Toggle SGML Header (+)


Section 1: 8-K (CURRENT REPORT, ITEMS 2.02 AND 9.01)

Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)
July 28, 2016

 
 
 
 
 
CAPITOL FEDERAL FINANCIAL, INC.
 
(Exact name of Registrant as specified in its Charter)

 
 
 
Maryland
001-34814
27-2631712
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification Number)


700 South Kansas Avenue Topeka, Kansas 66603
(Address of principal executive offices) (Zip Code)


Registrant's telephone number, including area code:
(785) 235-1341

N/A
(Former name or former address, if changed since last report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The Registrant’s press release dated July 28, 2016, announcing financial results for the quarter ended June 30, 2016 is attached hereto as Exhibit 99, and is incorporated herein by reference.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits

Exhibit 99 – Press release dated July 28, 2016






 
 
 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
CAPITOL FEDERAL FINANCIAL, INC.
Date: July 28, 2016
By: /s/ Kent G. Townsend
 
 
 
 
 
 
 
 
Kent G. Townsend, Executive Vice-President,
 
 
Chief Financial Officer, and Treasurer
 


(Back To Top)

Section 2: EX-99 (PRESS RELEASE ANNOUNCING EARNINGS)

Exhibit



NEWS RELEASE
FOR IMMEDIATE RELEASE
July 28, 2016
CAPITOL FEDERAL FINANCIAL, INC.
REPORTS THIRD QUARTER FISCAL YEAR 2016 RESULTS

Topeka, KS - Capitol Federal® Financial, Inc. (NASDAQ: CFFN) (the "Company") announced results today for the quarter ended June 30, 2016. Detailed results will be available in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, which will be filed with the Securities and Exchange Commission ("SEC") on or about August 9, 2016 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 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.


1



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.
 
For the Three Months Ended
 
 
 
 
 
June 30,
 
March 31,
 
Change Expressed in:
 
2016
 
2016
 
Dollars
 
Percent
 
(Dollars in thousands)
 
 
INTEREST AND DIVIDEND INCOME:
 
 
 
 
 
 
 
Loans receivable
$
60,840

 
$
60,732

 
$
108

 
0.2
 %
MBS
7,401

 
7,702

 
(301
)
 
(3.9
)
Federal Home Loan Bank Topeka ("FHLB") stock
3,050

 
3,006

 
44

 
1.5

Cash and cash equivalents
2,730

 
2,707

 
23

 
0.8

Investment securities
1,506

 
1,485

 
21

 
1.4

Total interest and dividend income
$
75,527

 
$
75,632

 
$
(105
)
 
(0.1
)

The increase in interest income on loans receivable was due to a $80.4 million increase in the average balance of the portfolio, partially offset by a four basis point decrease in the weighted average yield on the portfolio, to 3.58% for the current quarter. The loan growth was largely funded with cash flows from the securities portfolio during the current quarter. The decrease in yield was due primarily to an increase in the amortization of premiums paid for correspondent loans as a result of increased prepayment activity, mainly related to fixed-rate loans in this portfolio.

The decrease in interest income on MBS was due to a 10 basis point decrease in the weighted average yield on the portfolio, to 2.14% for the current quarter. The decrease in the weighted average yield was due mainly to an increase in net premium amortization. During the current quarter, $1.4 million of net premiums on MBS were amortized, which decreased the weighted average yield on the portfolio by 40 basis points. During the prior quarter, $1.1 million of net premiums were amortized, which decreased the weighted average yield on the portfolio by 32 basis points.

Interest Expense
The weighted average rate paid on total interest-bearing liabilities increased one basis point from the prior quarter, to 1.13%, and the average balance of interest-bearing liabilities increased $111.3 million between the two periods. Absent the impact of the daily leverage strategy, the weighted average rate paid on total interest-bearing liabilities would have increased two basis points from the prior quarter, to 1.29%, and the average balance would have increased $42.0 million. The following table presents the components of interest expense for the time periods presented, along with the change measured in dollars and percent.
 
For the Three Months Ended
 
 
 
 
 
June 30,
 
March 31,
 
Change Expressed in:
 
2016
 
2016
 
Dollars
 
Percent
 
(Dollars in thousands)
 
 
INTEREST EXPENSE:
 
 
 
 
 
 
 
FHLB advances
$
13,515

 
$
13,729

 
$
(214
)
 
(1.6
)%
FHLB line of credit
2,846

 
2,665

 
181

 
6.8

Deposits
9,749

 
9,213

 
536

 
5.8

Repurchase agreements
1,487

 
1,487

 

 

Total interest expense
$
27,597

 
$
27,094

 
$
503

 
1.9


The decrease in interest expense on FHLB advances was due primarily to a two basis point decrease in the average rate paid on the portfolio, to 2.21% for the current quarter. During the current quarter, a $100.0 million advance with an effective rate of 3.17% matured and was replaced with a $100.0 million advance with a rate of 1.82%. The increase in interest expense on FHLB line of credit borrowings was due mainly to a $76.9 million increase in the average balance, as well as a one basis point increase in the average rate paid on the borrowings, to 0.54% for the current quarter.


2



The increase in interest expense on deposits was due primarily to a three basis point increase in the weighted average rate paid on the deposit portfolio, to 0.77% for the current quarter, due mainly to an increase in the weighted average rate paid on the certificate of deposit portfolio, as well as a $41.6 million increase in the average balance of the deposit portfolio. The weighted average rate of the retail certificate of deposit portfolio increased six basis points during the current quarter, to 1.39%, due primarily to a full quarter impact of a promotional campaign on Presidents' Day during the prior quarter.

Non-Interest Income
The following table presents the components of non-interest income for the time periods presented, along with the change measured in dollars and percent.
 
For the Three Months Ended
 
 
 
 
 
June 30,
 
March 31,
 
Change Expressed in:
 
2016
 
2016
 
Dollars
 
Percent
 
(Dollars in thousands)
 
 
NON-INTEREST INCOME:
 
 
 
 
 
 
 
Retail fees and charges
$
3,725

 
$
3,558

 
$
167

 
4.7
 %
Income from bank-owned life insurance ("BOLI")
648

 
1,459

 
(811
)
 
(55.6
)
Insurance commissions
517

 
1,060

 
(543
)
 
(51.2
)
Loan fees
326

 
336

 
(10
)
 
(3.0
)
Other non-interest income
213

 
213

 

 

Total non-interest income
$
5,429

 
$
6,626

 
$
(1,197
)
 
(18.1
)

The increase in retail fees and charges was due primarily to an increase in debit card income, due in part to seasonality, and an increase in service charges earned. The decrease in income from BOLI was due primarily to the receipt of death benefits during the prior quarter and no such proceeds in the current quarter. The decrease in insurance commissions was due largely to the receipt of annual commissions from certain insurance providers during the prior quarter and no such commissions in the current quarter.

