Capitol Federal Financial Reports Second Quarter Earnings

Apr 25, 2001, 01:00 ET from Capitol Federal Financial

    TOPEKA, Kan., April 25 /PRNewswire/ -- Capitol Federal Financial
 (Nasdaq:   CFFN), today announced performance results for the March 31, 2001
 quarter.  Highlights for the quarter include:
      -- net income of $19.9 million,
      -- basic and diluted earnings per share of $0.26 and $0.25,
      -- efficiency ratio of 32.81%,
      -- dividend increase of $0.01 per share, from $0.14 to $0.15 per share.
 
     John C. Dicus, Chairman & CEO stated:  "Earnings per share exceeded the
 previous year due to an increase in net interest income coupled with the
 effect of our stock buyback plans.  We continue to manage our portfolios of
 assets and liabilities to maintain solid earnings while we work to increase
 shareholder value.  We announced our second consecutive quarterly increase in
 our dividend to $0.15 per share, approximately a 7% increase over the previous
 dividend paid.  Our transaction-based internet service, which began during the
 month of December, is now being used by more than 12,600 transaction account
 customers."
 
     Results for the Second Quarter ended March 31, 2001
     Total interest and dividend income for the three months was $145.0 million
 compared to $123.9 million in the same quarter of the previous fiscal year.
 Interest on loans receivable increased $19.5 million over the same period one
 year ago primarily due to increases in both the average outstanding balance of
 $957.9 million and the average yield of 17 basis points.  Interest on
 mortgage-related securities decreased $2.0 million from the previous year due
 to decreases in the average outstanding balance of $78.5 million, the average
 yield by 12 basis points and increased net amortization of premiums and
 discounts on mortgage-related securities partially due to prepayments of the
 underlying mortgage loans.  Interest on cash and cash equivalents increased
 $2.4 million, or 270.8%, over the previous year due to larger balances in
 overnight investments.  The dividend received on the stock of the Federal Home
 Loan Bank of Topeka ("FHLB") increased $1.3 million over the same period of
 the previous year due to increases in both the average outstanding balance (up
 $62.1 million) and the average yield to 7.50% from 6.96% the previous year.
 The average yield on interest earning assets increased to 7.07% from 6.99%
 during the same quarter one year ago.
     Total interest expense was $102.3 million compared to $82.2 million one
 year ago.  The increase was primarily due to increases in both the average
 balance of FHLB advances and the average cost of borrowings.  The average
 balance of FHLB advances was $3.20 billion for the current period compared to
 $2.15 billion for the same period one year ago.  The average cost of advances
 was 6.14% for the current quarter compared to 5.89% for the same period one
 year ago.  In addition, the average balance of deposits increased
 $79.9 million, and the average cost increased 26 basis points, over the same
 period one year ago.  FHLB advances, compared to deposits, comprised a larger
 portion of our interest bearing liabilities for the current quarter compared
 to one year ago.  The change in the mix of interest bearing liabilities has
 primarily led to the increase in the overall cost of interest bearing
 liabilities.  The average cost of deposits and borrowings was 5.72% for the
 quarter just ended compared to 5.39% for the same period one year ago.
     Net interest and dividend income was $42.7 million compared to
 $41.7 million for the same period one year ago.  The net interest margin
 decreased to 2.08% from 2.35% for the same period one year ago.
     Non-interest income increased to $3.8 million for the quarter ended
 March 31, 2001 from $3.4 million one year ago.  Non-interest expense was
 $15.2 million for the quarter just ended compared to $14.3 million one year
 ago.  The increase was primarily due to increases in compensation expense as a
 result of the stock benefit plans approved one year ago by shareholders.  The
 efficiency ratio for the current quarter was 32.81% compared to 31.68% one
 year ago.
     Net income for the quarter was $19.9 million compared to $19.1 million for
 the same period one year ago, an increase of 4.2%.  Basic and diluted earnings
 per share were $0.26 and $0.25 on weighted average shares outstanding of
 76,949,990 and 78,795,612, respectively.  Basic and diluted earnings per share
 for the same period one year ago were $0.22 on weighted average shares
 outstanding of 84,710,730.  Management anticipates that decreases in market
 interest rates will lead to an increase in earnings in the last half of this
 calendar year due to the repricing of certain higher-priced certificates over
 the next six months.  We do not expect the increase in earnings to be long-
 lived.  The decreased cost of savings will be offset by increased prepayments
 on mortgage loans with funds reinvested in loans at rates below our current
 average yield on the loan portfolio. We continue to pay fixed rates of
 interest on FHLB borrowings.
 
     Results for the Six Months ended March 31, 2001
     Net income for the six months ended March 31, 2001 was $39.4 million
 compared to $37.2 million for the same period one year ago.  Basic and diluted
 earnings per share, year-to-date, were $0.51 and $0.50 on 77,170,586 and
 78,905,007 average shares outstanding, respectively.  Our efficiency ratio for
 the current six month period was 32.85% compared to 32.65% one year ago.
     Total interest and dividend income for the six months ended March 31, 2001
 was $291.3 million compared to $237.9 million for the same period one year
 ago.  Interest on loans receivable increased $40.4 million over the same
 period one year ago primarily due to increases in both the average outstanding
 balance of $1.03 billion and the average yield by 13 basis points.  Income on
 mortgage-related securities increased $5.8 million, to $77.4 million,
 primarily due to an increase in the average balance of $113.7 million and the
 average yield of 18 basis points, partially offset by the increased net
 amortization of premiums and discounts on mortgage-related securities.  The
 average yield on interest earning assets increased to 7.11% during the six
 month period ended March 31, 2001 from 6.95% during the same period one year
 ago.
     Total interest expense for the six months ended March 31, 2001 was $207.0
 million compared to $155.3 million one year ago.  The increase was primarily
 due to increases in both the average balance of FHLB advances and the average
 cost of borrowings.  The average balance of FHLB advances was $3.21 billion
 for the current period compared to $1.88 billion for the same period one year
 ago.  The average cost of advances was 6.14% for the current period compared
 to 5.81% for the same period one year ago.  In addition, the average balance
 of deposits increased $48.6 million, and the average cost increased 35 basis
 points, over the same period one year ago.  The average cost of deposits and
 borrowings was 5.74% for the six months ended March 31, 2001 compared to 5.31%
 for the same period one year ago.
     Net interest and dividend income was $84.3 million for the six months
 ended March 31, 2001 compared to $82.5 million for the six months ended March
 31, 2000.  The net interest margin for the six months ended March 31, 2001 was
 2.06% compared to 2.41% for the same period one year ago.
 
