TOPEKA, Kan., Aug. 4 /PRNewswire-FirstCall/ -- Capitol Federal Financial
(Nasdaq: CFFN) today announced results for the June 30, 2004 quarter.
Detailed results of the quarter are available on Form 10-Q which will be filed
today and on our web-site, http://www.capfed.com/html/relations.html . Points
for the quarter include:
-- net income of $9.5 million, up from $7.5 million one year ago,
-- diluted earnings per share of $0.13,
-- efficiency ratio of 52.93%,
-- the Board of Directors declared a $0.50 per share dividend at its
meeting on July 27, 2004 to holders of record on August 6, 2004,
payable on August 20, 2004.
For the Quarter Ended June 30, 2004Capitol Federal Financial (the "Company") reported net income of
$9.5 million, up from $7.5 million for the same period one year ago. The
increase in net income was primarily due to an increase in the net interest
margin of 17 basis points between periods.
The increase in the net interest margin was due to a decrease in the cost
of our interest-bearing liabilities compared to the same period one year ago.
The average cost of deposits for the three months ended June 30, 2004
decreased 58 basis points from the same period one year ago. The average cost
of FHLB advances for the three months ended June 30, 2004 decreased from one
year ago by 65 basis points due to interest rate swaps entered into as a hedge
against some of our FHLB advances.
The decrease in the cost of our interest-bearing liabilities was partially
offset by an overall decrease in the yield on our interest-earning assets of
34 basis points compared to the same period one year ago. The average yield
on our portfolio of loans for the three months ended June 30, 2004 decreased
76 basis points from the same period one year ago. The average yield on our
mortgage-related securities for the current quarter decreased 25 basis points
from the same period one year ago. The average yield on our investments for
the current quarter increased 127 basis points from the same period one year
ago.
For the Nine Months Ended June 30, 2004
The Company reported net income of $23.7 million, down from $49.1 million
for the same period one year ago. The decrease was primarily due to the
decrease in our net interest margin of 29 basis points and Capitol Federal
Savings Bank (the "Bank") not selling mortgage loans during the current nine
month period.
The decrease in the net interest margin was due to an overall decrease in
the yield of our interest-earning assets of 80 basis points compared to the
same period one year ago. The average yield on our portfolio of loans for the
nine months ended June 30, 2004 decreased 103 basis points from the same
period one year ago. The average yield on our mortgage-related securities for
the nine months ended June 30, 2004 decreased 90 basis points from the same
period one year ago. The average yield on our investments for the nine months
ended June 30, 2004 increased 32 basis points from the same period one year
ago.
The decrease in the yield on our interest-earning assets was partially
offset by a decrease in the cost of our interest-bearing liabilities of 61
basis points compared to the same period one year ago. The average cost of
deposits for the nine months ended June 30, 2004 decreased 78 basis points
from the same period one year ago. The average cost of FHLB advances for the
nine months ended June 30, 2004 decreased from one year ago by 46 basis points
as a result of interest rate swaps against certain FHLB advances.
Financial Condition as of June 30, 2004
Total assets decreased $135.5 million from September 30, 2003. Our
portfolio of loans increased $229.3 million since September 30, 2003.
Originations and purchases of loans totaled $993.8 million for the nine months
ended June 30, 2004, down from $1.32 billion for the same period one year ago.
Loan modifications for the first nine months of fiscal year 2004 totaled
$218.9 million, down from $1.56 billion one year ago. The portfolio of
mortgage-related securities decreased $53.6 million since September 30, 2003.
Purchases of mortgage-related securities totaled $885.2 million since
September 30, 2003, compared to $2.47 billion for the same period one year
ago. Investment securities decreased $359.1 million from September 30, 2003.
Our balance of non-performing assets remained low, with non-performing assets
representing 0.15% of total assets, unchanged from September 30, 2003.
The balance of deposits decreased $63.8 million from September 30, 2003.
The decrease in deposits occurred in our portfolio of certificates of deposit,
a decrease of $97.4 million, while all other deposit categories increased.
The Company issued $53.6 million in trust preferred securities during the
quarter ended March 31, 2004.
