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Capitol Federal Financial(CFFN) - 2025 Q2 - Quarterly Results
CFFNCapitol Federal Financial(CFFN)2025-04-23 13:20

Financial Performance - The Company reported net income of 15.4million,or15.4 million, or 0.12 per share, for the quarter ended March 31, 2025, unchanged from the prior quarter[2]. - For the six months ended March 31, 2025, net income was 30.8million,or30.8 million, or 0.24 per share, compared to 16.3million,or16.3 million, or 0.12 per share, in the prior year[18]. - Net income for the six months ended March 31, 2025, was 30,830thousand,anincreaseof30,830 thousand, an increase of 14,525 thousand or 89.1% from 16,305thousandintheprioryear[33].−NetincomeforthethreemonthsendedMarch31,2025,was16,305 thousand in the prior year[33]. - Net income for the three months ended March 31, 2025, was 15,399 thousand, slightly down from 15,431thousandinthepreviousquarter[56].InterestIncomeandExpense−Totalinterestanddividendincomeroseto15,431 thousand in the previous quarter[56]. Interest Income and Expense - Total interest and dividend income rose to 98.175 million, a 0.6% increase from the previous quarter[4]. - Interest expense decreased by 1.9% to 54.335million,primarilyduetolowerratesondeposits[7].−Totalinterestanddividendincomeincreasedby54.335 million, primarily due to lower rates on deposits[7]. - Total interest and dividend income increased by 10,816 thousand, or 5.8%, to 195,797thousandforthesixmonthsendedMarch31,2025,comparedto195,797 thousand for the six months ended March 31, 2025, compared to 184,981 thousand for the same period in 2024[22]. - Interest expense on deposits rose by 7,340thousand,or11.17,340 thousand, or 11.1%, totaling 73,198 thousand for the six months ended March 31, 2025, compared to 65,858thousandintheprioryear[25].Non−InterestIncomeandExpense−Non−interestincomeincreasedby5.565,858 thousand in the prior year[25]. Non-Interest Income and Expense - Non-interest income increased by 5.5% to 4.953 million, driven by higher insurance commissions and other non-interest income[10]. - Non-interest income surged to 9,646thousandforthesixmonthsendedMarch31,2025,comparedtoanetlossof9,646 thousand for the six months ended March 31, 2025, compared to a net loss of 4,251 thousand in the prior year, marking a change of 13,897thousandor326.913,897 thousand or 326.9%[28]. - Non-interest expense rose by 8.8% to 29.540 million, with significant increases in salaries and employee benefits, and regulatory services[13]. - Total non-interest expense slightly decreased by 265thousand,or0.5265 thousand, or 0.5%, to 56,688 thousand for the six months ended March 31, 2025, compared to 56,953thousandintheprioryear[31].EfficiencyandRatios−TheCompany′sefficiencyratiowas60.5456,953 thousand in the prior year[31]. Efficiency and Ratios - The Company's efficiency ratio was 60.54%, up from 57.86% in the prior quarter, indicating higher costs relative to revenue generation[14]. - The efficiency ratio improved to 59.23% for the current year period compared to 74.29% for the prior year period, indicating better cost management[32]. - The return on average assets (annualized) was 0.64% for the three months ended March 31, 2025, slightly down from 0.65% in the previous quarter[58]. - Return on average assets improved to 0.64% for the six months ended March 31, 2025, up from 0.34% in the prior year[60]. - Return on average equity increased to 5.97% for the six months ended March 31, 2025, compared to 3.15% for the same period in 2024[60]. Assets and Liabilities - Total assets increased by 180 million, or 7.5%, to 9.72billionasofMarch31,2025,primarilyduetoincreasesincashandcashequivalentsandsecurities[37].−Totalassetsincreasedto9.72 billion as of March 31, 2025, primarily due to increases in cash and cash equivalents and securities[37]. - Total assets increased to 9,611,340 thousand as of March 31, 2025, from 9,552,269thousandattheendofthepreviousquarter[58].−Totalliabilitiesincreasedto9,552,269 thousand at the end of the previous quarter[58]. - Total liabilities increased to 8.68 billion as of March 31, 2025, compared to 8.51billionasofDecember31,2024[54].