Paying higher interest rates on deposits held profits flat at Capitol Federal Financial, the Topeka-based savings bank business said Friday.
Capitol Federal said it earned $20.6 million in October, November and December, or 15 cents a share. A year earlier, it had earned $20.7 million, or 16 cents a share, in those months. The quarter is the first in the company’s fiscal year that runs from Oct. 1 to Sept. 30.
Higher deposit rates pushed down on profits, but interest earned on a larger loan portfolio lifted profits, the company said in its announcement.
Loans, principally mortgages on homes, totaled $7.07 billion at the end of December, a 1.6 percent increase from a year earlier. Assets, which include loans and securities, totaled $9.14 billion. Capitol Federal has remained below $10 billion in assets, which exempts it from conducting a public financial stress test.
It also continues to profit from borrowing money at the Federal Home Loan Bank in Topeka and depositing the money in the Federal Reserve Bank of Kansas City, where it earns more than it paid to borrow the funds. This “leverage strategy,” as Capitol Federal calls it, earned the company $642,000 in the recent quarter.