Non-Interest Expense
The following table presents the components of non-interest expense for the time periods presented, along with the change measured in dollars and percent.
 
For the Three Months Ended
 
 
 
 
 
June 30,
 
March 31,
 
Change Expressed in:
 
2016
 
2016
 
Dollars
 
Percent
 
(Dollars in thousands)
 
 
NON-INTEREST EXPENSE:
 
 
 
 
 
 
 
Salaries and employee benefits
$
10,829

 
$
10,288

 
$
541

 
5.3
 %
Occupancy, net
2,606

 
2,616

 
(10
)
 
(0.4
)
Information technology and communications
2,716

 
2,609

 
107

 
4.1

Federal insurance premium
1,377

 
1,399

 
(22
)
 
(1.6
)
Deposit and loan transaction costs
1,449

 
1,396

 
53

 
3.8

Regulatory and outside services
1,370

 
1,144

 
226

 
19.8

Advertising and promotional
1,053

 
983

 
70

 
7.1

Low income housing partnerships
721

 
1,321

 
(600
)
 
(45.4
)
Office supplies and related expense
545

 
584

 
(39
)
 
(6.7
)
Other non-interest expense
661

 
1,086

 
(425
)
 
(39.1
)
Total non-interest expense
$
23,327

 
$
23,426

 
$
(99
)
 
(0.4
)

The increase in salaries and employee benefits expense was due primarily to compensation expense on unallocated Employee Stock Ownership Plan ("ESOP") shares related to the $0.25 per share True Blue Capitol dividend paid in June 2016. During the current quarter, $407 thousand of ESOP compensation expense was recognized related to the True Blue Capitol dividend. Similar to the current quarter, this dividend will result in $407 thousand of ESOP compensation expense in the fourth quarter of fiscal year 2016. The increase in regulatory and outside services was due primarily to the timing of external audit fees. The decrease in low income housing partnerships expense was due primarily to a decrease in amortization expense. The decrease in other non-interest expenses

3



was due mainly to a decrease in expenses related to other real estate owned ("OREO") operations, as well as a decrease in deposit account charge-offs related to debit card fraud.

The Company's efficiency ratio was 43.72% for the current quarter compared to 42.46% for the prior quarter. The change in the efficiency ratio was due primarily to a decrease in non-interest income and net interest income. The efficiency ratio is a measure of a financial institution's total non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. A lower value indicates that the financial institution is generating revenue with a lower level of expense.

Income Tax Expense
Income tax expense was $9.5 million for the current quarter compared to $10.2 million for the prior quarter. The decrease between periods was due primarily to a decrease in pre-tax income, as well as to a decrease in the effective income tax rate, from 32.2% for the prior quarter, to 31.6% for the current quarter. The decrease in the effective income tax rate between quarters was primarily a result of higher deductible expenses associated with dividends paid on allocated ESOP shares due to the True Blue Capitol dividend paid in June 2016. Management anticipates the effective tax rate for fiscal year 2016 will be approximately 32%, based on fiscal year 2016 estimates as of June 30, 2016.

Comparison of Operating Results for the Nine Months Ended June 30, 2016 and 2015

For the nine month period ended June 30, 2016, the Company recognized net income of $62.8 million, or $0.47 per share, compared to net income of $59.3 million, or $0.43 per share, for the nine month period ended June 30, 2015. The $3.5 million, or 5.9%, increase in net income was due primarily to a $2.6 million increase in net interest income and a $1.9 million increase in non-interest income, partially offset by a $1.2 million increase in non-interest expense. The $2.6 million, or 1.9%, increase in net interest income from the prior year nine month period was due primarily to a $6.4 million decrease in interest expense on term borrowings, partially offset by a $3.0 million increase in interest expense on deposits.

Net income attributable to the daily leverage strategy was $1.7 million during the current year nine month period, compared to $2.2 million for the prior year nine month period. The decrease in net income attributable to the daily leverage strategy was due to an increase in the average FHLB line of credit borrowings rate, which was a larger increase than the increase in the average yield earned on the cash balances held at the Federal Reserve Bank. The Company's efficiency ratio was 43.40% for the current year nine month period compared to 43.88% for the prior year nine month period.

The net interest margin increased three basis points, from 1.72% for the prior year nine month period to 1.75% for the current year nine month period. Excluding the effects of the daily leverage strategy, the net interest margin would have increased four basis points, from 2.07% for the prior year nine month period, to 2.11% for the current year nine month period. The increase in the net interest margin was due mainly to a decrease in interest expense on term borrowings, partially offset by an increase in interest expense on deposits.

Interest and Dividend Income
The weighted average yield on total interest-earning assets increased three basis points, from 2.71% for the prior year nine month period to 2.74% for the current year nine month period, and the average balance of interest-earning assets increased $19.9 million from the prior year nine month period. Absent the impact of the daily leverage strategy, the weighted average yield on total interest-earning assets would have decreased one basis point, from 3.22% for the prior year nine month period to 3.21% for the current year nine month period, while the average balance would have increased $38.0 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.
 
For the Nine Months Ended
 
 
 
 
 
June 30,
 
Change Expressed in:
 
2016
 
2015
 
Dollars
 
Percent
 
(Dollars in thousands)
 
 
INTEREST AND DIVIDEND INCOME:
 
 
 
 
 
 
 
Loans receivable
$
181,795

 
$
175,739

 
$
6,056

 
3.4
 %
MBS
22,934

 
28,387

 
(5,453
)
 
(19.2
)
FHLB stock
9,208

 
9,389

 
(181
)
 
(1.9
)
Cash and cash equivalents
7,057

 
4,174

 
2,883

 
69.1

Investment securities
4,524

 
5,262

 
(738
)
 
(14.0
)
Total interest and dividend income
$
225,518

 
$
222,951

 
$
2,567

 
1.2



4



The increase in interest income on loans receivable was due to a $391.4 million increase in the average balance of the portfolio, partially offset by a nine basis point decrease in the weighted average yield on the portfolio, to 3.61% for the current year nine month period. Loan growth was funded through cash flows from the securities portfolio along with deposit growth. The decrease in the weighted average yield was due primarily to loans repricing to lower market rates and the origination and purchase of loans between periods at rates less than the existing portfolio rate, along with an increase in the amortization of premiums paid for correspondent loans as a result of prepayment activity.