     Financial Condition at March 31, 2001
     Total assets at March 31, 2001 were $8.39 billion, an increase of
 $123.7 million from $8.27 billion at September 30, 2000.  The increase from
 September 30, 2000 was primarily due to a net increase in loans receivable of
 $65.5 million and an increase in cash and cash equivalents of $111.0 million
 offset by a net decrease in mortgage-related securities of $28.2 million.
 Loan originations and purchases during the quarter totaled $281.2 million,
 down $24.9 million from the same period one year ago.  Adjustable rate loans
 comprised 24.2% of originations and purchases at an average yield of 7.94%,
 while fixed rate loans were closed at an average yield of 7.03%.  Monthly
 adjustable equity loans, tied to prime, closed during the quarter totaled
 $26.4 million at an average yield of 9.54%.  Year-to-date loan origination and
 purchases totaled $542.5 million, down $156.7 million from the same period one
 year ago.  Loans were closed at an average yield of 7.55%, 12 basis points
 higher than the same period one year ago.
     Total liabilities at March 31, 2001 were $7.38 billion, which is
 $98.6 million greater than at September 30, 2000.  The increase in liabilities
 was primarily the result of the growth in the savings portfolio of
 $136.5 million, partially offset by a decrease in FHLB advances of
 $25.0 million.  During the quarter, deposits increased $63.7 million.
 Management continues to monitor the maturity of certificate accounts and
 believes that the majority of the deposits can be retained.  Certificates
 maturing within the next 180 days, with an average rate of approximately 125
 basis points greater than current market rates, total $935.9 million.
     Total non-performing assets were $5.4 million at March 31, 2001 compared
 to $4.5 million at September 30, 2000.  The percentage of non-performing
 assets to total assets was 0.06%, unchanged from the previous quarter.  The
 allowance for loan losses as a percentage of non-performing loans was 112.9%
 at March 31, 2001 compared to 133.0% at September 30, 2000.
     Stockholders' equity totaled $1.01 billion at March 31, 2001 compared to
 $986.2 million at September 30, 2000.  During the quarter, 246,500 shares were
 repurchased at an average price of $16.07 per share.  The balance of the
 unrealized gain on securities available-for-sale increased $4.3 million.  At
 March 31, 2001, book value per share was $13.16, with 76,824,754 shares
 outstanding, compared to $12.64 at September 30, 2000.  Equity to assets was
 12.05% at March 31, 2001 compared to 11.93% at September 30, 2000.
     Capitol Federal Financial is the holding company for Capitol Federal
 Savings Bank.  Capitol Federal Savings Bank has 34 branch locations in Kansas,
 of which 7 are in-store branches.  Capitol Federal Savings Bank continues to
 be the leading residential lender in the state of Kansas.
 
     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, that involve
 risks and uncertainties, including changes in economic conditions in the
 Company's market area, changes in policies by regulatory agencies,
 fluctuations in interest rates, demand for loans in the Company's market area,
 competition, and other risks detailed from time to time in the Company's SEC
 reports.  Actual strategies and results in future periods 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.
 
     All amounts and counts, except per share amounts, in the following tables
 are rounded to the nearest thousand and are unaudited.
 
                                     At
                            March 31,  September 30,  Change From Prior Period
                              2001         2000         Amount      Percent
     Selected Financial
      Condition Data:
       Total assets        $8,388,869   $8,265,219     $123,650      1.50%
       Cash and cash
        equivalents           243,941      133,034      110,907     83.37
       Loans held for sale     20,098       25,742       (5,644)   (21.93)
       Loans receivable,
        net                 5,507,946    5,442,445       65,501      1.20
      Mortgage-related
       securities, AFS        733,517      850,892     (117,375)   (13.79)
      Mortgage-related
       securities, HTM      1,650,409    1,561,251       89,158      5.71
      Investment securities        --       15,100      (15,100)  (100.00)
      Capital stock of FHLB   161,250      161,250           --        --
      Deposits              4,092,805    3,956,329      136,476      3.45
      Borrowings            3,200,000    3,225,000      (25,000)    (0.78)
      Net Unrealized Gain/(Loss)
       on AFS securities        8,346         (300)       8,646   2882.00
      Equity                1,011,261      986,207       25,054      2.54
      Shares outstanding       76,825       78,045       (1,220)    (1.56)
      Book value per share     $13.16       $12.64        $0.52      4.11
 
 
                          Average Balances for the
                           Quarter Ended March 31,   Change From Prior Year
                            2001           2000        Amount      Percent
 
     Selected Financial
      Condition Data:
       Total assets      $8,316,002    $7,287,080   $1,028,922      14.12%
       Loans receivable   5,557,743     4,599,881      957,862      20.82
 
