TOPEKA, Kan., Aug. 4 /PRNewswire-FirstCall/ -- Capitol Federal Financial
(Nasdaq: CFFN) today announced results for the June 30, 2005 quarter.
Detailed results of the quarter are available on Form 10-Q which will be filed
today and posted on our web-site, http://www.capfed.com/html/relations.html .
Highlights for the quarter include:
-- net income of $16.2 million, up from $9.5 million one year ago,
-- diluted earnings per share of $0.22 and
-- efficiency ratio of 41.99%.
In addition, the Board of Directors ("Board") declared a $0.50 per share
dividend on July 26, 2005 to holders of record on August 5, 2005, payable on
August 19, 2005.
Results of Operations for the Quarter Ended June 30, 2005
Capitol Federal Financial (the "Company") reported net income of
$16.2 million, up from $9.5 million for the same period one year ago. The
increase in net income was due primarily to an increase in net interest and
dividend income of $11.6 million between the two quarters, offset by an
increase of $3.5 million in income tax expense.
The increase in net interest and dividend income compared to the same
quarter one year ago was partially due to the $8.5 million increase in
interest income on loans. The average balance of loans increased
$712.0 million, while the average yield decreased 11 basis points between the
two quarters. The increase in the average balance of loans was due primarily
to the purchase of mortgage loans. The decrease in the average yield was due
to the reduction in the average rate on mortgages held in the portfolio as a
result of loan modifications, refinances, purchases and originations of
mortgage loans at rates which are generally below the existing average loan
portfolio rate.
The $7.9 million decrease in interest expense on Federal Home Loan Bank
("FHLB") advances compared to the same quarter one year ago also contributed
to the increase in net interest and dividend income. The average rate on the
FHLB advances decreased 127 basis points compared to the prior year quarter
due primarily to refinancing certain FHLB advances in July 2004. The
refinancing of FHLB advances reduced the interest expense on the FHLB advances
by $11.9 million compared to the prior year quarter. The reduction in
interest expense was partially offset by a $3.9 million increase in interest
expense on the variable-rate portion of the interest rate swaps due to the
increase in the one month LIBOR rate between the two periods.
Results of Operations for the Nine Months Ended June 30, 2005
The Company recognized net income of $52.2 million compared to net income
of $23.7 million for the same period one year ago, an increase of
$28.5 million. The increase in net income was due primarily to an increase in
net interest and dividend income of $43.6 million between the two periods,
offset by an increase of $16.0 million in income tax expense.
The increase in net interest and dividend income was due primarily to a
decrease in interest expense on FHLB advances. The average rate on FHLB
advances decreased 158 basis points compared to the prior year nine month
period due primarily to refinancing certain FHLB advances in July 2004. The
refinancing of FHLB advances reduced the interest expense on the FHLB advances
by $36.7 million compared to the prior year period. The reduction in interest
expense was partially offset by a $4.3 million increase in interest expense on
the variable-rate portion of the interest rate swaps.
The $18.9 million increase in interest income on loans compared to the
same period one year ago also contributed to the increase in net interest and
dividend income. The average balance of loans increased $605.8 million, while
the average yield decreased 18 basis points.
Financial Condition as of June 30, 2005
Total assets decreased $121.8 million from September 30, 2004. The
decrease in assets was attributed mainly to a decrease in mortgage-related
securities of $278.9 million, a decrease in investment securities of
$182.6 million, a decrease in cash and cash equivalents of $92.1 million and a
decrease in deferred income tax assets of $17.5 million, offset by an increase
in loans receivable of $454.1 million.
Total liabilities decreased $154.7 million to $7.55 billion at June 30,
2005. The decrease was due primarily to a decrease of $132.4 million in
certificates of deposit.
Stockholders' equity increased $32.9 million to $865.3 million at June 30,
2005. The increase was due primarily to net income of $52.2 million for the
first nine months of fiscal year 2005, offset by dividends paid of
$30.5 million.
Management's Discussion of Dividends
We strive to enhance shareholder value while maintaining a strong capital
position. We continue to provide returns to shareholders through our dividend
payments. On July 26, 2005, the Board declared a dividend of $0.50 per share
which will be paid on August 19, 2005 to holders of record on August 5, 2005.