The decrease in interest income on the MBS portfolio was due primarily to a $282.8 million decrease in the average balance of the portfolio as cash flows not reinvested were used to fund loan growth. Additionally, the weighted average yield on the MBS portfolio decreased six basis points, from 2.26% during the prior year nine month period to 2.20% for the current year nine month period. The decrease in the weighted average yield was due to an increase in the impact of net premium amortization, as well as the purchase of MBS with yields lower than the weighted average yield on the existing portfolio. Net premium amortization of $3.7 million during the current year nine month period decreased the weighted average yield on the portfolio by 35 basis points. During the prior year nine month period, $4.0 million of net premiums were amortized, which decreased the weighted average yield on the portfolio by 32 basis points. As of June 30, 2016, the remaining net balance of premiums on our portfolio of MBS was $14.4 million.

The increase in interest income on cash and cash equivalents was due primarily to a 17 basis point increase in the weighted average yield resulting from an increase in the yield earned on balances held at the Federal Reserve Bank.

The decrease in interest income on investment securities was due primarily to a $95.5 million decrease in the average balance, partially offset by a three basis point increase in the weighted average yield on the portfolio. Cash flows not reinvested in the portfolio were used to fund loan growth.

Interest Expense
The weighted average rate paid on total interest-bearing liabilities decreased two basis points, from 1.13% for the prior year nine month period to 1.11% for the current year nine month period, while the average balance of interest-bearing liabilities increased $142.7 million from the prior year nine month period. Absent the impact of the daily leverage strategy, the weighted average rate paid on total interest-bearing liabilities would have decreased nine basis points from the prior year nine month period, to 1.28% for the current year nine month period, due primarily to a decrease in the cost of term borrowings, while the average balance of interest-bearing liabilities would have increased $160.8 million due primarily to growth in deposits. The following table presents the components of interest expense for the time periods presented, along with the change measured in dollars and percent.
 
For the Nine Months Ended
 
 
 
 
 
June 30,
 
Change Expressed in:
 
2016
 
2015
 
Dollars
 
Percent
 
(Dollars in thousands)
 
 
INTEREST EXPENSE:
 
 
 
 
 
 
 
FHLB advances
$
41,569

 
$
47,300

 
$
(5,731
)
 
(12.1
)%
FHLB line of credit
7,260

 
3,958

 
3,302

 
83.4

Deposits
27,761

 
24,729

 
3,032

 
12.3

Repurchase agreements
4,478

 
5,136

 
(658
)
 
(12.8
)
Total interest expense
$
81,068

 
$
81,123

 
$
(55
)
 
(0.1
)

The decrease in interest expense on FHLB advances was due primarily to a 23 basis point decrease in the weighted average rate paid on the portfolio, to 2.23% for the current year nine month period, mainly resulting from the prepayment of a $175.0 million advance between periods with an effective rate of 5.08%, which was replaced with a $175.0 million advance with an effective rate of 2.18%. The increase in interest expense on FHLB line of credit borrowings was due primarily to a 21 basis point increase in the weighted average rate paid on the borrowings.

The increase in interest expense on deposits was due to growth in the portfolio, and a four basis point increase in the weighted average rate, to 0.74% for the current year nine month period. The average balance of the deposit portfolio increased $258.3 million for the current year nine month period, with the majority of the increase in the retail deposit portfolio, specifically the certificates of deposit and checking portfolios.

The decrease in interest expense on repurchase agreements was due to the maturity between periods of a $20.0 million repurchase agreement at a rate of 4.45% that was not replaced.


5



Provision for Credit Losses
Capitol Federal Savings Bank (the "Bank") did not record a provision for credit losses during the current year nine month period, compared to a provision for credit losses during the prior year nine month period of $771 thousand. No provision for credit losses was recorded during the current year nine month period due to the continued low level of net loan charge-offs and delinquent loan balances. Net loan charge-offs were $131 thousand for the current year nine month period compared to $397 thousand for the prior year nine month period. The improvement in collateral values has assisted in lowering our net charge-off amounts compared to prior years. At June 30, 2016, loans 30 to 89 days delinquent were 0.30% of total loans and loans 90 or more days delinquent or in foreclosure were 0.26% of total loans.

Non-Interest Income
The following table presents the components of non-interest income for the time periods presented, along with the change measured in dollars and percent.
 
For the Nine Months Ended
 
 
 
 
 
June 30,
 
Change Expressed in:
 
2016
 
2015
 
Dollars
 
Percent
 
(Dollars in thousands)
 
 
NON-INTEREST INCOME:
 
 
 
 
 
 
 
Retail fees and charges
$
11,097

 
$
11,052

 
$
45

 
0.4
 %
Income from BOLI
2,810

 
819

 
1,991

 
243.1

Insurance commissions
2,093

 
2,059

 
34

 
1.7

Loan fees
1,004

 
1,071

 
(67
)
 
(6.3
)
Other non-interest income
617

 
678

 
(61
)
 
(9.0
)
Total non-interest income
$
17,621

 
$
15,679

 
$
1,942

 
12.4


The increase in income from BOLI was due mainly to the purchase of a new BOLI investment between periods, as well as to the receipt of death benefits in the current year and no such proceeds in the prior year.

Non-Interest Expense
The following table presents the components of non-interest expense for the time periods presented, along with the change measured in dollars and percent.
 
