Capitol Federal Financial, Inc.® Reports First Quarter Fiscal Year 2021 Results
TOPEKA, Kan.–(BUSINESS WIRE)–Capitol Federal Financial, Inc.® (NASDAQ: CFFN) (the “Company”), the parent company of Capitol Federal Savings Bank (the “Bank”), announced results today for the quarter ended December 31, 2020. Detailed results will be available in the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2020, which will be filed with the Securities and Exchange Commission (“SEC”) on or about February 9, 2021 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 $18.9 million;
- basic and diluted earnings per share of $0.14;
- net interest margin of 1.92%;
- annualized deposit growth of approximately 14%;
- paid dividends of $29.1 million, or $0.215 per share;
- the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments, on October 1, 2020 which resulted in a cumulative-effect adjustment to retained earnings of $2.3 million (net of tax of $739 thousand); and
- on January 26, 2021, announced a cash dividend of $0.085 per share, payable on February 19, 2021 to stockholders of record as of the close of business on February 5, 2021.
Comparison of Operating Results for the Three Months Ended December 31, 2020 and September 30, 2020
For the quarter ended December 31, 2020, the Company recognized net income of $18.9 million, or $0.14 per share, compared to net income of $18.3 million, or $0.13 per share, for the quarter ended September 30, 2020. The increase was due primarily to a lower effective tax rate compared to the prior quarter. The net interest margin decreased 11 basis points, from 2.03% for the prior quarter to 1.92% for the current quarter. The decrease in the net interest margin was due mainly to a decrease in the loan portfolio and securities portfolio yields, along with a decrease in the average balance of the loan portfolio, partially offset by a decrease in the cost of deposits.
Since the onset of the Coronavirus Disease 2019 (“COVID-19”) pandemic, the Bank has lowered its offered rates on all deposit products except retail checking and savings accounts. The impact of reducing rates offered on our certificate of deposit products lowers the cost of deposits as certificates of deposit reprice to a lower rate when they mature and as new accounts are opened. We responded to lower market rates for lending by lowering rates offered on our loan products. Given current rates offered on new loans, increased prepayments on existing loans, and the volume of one- to four-family refinances and endorsements, the yield on the total loan portfolio is likely to continue to decrease. With significant cash inflows realized due to investment securities being called and prepayments on loans and mortgage-backed securities (“MBS”), the current yields on reinvested funds into new securities are lower than existing portfolio yields, reducing the yield on our investments significantly. Considering the drastic changes in market rates and the ongoing economic uncertainty, our net interest margin could continue to decrease, with further downside risk as a result of high levels of prepayments and premium amortization on correspondent one- to four-family loans and MBS.
Interest and Dividend Income
The weighted average yield on total interest-earning assets decreased 19 basis points, from 3.17% for the prior quarter to 2.98% for the current quarter, while the average balance of interest-earning assets increased $122.5 million between the two periods. 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 |
|
|
|
|
|||||||||
|
|
December 31, |
|
September 30, |
|
Change Expressed in: |
|||||||||
|
|
2020 |
|
2020 |
|
Dollars |
|
Percent |
|||||||
|
|
(Dollars in thousands) |
|
|
|||||||||||
|
INTEREST AND DIVIDEND INCOME: |
|
|
|
|
|
|
|
|||||||
|
Loans receivable |
$ |
60,694 |
|
|
$ |
64,315 |
|
|
$ |
(3,621 |
) |
|
(5.6 |
)% |
|
MBS |
5,710 |
|
|
5,425 |
|
|
285 |
|
|
5.3 |
|
|||
|
Federal Home Loan Bank Topeka (“FHLB”) stock |
1,069 |
|
|
1,080 |
|
|
(11 |
) |
|
(1.0 |
) |
|||
|
Investment securities |
683 |
|
|
731 |
|
|
(48 |
) |
|
(6.6 |
) |
|||
|
Cash and cash equivalents |
51 |
|
|
55 |
|
|
(4 |
) |
|
(7.3 |
) |
|||
|
Total interest and dividend income |
$ |
68,207 |
|
|
$ |
71,606 |
|
|
$ |
(3,399 |
) |
|
(4.7 |
) |
The decrease in interest income on loans receivable was due to a $242.0 million decrease in the average balance and eight basis point decrease in the weighted average portfolio yield. The decrease in the average balance was primarily in the correspondent loan portfolio, as payoff activity outpaced purchases during the current quarter, along with a decrease in the commercial loan portfolio due primarily to the payoff of two large loans at the beginning of the current quarter. The weighted average yield on the loans receivable portfolio decreased from 3.49% for the prior quarter to 3.41% for the current quarter, due mainly to endorsements and refinances of one- to four-family loans to lower current market rates, along with an increase in premium amortization related to correspondent loan payoff activity.