       Mortgage-related
        securities        2,238,865     2,317,385      (78,520)     (3.39)
       Investment
        securities           11,003        15,100       (4,097)    (27.13)
       Cash and cash
        equivalents         246,572        63,243      183,329     289.88
       Capital stock of
        FHLB                161,250        99,194       62,056      62.56
       Deposits           4,011,363     3,931,443       79,920       2.03
       Borrowings         3,200,111     2,146,099    1,054,012      49.11
       Equity             1,001,903     1,023,535      (21,632)     (2.11)
 
 
                          Average Balances for the
                         Six Months Ended March 31,  Change From Prior Year
                            2001          2000         Amount     Percent
     Selected Financial
      Condition Data:
       Total assets      $8,297,390    $7,045,215   $1,252,175     17.77%
       Loans receivable   5,538,017     4,509,518    1,028,499     22.81
       Mortgage-related
        securities        2,298,270     2,184,527      113,743      5.21
       Investment
        securities           13,074        15,100       (2,026)   (13.42)
       Cash and cash
        equivalents         183,791        47,710      136,081    285.23
       Capital stock of
        FHLB                161,250        85,829       75,421     87.87
       Deposits           3,977,196     3,928,559       48,637      1.24
       Borrowings         3,210,769     1,876,399    1,334,370     71.11
       Equity               995,744     1,035,660      (39,916)    (3.85)
 
 
 
                            For the Quarter Ended
                                  March 31,            Change From Prior Year
                             2001          2000         Amount        Percent
     Selected Operations Data:
     Interest and dividend
      income:
        Loans receivable   $101,829       $82,324      $19,505         23.69%
        Mortgage-related
         securities          36,709        38,708       (1,999)        (5.16)
        Other interest and
         dividend income      6,464         2,845        3,619        127.21
        Total interest and
         dividend income    145,002       123,877       21,125         17.05
     Interest Expense:
        Deposits             53,257        50,175        3,082          6.14
        Borrowings           49,084        31,997       17,087         53.40
        Total interest
         expense            102,341        82,172       20,169         24.54
        Net interest and
         dividend income     42,661        41,705          956          2.29
        Provision for loan
         losses                  --           250         (250)      (100.00)
        Savings related fees  2,074         1,923          151          7.85
        Other non-interest
         income               1,760         1,521          239         15.71
        Total non-interest
         income               3,834         3,444          390         11.32
        Compensation expense  8,825         8,063          762          9.45
        Occupancy and office
         expense              3,199         3,000          199          6.63
        Other non-interest
         expense              3,220         3,226           (6)        (0.19)
        Total non-interest
         expense             15,244        14,289          955          6.68
 
        Income before taxes  31,251        30,610          641          2.09
        Income tax expense   11,323        11,555         (232)        (2.01)
        Net income          $19,928       $19,055         $873          4.58
        Average shares
         outstanding         76,950        84,711       (7,761)        (9.16)
        Diluted shares
         outstanding         78,796        84,711       (5,915)        (6.98)
        Basic earnings
         per share            $0.26         $0.22        $0.04         18.18
        Diluted earnings
         per share            $0.25         $0.22        $0.03         13.64
 
 
 
                          For the Six Months ended
                                  March 31,           Change From Prior Year
                             2001          2000         Amount      Percent
     Selected Operations Data:
      Interest and dividend
        income:
       Loans receivable    $201,676      $161,304      $40,372         25.03%
       Mortgage-related
        securities           77,430        71,675        5,755          8.03
       Other interest and
        dividend income      12,226         4,875        7,351        150.79
       Total interest and
        dividend income     291,332       237,854       53,478         22.48
      Interest Expense:
       Deposits             107,380        99,909        7,471          7.48
       Borrowings            99,612        55,418       44,194         79.75
       Total interest
        expense             206,992       155,327       51,665         33.26
       Net interest and
        dividend income      84,340        82,527        1,813          2.20
       Provision for loan
        losses                   --           494         (494)      (100.00)
       Savings related fees   4,269         3,975          294          7.40
 
       Other non-interest
        income                3,746         2,884          862         29.89
       Total non-interest
        income                8,015         6,859        1,156         16.85
       Compensation expense  17,856        16,292        1,564          9.60
       Occupancy and office
        expense               6,370         6,446          (76)        (1.18)
       Other non-interest
        expense               6,093         6,428         (335)        (5.21)
       Total non-interest
        expense              30,319        29,166        1,153          3.95
       Income before taxes   62,036        59,726        2,310          3.87
       Income tax expense    22,643        22,547           96          0.43
       Net income           $39,393       $37,179       $2,214          5.95
     Average shares
      outstanding            77,171        86,435       (9,264)       (10.72)
     Diluted shares
      outstanding            78,905        86,435       (7,530)        (8.71)
     Basic earnings
      per share               $0.51         $0.43        $0.08         18.60
     Diluted earnings
      per share               $0.50        $0.43        $0.07         16.28
 
 
 
                              For the Quarter Ended    For the Six Months Ended
                                    March 31,                  March 31,
                               2001          2000         2001          2000
     Performance Ratios:
     Return on average assets  0.96%         1.05%        0.95%         1.06%
     Return on average equity  7.96          7.45         7.91          7.18
 
     Average interest rate
      spread during the period 1.35          1.60         1.37          1.64
 
     Net interest margin       2.08          2.35         2.06          2.41
 
     Efficiency ratio         32.81         31.68        32.85         32.65
 
     Ratio of earning assets
      to costing liabilities   1.14          1.17         1.14          1.18
 