For the Nine Months Ended
 
 
 
 
 
June 30,
 
Change Expressed in:
 
2016
 
2015
 
Dollars
 
Percent
 
(Dollars in thousands)
 
 
NON-INTEREST EXPENSE:
 
 
 
 
 
 
 
Salaries and employee benefits
$
31,604

 
$
31,927

 
$
(323
)
 
(1.0
)%
Occupancy, net
7,894

 
7,437

 
457

 
6.1

Information technology and communications
7,883

 
7,726

 
157

 
2.0

Federal insurance premium
4,158

 
4,092

 
66

 
1.6

Deposit and loan transaction costs
4,119

 
4,065

 
54

 
1.3

Regulatory and outside services
4,000

 
3,867

 
133

 
3.4

Advertising and promotional
3,190

 
2,707

 
483

 
17.8

Low income housing partnerships
2,815

 
3,404

 
(589
)
 
(17.3
)
Office supplies and related expense
2,016

 
1,560

 
456

 
29.2

Other non-interest expense
2,664

 
2,322

 
342

 
14.7

Total non-interest expense
$
70,343

 
$
69,107

 
$
1,236

 
1.8


The increase in occupancy, net expense was due mainly to non-capitalizable costs and depreciation associated with the remodel of the Bank's Kansas City market area operations center. The increase in advertising and promotional expense was due primarily to the timing of media campaigns and sponsorships. The decrease in low income housing partnerships expense was due primarily to impairments of $611 thousand in the prior year period, compared to $85 thousand in the current year period. The increase in office supplies and related expense was due primarily to the purchase of cards enabled with chip card technology. The increase in other non-

6



interest expense was due largely to higher deposit account charge-offs related to debit card fraud in the current year, along with an increase in expenses related to OREO operations due to an increase in properties with deferred maintenance and damage issues.

Management anticipates that salaries and employee benefits will decrease approximately $500 thousand from fiscal year 2015, a change from our estimate in the previous quarter of a $500 thousand increase from fiscal year 2015. The change in our projection was due mainly to lower than anticipated employee benefit expenses.

The Bank invests in low income housing partnerships that make equity investments in affordable housing properties and is a limited partner in these partnerships. Currently the Bank accounts for these partnerships using the equity method of accounting as two of the Bank's officers are involved in the operational management of the low income housing partnership investment group. It is anticipated that, effective September 30, 2016, those two Bank officers will discontinue their involvement in the operational management of the investment group. Starting October 1, 2016, the Bank will begin using the proportional method of accounting for its low income housing partnership investments. In fiscal year 2017, the Bank will no longer report low income housing partnership expenses in non-interest expense. Rather, the pretax operating losses and related tax benefits of the investments will be reported as a component of income tax expense. If this change would have occurred during fiscal year 2016, the effective income tax rate would have been approximately 250 basis points higher and the efficiency ratio would have been approximately 175 basis points lower.

Income Tax Expense
Income tax expense was $28.9 million for the current year nine month period compared to $28.3 million for the prior year nine month period. The effective tax rate for the current year nine month period was 31.5% compared to 32.3% for the prior year nine month period. The decrease in the effective tax rate was due primarily to an increase in nontaxable income related to BOLI and higher low income housing tax credits in the current fiscal year.

Financial Condition as of June 30, 2016

Total assets were $9.24 billion at June 30, 2016 compared to $9.84 billion at September 30, 2015. The $602.4 million decrease was due primarily to a $619.8 million decrease in cash and cash equivalents and a $36.1 million decrease in FHLB stock, both due to the removal of the entire daily leverage strategy at June 30, 2016 compared to $700.0 million of the daily leverage strategy being in place at September 30, 2015. Additionally, loans receivable, net, increased $214.1 million which was partially offset by a $174.1 million decrease in the securities portfolio. The entire $2.10 billion daily leverage strategy was reinstated on July 1, 2016.

The loans receivable portfolio, net, increased to $6.84 billion at June 30, 2016, from $6.63 billion at September 30, 2015. This growth was primarily funded with cash flows from the securities portfolio and growth in deposits. During the current year nine month period, the Bank originated and refinanced $547.8 million of loans with a weighted average rate of 3.63%, purchased $460.9 million of loans from correspondent lenders with a weighted average rate of 3.50%, and purchased participations of $146.4 million of commercial real estate loans with a weighted average rate of 3.94%.

Total liabilities were $7.86 billion at June 30, 2016 compared to $8.43 billion at September 30, 2015. The $567.0 million decrease was due primarily to a $798.5 million decrease in FHLB borrowings, largely as a result of the removal of the entire daily leverage strategy at June 30, 2016, along with a $100.0 million decrease in term FHLB advances, partially offset by a $252.6 million increase in the deposit portfolio. The growth in deposits was primarily in the retail certificates of deposit, checking, and wholesale certificates of deposit portfolios, which increased $79.3 million, $60.3 million, and $55.9 million, respectively.

Stockholders' equity was $1.38 billion at June 30, 2016 compared to $1.42 billion at September 30, 2015. The $35.4 million decrease between periods was due primarily to the payment of $100.4 million in cash dividends, partially offset by net income of $62.8 million. The cash dividends paid during the current year nine month period consisted of a $0.25 per share cash true-up dividend related to fiscal year 2015 earnings per the Company's dividend policy, a $0.25 per share True Blue Capitol dividend, and three regular quarterly cash dividends totaling $0.255 per share. On July 21, 2016, the Company declared a regular quarterly cash dividend of $0.085 per share, or approximately $11.3 million, payable on August 19, 2016 to stockholders of record as of the close of business on August 5, 2016.


7



At June 30, 2016, Capitol Federal Financial, Inc., at the holding company level, had $93.6 million on deposit at the Bank. For fiscal year 2016, it is the intent of the Board of Directors and management to continue with the payout of 100% of the Company's earnings to its stockholders. Dividend payments depend upon a number of factors including the Company's financial condition and results of operations, regulatory capital requirements, regulatory limitations on the Bank's ability to make capital distributions to the Company, and the amount of cash at the holding company.

In October 2015, the Company announced a stock repurchase plan for up to $70.0 million of common stock. The repurchase plan does not have an expiration date. The Company has not repurchased any shares under the repurchase plan through the date of this release.

The following table presents the balance of stockholders' equity and related information as of the dates presented.
 
June 30,
 
September 30,
 
June 30,
 
2016
 
2015
 
2015
 
(Dollars in thousands)
Stockholders' equity
$
1,380,815

 
$
1,416,226

 
$
1,426,723

Equity to total assets at end of period
14.9
%
 
14.4
%
 
15.6
%

The following table presents a reconciliation of total to net shares outstanding as of June 30, 2016.
Total shares outstanding
137,235,922

Less unallocated ESOP shares and unvested restricted stock
(4,078,528
)
Net shares outstanding
133,157,394


Consistent with our goal to operate a sound and profitable financial organization, we actively seek to maintain a "well-capitalized" status for the Bank and the Company in accordance with regulatory standards. As of June 30, 2016, the Bank and Company exceeded all regulatory capital requirements. The following table presents the Bank's regulatory capital ratios at June 30, 2016.
 