Due to Capitol Federal Savings Bank MHC's ("MHC") waiver of dividends, the
dividend of $0.50 per share will be paid only on public shares. Total
dividends declared during the first nine months of fiscal year 2005 were $1.50
per share. On January 25, 2005, the Board approved an enhanced dividend
policy. In December of each year, the Company will pay a special dividend
equal to 25% of the excess of the prior fiscal year reported net income over
the amount required to meet the Company's current dividend policy of $2.00 per
share each fiscal year after allowing for the waiver of dividends by MHC. If
the fiscal year reported net income does not exceed the amount required to
meet the Company's current dividend policy, it is the Board's intent to
continue to pay dividends at the current level. Our cash dividend payout
policy is continually reviewed by management and the Board, and our ability to
pay dividends under the policy depends upon a number of factors including: the
Company's financial condition, results of operations, regulatory capital
requirements of the Bank and other regulatory limitations on the Bank's
ability to make capital distributions to the Company.
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. The earnings per share amounts in the following table are
presented in accordance with GAAP. Included in the GAAP earnings per share
calculations are the average shares held by MHC. It is expected that MHC will
continue to waive future dividends except to the extent dividends are needed
to fund its continuing operations.
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,
2005 2004 2005 2004
(Dollars in thousands, except per share amounts)
Net income $16,160 $9,485 $52,215 $23,713
Average common shares
outstanding 72,559,699 71,781,258 72,401,746 71,375,369
Average committed ESOP
shares outstanding 101,374 101,374 50,779 50,778
Total basic average
common shares
outstanding 72,661,073 71,882,632 72,452,525 71,426,147
Effect of dilutive RRP
shares 2,091 49,383 2,412 173,013
Effect of dilutive
stock options 452,100 886,211 616,078 1,144,746
Total diluted average
common shares
outstanding 73,115,264 72,818,226 73,071,015 72,743,906
Net earnings per share:
Basic $0.22 $0.13 $0.72 $0.33
Diluted $0.22 $0.13 $0.71 $0.32
Because of the waiver of dividends by MHC, the inclusion of shares held by
MHC understates earnings available to be paid out through dividends to public
shareholders of CFFN stock. The following table is presented to provide a
better understanding of the information the Board 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,
2005 2004 2005 2004
(Dollars in thousands, except per share amounts)
Net income $16,160 $9,485 $52,215 $23,713
Basic average common
shares outstanding 72,661,073 71,882,632 72,452,525 71,426,147
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 20,468,256 19,689,815 20,259,708 19,233,330
Effect of dilutive RRP
shares 2,091 49,383 2,412 173,013
Effect of dilutive
stock options 452,100 886,211 616,078 1,144,746
Total adjusted diluted
average shares held by
public shareholders 20,922,447 20,625,409 20,878,198 20,551,089
Net earnings per share,
available to public
shareholders:
Basic $0.79 $0.48 $2.58 $1.23
Diluted $0.77 $0.46 $2.50 $1.15
The following table shows the number of shares eligible to receive
dividends at June 30, 2005. The unvested shares in ESOP receive dividends
that are recorded through compensation expense. MHC has waived its right to
dividends.
Total voting shares outstanding at September 30, 2004 73,990,801
Treasury stock acquisitions (137,837)
Net RRP grants (net of forfeitures) 11,200
Options exercised, net 507,618
Total voting shares outstanding at June 30, 2005 74,371,782
Unvested shares in ESOP (1,814,746)
Shares held by MHC (52,192,817)
Total shares eligible to receive dividends at June 30, 2005 20,364,219
Capitol Federal Financial is the holding company for Capitol Federal
Savings Bank. Capitol Federal Savings Bank has 37 branch locations in Kansas,
8 of which are in-store branches. Capitol Federal Savings Bank employs 662
full time equivalent employees in the operation of its business and is one of
the largest residential lenders 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,
the future earnings and capital levels of Capitol Federal Savings Bank which
could affect the ability of the Company to pay dividends in accordance with
its dividend policies, 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- 08/04/2005
/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
IN: FIN
SU: ERN
JK-AB
-- CGTH028 --
5486 08/04/200509:12 EDThttp://www.prnewswire.com