     Capital Ratios:
     Equity to total assets
      at end of period        12.05%        13.30%       12.05%        13.30%
     Average equity to
      average assets          12.05%        14.05%       12.00%        14.70%
 
 
                             For the Quarter Ended    For the Six Months Ended
                                    March 31,                 March 31,
                               2001          2000        2001         2000
     Average Yield and
      Cost During Period:
       Loans receivable        7.33%         7.16%       7.28%        7.15%
       Mortgage-related
        securities             6.56          6.68        6.74         6.56
       Investment securities   6.22          6.08        6.13         6.22
       Cash and cash
        equivalents            5.45          5.66        5.78         5.50
       Capital stock of FHLB   7.50          6.96        8.12         7.18
 
     Average yield on
      interest earning assets  7.07          6.99        7.11         6.95
     Deposits                  5.38          5.12        5.42         5.07
 
     Borrowings                6.14          5.89        6.14         5.81
 
     Average rate on interest
      bearing liabilities      5.72          5.39        5.74         5.31
 
 
                                                      At
                                          March 31,         September 30,
                                            2001                 2000
 
     Average Yield / Cost at End of Period:
     Loans receivable                       7.35%                7.31%
 
     Mortgage-related securities            6.83                 7.05
     Investment securities                    --                 6.09
     Deposits                               5.27                 5.41
     Borrowings                             6.14                 6.14
 
 
                                                     At
                                         March 31,         September 30,
                                           2001                 2000
     Asset Quality Information:
     Non-accruing loans                   $4,273               $3,455
     Real estate owned                     1,126                1,094
     Asset Quality Ratios:
     Non-performing assets to
      total assets at end of period         0.06%                0.06%
     Non-performing loans to total loans    0.08%                0.06%
     Allowance for loan losses
      to non-performing loans             112.85%              133.02%
     Allowance for loan losses to loans
      receivable, net                       0.09%                0.08%
 
 
                               For the Quarter Ended   For the Six Months Ended
                                      March 31,               March 31,
                                 2001          2000      2001         2000
     Allowance for loan and
      lease losses:
     Beginning balance          $4,579        $4,617    $4,596       $4,407
     Losses charged against
      the allowance:
       One- to four-family loans    --            --        11           33
     Multi-family loans             --            --        --           --
     Commercial and other loans     --            --        --           --
     Consumer loans                  7             2        15            3
     Total Charge-offs               7             2        26           36
     Recoveries                    250             1       252            1
     Provision charged to expense   --           250        --          494
 
     Ending balance             $4,822        $4,866    $4,822       $4,866
 
 
 
                                       At                        At
                                    March 31, 2001      September 30, 2000
                             Amount       % of Total    Amount    % of Total
     Loans receivable, net:
     Real Estate Loans:
     One- to four-family   $5,266,454        94.92%   $5,206,237    95.02%
     Multi-family              48,462         0.87        50,767     0.93
     Commercial                 8,391         0.15        13,206     0.24
 
     Construction or
      land development         47,736         0.86        38,192     0.70
     Total Real Estate
      Loans:                5,371,043        96.80%    5,308,402    96.89%
 
     Other Loans:
     Consumer loans:
     Home equity              147,661         2.66%      142,655     2.60%
     Other consumer loans      29,763         0.54        27,936     0.51
     Total Other Loans:       177,424         3.20%      170,591     3.11%
     Total Loans Receivable 5,548,467       100.00%    5,478,993   100.00%
 
     Less:
     Loans in Process          19,929                     16,891
     Deferred fees and
      discounts                15,770                     15,061
     Allowance for losses       4,822                      4,596
     Total Loans
      Receivable, net      $5,507,946                 $5,442,445
 
 
 
                                        At                      At
                                  March 31, 2001      September 30, 2000
                             Amount      % of Total      Amount   % of Total
     Deposits:
     Demand deposits       $323,962          7.92%      $303,744      7.68%
     Passbook & passcard    100,230          2.45        104,558      2.64
     Money market           582,568         14.23        529,678     13.39
     Certificates         3,086,045         75.40      3,018,349     76.29
     Total Deposits      $4,092,805        100.00%    $3,956,329    100.00%
 
 
 
                           For the Quarter Ended     For the Six Months Ended
                                 March 31,                   March 31,
                             2001          2000          2001         2000
     Loan Originations:
     Adjustable rate one-
      to four- family real
      estate               $20,505      $103,179       $71,663      $197,890
     Fixed rate one- to
      four-family real
      estate               204,807        83,349       335,647       194,849
     Multi-family and
      commercial real estate    --            63            --         2,513
     Consumer               34,601        32,901        69,110        67,251
     Purchased one- to
      four-family real
      estate                21,301        86,644        66,039       236,650
     Total loan originations
      and purchases       $281,214      $306,136      $542,459      $699,153
 
     Mortgage-related
      securities additions:
     REMICs and CMOs           $--      $335,870           $--      $732,175
     Other                 249,797            --       250,792            --
 
     Total mortgage-related
      securities
      additions           $249,797      $335,870      $250,792      $732,175
     Total loans sold       $1,689        $2,117       $12,196        $3,490
 
 
                            For the Quarter Ended   For the Six Months Ended
                                 March 31,                  March 31,
                            2001          2000         2001          2000
     Deposit Activity:
     Opening balance     $4,029,125    $3,962,712   $3,956,329    $3,899,565
     Deposits             1,427,592     1,402,059    2,805,124     2,803,863
     Withdrawals          1,411,416     1,430,541    2,763,054     2,812,223
     Interest credits        47,504        45,106       94,406        88,131
     Ending Balance      $4,092,805    $3,979,336   $4,092,805    $3,979,336
 
     Net increase           $63,680       $16,624     $136,476       $79,771
 
 
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SOURCE Capitol Federal Financial
    TOPEKA, Kan., April 25 /PRNewswire/ -- Capitol Federal Financial
 (Nasdaq:   CFFN), today announced performance results for the March 31, 2001
 quarter.  Highlights for the quarter include:
      -- net income of $19.9 million,
      -- basic and diluted earnings per share of $0.26 and $0.25,
      -- efficiency ratio of 32.81%,
      -- dividend increase of $0.01 per share, from $0.14 to $0.15 per share.
 