 
 
Regulatory
 
 
 
Requirement For
 
Bank
 
"Well-Capitalized"
 
Ratios
 
Status
Tier 1 leverage ratio
10.9%
 
5.0
%
Common equity tier 1 capital ratio
28.8
 
6.5

Tier 1 capital ratio
28.8
 
8.0

Total capital ratio
29.0
 
10.0


A reconciliation of the Bank's equity under accounting principles generally accepted in the United States of America ("GAAP") to regulatory capital amounts as of June 30, 2016 is as follows (dollars in thousands):
Total Bank equity as reported under GAAP
$
1,240,932

Unrealized gains on available-for-sale ("AFS") securities
(6,820
)
Total tier 1 capital
1,234,112

Allowance for credit losses ("ACL")
9,312

Total capital
$
1,243,424



8



Capitol Federal Financial, Inc. is the holding company for the Bank. The Bank has 47 branch locations in Kansas and Missouri, and is one of the largest residential lenders in the State of Kansas. News and other information about the Company can be found on the Internet at the Bank's website, http://www.capfed.com.

Except for the historical information contained in this press release, the matters discussed may be deemed to be forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements about our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions. The words "may," "could," "should," "would," "will," "believe," "anticipate," "estimate," "expect," "intend," "plan," and similar expressions are intended to identify forward-looking statements. Forward-looking statements that involve risks and uncertainties, including changes in economic conditions in the Company's market area, changes in policies by regulatory agencies and other governmental initiatives affecting the financial services industry, fluctuations in interest rates, demand for loans in the Company's market area, the future earnings and capital levels of the Bank, which would affect the ability of the Company to pay dividends in accordance with its dividend policies, competition, and other risks detailed from time to time in documents filed or furnished by the Company with the SEC. Actual results may differ materially from those currently expected. These forward-looking statements represent the Company's judgment as of the date of this release. The Company disclaims, however, any intent or obligation to update these forward-looking statements.

For further information contact:
Jim Wempe
Kent Townsend
Vice President,
Executive Vice President,
Investor Relations
Chief Financial Officer and Treasurer
700 S Kansas Ave.
700 S Kansas Ave.
Topeka, KS 66603
Topeka, KS 66603
(785) 270-6055
(785) 231-6360
jwempe@capfed.com
ktownsend@capfed.com

9




SUPPLEMENTAL FINANCIAL INFORMATION

 
CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands, except per share amounts)
 
June 30,
 
September 30,
 
2016
 
2015
ASSETS:
 
 
 
Cash and cash equivalents (includes interest-earning deposits of $145,477 and $764,816)
$
152,831

 
$
772,632

Securities:
 
 
 
AFS at estimated fair value (amortized cost of $655,349 and $744,708)
666,313

 
758,171

Held-to-maturity at amortized cost (estimated fair value of $1,214,498 and $1,295,274)
1,188,913

 
1,271,122

Loans receivable, net (ACL of $9,312 and $9,443)
6,839,123

 
6,625,027

FHLB stock, at cost
114,425

 
150,543

Premises and equipment, net
81,928

 
75,810

Income taxes receivable, net
123

 
1,071

Other assets
198,119

 
189,785

TOTAL ASSETS
$
9,241,775

 
$
9,844,161

 
 
 
 
LIABILITIES:
 
 
 
Deposits
$
5,085,129

 
$
4,832,520

FHLB borrowings
2,472,026

 
3,270,521

Repurchase agreements
200,000

 
200,000

Advance payments by borrowers for taxes and insurance
37,902

 
61,818

Deferred income tax liabilities, net
25,925

 
26,391

Accounts payable and accrued expenses
39,978

 
36,685

Total liabilities
7,860,960

 
8,427,935

 
 
 
 
STOCKHOLDERS' EQUITY:
 
 
 
Preferred stock, $0.01 par value; 100,000,000 shares authorized, no shares issued or outstanding

 

Common stock, $0.01 par value; 1,400,000,000 shares authorized, 137,235,922 and 137,106,822
 
 
 
 shares issued and outstanding as of June 30, 2016 and September 30, 2015, respectively
1,372

 
1,371

Additional paid-in capital
1,153,589

 
1,151,041

Unearned compensation, ESOP
(40,060
)
 
(41,299
)
Retained earnings
259,094

 
296,739

Accumulated other comprehensive income, net of tax
6,820

 
8,374

Total stockholders' equity
1,380,815

 
1,416,226

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
9,241,775

 
$
9,844,161


10



 
CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands)
 
For the Three Months Ended
 
For the Nine Months Ended
 
June 30,
 
March 31,
 
June 30,
 
2016
 
2016
 
2016
 
2015
INTEREST AND DIVIDEND INCOME:
 
 
 
 
 
 
 
Loans receivable
$
60,840

 
$
60,732

 
$
181,795

 
$
175,739

MBS
7,401

 
7,702

 
22,934

 
28,387

FHLB stock
3,050

 
3,006

 
9,208

 
9,389

Cash and cash equivalents
2,730

 
2,707

 
7,057

 
4,174

Investment securities
1,506

 
1,485

 
4,524

 
5,262

Total interest and dividend income
75,527

 
75,632

 
225,518

 
222,951

 
 
 
 
 
 
 
 
INTEREST EXPENSE:
 
 
 
 
 
 
 
FHLB borrowings
16,361

 
16,394

 
48,829

 
51,258

Deposits
9,749

 
9,213

 
27,761

 
24,729

Repurchase agreements
1,487

 
1,487

 
4,478

 
5,136

Total interest expense
27,597

 
27,094

 
81,068

 
81,123

 
 
 
 
 
 
 
 
NET INTEREST INCOME
47,930

 
48,538

 
144,450

 
141,828

 
 
 
 
 
 
 
 
PROVISION FOR CREDIT LOSSES

 

 

 
771

NET INTEREST INCOME AFTER
 
 
 
 
 
 
 
