TOPEKA, Kan., May 5 /PRNewswire-FirstCall/ -- Capitol Federal Financial
(Nasdaq: CFFN) (the "Company") announced results today for the quarter ending
March 31, 2006. Detailed results of the quarter are available in the
Company's Quarterly Report on Form 10-Q for the three months ended March 31,
2006, which will be filed today and posted on our website,
http://www.capfed.com/html/relations.html . Highlights for the quarter
include:
-- net income of $13.6 million,
-- diluted earnings per share of $0.19, and
-- efficiency ratio of 45.15%.
On April 25, 2006, the Board of Directors declared a $0.50 per share
dividend to stockholders of record as of May 5, 2006, payable on May 19, 2006.
Results of Operations for the Quarter Ended March 31, 2006
Net income for the quarter was $13.6 million compared to net income of
$17.5 million for the same quarter one year ago. The $3.9 million decrease in
net income was primarily a result of an $8.8 million increase in interest
expense, specifically on the certificates of deposit and interest rate swaps
which are both generally priced based upon short-term interest rates (two year
and shorter maturities). The increase in interest expense was partially
offset by a $2.4 million decrease in income tax expense due to a reduction in
earnings between the two periods and a $1.8 million increase in interest and
dividend income.
Total interest and dividend income for the quarter was $102.0 million
compared to $100.2 million for the prior year quarter. The $1.8 million
increase was primarily a result of an increase in interest income on loans
receivable due to growth of the loan portfolio, which was partially offset by
a decrease in interest income on mortgage-related and investment securities.
Interest expense on deposits for the current quarter was $29.0 million
compared to $23.6 million for the prior year quarter. The $5.4 million
increase was primarily a result of an increase in the average rate on the
certificate of deposit portfolio which was partially offset by a decrease in
the average balance of the portfolio.
Interest expense on Federal Home Loan Bank ("FHLB") advances for the
current quarter was $38.2 million compared to $35.0 million for the prior year
quarter. The $3.2 million increase was a result of an increase in the paying
rate on the related interest rate swaps, partially offset by a decrease in the
average balance of advances as a result of the repayment of $200.0 million in
advances during fiscal year 2006.
Results of Operations for the Six Months Ended March 31, 2006
Net income for the six months ended March 31, 2006 was $26.9 million
compared to net income of $36.1 million for the six month period ended
March 31, 2005. The $9.2 million decrease in net income was a result of a
$14.7 million decrease in net interest and dividend income offset by a
$5.1 million decrease in income tax expense.
Net interest and dividend income for the current six month period was
$67.7 million compared to $82.4 million for the six month period ended
March 31, 2005. The $14.7 million decrease between the two periods was a
result of an $18.6 million increase in interest expense which was partially
offset by the $3.8 million increase in interest and dividend income.
Total interest and dividend income was $203.8 million for the current six
month period, compared to $200.0 million for the six month period ended
March 31, 2005. The $3.8 million increase was primarily a result of an
increase in interest income on loans due to a $655.9 million increase in the
average balance of the loan portfolio.
Interest expense on deposits for the current six month period was
$56.2 million compared to $46.7 million for the six month period ended March
31, 2005. The $9.5 million increase was primarily a result of an increase in
the average rate on the certificate of deposit and money market portfolios
which was partially offset by a decrease in the average balance of each
portfolio.
Interest expense on FHLB advances for the current six month period was
$78.0 million compared to $69.4 million for the six month period ended
March 31, 2005. The $8.6 million increase in interest expense was primarily a
result of an increase in the weighted average cost of the FHLB advances due to
an increase in the paying rate on the interest rate swaps related to the FHLB
advances.
Financial Condition as of March 31, 2006
Total assets decreased $157.5 million from $8.41 billion at September 30,
2005 to $8.25 billion at March 31, 2006. The decrease in assets was
attributed mainly to a decrease in mortgage-related securities of
$305.7 million and partially to a decrease in investment securities of
$50.0 million. The decrease in assets was partially offset by an increase in
cash and cash equivalents of $147.6 million and loans receivable of
$58.7 million.