     John C. Dicus, Chairman & CEO stated:  "Earnings per share exceeded the
 previous year due to an increase in net interest income coupled with the
 effect of our stock buyback plans.  We continue to manage our portfolios of
 assets and liabilities to maintain solid earnings while we work to increase
 shareholder value.  We announced our second consecutive quarterly increase in
 our dividend to $0.15 per share, approximately a 7% increase over the previous
 dividend paid.  Our transaction-based internet service, which began during the
 month of December, is now being used by more than 12,600 transaction account
 customers."
 
     Results for the Second Quarter ended March 31, 2001
     Total interest and dividend income for the three months was $145.0 million
 compared to $123.9 million in the same quarter of the previous fiscal year.
 Interest on loans receivable increased $19.5 million over the same period one
 year ago primarily due to increases in both the average outstanding balance of
 $957.9 million and the average yield of 17 basis points.  Interest on
 mortgage-related securities decreased $2.0 million from the previous year due
 to decreases in the average outstanding balance of $78.5 million, the average
 yield by 12 basis points and increased net amortization of premiums and
 discounts on mortgage-related securities partially due to prepayments of the
 underlying mortgage loans.  Interest on cash and cash equivalents increased
 $2.4 million, or 270.8%, over the previous year due to larger balances in
 overnight investments.  The dividend received on the stock of the Federal Home
 Loan Bank of Topeka ("FHLB") increased $1.3 million over the same period of
 the previous year due to increases in both the average outstanding balance (up
 $62.1 million) and the average yield to 7.50% from 6.96% the previous year.
 The average yield on interest earning assets increased to 7.07% from 6.99%
 during the same quarter one year ago.
     Total interest expense was $102.3 million compared to $82.2 million one
 year ago.  The increase was primarily due to increases in both the average
 balance of FHLB advances and the average cost of borrowings.  The average
 balance of FHLB advances was $3.20 billion for the current period compared to
 $2.15 billion for the same period one year ago.  The average cost of advances
 was 6.14% for the current quarter compared to 5.89% for the same period one
 year ago.  In addition, the average balance of deposits increased
 $79.9 million, and the average cost increased 26 basis points, over the same
 period one year ago.  FHLB advances, compared to deposits, comprised a larger
 portion of our interest bearing liabilities for the current quarter compared
 to one year ago.  The change in the mix of interest bearing liabilities has
 primarily led to the increase in the overall cost of interest bearing
 liabilities.  The average cost of deposits and borrowings was 5.72% for the
 quarter just ended compared to 5.39% for the same period one year ago.
     Net interest and dividend income was $42.7 million compared to
 $41.7 million for the same period one year ago.  The net interest margin
 decreased to 2.08% from 2.35% for the same period one year ago.
     Non-interest income increased to $3.8 million for the quarter ended
 March 31, 2001 from $3.4 million one year ago.  Non-interest expense was
 $15.2 million for the quarter just ended compared to $14.3 million one year
 ago.  The increase was primarily due to increases in compensation expense as a
 result of the stock benefit plans approved one year ago by shareholders.  The
 efficiency ratio for the current quarter was 32.81% compared to 31.68% one
 year ago.
     Net income for the quarter was $19.9 million compared to $19.1 million for
 the same period one year ago, an increase of 4.2%.  Basic and diluted earnings
 per share were $0.26 and $0.25 on weighted average shares outstanding of
 76,949,990 and 78,795,612, respectively.  Basic and diluted earnings per share
 for the same period one year ago were $0.22 on weighted average shares
 outstanding of 84,710,730.  Management anticipates that decreases in market
 interest rates will lead to an increase in earnings in the last half of this
 calendar year due to the repricing of certain higher-priced certificates over
 the next six months.  We do not expect the increase in earnings to be long-
 lived.  The decreased cost of savings will be offset by increased prepayments
 on mortgage loans with funds reinvested in loans at rates below our current
 average yield on the loan portfolio. We continue to pay fixed rates of
 interest on FHLB borrowings.
 
     Results for the Six Months ended March 31, 2001
     Net income for the six months ended March 31, 2001 was $39.4 million
 compared to $37.2 million for the same period one year ago.  Basic and diluted
 earnings per share, year-to-date, were $0.51 and $0.50 on 77,170,586 and
 78,905,007 average shares outstanding, respectively.  Our efficiency ratio for
 the current six month period was 32.85% compared to 32.65% one year ago.
     Total interest and dividend income for the six months ended March 31, 2001
 was $291.3 million compared to $237.9 million for the same period one year
 ago.  Interest on loans receivable increased $40.4 million over the same
 period one year ago primarily due to increases in both the average outstanding
 balance of $1.03 billion and the average yield by 13 basis points.  Income on
 mortgage-related securities increased $5.8 million, to $77.4 million,
 primarily due to an increase in the average balance of $113.7 million and the
 average yield of 18 basis points, partially offset by the increased net
 amortization of premiums and discounts on mortgage-related securities.  The
 average yield on interest earning assets increased to 7.11% during the six
 month period ended March 31, 2001 from 6.95% during the same period one year
 ago.
     Total interest expense for the six months ended March 31, 2001 was $207.0
 million compared to $155.3 million one year ago.  The increase was primarily
 due to increases in both the average balance of FHLB advances and the average
 cost of borrowings.  The average balance of FHLB advances was $3.21 billion
 for the current period compared to $1.88 billion for the same period one year
 ago.  The average cost of advances was 6.14% for the current period compared
 to 5.81% for the same period one year ago.  In addition, the average balance
 of deposits increased $48.6 million, and the average cost increased 35 basis
 points, over the same period one year ago.  The average cost of deposits and
 borrowings was 5.74% for the six months ended March 31, 2001 compared to 5.31%
 for the same period one year ago.
     Net interest and dividend income was $84.3 million for the six months
 ended March 31, 2001 compared to $82.5 million for the six months ended March
 31, 2000.  The net interest margin for the six months ended March 31, 2001 was
 2.06% compared to 2.41% for the same period one year ago.
 