The increase in interest income on the MBS portfolio was due to a $274.2 million increase in the average balance as a result of purchases, primarily utilizing funds received from loan repayments. This was partially offset by a 36 basis point decrease in the weighted average yield, to 1.75% for the current quarter, due primarily to purchases at lower market yields, along with an increase in the impact of net premium amortization.
Interest Expense
The weighted average rate paid on total interest-bearing liabilities decreased 10 basis points, from 1.30% for the prior quarter to 1.20% for the current quarter, while the average balance of interest-bearing liabilities increased $119.7 million between the two periods. 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 |
|
|
|
|
|||||||||
|
|
December 31, |
|
September 30, |
|
Change Expressed in: |
|||||||||
|
|
2020 |
|
2020 |
|
Dollars |
|
Percent |
|||||||
|
|
(Dollars in thousands) |
|
|
|||||||||||
|
INTEREST EXPENSE: |
|
|
|
|
|
|
|
|||||||
|
Deposits |
$ |
14,067 |
|
|
$ |
15,299 |
|
|
$ |
(1,232) |
|
|
(8.1) |
% |
|
Borrowings |
10,327 |
|
|
10,624 |
|
|
(297) |
|
|
(2.8) |
|
|||
|
Total interest expense |
$ |
24,394 |
|
|
$ |
25,923 |
|
|
$ |
(1,529) |
|
|
(5.9) |
|
The decrease in interest expense on deposits was due primarily to a decrease in the weighted average rate paid on the certificate of deposit portfolio. Management has generally reduced deposit offer rates as discussed above. See the Financial Condition section below for additional information on deposits.
The decrease in interest expense on borrowings was due primarily to not replacing term borrowings that matured during the current quarter and prior quarter. Cash flows from the deposit portfolio were generally utilized to repay maturing term borrowings during the current and prior quarters. The average balance of borrowings decreased $44.2 million compared to the prior quarter.
Provision for Credit Losses
ASU 2016-13 became effective for the Company on October 1, 2020. This ASU replaced the incurred loss impairment methodology for calculating allowance for credit losses (“ACL”) under accounting principles generally accepted in the United States of America (“GAAP”) with a new impairment methodology, commonly known as the current expected credit loss (“CECL”) methodology. The new methodology requires the Company to measure, at each reporting date, the expected credit losses for loans and off-balance sheet credit exposures over their contractual lives based on historical experience, current conditions, and reasonable and supportable forecasts.
For the quarter ended December 31, 2020, the Bank recorded a negative provision for credit losses of $1.5 million, compared to no provision for credit losses for the quarter ended September 30, 2020. The negative provision in the current quarter was composed of a $177 thousand decrease in the ACL for loans and a $1.4 million decrease in the reserve for off-balance sheet credit exposures. The $177 thousand decrease in the ACL for loans was due primarily to a reduction in the correspondent one- to four-family loan portfolio, partially offset by a slight increase in the ACL for commercial loans due to an increase in the balance of special mention loans during the current quarter. The $1.4 million reduction in the reserve for off-balance sheet credit exposures was due primarily to an improved economic forecast during the current quarter with consideration given to the current economic climate in which these loans are being underwritten. See additional discussion regarding management’s evaluation of the adequacy of the Bank’s ACL and reserve for off-balance sheet credit exposures at December 31, 2020 in the Asset Quality section below.
