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Capitol Federal Financial Inc's Business Segments
Capitol Federal Financial Inc's reported revenue by business segment and by geographic region, quarterly and annual, normalized against the consolidated income statement. Free below: the top 3 rows per table, this quarter and this fiscal year. Subscriber access adds the full segment history and operating income by segment.
Segment Data As of FY
Reportable Segments
2
Largest Segment
Deposit Account
Total Revenue
$ 61
Regions Reported
-
Revenue Share by Reportable Segment - FY
- Deposit Account14.1%
- Insurance Services3.5%
Revenue by Reportable Segment - FY
| Segment | Revenue (Millions) | % of Total |
|---|---|---|
| Deposit Account | $ 9 | 14.1% |
| Insurance Services | $ 2 | 3.5% |
Annual Results
Revenue Share by Reportable Segment - FY
- Deposit Account14.1%
- Insurance Services3.5%
Revenue by Reportable Segment - FY
| Segment | Revenue (Millions) | % of Total |
|---|---|---|
| Deposit Account | $ 9 | 14.1% |
| Insurance Services | $ 2 | 3.5% |
Description of Capitol Federal Financial Inc
The Company is a Maryland corporation that was incorporated in April 2010. The
Companys common stock is traded on the Global Select tier of the NASDAQ Stock
Market under the symbol "CFFN."
The Bank is a wholly-owned subsidiary of the Company and is a federally chartered and insured savings bank headquartered in Topeka, Kansas. The Bank is examined and regulated by the Office of the Comptroller of the Currency (the "OCC"), its primary regulator, and its deposits are insured up to applicable limits by the Deposit Insurance Fund ("DIF"), which is administered by the Federal Deposit Insurance Corporation ("FDIC"). We primarily serve the metropolitan areas of Topeka, Wichita, Lawrence, Manhattan, Emporia and Salina, Kansas and a portion of the metropolitan area of greater Kansas City through 37 traditional and 10 in-store branches. The Company, as a savings and loan holding company, is examined and regulated by the FRB.
Capitol Federal Financial Inc. a prominent community bank, offers a comprehensive range of segments, products, and services tailored to meet the diverse financial needs of its customers.
1. One- to Four-Family Residential Real Estate Lending
Capitol Federal is well-known for originating and servicing one- to four-family residential loans that are not federally guaranteed or insured. This segment encompasses both the origination and purchase of residential loans.
a. Originated Loans
The Bank offers a variety of loan types:
- Fixed-Rate Loans: These loans maintain a constant interest rate throughout the life of the loan, providing stability to borrowers.
- Adjustable-Rate Loans (ARMs): These loans have interest rates that may change over time, depending on market conditions. The transition between fixed and adjustable rates is the main characteristic.
The origination volume in this segment is influenced by market factors, including local housing demand, competitive pricing, and interest rate fluctuations.
b. Purchased Loans
Capitol Federal selectively purchases loans from correspondent lenders, allowing it to diversify its geographic portfolio and complement its originated loans. This purchase strategy is typically executed on a loan-by-loan basis, which helps manage risk while expanding its lending footprint.
c. Loan Servicing
The Bank collaborates with third-party mortgage sub-servicers to manage loans from correspondent lenders in certain states. This relationship is designed to maintain high standards of customer service and operational efficiency, thereby enhancing the performance of the loan portfolio.
d. Underwriting Standards
The Bank employs rigorous underwriting standards, requiring full documentation to assess creditworthiness. Loans are generally subject to the ability to repayand qualified mortgagestandards outlined by the Consumer Financial Protection Bureau (CFPB). For example:
- Maximum debt-to-income ratio of 43%
- Property valuations supported by independent appraisals
Loans exceeding certain thresholds ($500,000, $750,000, and $1.5 million) must receive escalating levels of approval, from senior underwriters to the Board of Directors.
Adjustable-Rate Loans
Capitol Federals ARMs come with specified caps on periodic interest rate adjustments and includes safeguards to prevent negative amortization. Borrowers are vetted based on the initial rates plus predetermined caps, ensuring they can afford potential increases in their payments.
Pricing Strategy
The pricing strategy for first mortgage loans considers both secondary market conditions and local competitor pricing. This includes various terms for ARMs, which reprice after initial periods of three, five, or seven years.
Mortgage Insurance
Loans with a loan-to-value (LTV) ratio over 80% necessitate private mortgage insurance (PMI), providing protection against borrower default. The Bank can offer loans up to 97% of the lesser appraised value or purchase price if PMI is obtained.
Loan Endorsement Program
The endorsement program allows current loan customers to adjust to new loan terms for a fee. This program aims to retain customers while encouraging loyalty and mitigating the impact of repayment activities.
Repayment Terms
Loans are generally fully amortizing, with terms extending up to 30 years, and include due on saleclauses that enforce full repayment upon property transfer.
Loan Sales
To manage interest rate risk and liquidity, the Bank has protocols for selling loans, both on a bulk and flow basis, while typically retaining servicing rights on these loans.
8. Construction Lending
The Bank also engages in construction-to-permanent lending for one- to four-family residences, as well as multi-family and commercial properties. These loans facilitate the construction phase, transitioning seamlessly into permanent financing upon completion.
a. Construction Loan Features
- Application Process: Borrowers must submit detailed plans and costs.
