Capitol Federal Financial(US:CFFN)2023-05-09 16:00Financial Performance - Net income for March 2023 was $14,189,000, a decrease from $21,623,000 in March 2022, representing a decline of approximately 34.4%[187]. - For the quarter ended March 31, 2023, the company reported net income of $14,189 thousand, compared to $21,623 thousand for the same period in 2022, reflecting a decrease of 34.3%[216]. - The company reported total non-interest expense of $28,631 thousand for the quarter ended March 31, 2023, compared to $27,960 thousand for the same period in 2022, an increase of 2.4%[216]. - The company experienced a decrease in salaries and employee benefits primarily due to a reduction in incentive compensation[99]. - The company experienced a significant decrease in unrealized losses on AFS securities, with an ending balance of $(71,776) thousand for the six months ended March 31, 2022[239]. Asset and Liability Management - Total assets increased to $10.09 billion as of March 31, 2023, representing a 6.3% increase from $9.93 billion as of December 31, 2022[46]. - Total liabilities increased to $9,013,736 thousand as of March 31, 2023, up from $8,528,398 thousand as of September 30, 2022, reflecting a growth of 5.7%[215]. - Total stockholders' equity as of March 31, 2023, was $1,072,034, a decrease from $1,096,499 as of December 31, 2022[203]. - The Bank's borrowing capacity from the FHLB was limited to 50% of total assets as of March 31, 2023[44]. - Total deposits decreased to $6.14 billion at March 31, 2023, a decline of $50.4 million from September 30, 2022, mainly driven by a $284.5 million decrease in money market account balances[241]. Loan Portfolio - Total loans receivable increased to $7,966,125 thousand as of March 31, 2023, up from $7,471,670 thousand as of September 30, 2022, representing an increase of approximately 6.6%[211]. - The total amount of commercial loans reached $1,181,603 thousand with a weighted average rate of 4.89%[78]. - The total loans reported for commercial real estate were $881,081, with "Pass" loans at $366,794[227]. - Loans receivable, net rose to $7.96 billion, a 9.0% increase from $7.78 billion as of December 31, 2022[46]. - The total amount of non-accrual loans was reported with no loans 90 or more days delinquent accruing interest[83]. Credit Quality - The provision for credit losses was $427 million for the six months ended March 31, 2023, with an ending balance of $19.889 billion in the allowance for credit losses[63]. - The ratio of net charge-offs (NCOs) to average non-performing assets was 0.20% for the current period, compared to (0.35)% for the prior period[116]. - Non-performing assets as a percentage of total assets decreased to 0.06% from 0.08% year-over-year, reflecting improved asset quality[181]. - The provision for credit losses for the current year period was $4.6 million, compared to a release of provision of $6.6 million during the prior year period, reflecting growth in the commercial loan portfolio[161]. - The allowance for credit losses (ACL) increased to $19,889 thousand as of March 31, 2023, from $16,371 thousand as of September 30, 2022, indicating a rise of 21.5%[215]. Income and Expenses - Total interest and dividend income for the quarter was $89.5 million, a decrease of 2.0% from $91.3 million in the prior quarter[96]. - The net interest margin decreased by 24 basis points, from 1.83% for the prior year period to 1.59% for the current year period, primarily due to an increase in the cost of borrowings and deposits[105]. - Total interest expense for the six months ended March 31, 2023, was $93.099 million, an increase of $59.126 million or 174.0% from $33.973 million in the prior year[160]. - The company anticipates continued net interest margin compression due to the current yield curve dynamics and the pace of liability repricing[1]. - The efficiency ratio for the current quarter was 60.86%, compared to 54.27% for the prior quarter, indicating increased costs relative to revenue generation[131]. Dividends and Shareholder Returns - Cash dividends paid totaled $60.53 million for the six months ended March 31, 2023, compared to $52.92 million for the same period in 2022[50]. - The company announced a regular quarterly cash dividend of $0.085 per share, totaling approximately $11.3 million, payable on May 19, 2023[92]. - The company’s total dividends paid year-to-date reached $22,640,000, compared to $110,955,000 in the previous year, indicating a significant decrease in total dividends paid[196]. - The average number of basic and diluted shares outstanding decreased by 4.4% to 133,150 as of March 31, 2023[46]. - There remains $22.5 million authorized under the existing stock repurchase plan for additional purchases of the company's common stock[124]. Strategic Initiatives - Management anticipates an increase in information technology and related expenses in fiscal year 2023 due to the ongoing digital transformation initiative[75]. - Management is implementing a new core processing system expected to enhance product offerings and customer experience by September 2023[75]. - The company plans to implement a new core processing system by September 2023 as part of its digital transformation strategy[165]. - The average balance of cash and cash equivalents related to the leverage strategy was $935.1 million for the quarter ended March 31, 2023, down from $1.79 billion in the previous quarter[5]. - The company experienced an increase in interest expense on borrowings due to a higher average balance and weighted average rate, alongside a reduction in deposits[149].