statements
represent the Company's judgment as of the date of this release. The Company
disclaims, however, any intent or obligation to update these forward-looking
statements.
SOURCE Capitol Federal Financial
-0- 05/05/2004
/CONTACT: Jim Wempe, Vice President, Investor Relations, +1-785-270-6055,
jwempe@capfed.com , or Kent Townsend, Senior Vice President, Controller,
+1-785-231-6360, ktownsend@capfed.com , both of Capitol Federal Financial/
/Web site: http://www.capfed.com /
(CFFN)
CO: Capitol Federal Financial
ST: Kansas, Missouri
IN: FIN
SU: ERN
AB-JS
-- CGW035 --
5888 05/05/200412:05 EDThttp://www.prnewswire.com