Capitol Federal Financial(US:CFFN)2025-04-23 13:20Financial Performance - The Company reported net income of $15.4 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 $30.8 million, or $0.24 per share, compared to $16.3 million, or $0.12 per share, in the prior year[18]. - Net income for the six months ended March 31, 2025, was $30,830 thousand, an increase of $14,525 thousand or 89.1% from $16,305 thousand in the prior year[33]. - Net income for the three months ended March 31, 2025, was $15,399 thousand, slightly down from $15,431 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 $54.335 million, primarily due to lower rates on deposits[7]. - Total interest and dividend income increased by $10,816 thousand, or 5.8%, to $195,797 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 $7,340 thousand, or 11.1%, totaling $73,198 thousand for the six months ended March 31, 2025, compared to $65,858 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 $9,646 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 $13,897 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 $265 thousand, or 0.5%, to $56,688 thousand for the six months ended March 31, 2025, compared to $56,953 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 $9.72 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 $9,552,269 thousand at the end of the previous quarter[58]. - Total liabilities increased to $8.68 billion as of March 31, 2025, compared to $8.51 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 $4.8 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 $242.6 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 $6.372 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 $64.5 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 $1.01 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, 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 $10,833,000 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 $424 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 $45,961,000 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 $1.30 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 $2,143,320 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].