Capitol Federal Financial, Inc. (CFFN): Business Model Canvas [10-2024 Updated]
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Capitol Federal Financial, Inc. (CFFN) Bundle
Understanding the business model of Capitol Federal Financial, Inc. (CFFN) reveals how this financial institution effectively meets the needs of its diverse customer base while ensuring sustainability and growth. With a strong emphasis on community engagement and a robust suite of financial products, CFFN stands out in the competitive banking landscape. Explore the key components of their Business Model Canvas below to uncover the strategies driving their success.
Capitol Federal Financial, Inc. (CFFN) - Business Model: Key Partnerships
Federal Home Loan Bank (FHLB)
Capitol Federal Financial, Inc. maintains a strong partnership with the Federal Home Loan Bank (FHLB), which is crucial for liquidity and funding. As of September 30, 2024, the average outstanding balance of FHLB borrowings was approximately $2.18 billion, with a weighted average contractual rate of 3.41%. This partnership allows Capitol Federal to access funds at competitive rates, which are essential for its lending operations.
Local Real Estate Agents and Brokers
Collaboration with local real estate agents and brokers is vital for Capitol Federal's mortgage origination business. In fiscal year 2024, the bank originated $354.5 million in one- to four-family loans at a weighted average rate of 6.81%. This strategic partnership helps in reaching potential homebuyers and facilitating smoother transactions in the real estate market.
Insurance Providers for Bundled Services
Capitol Federal partners with various insurance providers to offer bundled services to its customers. Insurance commissions for the year ended September 30, 2024, amounted to $3.26 million. This collaboration not only enhances customer service but also provides additional revenue streams for the bank.
Technology Providers for Banking Operations
Investments in technology have become increasingly important for Capitol Federal. The bank spent approximately $20.32 million on information technology and related expenses in fiscal year 2024. Partnerships with technology providers enhance operational efficiency and improve customer experience through digital banking solutions.
| Partnership Type | Key Metrics |
|---|---|
| Federal Home Loan Bank (FHLB) | Outstanding Borrowings: $2.18 billion Weighted Average Rate: 3.41% |
| Local Real Estate Agents and Brokers | Loan Originations: $354.5 million Weighted Average Rate: 6.81% |
| Insurance Providers | Insurance Commissions: $3.26 million |
| Technology Providers | IT Expenses: $20.32 million |
Capitol Federal Financial, Inc. (CFFN) - Business Model: Key Activities
Origination and servicing of loans
As of September 30, 2024, Capitol Federal Financial, Inc. (CFFN) had total loans receivable amounting to $7.94 billion, with the following breakdown:
| Loan Type | Amount (in thousands) | Weighted Average Rate |
|---|---|---|
| One- to four-family loans | $6,458,272 | 3.43% |
| Commercial loans | $1,378,421 | 5.57% |
| Consumer loans | $107,357 | 8.53% |
| Total | $7,944,050 | 3.87% |
During the fiscal year ended September 30, 2024, CFFN originated loans totaling $708.6 million, with a weighted average rate of 7.25%, comprising:
- One- to four-family loans: $354.5 million
- Commercial loans: $306.4 million
- Consumer loans: $47.0 million
Risk management and compliance
CFFN has implemented rigorous risk management practices, maintaining a reserve for credit losses (ACL) of $23 million as of September 30, 2024. The ratio of ACL to total loans receivable was 0.29%. Provisions for credit losses recorded during the year were $1.3 million, compared to $6.8 million in the previous year. The bank's non-performing loans (90 days or more delinquent) totaled $2.3 million, representing a low delinquency ratio of 0.03% of total loans.
Marketing and customer engagement
In fiscal year 2024, CFFN focused on enhancing customer engagement through competitive products. The introduction of a high-yield savings account offered an annual percentage yield (APY) of 4.30% for balances over $10,000, resulting in a balance of $96.2 million as of September 30, 2024. The bank's deposit portfolio included:
| Deposit Type | Amount (in thousands) | Weighted Average Rate |
|---|---|---|
| Non-interest-bearing checking | $549,596 | — |
| Interest-bearing checking | $847,542 | 0.23% |
| Savings | $540,572 | 0.82% |
| Money market | $1,226,962 | 1.46% |
| Retail certificates of deposit | $2,830,579 | 4.23% |
| Total Deposits | $6,129,982 | 2.45% |
Financial reporting and regulatory compliance
CFFN adheres to strict financial reporting standards, with total assets reported at $9.54 billion as of September 30, 2024. The efficiency ratio was 59.29%, indicating operational efficiency relative to revenues. The bank's capital ratios exceeded well-capitalized requirements, with stockholders' equity totaling $1.03 billion. Quarterly cash dividends paid in fiscal year 2024 totaled $44.5 million, or $0.34 per share. The bank's community bank leverage ratio was recorded at 9.2% as of September 30, 2024.
