Capitol Federal Financial(US:CFFN)2024-08-07 16:12Financial Performance - The Company recognized net income of $26.0 million, or $0.20 per share, for the current year period, down from $38.7 million, or $0.29 per share, in the prior year period [111]. - For the quarter ended June 30, 2024, the Company reported net income of $9.6 million, or $0.07 per share, down from $13.8 million, or $0.11 per share in the previous quarter [183]. - The company reported net income of $26.0 million, or $0.20 per share, for the nine months ended June 30, 2024, compared to $38.7 million, or $0.29 per share, for the same period in 2023 [199]. - Net income decreased to $9,648 thousand, down 29.9% from $13,762 thousand in the prior quarter, influenced by a higher income tax expense [192]. - The effective tax rate increased to 38.2% from 20.1% in the previous quarter, primarily due to recording $2.9 million of income taxes on earnings distributions [192]. Securities Transactions - The Company sold $1.30 billion of securities, representing 94% of its securities portfolio, and recognized an impairment loss of $192.6 million for the quarter ended September 30, 2023 [109]. - The Company completed the sale of securities and recognized an additional loss of $13.3 million ($10.0 million net of tax), or $0.08 per share, related to the sale [109]. - The net loss from securities transactions was $13,345 thousand [161]. - The company recorded a net loss from securities transactions of $13,345,000, with no similar transaction in the prior year [205]. Interest Income and Margin - The net interest margin increased by 27 basis points from 1.50% in the prior year period to 1.77% in the current year period, primarily due to higher yields on securities and loans [113]. - The net interest margin decreased from 1.82% to 1.77% due to rising costs of retail certificates of deposit [183]. - The net interest margin improved to 1.77%, up from 1.50% in the previous period [212]. - The average yield for total interest-earning assets was 4.20% as of June 30, 2024, with total interest-earning assets amounting to $9.18 billion [267]. Loan Portfolio - The loan portfolio was $7.93 billion, a decrease of $37.9 million, with a $214.4 million drop in one- to four-family loans, partially offset by a $177.9 million increase in commercial loans [115]. - Total originated, refinanced, and purchased/participations for the nine months ended June 30, 2024, amounted to $1,393,732, with a weighted average rate of 5.67% [132]. - The total fixed-rate loans for the nine months ended June 30, 2024, were $577,271, representing 35.7% of total loans, with a weighted average rate of 5.68% [132]. - The total adjustable-rate loans for the nine months ended June 30, 2024, were $816,461, accounting for 64.3% of total loans, with a weighted average rate of 5.66% [132]. Deposits and Borrowings - Total deposits increased by $78.4 million to $6.13 billion, driven mainly by retail certificates of deposit [116]. - Total borrowings decreased by $587.5 million to $2.29 billion, primarily due to the repayment of $500 million in borrowings under the BTFP [117]. - As of June 30, 2024, total deposits amounted to $6.13 billion, with a year-over-year increase in retail certificates of deposit to $2.77 billion, representing 45.2% of total deposits [162]. - Total borrowings at June 30, 2024, were $2.29 billion, including $1.99 billion in fixed-rate FHLB advances [164]. Efficiency and Expenses - The Company's efficiency ratio was 69.77% for the current year period compared to 61.78% for the prior year period, with a potential adjusted efficiency ratio of 62.87% excluding the net loss from the securities strategy [114]. - The efficiency ratio for the quarter was 62.07%, slightly up from 61.89% in the previous quarter [181]. - Total non-interest expense decreased to $27,950 thousand, down 1.7% from $28,445 thousand, reflecting lower costs in various categories [189]. - The efficiency ratio increased to 69.77% from 61.78%, primarily due to lower non-interest income [208]. Credit Quality and Losses - The total allowance for credit losses (ACL) ratio to loans receivable was 0.33% as of September 30, 2023 [152]. - The provision for credit losses was $2,133 thousand for the current period, down from $6,054 thousand in the prior year [154]. - The provision for credit losses increased to $1.472 million, reflecting growth in commercial loans [181]. - The total amount of non-performing assets was $8,603,000, which is 0.09% of total assets [148]. Digital Transformation and Services - The digital transformation implemented in August 2023 led to a 60% increase in online deposit accounts opened compared to the prior fiscal year [120]. - The integration of Zelle into the Bank's digital platform resulted in a 37% increase in settlement volume quarter over quarter [120]. - The Bank is now accepting credits from two instant payment networks, RTP® and FedNow®, enhancing consumer banking services [121]. Capital and Equity - Stockholders' equity totaled $1.02 billion at June 30, 2024, a decrease of $23.4 million from September 30, 2023, due to share repurchases and dividend payments [173]. - The Bank's community bank leverage ratio (CBLR) was 9.1% as of June 30, 2024, exceeding regulatory capital requirements [174]. - Approximately $751.2 million, or 12% of the bank's deposit balance, was uninsured as of June 30, 2024 [163].