−TheBank′sstockholders′equitytotaled8.51 billion as of December 31, 2024[54]. - The Bank's stockholders' equity totaled 1.04 billion as of March 31, 2025, reflecting an increase of 4.8millionfromSeptember30,2024[44].Deposits−Depositsroseby4.8 million from September 30, 2024[44]. Deposits - Deposits rose by 166.4 million, or 10.7% annualized, during the current quarter, largely due to the Bank's high yield savings account offering[39]. - Deposits rose by 242.6millionfromSeptember30,2024,drivenbyhighyieldsavingsaccountsandretailcheckingaccounts,whileborrowingsdecreasedby242.6 million from September 30, 2024, driven by high yield savings accounts and retail checking accounts, while borrowings decreased by 36.6 million[41]. - The deposit portfolio totaled 6.372billion,withaweightedaveragerateof2.286.372 billion, with a weighted average rate of 2.28%[104]. - Total retail deposits amounted to 5,937,725 thousand with an average rate of 2.30%, representing 93.2% of total deposits[107]. Loans and Credit Quality - Loan originations for one- to four-family and consumer loans amounted to 64.5millionatarateof6.6564.5 million at a rate of 6.65% for the three months ended March 31, 2025[43]. - Total loans receivable as of March 31, 2025, amounted to 7,894,620 thousand, with a weighted average rate of 4.10%[64]. - The unpaid principal balance of non-owner occupied commercial real estate loans was 1.01billionasofMarch31,2025[72].−Thetotalamountofconsumerloanswas1.01 billion as of March 31, 2025[72]. - The total amount of consumer loans was 108,483 thousand, with a weighted average rate of 7.93%[64]. - As of March 31, 2025, the total gross loan amount was 1,802,424,000,aslightdecreasefrom1,802,424,000, a slight decrease from 1,813,579,000 as of December 31, 2024[75]. - The total number of non-accrual loans was 81, with a total amount of 10,833,000asofMarch31,2025[84].−Thepercentageofloans90ormoredaysdelinquentorinforeclosurewas0.1210,833,000 as of March 31, 2025[84]. - The percentage of loans 90 or more days delinquent or in foreclosure was 0.12% as of March 31, 2025, compared to 0.13% on December 31, 2024[84]. Credit Losses and Provisions - The provision for credit losses increased to 677 thousand in the current year period from 424thousandintheprioryearperiod,drivenbycommercialloangrowth[27].−Theallowanceforcreditlosses(ACL)totaled424 thousand in the prior year period, driven by commercial loan growth[27]. - The allowance for credit losses (ACL) totaled 23,970,000 as of March 31, 2025, with a ratio of ACL to loans receivable at 0.30%[89]. - The commercial real estate substandard loans increased to 45,961,000asofMarch31,2025,primarilyduetoa45,961,000 as of March 31, 2025, primarily due to a 39.0 million participation loan related to a hotel in Texas[86]. - The ratio of ACL to commercial real estate loans was 1.27 as of March 31, 2025, slightly down from 1.32 on December 31, 2024[89]. Securities and Investments - The Company initiated a securities strategy in October 2023, selling 1.30billionofsecuritiestoimproveearningsandliquidity[20].−Thesecuritiesportfolioatamortizedcostwas1.30 billion of securities to improve earnings and liquidity[20]. - The securities portfolio at amortized cost was 941.585 million, with fixed-rate securities comprising 92% of the portfolio[97]. - The weighted average yield on the securities portfolio was 5.46% as of March 31, 2025[98]. - The weighted average life (WAL) of the securities portfolio was estimated at 5.6 years[98]. Borrowings - The Bank's total borrowings as of March 31, 2025, were 2,143,320thousandwithaweightedaverageeffectiverateof3.542,143,320 thousand with a weighted average effective rate of 3.54%[112]. - New FHLB borrowings during the three months ended March 31, 2025, amounted to 150,000 thousand at an effective rate of 4.35%[112]. - The weighted average maturity (WAM) of the Bank's borrowings remained at 1.6 years as of March 31, 2025[112]. Future Outlook - The Bank anticipates continued improvement in net interest margin for the remainder of fiscal year 2025, driven by decreasing deposit costs and increasing yields on the loan portfolio[35]. - Management anticipates improved occupancy and cash flow for the hotel project in Texas during 2025, expecting full stabilization in 2026[86].