Capitol Federal Financial, Inc. Reports Third Quarter Fiscal Year 2016 Results

TOPEKA, Kan., July 28, 2016

Highlights for the quarter include:

• net income of $20.6 million, including $532 thousand from the daily leverage strategy;
• basic and diluted earnings per share of $0.15;
• annualized loan portfolio growth of 4%;
• net interest margin of 1.73% (2.09% excluding the effects of the daily leverage strategy); and
• paid dividends of $44.6 million, or $0.335 per share, including a $0.25 per share True Blue® Capitol dividend.

Comparison of Operating Results for the Three Months Ended June 30, 2016 and March 31, 2016

Net income decreased $976 thousand, or 4.5%, from the quarter ended March 31, 2016 to $20.6 million, or $0.15 per share, for the quarter ended June 30, 2016, due primarily to a decrease in non-interest income.  Net income attributable to the daily leverage strategy was $532 thousand during the current quarter compared to $561 thousand for the prior quarter.

Net interest income decreased $608 thousand, or 1.3%, from the prior quarter to $47.9 million for the current quarter.  The decrease was due primarily to an increase in interest expense on deposits, specifically an increase in the cost of our certificate of deposit portfolio.  The net interest margin decreased five basis points from 1.78% for the prior quarter to 1.73% for the current quarter.  Excluding the effects of the daily leverage strategy, the net interest margin would have been 2.09% for the current quarter compared to 2.13% for the prior quarter.  The four basis point decrease was due mainly to a decrease in yield on loans receivable and the mortgage-backed securities ("MBS") portfolio, along with an increase in the cost of retail certificates of deposit, partially offset by a shift in the mix of interest-earning assets.

Interest and Dividend Income
The weighted average yield on total interest-earning assets for the current quarter decreased four basis points from the prior quarter, to 2.73%, while the average balance of interest-earning assets increased $125.8 million between the two periods.  Absent the impact of the daily leverage strategy, the weighted average yield on total interest-earning assets would have decreased three basis points from the prior quarter, to 3.19%, while the average balance would have increased $56.6 million.  The following table presents the components of interest and dividend income for the time periods presented, along with the change measured in dollars and percent.