     Financial Condition at March 31, 2001
     Total assets at March 31, 2001 were $8.39 billion, an increase of
 $123.7 million from $8.27 billion at September 30, 2000.  The increase from
 September 30, 2000 was primarily due to a net increase in loans receivable of
 $65.5 million and an increase in cash and cash equivalents of $111.0 million
 offset by a net decrease in mortgage-related securities of $28.2 million.
 Loan originations and purchases during the quarter totaled $281.2 million,
 down $24.9 million from the same period one year ago.  Adjustable rate loans
 comprised 24.2% of originations and purchases at an average yield of 7.94%,
 while fixed rate loans were closed at an average yield of 7.03%.  Monthly
 adjustable equity loans, tied to prime, closed during the quarter totaled
 $26.4 million at an average yield of 9.54%.  Year-to-date loan origination and
 purchases totaled $542.5 million, down $156.7 million from the same period one
 year ago.  Loans were closed at an average yield of 7.55%, 12 basis points
 higher than the same period one year ago.
     Total liabilities at March 31, 2001 were $7.38 billion, which is
 $98.6 million greater than at September 30, 2000.  The increase in liabilities
 was primarily the result of the growth in the savings portfolio of
 $136.5 million, partially offset by a decrease in FHLB advances of
 $25.0 million.  During the quarter, deposits increased $63.7 million.
 Management continues to monitor the maturity of certificate accounts and
 believes that the majority of the deposits can be retained.  Certificates
 maturing within the next 180 days, with an average rate of approximately 125
 basis points greater than current market rates, total $935.9 million.
     Total non-performing assets were $5.4 million at March 31, 2001 compared
 to $4.5 million at September 30, 2000.  The percentage of non-performing
 assets to total assets was 0.06%, unchanged from the previous quarter.  The
 allowance for loan losses as a percentage of non-performing loans was 112.9%
 at March 31, 2001 compared to 133.0% at September 30, 2000.
     Stockholders' equity totaled $1.01 billion at March 31, 2001 compared to
 $986.2 million at September 30, 2000.  During the quarter, 246,500 shares were
 repurchased at an average price of $16.07 per share.  The balance of the
 unrealized gain on securities available-for-sale increased $4.3 million.  At
 March 31, 2001, book value per share was $13.16, with 76,824,754 shares
 outstanding, compared to $12.64 at September 30, 2000.  Equity to assets was
 12.05% at March 31, 2001 compared to 11.93% at September 30, 2000.
     Capitol Federal Financial is the holding company for Capitol Federal
 Savings Bank.  Capitol Federal Savings Bank has 34 branch locations in Kansas,
 of which 7 are in-store branches.  Capitol Federal Savings Bank continues to
 be the leading residential lender in the state of Kansas.
 
     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, that involve
 risks and uncertainties, including changes in economic conditions in the
 Company's market area, changes in policies by regulatory agencies,
 fluctuations in interest rates, demand for loans in the Company's market area,
 competition, and other risks detailed from time to time in the Company's SEC
 reports.  Actual strategies and results in future periods 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.
 
     All amounts and counts, except per share amounts, in the following tables
 are rounded to the nearest thousand and are unaudited.
 
                                     At
                            March 31,  September 30,  Change From Prior Period
                              2001         2000         Amount      Percent
     Selected Financial
      Condition Data:
       Total assets        $8,388,869   $8,265,219     $123,650      1.50%
       Cash and cash
        equivalents           243,941      133,034      110,907     83.37
       Loans held for sale     20,098       25,742       (5,644)   (21.93)
       Loans receivable,
        net                 5,507,946    5,442,445       65,501      1.20
      Mortgage-related
       securities, AFS        733,517      850,892     (117,375)   (13.79)
      Mortgage-related
       securities, HTM      1,650,409    1,561,251       89,158      5.71
      Investment securities        --       15,100      (15,100)  (100.00)
      Capital stock of FHLB   161,250      161,250           --        --
      Deposits              4,092,805    3,956,329      136,476      3.45
      Borrowings            3,200,000    3,225,000      (25,000)    (0.78)
      Net Unrealized Gain/(Loss)
       on AFS securities        8,346         (300)       8,646   2882.00
      Equity                1,011,261      986,207       25,054      2.54
      Shares outstanding       76,825       78,045       (1,220)    (1.56)
      Book value per share     $13.16       $12.64        $0.52      4.11
 
 
                          Average Balances for the
                           Quarter Ended March 31,   Change From Prior Year
                            2001           2000        Amount      Percent
 
     Selected Financial
      Condition Data:
       Total assets      $8,316,002    $7,287,080   $1,028,922      14.12%
       Loans receivable   5,557,743     4,599,881      957,862      20.82
 
