NEWS RELEASE
FOR IMMEDIATE RELEASE
CAPITOL FEDERAL FINANCIAL, INC.
REPORTS FISCAL YEAR 2014 RESULTS
Topeka, KS - Capitol Federal® Financial, Inc. (NASDAQ: CFFN) (the “Company”) announced results today for the fiscal year ended September 30, 2014. Detailed results will be available in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2014, which will be filed with the Securities and Exchange Commission (“SEC”) on or about November 26, 2014 and posted on our website, http://ir.capfed.com. For best viewing results, please view this release in Portable Document Format (PDF) on our website.
Highlights for fiscal year 2014 include:
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• | net income of $77.7 million, including $501 thousand from the previously announced leverage strategy that was fully implemented on August 1, 2014; |
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• | basic and diluted earnings per share of $0.56; |
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• | net interest margin of 2.00%; |
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• | dividends paid of $138.2 million, or $0.98 per share; |
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• | repurchased 6,947,065 shares of common stock at an average price of $11.98 per share; and |
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• | declared a special year-end dividend of $0.26 per share payable on December 5, 2014. |
Comparison of Operating Results for the Years Ended September 30, 2014 and 2013
For fiscal year 2014, the Company recognized net income of $77.7 million, compared to net income of $69.3 million for fiscal year 2013. The $8.4 million, or 12.0%, increase in net income was due primarily to a $6.0 million increase in net interest income, and a $5.4 million decrease in salaries and employee benefits due primarily to a reduction in Employee Stock Ownership Plan (“ESOP”) related expenses. The net interest margin increased three basis points, from 1.97% for the prior fiscal year to 2.00% for the current fiscal year. Decreases in the cost of funds and a shift in the mix of interest-earning assets from relatively lower yielding securities to higher yielding loans were the primary drivers for the higher net interest margin in the current fiscal year.
During the fourth quarter of fiscal year 2014, Capitol Federal Savings Bank (the “Bank”) implemented a leverage strategy (“daily leverage strategy”) to increase earnings. The daily leverage strategy involves borrowing up to $2.10 billion on the Bank’s Federal Home Loan Bank (“FHLB”) line of credit in two leverage tiers. The first tier of $800.0 million is intended to remain borrowed on the FHLB line of credit for an extended period of time. The second tier of $1.30 billion is borrowed at the beginning of each quarter and paid off prior to each quarter end. The proceeds of the borrowings, net of the required FHLB stock holdings, are deposited at the Federal Reserve Bank of Kansas City. The daily leverage strategy was fully implemented beginning on August 1, 2014. The daily leverage strategy has had minimal impact on the Bank’s interest rate risk and liquidity. The pre-tax yield of the daily leverage strategy, which is defined as the annualized pre-tax income resulting from the transaction as a percentage of the interest-earning assets associated with the transaction, was 0.21% for fiscal year 2014. Excluding the effects of the daily leverage strategy, the net interest margin would have been 2.07% for the current fiscal year.
The following information was filed by Capitol Federal Financial, Inc. (CFFN) on Wednesday, October 29, 2014 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.