Capitol Federal Financial Earnings Lag, Shares Dip - Analyst Blog

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Shares of Capitol Federal Financial, Inc. ( CFFN ) dropped 0.3% on Thursday after the company's fiscal first-quarter 2014 earnings (ended Dec 31) of 12 cents per share missed the Zacks Consensus Estimate by a penny. However, this was in line with the year-ago figure.

Lower-than-expected results were adversely impacted by a decline in the top line, partially offset by lower operating expenses. Further, credit quality was a mixed bag while strong capital deployment activities depicted robust liquidity levels.

Capitol Federal Financial's net income fell 1.4% year over year to $17.8 million.

Quarterly Performance

Total revenue for the reported quarter came in at $77.7 million, down 6.8% from the prior-year quarter. However, it outpaced the Zacks Consensus Estimate of $50.0 million.

Net interest income fell 3.0% year over year to $43.8 million. The decrease was mainly due to fall in interest and dividend income, partially offset by lower interest expense. Also, net interest margin declined 3 basis points to 1.98%.

Non-interest income decreased 4.6% from the year-ago quarter to $5.5 million. All the non-interest income components declined.

Non-interest expense decreased 7.9% from the year-ago quarter to $22.8 million. The fall was mainly due to decline in salaries and employee benefit expenses as well as other non-interest expenses.

Asset Quality

Asset quality was a mixed bag during the quarter. Total nonperforming assets fell 10.4% year over year to $31.4 million as of Dec 31, 2013.

Moreover, allowance for credit losses as a percentage of total loans came in at 0.15% as of Dec 31, 2013, down 4 bps. However, provision for credit losses rose significantly from $0.2 million in the prior-year quarter to $0.5 million.

Capital Deployment Activities

Capitol Federal Financial continues with its share repurchase plan of $175.0 million, which was approved in Nov 2012. As of Dec 31, 2013, the company bought back 4.4 million shares for $52.4 million at an average price of $11.89 per share.

Subsequent to Dec 31, 2013 through Jan 17, 2014, the company has repurchased 2.1 million shares at an average price of $11.99 per share. This plan has $96.9 million remaining as of Jan 17, 2014.

Performance of Other Banks

Among other companies in the same industry, Washington Federal Inc. 's ( WAFD ) fiscal first-quarter 2014 earnings beat the Zacks Consensus Estimate, while People's United Financial Inc. ( PBCT ) and First Niagara Financial Group Inc. ( FNFG ) reported earnings that were in line with the Zacks Consensus Estimate.

Our Viewpoint

Capitol Federal Financial's conservative credit culture and solid capital position are expected to act as tailwinds. However, a still weak interest rate scenario is expected to deter any significant bottom-line improvement in the near term.

Currently, Capitol Federal Financial carries a Zacks Rank #3 (Hold).



CAPITOL FEDL FN (CFFN): Free Stock Analysis Report

FIRST NIAGARA (FNFG): Free Stock Analysis Report

PEOPLES UTD FIN (PBCT): Free Stock Analysis Report

WASH FEDL INC (WAFD): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: CFFN , FNFG , PBCT , WAFD

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