       Mortgage-related
        securities        2,238,865     2,317,385      (78,520)     (3.39)
       Investment
        securities           11,003        15,100       (4,097)    (27.13)
       Cash and cash
        equivalents         246,572        63,243      183,329     289.88
       Capital stock of
        FHLB                161,250        99,194       62,056      62.56
       Deposits           4,011,363     3,931,443       79,920       2.03
       Borrowings         3,200,111     2,146,099    1,054,012      49.11
       Equity             1,001,903     1,023,535      (21,632)     (2.11)
 
 
                          Average Balances for the
                         Six Months Ended March 31,  Change From Prior Year
                            2001          2000         Amount     Percent
     Selected Financial
      Condition Data:
       Total assets      $8,297,390    $7,045,215   $1,252,175     17.77%
       Loans receivable   5,538,017     4,509,518    1,028,499     22.81
       Mortgage-related
        securities        2,298,270     2,184,527      113,743      5.21
       Investment
        securities           13,074        15,100       (2,026)   (13.42)
       Cash and cash
        equivalents         183,791        47,710      136,081    285.23
       Capital stock of
        FHLB                161,250        85,829       75,421     87.87
       Deposits           3,977,196     3,928,559       48,637      1.24
       Borrowings         3,210,769     1,876,399    1,334,370     71.11
       Equity               995,744     1,035,660      (39,916)    (3.85)
 
 
 
                            For the Quarter Ended
                                  March 31,            Change From Prior Year
                             2001          2000         Amount        Percent
     Selected Operations Data:
     Interest and dividend
      income:
        Loans receivable   $101,829       $82,324      $19,505         23.69%
        Mortgage-related
         securities          36,709        38,708       (1,999)        (5.16)
        Other interest and
         dividend income      6,464         2,845        3,619        127.21
        Total interest and
         dividend income    145,002       123,877       21,125         17.05
     Interest Expense:
        Deposits             53,257        50,175        3,082          6.14
        Borrowings           49,084        31,997       17,087         53.40
        Total interest
         expense            102,341        82,172       20,169         24.54
        Net interest and
         dividend income     42,661        41,705          956          2.29
        Provision for loan
         losses                  --           250         (250)      (100.00)
        Savings related fees  2,074         1,923          151          7.85
        Other non-interest
         income               1,760         1,521          239         15.71
        Total non-interest
         income               3,834         3,444          390         11.32
        Compensation expense  8,825         8,063          762          9.45
        Occupancy and office
         expense              3,199         3,000          199          6.63
        Other non-interest
         expense              3,220         3,226           (6)        (0.19)
        Total non-interest
         expense             15,244        14,289          955          6.68
 
        Income before taxes  31,251        30,610          641          2.09
        Income tax expense   11,323        11,555         (232)        (2.01)
        Net income          $19,928       $19,055         $873          4.58
        Average shares
         outstanding         76,950        84,711       (7,761)        (9.16)
        Diluted shares
         outstanding         78,796        84,711       (5,915)        (6.98)
        Basic earnings
         per share            $0.26         $0.22        $0.04         18.18
        Diluted earnings
         per share            $0.25         $0.22        $0.03         13.64
 
 
 
                          For the Six Months ended
                                  March 31,           Change From Prior Year
                             2001          2000         Amount      Percent
     Selected Operations Data:
      Interest and dividend
        income:
       Loans receivable    $201,676      $161,304      $40,372         25.03%
       Mortgage-related
        securities           77,430        71,675        5,755          8.03
       Other interest and
        dividend income      12,226         4,875        7,351        150.79
       Total interest and
        dividend income     291,332       237,854       53,478         22.48
      Interest Expense:
       Deposits             107,380        99,909        7,471          7.48
       Borrowings            99,612        55,418       44,194         79.75
       Total interest
        expense             206,992       155,327       51,665         33.26
       Net interest and
        dividend income      84,340        82,527        1,813          2.20
       Provision for loan
        losses                   --           494         (494)      (100.00)
       Savings related fees   4,269         3,975          294          7.40
 
       Other non-interest
        income                3,746         2,884          862         29.89
       Total non-interest
        income                8,015         6,859        1,156         16.85
       Compensation expense  17,856        16,292        1,564          9.60
       Occupancy and office
        expense               6,370         6,446          (76)        (1.18)
       Other non-interest
        expense               6,093         6,428         (335)        (5.21)
       Total non-interest
        expense              30,319        29,166        1,153          3.95
       Income before taxes   62,036        59,726        2,310          3.87
       Income tax expense    22,643        22,547           96          0.43
       Net income           $39,393       $37,179       $2,214          5.95
     Average shares
      outstanding            77,171        86,435       (9,264)       (10.72)
     Diluted shares
      outstanding            78,905        86,435       (7,530)        (8.71)
     Basic earnings
      per share               $0.51         $0.43        $0.08         18.60
     Diluted earnings
      per share               $0.50        $0.43        $0.07         16.28
 
 
 
                              For the Quarter Ended    For the Six Months Ended
                                    March 31,                  March 31,
                               2001          2000         2001          2000
     Performance Ratios:
     Return on average assets  0.96%         1.05%        0.95%         1.06%
     Return on average equity  7.96          7.45         7.91          7.18
 
     Average interest rate
      spread during the period 1.35          1.60         1.37          1.64
 
     Net interest margin       2.08          2.35         2.06          2.41
 
     Efficiency ratio         32.81         31.68        32.85         32.65
 
     Ratio of earning assets
      to costing liabilities   1.14          1.17         1.14          1.18
 
     Capital Ratios:
     Equity to total assets
      at end of period        12.05%        13.30%       12.05%        13.30%
     Average equity to
      average assets          12.05%        14.05%       12.00%        14.70%
 