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 |
|
|
|
|
|||||||||
|
|
December 31, |
|
September 30, |
|
Change Expressed in: |
|||||||||
|
|
2020 |
|
2020 |
|
Dollars |
|
Percent |
|||||||
|
|
(Dollars in thousands) |
|
|
|||||||||||
|
NON-INTEREST INCOME: |
|
|
|
|
|
|
|
|||||||
|
Deposit service fees |
$ |
2,947 |
|
|
$ |
2,901 |
|
|
$ |
46 |
|
|
1.6 |
% |
|
Insurance commissions |
638 |
|
|
725 |
|
|
(87 |
) |
|
(12.0 |
) |
|||
|
Other non-interest income |
1,485 |
|
|
1,359 |
|
|
126 |
|
|
9.3 |
|
|||
|
Total non-interest income |
$ |
5,070 |
|
|
$ |
4,985 |
|
|
$ |
85 |
|
|
1.7 |
|
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 |
|
|
|
|
|||||||||
|
|
December 31, |
|
September 30, |
|
Change Expressed in: |
|||||||||
|
|
2020 |
|
2020 |
|
Dollars |
|
Percent |
|||||||
|
|
(Dollars in thousands) |
|
|
|||||||||||
|
NON-INTEREST EXPENSE: |
|
|
|
|
|
|
|
|||||||
|
Salaries and employee benefits |
$ |
14,138 |
|
|
$ |
13,231 |
|
|
$ |
907 |
|
|
6.9 |
% |
|
Information technology and related expense |
4,233 |
|
|
4,280 |
|
|
(47 |
) |
|
(1.1 |
) |
|||
|
Occupancy, net |
3,379 |
|
|
3,658 |
|
|
(279 |
) |
|
(7.6 |
) |
|||
|
Regulatory and outside services |
1,585 |
|
|
1,574 |
|
|
11 |
|
|
0.7 |
|
|||
|
Advertising and promotional |
838 |
|
|
1,116 |
|
|
(278 |
) |
|
(24.9 |
) |
|||
|
Deposit and loan transaction costs |
766 |
|
|
804 |
|
|
(38 |
) |
|
(4.7 |
) |
|||
|
Federal insurance premium |
621 |
|
|
627 |
|
|
(6 |
) |
|
(1.0 |
) |
|||
|
Office supplies and related expense |
424 |
|
|
609 |
|
|
(185 |
) |
|
(30.4 |
) |
|||
|
Other non-interest expense |
1,083 |
|
|
1,277 |
|
|
(194 |
) |
|
(15.2 |
) |
|||
|
Total non-interest expense |
$ |
27,067 |
|
|
$ |
27,176 |
|
|
$ |
(109 |
) |
|
(0.4 |
) |
The increase in salaries and employee benefits was due primarily to non-officer employee bonuses of $313 thousand paid during the current quarter in appreciation of all the hard work and dedication by our non-officer employees during these challenging times, along with an increase in loan commissions. The decrease in occupancy, net was due mainly to a decrease in utilities and maintenance during the current quarter. The decrease in advertising and promotional expenses was due to the timing of campaigns. The decrease in office supplies and related expenses was due to the timing of supply purchases. The decrease in other non-interest expense was due to a reduction in customer debit card fraud losses, a decrease in mortgage servicing asset valuation charges related to changes in prepayment speeds, and a decrease in amortization of deposit intangibles.
The Company’s efficiency ratio was 55.37% for the current quarter compared to 53.64% for the prior quarter. The change in the efficiency ratio was due primarily to lower net interest income in the current quarter compared to the prior quarter. 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 higher value indicates that the financial institution is generating revenue with a proportionally higher level of expense, relative to the net interest margin.
Income Tax Expense
The following table presents pretax income, income tax expense, and net income for the time periods presented, along with the change measured in dollars and percent.
|
|
For the Three Months Ended |
|
|
|
|
|||||||||
|
|
December 31, |
|
September 30, |
|
Change Expressed in: |
|||||||||
|
|
2020 |
|
2020 |
|
Dollars |
|
Percent |
|||||||
|
|
(Dollars in thousands) |
|
|
|||||||||||
|
Income before income tax expense |
$ |
23,348 |
|
|
$ |
23,492 |
|
|
$ |
(144 |
) |
|
(0.6 |
)% |
|
Income tax expense |
4,450 |
|
|
5,213 |
|
|
(763 |
) |
|
(14.6 |
) |
|||
|
Net income |
$ |
18,898 |
|
|
$ |
18,279 |
|
|
$ |
619 |
|
|
3.4 |
|
|
|
|
|
|
|
|
|
|
|||||||
|
Effective Tax Rate |
19.1 |
% |
|
22.2 |
% |
|
|
|
|
|||||
The decrease in income tax expense was due mainly to a lower effective tax rate compared to the prior quarter. The lower effective tax rate was due primarily to true-ups related to the preparation of the September 30, 2020 federal and state tax returns. Management anticipates the effective income tax rate for fiscal year 2021 will be approximately 21% to 22%.