Stockholders' equity decreased $12.5 million from September 30, 2003 to
$964.0 million at June 30, 2004.
Subsequent Event
On July 21, 2004, the Bank refinanced $2.40 billion of its fixed-rate FHLB
advances. The refinanced FHLB advances were not hedged by the Bank. The
refinanced FHLB advances had a weighted average cost of 6.13% and were
scheduled to mature between May 2009 and September 2010. The Bank incurred a
prepayment penalty of $236.1 million, pre-tax. The Bank entered into
$2.65 billion of new fixed-rate, fixed-term FHLB advances that have no
conversion features. The increase in the amount of advances was primarily to
pay for the prepayment penalty associated with the refinancing.
The new FHLB advances have an average cost of 3.78% which reduces the cost
of FHLB advances that are not hedged by 2.35% until the FHLB advances
scheduled to mature in fiscal year 2005 reprice. The change in the term
structure of the FHLB advances has the effect of shortening the average
maturity of the refinanced FHLB advances to a weighted average life of 43
months from 67 months. The effective tax rate for the nine months ended June
30, 2004 was 40.4%. After recording the $236.1 million prepayment cost
associated with the refinancing, the composite effective tax rate for fiscal
year 2004 is estimated to be a benefit of 37.1%.
The Bank's regulatory core and tier one capital ratios were 8.5% after the
transaction, which continues to be above the levels required by the Office of
Thrift Supervision ("OTS") to be classified as a well capitalized institution.
This transaction will not affect the Company's current dividend policy.
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 June 30, 2004, basic 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 Nine Months Ended
June 30, June 30,
2004 2003 2004 2003
Net Income $9,485 $7,527 $23,713 $49,071
Average common shares
outstanding 71,781,258 70,696,870 71,375,369 70,555,161
Average committed
ESOP shares
outstanding 101,374 101,374 50,778 50,779
Total basic average
common shares
outstanding 71,882,632 70,798,244 71,426,147 70,605,940
Effect of dilutive
RRP shares 49,383 229,660 173,013 342,901
Effect of dilutive
stock options 886,211 1,366,467 1,144,746 1,419,175
Total diluted average
common shares
outstanding 72,818,226 72,394,371 72,743,906 72,368,016
Net earnings per share
Basic $0.13 $0.11 $0.33 $0.70
Diluted $0.13 $0.11 $0.32 $0.68
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 generally 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 Nine Months Ended
June 30, June 30,
2004 2003 2004 2003
Net Income $9,485 $7,527 $23,713 $49,071
Basic average
common shares
outstanding 71,882,632 70,798,244 71,426,147 70,605,940
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 19,689,815 18,605,427 19,233,330 18,413,123
Effect of dilutive
RRP shares 49,383 229,660 173,013 342,901
Effect of dilutive
stock options 886,211 1,366,467 1,144,746 1,419,175
Total adjusted diluted
average shares held
by public
shareholders 20,625,409 20,201,554 20,551,089 20,175,199
Net earnings per share,
available to public
shareholders
Basic $0.48 $0.40 $1.23 $2.67
Diluted $0.46 $0.37 $1.15 $2.43
The following table shows the number of shares eligible to receive
dividends because of the waiver of dividends by MHC at June 30, 2004:
Total voting shares outstanding at
September 30, 2003 73,309,059
Net RRP grants (net of forfeitures) 5,000
Options exercised, net 655,642
Total voting shares outstanding at
June 30, 2004 73,969,701
Unallocated shares in ESOP (2,016,384)
Shares held by MHC (52,192,817)
Total shares eligible to receive dividends at
June 30, 2004 19,760,500
Capitol Federal Financial is the holding company for Capitol Federal
Savings Bank. Capitol Federal Savings Bank has 36 branch locations in Kansas,
8 of which are in-store branches. Capitol Federal Savings Bank employs 694
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- 08/04/2004
/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.comhttp://www.capfed.com/html/relations.html /
(CFFN)
CO: Capitol Federal Financial
ST: Kansas
IN: FIN
SU: ERN
JK-AB
-- CGW027 --
3586 08/04/200409:29 EDThttp://www.prnewswire.com