 
                             For the Quarter Ended    For the Six Months Ended
                                    March 31,                 March 31,
                               2001          2000        2001         2000
     Average Yield and
      Cost During Period:
       Loans receivable        7.33%         7.16%       7.28%        7.15%
       Mortgage-related
        securities             6.56          6.68        6.74         6.56
       Investment securities   6.22          6.08        6.13         6.22
       Cash and cash
        equivalents            5.45          5.66        5.78         5.50
       Capital stock of FHLB   7.50          6.96        8.12         7.18
 
     Average yield on
      interest earning assets  7.07          6.99        7.11         6.95
     Deposits                  5.38          5.12        5.42         5.07
 
     Borrowings                6.14          5.89        6.14         5.81
 
     Average rate on interest
      bearing liabilities      5.72          5.39        5.74         5.31
 
 
                                                      At
                                          March 31,         September 30,
                                            2001                 2000
 
     Average Yield / Cost at End of Period:
     Loans receivable                       7.35%                7.31%
 
     Mortgage-related securities            6.83                 7.05
     Investment securities                    --                 6.09
     Deposits                               5.27                 5.41
     Borrowings                             6.14                 6.14
 
 
                                                     At
                                         March 31,         September 30,
                                           2001                 2000
     Asset Quality Information:
     Non-accruing loans                   $4,273               $3,455
     Real estate owned                     1,126                1,094
     Asset Quality Ratios:
     Non-performing assets to
      total assets at end of period         0.06%                0.06%
     Non-performing loans to total loans    0.08%                0.06%
     Allowance for loan losses
      to non-performing loans             112.85%              133.02%
     Allowance for loan losses to loans
      receivable, net                       0.09%                0.08%
 
 
                               For the Quarter Ended   For the Six Months Ended
                                      March 31,               March 31,
                                 2001          2000      2001         2000
     Allowance for loan and
      lease losses:
     Beginning balance          $4,579        $4,617    $4,596       $4,407
     Losses charged against
      the allowance:
       One- to four-family loans    --            --        11           33
     Multi-family loans             --            --        --           --
     Commercial and other loans     --            --        --           --
     Consumer loans                  7             2        15            3
     Total Charge-offs               7             2        26           36
     Recoveries                    250             1       252            1
     Provision charged to expense   --           250        --          494
 
     Ending balance             $4,822        $4,866    $4,822       $4,866
 
 
 
                                       At                        At
                                    March 31, 2001      September 30, 2000
                             Amount       % of Total    Amount    % of Total
     Loans receivable, net:
     Real Estate Loans:
     One- to four-family   $5,266,454        94.92%   $5,206,237    95.02%
     Multi-family              48,462         0.87        50,767     0.93
     Commercial                 8,391         0.15        13,206     0.24
 
     Construction or
      land development         47,736         0.86        38,192     0.70
     Total Real Estate
      Loans:                5,371,043        96.80%    5,308,402    96.89%
 
     Other Loans:
     Consumer loans:
     Home equity              147,661         2.66%      142,655     2.60%
     Other consumer loans      29,763         0.54        27,936     0.51
     Total Other Loans:       177,424         3.20%      170,591     3.11%
     Total Loans Receivable 5,548,467       100.00%    5,478,993   100.00%
 
     Less:
     Loans in Process          19,929                     16,891
     Deferred fees and
      discounts                15,770                     15,061
     Allowance for losses       4,822                      4,596
     Total Loans
      Receivable, net      $5,507,946                 $5,442,445
 
 
 
                                        At                      At
                                  March 31, 2001      September 30, 2000
                             Amount      % of Total      Amount   % of Total
     Deposits:
     Demand deposits       $323,962          7.92%      $303,744      7.68%
     Passbook & passcard    100,230          2.45        104,558      2.64
     Money market           582,568         14.23        529,678     13.39
     Certificates         3,086,045         75.40      3,018,349     76.29
     Total Deposits      $4,092,805        100.00%    $3,956,329    100.00%
 
 
 
                           For the Quarter Ended     For the Six Months Ended
                                 March 31,                   March 31,
                             2001          2000          2001         2000
     Loan Originations:
     Adjustable rate one-
      to four- family real
      estate               $20,505      $103,179       $71,663      $197,890
     Fixed rate one- to
      four-family real
      estate               204,807        83,349       335,647       194,849
     Multi-family and
      commercial real estate    --            63            --         2,513
     Consumer               34,601        32,901        69,110        67,251
     Purchased one- to
      four-family real
      estate                21,301        86,644        66,039       236,650
     Total loan originations
      and purchases       $281,214      $306,136      $542,459      $699,153
 
     Mortgage-related
      securities additions:
     REMICs and CMOs           $--      $335,870           $--      $732,175
     Other                 249,797            --       250,792            --
 
     Total mortgage-related
      securities
      additions           $249,797      $335,870      $250,792      $732,175
     Total loans sold       $1,689        $2,117       $12,196        $3,490
 
 
                            For the Quarter Ended   For the Six Months Ended
                                 March 31,                  March 31,
                            2001          2000         2001          2000
     Deposit Activity:
     Opening balance     $4,029,125    $3,962,712   $3,956,329    $3,899,565
     Deposits             1,427,592     1,402,059    2,805,124     2,803,863
     Withdrawals          1,411,416     1,430,541    2,763,054     2,812,223
     Interest credits        47,504        45,106       94,406        88,131
     Ending Balance      $4,092,805    $3,979,336   $4,092,805    $3,979,336
 
     Net increase           $63,680       $16,624     $136,476       $79,771
 
 
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 SOURCE  Capitol Federal Financial