PROVISION FOR CREDIT LOSSES
47,930

 
48,538

 
144,450

 
141,057

 
 
 
 
 
 
 
 
NON-INTEREST INCOME:
 
 
 
 
 
 
 
Retail fees and charges
3,725

 
3,558

 
11,097

 
11,052

Income from BOLI
648

 
1,459

 
2,810

 
819

Insurance commissions
517

 
1,060

 
2,093

 
2,059

Loan fees
326

 
336

 
1,004

 
1,071

Other non-interest income
213

 
213

 
617

 
678

Total non-interest income
5,429

 
6,626

 
17,621

 
15,679

 
 
 
 
 
 
 
 
NON-INTEREST EXPENSE:
 
 
 
 
 
 
 
Salaries and employee benefits
10,829

 
10,288

 
31,604

 
31,927

Occupancy, net
2,606

 
2,616

 
7,894

 
7,437

Information technology and communications
2,716

 
2,609

 
7,883

 
7,726

Federal insurance premium
1,377

 
1,399

 
4,158

 
4,092

Deposit and loan transaction costs
1,449

 
1,396

 
4,119

 
4,065

Regulatory and outside services
1,370

 
1,144

 
4,000

 
3,867

Advertising and promotional
1,053

 
983

 
3,190

 
2,707

Low income housing partnerships
721

 
1,321

 
2,815

 
3,404

Office supplies and related expense
545

 
584

 
2,016

 
1,560

Other non-interest expense
661

 
1,086

 
2,664

 
2,322

Total non-interest expense
23,327

 
23,426

 
70,343

 
69,107

INCOME BEFORE INCOME TAX EXPENSE
30,032

 
31,738

 
91,728

 
87,629

INCOME TAX EXPENSE
9,481

 
10,211

 
28,932

 
28,321

NET INCOME
$
20,551

 
$
21,527

 
$
62,796

 
$
59,308


11



The following is a reconciliation of the basic and diluted earnings per share calculations for the periods indicated.
 
For the Three Months Ended
 
For the Nine Months Ended
 
June 30,
 
March 31,
 
June 30,
 
2016
 
2016
 
2016
 
2015
 
(Dollars in thousands, except per share amounts)
Net income
$
20,551

 
$
21,527

 
$
62,796

 
$
59,308

Income allocated to participating securities
(11
)
 
(16
)
 
(54
)
 
(93
)
Net income available to common stockholders
$
20,540

 
$
21,511

 
$
62,742

 
$
59,215

 
 
 
 
 
 
 
 
Average common shares outstanding
133,018,908

 
132,918,277

 
132,919,316

 
135,971,846

Average committed ESOP shares outstanding
83,052

 
41,753

 
41,601

 
41,602

Total basic average common shares outstanding
133,101,960

 
132,960,030

 
132,960,917

 
136,013,448

 
 
 
 
 
 
 
 
Effect of dilutive stock options
148,751

 
71,012

 
104,911

 
27,254

 
 
 
 
 
 
 
 
Total diluted average common shares outstanding
133,250,711

 
133,031,042

 
133,065,828

 
136,040,702

 
 
 
 
 
 
 
 
Net earnings per share:
 
 
 
 
 
 
 
Basic
$
0.15

 
$
0.16

 
$
0.47

 
$
0.43

Diluted
$
0.15

 
$
0.16

 
$
0.47

 
$
0.43

 
 
 
 
 
 
 
 
Antidilutive stock options, excluded from the diluted
 
 
 
 
 
 
average common shares outstanding calculation
875,390

 
921,199

 
906,634

 
1,253,057




12



Loan Portfolio

The following table presents information related to the composition of our loan portfolio in terms of dollar amounts, weighted average rates, and percentages as of the dates indicated.
 
June 30, 2016
 
March 31, 2016
 
September 30, 2015
 
 
 
 
 
% of
 
 
 
 
 
% of
 
 
 
 
 
% of
 
Amount
 
Rate
 
Total
 
Amount
 
Rate
 
Total
 
Amount
 
Rate
 
Total
 
(Dollars in thousands)
Real estate loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
One- to four-family:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Originated
$
4,001,135

 
3.78
%
 
56.8
%
 
$
4,002,874

 
3.81
%
 
57.6
%
 
$
4,010,517

 
3.84
%
 
59.8
%
Correspondent purchased
2,092,608

 
3.51

 
29.7

 
2,016,685

 
3.52

 
29.0

 
1,846,213

 
3.52

 
27.5

Bulk purchased
439,954

 
2.22

 
6.3

 
456,876

 
2.23

 
6.6

 
485,682

 
2.25

 
7.2

Construction
78,358

 
3.50

 
1.1

 
76,457

 
3.51

 
1.1

 
75,152

 
3.57

 
1.1

Total
6,612,055

 
3.59

 
93.9

 
6,552,892

 
3.61

 
94.3

 
6,417,564

 
3.62

 
95.6

Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Permanent
110,601

 
4.16

 
1.6

 
112,414

 
4.15

 
1.6

 
110,938

 
4.14

 
1.6

Construction
187,705

 
4.00

 
2.7

 
153,231

 
3.91

 
2.2

 
54,768

 
4.13

 
0.8

Total
298,306

 
4.06

 
4.3

 
265,645

 
4.01

 
3.8

 
165,706

 
4.14

 
2.4

Total real estate loans
6,910,361

 
3.61

 
98.2

 
6,818,537

 
3.62

 
98.1

 
6,583,270

 
3.64

 
98.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Home equity
123,673

 
5.04

 
1.7

 
123,565

 
5.07

 
1.8

 
125,844

 
5.00

 
1.9

Other
4,568

 
4.17

 
0.1

 
4,279

 
4.17

 
0.1

 
4,179

 
4.03

 
0.1

Total consumer loans
128,241

 
5.01

 
1.8

 
127,844

 
5.04

 
1.9

 
130,023

 
4.97

 
2.0

Total loans receivable
7,038,602

 
3.64

 
100.0
%
 
6,946,381

 
3.65

 
100.0
%
 
6,713,293

 
3.66

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Undisbursed loan funds:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
One- to four-family
39,595

 
 
 
 
 
42,906

 
 
 
 
 
45,696

 
 
 
 
Commercial
166,237

 
 
 
 
 
139,495

 
 
 
 
 
44,869

 
 
 
 
ACL
9,312

 
 
 
 