Total liabilities decreased $154.2 million from $7.54 billion at
September 30, 2005 to $7.39 billion at March 31, 2006. The decrease in
liabilities was due in part to the repayment of $200.0 million in FHLB
advances. The decrease was partially offset by an increase of $54.8 million
in deposits, primarily in the certificate of deposit portfolio as a result of
net growth in public unit funds.
Stockholders' equity decreased $3.3 million during the six month period to
$861.8 million at March 31, 2006. The decrease was primarily a result of
$26.6 million in dividend payments and partially a result of an $8.5 million
increase in treasury stock due primarily to stock repurchases. The decrease
in stockholders' equity was partially offset by $26.9 million in net income
and a $4.2 million increase in additional paid-in capital.
Management's Discussion of Dividends
We strive to enhance stockholder value while maintaining a strong capital
position. We continue to provide returns to stockholders through our dividend
payments. On April 25, 2006, the Board of Directors declared a dividend of
$0.50 per share which will be paid on May 19, 2006 to stockholders of record
on May 5, 2006. 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.
Our cash dividend payout policy is continually reviewed by management and the
Board of Directors, 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, other regulatory
limitations on the Bank's ability to make capital distributions to the Company
and the continued waiver of dividends by MHC.
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 of Directors 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 Six Months Ended
March 31, March 31,
2006 2005 2006 2005
(Dollars in thousands, except per share amounts)
Net income $13,587 $17,482 $26,900 $36,055
Average common shares
outstanding 72,596,424 72,421,545 72,623,113 72,322,769
Average committed
ESOP shares
outstanding 50,970 50,970 25,482 25,482
Total basic average
common shares
outstanding 72,647,394 72,472,515 72,648,595 72,348,251
Effect of dilutive
RRP shares 2,114 2,455 2,775 2,524
Effect of dilutive
stock options 273,367 620,933 295,837 699,107
Total diluted average
common shares
outstanding 72,922,875 73,095,903 72,947,207 73,049,882
Net earnings per share:
Basic $0.19 $0.24 $0.37 $0.50
Diluted $0.19 $0.24 $0.37 $0.49
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
stockholders 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,
2006 2005 2006 2005
(Dollars in thousands, except per share amounts)
Net income $13,587 $17,482 $26,900 $36,055
Basic average
common shares
outstanding 72,647,394 72,472,515 72,648,595 72,348,251
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
stockholders 20,454,577 20,279,698 20,455,778 20,155,434
Effect of dilutive
RRP shares 2,114 2,455 2,775 2,524
Effect of dilutive
stock options 273,367 620,933 295,837 699,107
Total adjusted
diluted average
shares held by
public
stockholders 20,730,058 20,903,086 20,754,390 20,857,065
Net earnings per
share, available
to public
stockholders:
Basic $0.67 $0.86 $1.32 $1.79
Diluted $0.66 $0.84 $1.30 $1.73
The following table shows the number of shares eligible to receive
dividends at March 31, 2006. The unvested shares in the ESOP receive
dividends that are recorded through compensation expense. MHC has waived its
right to dividends.
Total voting shares outstanding at September 30, 200 574,286,889
Treasury stock acquisitions (306,837)
RRP grants, net 22,500
Options exercised, net 141,300
Total voting shares outstanding at March 31, 2006 74,143,852
Unvested shares in ESOP (1,613,108)
Shares held by MHC (52,192,817)
Total shares eligible to receive dividends at
March 31, 2006 20,337,927
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 656
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- 05/05/2006
/CONTACT: Jim Wempe, Vice President, Investor Relations, +1-785-270-6055,
jwempe@capfed.com , or Kent Townsend, Executive Vice President, Chief
Financial Officer and Treasurer, +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 DIV
JR-AM
-- CGF008 --
4031 05/05/200608:30 EDThttp://www.prnewswire.com