- Manual Underwriting: All construction loans are manually underwritten to adhere to internal standards.
- Draw Requests: Disbursement of loan funds is contingent upon project inspections and management approvals.
9. Consumer Lending
Capitol Federal offers an array of consumer loans, including:
- Home Equity Loans and Lines of Credit: Allowing homeowners to leverage their property for additional financing.
- Home Improvement Loans: Designed to finance upgrades and renovations.
- Auto Loans: Secured loans for vehicle purchases.
- Secured and Unsecured Loans: A limited number of unsecured loans are available.
10. Multi-family and Commercial Lending
This segment primarily involves loans secured by multi-family dwellings or commercial real estate. The Bank is focused on expanding this portfolio through correspondent lending arrangements. Such involvement enhances opportunities for diversifying revenue and market presence.
Overall, Capitol Federal Financial Inc. stands out with its diverse financial offerings, built on a framework of stringent underwriting standards and customer-centric services. Each segment of its business is designed to address specific market needs while promoting responsible lending practices.
1. One- to Four-Family Residential Real Estate Lending
Capitol Federal is well-known for originating and servicing one- to four-family residential loans that are not federally guaranteed or insured. This segment encompasses both the origination and purchase of residential loans.
a. Originated Loans
The Bank offers a variety of loan types:
- Fixed-Rate Loans: These loans maintain a constant interest rate throughout the life of the loan, providing stability to borrowers.
- Adjustable-Rate Loans (ARMs): These loans have interest rates that may change over time, depending on market conditions. The transition between fixed and adjustable rates is the main characteristic.
The origination volume in this segment is influenced by market factors, including local housing demand, competitive pricing, and interest rate fluctuations.
b. Purchased Loans
Capitol Federal selectively purchases loans from correspondent lenders, allowing it to diversify its geographic portfolio and complement its originated loans. This purchase strategy is typically executed on a loan-by-loan basis, which helps manage risk while expanding its lending footprint.
c. Loan Servicing
The Bank collaborates with third-party mortgage sub-servicers to manage loans from correspondent lenders in certain states. This relationship is designed to maintain high standards of customer service and operational efficiency, thereby enhancing the performance of the loan portfolio.
d. Underwriting Standards
The Bank employs rigorous underwriting standards, requiring full documentation to assess creditworthiness. Loans are generally subject to the ability to repayand qualified mortgagestandards outlined by the Consumer Financial Protection Bureau (CFPB). For example:
- Maximum debt-to-income ratio of 43%
- Property valuations supported by independent appraisals
Loans exceeding certain thresholds ($500,000, $750,000, and $1.5 million) must receive escalating levels of approval, from senior underwriters to the Board of Directors.
Adjustable-Rate Loans
Capitol Federals ARMs come with specified caps on periodic interest rate adjustments and includes safeguards to prevent negative amortization. Borrowers are vetted based on the initial rates plus predetermined caps, ensuring they can afford potential increases in their payments.
Pricing Strategy
The pricing strategy for first mortgage loans considers both secondary market conditions and local competitor pricing. This includes various terms for ARMs, which reprice after initial periods of three, five, or seven years.
Mortgage Insurance
Loans with a loan-to-value (LTV) ratio over 80% necessitate private mortgage insurance (PMI), providing protection against borrower default. The Bank can offer loans up to 97% of the lesser appraised value or purchase price if PMI is obtained.
Loan Endorsement Program
The endorsement program allows current loan customers to adjust to new loan terms for a fee. This program aims to retain customers while encouraging loyalty and mitigating the impact of repayment activities.
Repayment Terms
Loans are generally fully amortizing, with terms extending up to 30 years, and include due on saleclauses that enforce full repayment upon property transfer.
Loan Sales
To manage interest rate risk and liquidity, the Bank has protocols for selling loans, both on a bulk and flow basis, while typically retaining servicing rights on these loans.
8. Construction Lending
The Bank also engages in construction-to-permanent lending for one- to four-family residences, as well as multi-family and commercial properties. These loans facilitate the construction phase, transitioning seamlessly into permanent financing upon completion.
a. Construction Loan Features
- Application Process: Borrowers must submit detailed plans and costs.
- Manual Underwriting: All construction loans are manually underwritten to adhere to internal standards.
- Draw Requests: Disbursement of loan funds is contingent upon project inspections and management approvals.
9. Consumer Lending
Capitol Federal offers an array of consumer loans, including:
- Home Equity Loans and Lines of Credit: Allowing homeowners to leverage their property for additional financing.
- Home Improvement Loans: Designed to finance upgrades and renovations.
- Auto Loans: Secured loans for vehicle purchases.
- Secured and Unsecured Loans: A limited number of unsecured loans are available.
10. Multi-family and Commercial Lending
This segment primarily involves loans secured by multi-family dwellings or commercial real estate. The Bank is focused on expanding this portfolio through correspondent lending arrangements. Such involvement enhances opportunities for diversifying revenue and market presence.
Overall, Capitol Federal Financial Inc. stands out with its diverse financial offerings, built on a framework of stringent underwriting standards and customer-centric services. Each segment of its business is designed to address specific market needs while promoting responsible lending practices.