Comparison of Operating Results for the Three Months Ended December 31, 2020 and 2019
The Company recognized net income of $18.9 million, or $0.14 per share, for the quarter ended December 31, 2020 compared to net income of $22.5 million, or $0.16 per share, for the quarter ended December 31, 2019. The decrease in net income was due primarily to a decrease in net interest income compared to the prior year quarter, partially offset by recording a negative provision for credit losses in the current quarter. Net interest income decreased $4.9 million, or 10.0%, from the prior year quarter to $43.8 million for the current quarter. The net interest margin decreased 26 basis points, from 2.18% for the prior year quarter to 1.92% for the current quarter. The decrease in the net interest margin was due mainly to a decrease in asset yields, along with a change in asset mix as cash flows from the loan portfolio have been used to purchase lower yielding securities, partially offset by a decrease in the cost of deposits and borrowings.
Interest and Dividend Income
The weighted average yield on total interest-earning assets decreased 60 basis points, from 3.58% for the prior year quarter to 2.98% for the current quarter, while the average balance of interest-earning assets increased $202.2 million. The decrease in the weighted average yield between periods was due primarily to a decrease in the loan portfolio yield, along with a change in asset mix as cash flows from the loan portfolio have been used to purchase lower yielding securities. 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 |
|
|
|
|
|||||||||
|
|
December 31, |
|
Change Expressed in: |
|||||||||||
|
|
2020 |
|
2019 |
|
Dollars |
|
Percent |
|||||||
|
|
(Dollars in thousands) |
|
|
|||||||||||
|
INTEREST AND DIVIDEND INCOME: |
|
|
|
|
|
|
|
|||||||
|
Loans receivable |
$ |
60,694 |
|
|
$ |
69,914 |
|
|
$ |
(9,220) |
|
|
(13.2) |
% |
|
MBS |
5,710 |
|
|
6,102 |
|
|
(392) |
|
|
(6.4) |
|
|||
|
FHLB stock |
1,069 |
|
|
1,826 |
|
|
(757) |
|
|
(41.5) |
|
|||
|
Investment securities |
683 |
|
|
1,507 |
|
|
(824) |
|
|
(54.7) |
|
|||
|
Cash and cash equivalents |
51 |
|
|
687 |
|
|
(636) |
|
|
(92.6) |
|
|||
|
Total interest and dividend income |
$ |
68,207 |
|
|
$ |
80,036 |
|
|
$ |
(11,829) |
|
|
(14.8) |
|
The decrease in interest income on loans receivable was due mainly to a 34 basis point decrease in the weighted average yield on the portfolio, from 3.75% for the prior year quarter to 3.41% for the current quarter, primarily on correspondent loans related to higher premium amortization resulting from increases in payoff and endorsement activity, as well as adjustable-rate loans repricing to lower market rates, endorsements and refinances of one- to four-family originated loans to lower market rates, and the origination of new loans at lower market rates. Additionally, the average balance of the portfolio decreased $339.4 million compared to the prior year quarter. The majority of the decrease in the average balance of the loan portfolio between periods was due to a reduction in the correspondent one- to four-family loan portfolio as we suspended accepting new applications for these loans in mid-March 2020 to mid-June 2020. This was done to manage the influx of refinance requests from current customers in our local market areas during that time period while also managing changing Bank operations due to the COVID-19 pandemic.
The decrease in interest income on the MBS portfolio was due to an 86 basis point decrease in the weighted average yield to 1.75% in the current quarter as a result of new purchases at lower market yields and the repricing of existing adjustable-rate MBS to lower market yields, partially offset by a $368.6 million increase in the average balance of the portfolio.