 
9,193

 
 
 
 
 
9,443

 
 
 
 
Discounts/unearned loan fees
24,352

 
 
 
 
 
24,347

 
 
 
 
 
24,213

 
 
 
 
Premiums/deferred costs
(40,017
)
 
 
 
 
 
(38,754
)
 
 
 
 
 
(35,955
)
 
 
 
 
Total loans receivable, net
$
6,839,123

 
 
 
 
 
$
6,769,194

 
 
 
 
 
$
6,625,027

 
 
 
 




13



Loan Activity: The following tables summarize activity in our loan portfolio, along with weighted average rates where applicable, for the periods indicated, excluding changes in undisbursed loan funds, ACL, discounts/unearned loan fees, and premiums/deferred costs. Loans that were paid-off as a result of refinances are included in repayments. Loan endorsements are not included in the activity in the following tables because a new loan is not generated at the time of the endorsement. The endorsed balance and rate are included in the ending loan portfolio balance and rate. During the three and nine months ended June 30, 2016, the Bank endorsed $36.4 million and $80.5 million of one- to four-family loans, respectively, reducing the average rate on those loans by 95 and 89 basis points, respectively.
 
For the Three Months Ended
 
June 30, 2016
 
March 31, 2016
 
December 31, 2015
 
September 30, 2015
 
Amount
 
Rate
 
Amount
 
Rate
 
Amount
 
Rate
 
Amount
 
Rate
 
(Dollars in thousands)
Beginning balance
$
6,946,381

 
3.65
%
 
$
6,753,249

 
3.65
%
 
$
6,713,293

 
3.66
%
 
$
6,547,702

 
3.67
%
Originated and refinanced:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed
155,179

 
3.52

 
117,205

 
3.65

 
157,447

 
3.67

 
165,646

 
3.73

Adjustable
44,319

 
3.61

 
35,495

 
3.77

 
38,117

 
3.74

 
51,634

 
3.59

Purchased and participations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed
178,762

 
3.71

 
249,017

 
3.68

 
101,644

 
3.69

 
164,397

 
3.64

Adjustable
24,715

 
2.90

 
27,355

 
2.93

 
25,861

 
3.17

 
65,722

 
3.69

Repayments
(310,041
)
 
 
 
(235,202
)
 
 
 
(280,978
)
 
 
 
(280,671
)
 
 
Principal recoveries (charge-offs), net
119

 
 
 
(8
)
 
 
 
(242
)
 
 
 
(158
)
 
 
Other
(832
)
 
 
 
(730
)
 
 
 
(1,893
)
 
 
 
(979
)
 
 
Ending balance
$
7,038,602

 
3.64

 
$
6,946,381

 
3.65

 
$
6,753,249

 
3.65

 
$
6,713,293

 
3.66

 
For the Nine Months Ended
 
June 30, 2016
 
June 30, 2015
 
Amount
 
Rate
 
Amount
 
Rate
 
(Dollars in thousands)
Beginning balance
$
6,713,293

 
3.66
%
 
$
6,289,519

 
3.76
%
Originated and refinanced:
 
 
 
 
 
 
 
Fixed
429,831

 
3.61

 
440,697

 
3.55

Adjustable
117,931

 
3.70

 
122,540

 
3.64

Purchased and participations:
 
 
 
 
 
 
 
Fixed
529,423

 
3.69

 
386,631

 
3.59

Adjustable
77,931

 
3.00

 
94,609

 
2.94

Repayments
(826,221
)
 
 
 
(781,197
)
 
 
Principal charge-offs, net
(131
)
 
 
 
(397
)
 
 
Other
(3,455
)
 
 
 
(4,700
)
 
 
Ending balance
$
7,038,602

 
3.64

 
$
6,547,702

 
3.67



14



The following table presents loan origination, refinance, and purchase activity for the periods indicated, excluding endorsement activity, along with associated weighted average rates and percent of total. The fixed-rate one- to four-family loans less than or equal to 15 years have an original maturity at origination of less than or equal to 15 years, while fixed-rate one- to four-family loans greater than 15 years have an original maturity at origination of greater than 15 years. The adjustable-rate one- to four-family loans less than or equal to 36 months have a term to first reset of less than or equal to 36 months at origination, and adjustable-rate one- to four-family loans greater than 36 months have a term to first reset of greater than 36 months at origination.
 
For the Three Months Ended
 
For the Nine Months Ended 
 
June 30, 2016
 
June 30, 2016
 
Amount
 
Rate
 
% of Total
 
Amount
 
Rate
 
% of Total
Fixed-rate:
(Dollars in thousands)
One- to four-family:
 
 
 
 
 
 
 
 
 
 
 
<= 15 years
$
57,702

 
2.93
%
 
14.3
%
 
$
176,597

 
3.00
%
 
15.3
%
> 15 years
240,111

 
3.66

 
59.6

 
605,575

 
3.73

 
52.4

Commercial real estate
34,475

 
4.40

 
8.6

 
173,199

 
4.00

 
15.0

Home equity
1,452

 
5.62

 
0.4

 
3,230

 
5.72

 
0.2

Other
201

 
8.75

 

 
653

 
9.02

 
0.1

Total fixed-rate
333,941

 
3.62

 
82.9

 
959,254

 
3.66

 
83.0

 
 
 
 
 
 
 
 
 
 
 
 
Adjustable-rate:
 
 
 
 
 
 
 
 
 
 
 
One- to four-family:
 
 
 
 
 
 
 
 
 
 
 
<= 36 months
2,433

 
2.56

 
0.6

 
4,255

 
2.61

 
0.4

> 36 months
48,049

 
2.88

 
11.9

 
134,220

 
2.95

 
11.6

Commercial real estate

 

 

 
3,376

 
4.25

 
0.3

Home equity
17,833

 
4.72

 
4.4

 
51,803

 
4.63

 
4.5

Other
719

 
3.41

 
0.2

 
2,208

 
3.45

 
0.2

Total adjustable-rate
69,034

 
3.35

 
17.1

 
195,862

 
3.42

 
17.0

 
 
 
 
 
 
 
 
 
 
 
 
Total originated, refinanced and purchased
$
402,975

 
3.58

 
100.0
%
 
$
1,155,116

 
3.62

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
Purchased and participation loans included above:
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate:
 
 
 
 
 
 
 
 
 
