Capitol Federal Financial(CFFN) - 2019 Q3 - Quarterly Report

Financial Performance - For the quarter ended June 30, 2019, the Company recognized net income of $22.9 million, or$0.17 per share, compared to $22.4 million, or$0.17 per share for the same quarter in 2018, reflecting a $525 thousand increase in net income [79]. - For the nine-month period ended June 30, 2019, net income was$71.8 million, or $0.52 per share, a decrease of$5.7 million, or 7.4%, from the same period in 2018, primarily due to increased non-interest expenses [79]. - The company reported net income of $71.8 million for the nine-month period ending June 30, 2019 [136]. - The company reported net income of$22.9 million for the three months ended June 30, 2019, a decrease from $24.6 million in the previous quarter, reflecting a decline of 6.7$51.2 million, down from $52.6 million in the previous quarter, indicating a decrease of 2.6$9.29 billion, a decrease of $163.3 million from September 30, 2018, largely due to reductions in operating cash and the securities portfolio [82]. - Total assets decreased to$9.29 billion at June 30, 2019, down from $9.53 billion at March 31, 2019, a decrease of$248.3 million [91]. - Total liabilities and stockholders' equity were $9,286,275 thousand as of June 30, 2019 [155]. - The total amount of term borrowings was$990 million with a repricing rate of 2.40% as of June 30, 2020 [134]. - The Bank had total borrowings of $2.24 billion, representing approximately 24$798.7 million at June 30, 2019, compared to $569.6 million at September 30, 2018, with 77$229.1 million, while the commercial loan portfolio increased by the same amount during the fiscal year [91]. - Total loans receivable amounted to $7,548,313 thousand with a yield of 3.78$7.51 billion as of June 30, 2019, showing a slight decrease from $7.51 billion at March 31, 2019 [93]. - The commercial loan portfolio increased to$798.7 million as of June 30, 2019, up from $729.7 million at March 31, 2019 [105]. Interest Income and Expense - The net interest margin increased by 43 basis points, from 1.87$90.1 million for the nine months ended June 30, 2019, down from $95.9 million in the prior year [144]. - The average yield on total interest-earning assets remained unchanged at 3.64$646 thousand [179]. - The average rate paid on FHLB line of credit borrowings during the nine-month period was 2.58% [136]. Non-Interest Income and Expenses - Non-interest income increased to $5.7 million from$5.0 million in the previous quarter, representing a growth of 13.5% [139]. - Total non-interest income decreased by $116 thousand, or 0.7$16,099 thousand for the current year nine-month period [148]. - Total non-interest expense increased by $10,469 thousand, or 14.9$80,614 thousand for the current year nine-month period [149]. - The efficiency ratio rose to 48.28% from 45.38% in the previous quarter, indicating a decline in operational efficiency [139]. - The increase in salaries and employee benefits was primarily due to expenses related to former CCB employees, contributing to the overall rise in non-interest expenses [171]. Capital and Equity - Stockholders' equity was $1.33 billion at June 30, 2019, down$64.5 million from September 30, 2018, primarily due to $123.2 million in cash dividends paid [82]. - The ratio of stockholders' equity to total assets was 12.6$70.0 million, with no shares repurchased to date [136]. Credit Quality - The Bank's traditional underwriting guidelines have resulted in low delinquency rates, with loans 30 to 89 days delinquent at 0.21% as of June 30, 2019, compared to 0.23% in March 2019 [111]. - As of June 30, 2019, the total non-performing loans amounted to $10,013,000, a decrease from$12,926,000 in March 2019 [113]. - Non-performing loans as a percentage of total loans were 0.13% in June 2019, down from 0.17% in March 2019 [113]. - The allowance for credit losses (ACL) ending balance is $9,036 thousand, reflecting a provision for credit losses of$450 thousand during the current quarter [119]. - The overall ACL is considered adequate for the loan portfolio as of June 30, 2019 [119]. Securities and Investments - The balance of Mortgage-Backed Securities (MBS) decreased by $57.7 million, from$1.04 billion at September 30, 2018, to $979.3 million at June 30, 2019 [124]. - Total fixed-rate securities amounted to$921.4 million with a yield of 2.42% and a weighted average life (WAL) of 2.4 years as of June 30, 2019 [122]. - The total securities portfolio was valued at $1.24 billion with a yield of 2.60$149.8 million at a yield of 2.65% during the nine months ended June 30, 2019 [125]. - The total carrying value of MBS held by the company was $979.3 million, reflecting a decrease from the previous period [124]. Deposits and Funding - The deposit portfolio decreased by$120.2 million during the current quarter, primarily due to a $57.2 million decrease in public unit certificates of deposit [91]. - Total deposits amounted to$5,580,871 thousand as of June 30, 2019, with a weighted average rate of 1.24% [129]. - The bank plans to reduce the balance of public unit certificates of deposit to approximately $300 million by September 30, 2019 [129]. - The weighted average rate for retail/business certificates of deposit was 2.05% as of June 30, 2019 [130]. - The bank's strategy includes pricing short-term certificates of deposit more aggressively to manage interest rate expectations [129].