The decrease in dividend income on FHLB stock was due mainly to a decrease in the dividend rate paid by FHLB, along with a decrease in the average balance of FHLB stock. The average balance decreased as the Bank did not replace certain maturing FHLB advances between periods, which reduced the amount of FHLB stock owned by the Bank per FHLB requirements.
The decrease in interest income on investment securities was due to a 149 basis point decrease in the weighted average yield to 0.63% for the current quarter as a result of new purchases at lower market yields, partially offset by a $146.9 million increase in the average balance of the portfolio.
The decrease in interest income on cash and cash equivalents was due to a decrease in the yield earned on cash held at the Federal Reserve Bank of Kansas City, partially offset by a $39.3 million increase in the average balance.
Interest Expense
The weighted average rate paid on total interest-bearing liabilities decreased 39 basis points, from 1.59% for the prior year quarter to 1.20% for the current quarter, while the average balance of interest-bearing liabilities increased $244.0 million. The increase in the average balance was primarily in checking, savings and money market accounts, partially offset by a decrease in borrowings. 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 |
|
|
|
|
|||||||||
|
|
December 31, |
|
Change Expressed in: |
|||||||||||
|
|
2020 |
|
2019 |
|
Dollars |
|
Percent |
|||||||
|
|
(Dollars in thousands) |
|
|
|||||||||||
|
INTEREST EXPENSE: |
|
|
|
|
|
|
|
|||||||
|
Deposits |
$ |
14,067 |
|
|
$ |
17,962 |
|
|
$ |
(3,895) |
|
|
(21.7) |
% |
|
Borrowings |
10,327 |
|
|
13,377 |
|
|
(3,050) |
|
|
(22.8) |
|
|||
|
Total interest expense |
$ |
24,394 |
|
|
$ |
31,339 |
|
|
$ |
(6,945) |
|
|
(22.2) |
|
The decrease in interest expense on deposits was due mainly to a decrease in the weighted average rate paid on retail/business certificates of deposit, money market accounts, and wholesale certificates of deposit, which decreased by 33 basis points, 38 basis points, and 155 basis points, respectively. Since the onset of the COVID-19 pandemic, certificates of deposit have been gradually repricing down as they renew or are replaced at lower offered rates and rates on money market accounts have been lowered.
The decrease in interest expense on borrowings was due primarily to a $457.9 million decrease in the average balance, as certain maturing FHLB advances and repurchase agreements were not replaced and the Bank paid down its FHLB line of credit with funds generated from the deposit portfolio.
Provision for Credit Losses
The Bank recorded a negative provision for credit losses during the current quarter of $1.5 million, compared to a $225 thousand provision for credit losses during the prior year quarter. See the Comparison of Operating Results for the Three Months Ended December 31, 2020 and September 30, 2020 above for discussion regarding the negative provision for credit losses in the current quarter. See additional discussion regarding management’s evaluation of the adequacy of the Bank’s ACL and reserve for off-balance sheet credit exposures at December 31, 2020 in the Asset Quality section below.
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 |
|
|
|
|
|||||||||
|
|
December 31, |
|
Change Expressed in: |
|||||||||||
|
|
2020 |
|
2019 |
|
Dollars |
|
Percent |
|||||||
|
|
(Dollars in thousands) |
|
|
|||||||||||
|
NON-INTEREST INCOME: |
|
|
|
|
|
|
|
|||||||
|
Deposit service fees |
$ |
2,947 |
|
|
$ |
3,062 |
|
|
$ |
(115) |
|
|
(3.8) |
% |
|
Insurance commissions |
638 |
|
|
691 |
|
|
(53) |
|
|
(7.7) |
|
|||
|
Other non-interest income |
1,485 |
|
|
1,751 |
|
|
(266) |
|
|
(15.2) |
|
|||
|
Total non-interest income |
$ |
5,070 |
|
|
$ |
5,504 |
|
|
$ |
(434) |
|
|
(7.9) |
|
The decrease in other non-interest income was mainly the result of a decrease in income from bank-owned life insurance (“BOLI”) compared to the prior year quarter due to a reduction in the yield and lower death benefit receipts between the two periods.