 
 
Correspondent - one- to four-family
$
144,287

 
3.55

 
 
 
$
386,355

 
3.60

 
 
Participations - commercial real estate
34,475

 
4.40

 
 
 
143,068

 
3.93

 
 
Total fixed-rate purchased/participations
178,762

 
3.71

 
 
 
529,423

 
3.69

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjustable-rate:
 
 
 
 
 
 
 
 
 
 
 
Correspondent - one- to four-family
24,715

 
2.90

 
 
 
74,555

 
2.94

 
 
Participations - commercial real estate

 

 
 
 
3,376

 
4.25

 
 
Total adjustable-rate purchased/participations
24,715

 
2.90

 
 
 
77,931

 
3.00

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total purchased/participation loans
$
203,477

 
3.61

 
 
 
$
607,354

 
3.60

 
 




15



One- to Four-Family Loans: The following table presents, for our portfolio of one- to four-family loans, the amount, percent of total, weighted average credit score, weighted average loan-to-value ("LTV") ratio, and average balance per loan at the dates presented. Credit scores are updated at least semiannually, with the last update in March 2016, from a nationally recognized consumer rating agency. The LTV ratios were based on the current loan balance and either the lesser of the purchase price or original appraisal, or the most recent Bank appraisal, if available. In most cases, the most recent appraisal was obtained at the time of origination.
 
June 30, 2016
 
March 31, 2016
 
September 30, 2015
 
 
 
% of
 
Credit
 
 
 
Average
 
 
 
% of
 
Credit
 
 
 
Average
 
 
 
% of
 
Credit
 
 
 
Average
 
Amount
 
Total
 
Score
 
LTV
 
Balance
 
Amount
 
Total
 
Score
 
LTV
 
Balance
 
Amount
 
Total
 
Score
 
LTV
 
Balance
 
(Dollars in thousands)
Originated
$
4,001,135

 
61.2
%
 
767

 
63
%
 
$
131

 
$
4,002,874

 
61.8
%
 
765

 
63
%
 
$
130

 
$
4,010,517

 
63.2
%
 
765

 
64
%
 
$
129

Correspondent purchased
2,092,608

 
32.0

 
763

 
68

 
352

 
2,016,685

 
31.1

 
764

 
68

 
348

 
1,846,213

 
29.1

 
764

 
68

 
344

Bulk purchased
439,954

 
6.8

 
753

 
64

 
307

 
456,876

 
7.1

 
753

 
65

 
308

 
485,682

 
7.7

 
752

 
65

 
310

 
$
6,533,697

 
100.0
%
 
765

 
65

 
172

 
$
6,476,435

 
100.0
%
 
764

 
65

 
170

 
$
6,342,412

 
100.0
%
 
764

 
65

 
167


The following table summarizes our one- to four-family loan origination, refinance, and correspondent purchase commitments as of June 30, 2016, along with associated weighted average rates. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a rate lock fee. A percentage of the commitments are expected to expire unfunded, so the amounts reflected in the table below are not necessarily indicative of future cash requirements.
 
Fixed-Rate
 
 
 
 
 
 
 
15 years
 
More than
 
Adjustable-
 
Total
 
or less
 
15 years
 
Rate
 
Amount
 
Rate
 
(Dollars in thousands)
Originate/refinance
$
27,392

 
$
54,321

 
$
21,306

 
$
103,019

 
3.31
%
Correspondent
14,893

 
126,771

 
15,244

 
156,908

 
3.62

 
$
42,285

 
$
181,092

 
$
36,550

 
$
259,927

 
3.50

 
 
 
 
 
 
 
 
 
 
Rate
3.11
%
 
3.71
%
 
2.90
%
 
 
 
 


16



The following table presents originated, refinanced, and correspondent activity in our one- to four-family loan portfolio, excluding endorsement activity, along with associated weighted average LTVs and weighted average credit scores for the periods indicated.
 
For the Three Months Ended
 
For the Nine Months Ended
 
June 30, 2016
 
June 30, 2016
 
 
 
 
 
Credit
 
 
 
 
 
Credit
 
Amount
 
LTV
 
Score
 
Amount
 
LTV
 
Score
 
(Dollars in thousands)
Originated
$
146,590

 
80
%
 
773

 
$
361,651

 
78
%
 
769

Refinanced by Bank customers
32,703

 
69

 
766

 
98,086

 
69

 
768

Correspondent purchased
169,002

 
74

 
761

 
460,910

 
74

 
763

 
$
348,295

 
76

 
766

 
$
920,647

 
75

 
766


The following table presents the amount, percent of total, and weighted average rate, by state, for one- to four-family loan originations and correspondent purchases where originations and purchases in the state exceeded five percent of the total amount originated and purchased during the nine month period ended June 30, 2016.
 
 
For the Three Months Ended
 
For the Nine Months Ended
 
 
June 30, 2016
 
June 30, 2016
State
 
Amount
 
% of Total
 
Rate
 
Amount
 
% of Total
 
Rate
 
 
(Dollars in thousands)
Kansas
 
$
162,151

 
46.5
%
 
3.40
%
 
$
420,566

 
45.7
%
 
3.46
%
Missouri
 
66,734

 
19.2

 
3.45

 
175,815

 
19.1

 
3.50

Texas
 
57,316

 
16.5

 
3.43

 
146,303

 
15.9

 
3.46

Tennessee
 
16,340

 
4.7

 
3.52

 
47,921

 
5.2

 
3.54

Other states
 
45,754

 
13.1

 
3.39

 
130,042

 
14.1

 
3.47

 
 
$
348,295

 
100.0
%
 
3.42

 
$
920,647

 
100.0
%
 
3.47


Commercial Real Estate Loans: During the current quarter, the Bank continued to grow its commercial real estate loan portfolio by purchasing a $34.5 million participation in a commercial real estate construction loan. At June 30, 2016, the Bank had $51.6 million of outstanding commercial real estate loan commitments. The Bank intends to continue to grow its commercial real estate loan portfolio through participations with correspondent lenders and other lead banks with which the Bank already has commercial real estate lending relationships.

The following table presents the Bank's commercial real estate loans and commitments by industry classification, as defined by the North American Industry Classification System, as of June 30, 2016.
 
Unpaid
 
Undisbursed
 
Gross Loan
 
Outstanding
 
 
 
% of
 
Principal