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 |
|
|
|
|
|||||||||
|
|
December 31, |
|
Change Expressed in: |
|||||||||||
|
|
2020 |
|
2019 |
|
Dollars |
|
Percent |
|||||||
|
|
(Dollars in thousands) |
|
|
|||||||||||
|
NON-INTEREST EXPENSE: |
|
|
|
|
|
|
|
|||||||
|
Salaries and employee benefits |
$ |
14,138 |
|
|
$ |
13,471 |
|
|
$ |
667 |
|
|
5.0 |
% |
|
Information technology and related expense |
4,233 |
|
|
4,141 |
|
|
92 |
|
|
2.2 |
|
|||
|
Occupancy, net |
3,379 |
|
|
3,207 |
|
|
172 |
|
|
5.4 |
|
|||
|
Regulatory and outside services |
1,585 |
|
|
1,343 |
|
|
242 |
|
|
18.0 |
|
|||
|
Advertising and promotional |
838 |
|
|
1,410 |
|
|
(572 |
) |
|
(40.6 |
) |
|||
|
Deposit and loan transaction costs |
766 |
|
|
711 |
|
|
55 |
|
|
7.7 |
|
|||
|
Federal insurance premium |
621 |
|
|
— |
|
|
621 |
|
|
N/A |
|
|||
|
Office supplies and related expense |
424 |
|
|
519 |
|
|
(95 |
) |
|
(18.3 |
) |
|||
|
Other non-interest expense |
1,083 |
|
|
1,698 |
|
|
(615 |
) |
|
(36.2 |
) |
|||
|
Total non-interest expense |
$ |
27,067 |
|
|
$ |
26,500 |
|
|
$ |
567 |
|
|
2.1 |
|
The increase in salaries and employee benefits was due primarily to an increase in loan commissions, an increase in full-time equivalent employees, and higher non-officer related bonuses paid in the current quarter. The increase in regulatory and outside services was due mainly to higher progress billings from our external auditors and other professional service fees. The decrease in advertising and promotional expenses was due mainly to the timing of campaigns. The increase in the federal insurance premium was due mainly to the Bank utilizing an assessment credit from the Federal Deposit Insurance Corporation (“FDIC”) during the prior year quarter. The decrease in other non-interest expense was due primarily to a decrease in write-downs of other real estate owned (“OREO”) properties in the current quarter compared to the prior year quarter.
The Company’s efficiency ratio was 55.37% for the current quarter compared to 48.89% for the prior year quarter. The change in the efficiency ratio was due to lower net interest income in the current quarter compared to the prior year quarter.
Income Tax Expense
The following table presents pretax income, income tax expense, and net income for the time periods presented, along with the change measured in dollars and percent.
|
|
For the Three Months Ended |
|
|
|
|
|||||||||
|
|
December 31, |
|
Change Expressed in: |
|||||||||||
|
|
2020 |
|
2019 |
|
Dollars |
|
Percent |
|||||||
|
|
(Dollars in thousands) |
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|||||||
|
Income before income tax expense |
$ |
23,348 |
|
|
$ |
27,476 |
|
|
$ |
(4,128) |
|
|
(15.0) |
% |
|
Income tax expense |
4,450 |
|
|
4,965 |
|
|
(515) |
|
|
(10.4) |
|
|||
|
Net income |
$ |
18,898 |
|
|
$ |
22,511 |
|
|
$ |
(3,613) |
|
|
(16.0) |
|
|
|
|
|
|
|
|
|
|
|||||||
|
Effective Tax Rate |
19.1 |
% |
|
18.1 |
% |
|
|
|
|
|||||
The decrease in income tax expense was due primarily to lower pretax income in the current quarter, partially offset by an increase in the effective tax rate. The effective tax rate was lower in the prior year due primarily to a discrete benefit recognized in the prior year quarter related to certain BOLI policies that were acquired in fiscal year 2018.
Financial Condition as of December 31, 2020
The Federal Reserve, in response to economic risks resulting from the COVID-19 pandemic, returned to a zero-interest rate policy in March 2020. This was after most broader market rates decreased significantly in response to evolving news about COVID-19. Many areas of consumer spending, not related to travel and entertainment, have rebounded in recent months.
Contacts
Kent Townsend
Executive Vice President,
Chief Financial Officer and Treasurer
(785) 231-6360
ktownsend@capfed.com
Investor Relations
(785) 270-6055
investorrelations@capfed.com