Capitol Federal Financial, Inc. (CFFN) - Business Model: Key Resources
Loan Portfolio
Capitol Federal Financial, Inc. (CFFN) maintains a loan portfolio exceeding $7.9 billion as of September 30, 2024. The composition of this portfolio includes:
| Loan Type | Amount (in thousands) | Percentage of Total Portfolio | Weighted Average Rate |
|---|---|---|---|
| One- to Four-Family Loans | $6,304,670 | 79.7% | 3.55% |
| Commercial Loans | $1,508,978 | 19.0% | 5.65% |
| Consumer Loans | $109,603 | 1.4% | 8.62% |
Digital Banking Platform
Capitol Federal has invested heavily in its digital banking platform, enhancing customer access and engagement. The platform facilitates:
- Online banking services with real-time access to accounts.
- Mobile banking applications allowing transactions and account management on-the-go.
- High-yield savings accounts, with balances totaling $96.2 million as of September 30, 2024.
Experienced Workforce
The company employs an experienced workforce in financial services, contributing to its operational efficiency and customer service quality. The workforce is characterized by:
- High retention rates, with approximately 87% retention of retail certificate of deposit customers over the past year.
- Skilled professionals in mortgage lending, commercial banking, and customer service.
- Commitment to continuous training and development to adapt to evolving market demands.
Strong Capital Base
As of September 30, 2024, Capitol Federal maintains a strong capital base exceeding regulatory requirements. Key financial metrics include:
| Metric | Value |
|---|---|
| Total Stockholders' Equity | $1.03 billion |
| Community Bank Leverage Ratio | 9.2% |
| Return on Average Assets | 0.51% |
| Return on Average Equity | 4.69% |
Capitol Federal's capital ratios surpass the well-capitalized requirements, ensuring a robust financial foundation to support future growth and stability.
Capitol Federal Financial, Inc. (CFFN) - Business Model: Value Propositions
Competitive interest rates on loans and deposits
Capitol Federal Financial, Inc. offers competitive interest rates on both loans and deposits, which is a critical value proposition for attracting customers. As of September 30, 2024, the weighted average rate for retail certificates of deposit was approximately 4.23%. The company introduced a high-yield savings account with an annual percentage yield (APY) of 4.30% for balances exceeding $10,000, accumulating a total balance of $96.2 million. Additionally, the average interest rate for originated one- to four-family loans stood at 6.41%, while commercial loans averaged 6.58%. These rates are designed to remain attractive amid fluctuating market conditions, particularly as the Federal Reserve adjusts its monetary policy.
Personalized banking services tailored to customer needs
Capitol Federal emphasizes personalized banking services to cater to specific customer requirements. The bank has maintained a retail certificate of deposit retention rate of approximately 87% over the past year. This high retention reflects the effectiveness of their personalized customer engagement strategies. Furthermore, Capitol Federal has adapted its service offerings based on customer feedback and market trends, ensuring that products like the high-yield savings account align with the needs of its clientele.
Robust online and mobile banking features
The bank has invested significantly in digital transformation, enhancing its online and mobile banking platforms. As of September 30, 2024, Capitol Federal reported that approximately 70% of its transactions were conducted through digital channels. The bank's mobile app includes features such as mobile check deposit, fund transfers, and account management, which are crucial for customer convenience. The focus on technology has not only improved customer satisfaction but also streamlined operational efficiency, allowing for a reduction in overhead costs.
Commitment to community investment and support
Capitol Federal demonstrates a strong commitment to community investment, which enhances its value proposition. In fiscal year 2024, the bank allocated over $1 million to local community initiatives and charitable organizations. This commitment includes funding for educational programs, housing assistance, and local economic development projects. By actively engaging in community support, Capitol Federal strengthens its brand loyalty and enhances its reputation among customers who value corporate social responsibility.
| Product/Service | Details | Financial Impact |
|---|---|---|
| High-Yield Savings Account | APY of 4.30% for balances over $10,000 | $96.2 million in total balance as of September 30, 2024 |
| Retail Certificates of Deposit | Weighted average rate of 4.23% | Retention rate of 87% over the past year |
| One- to Four-Family Loans | Average interest rate of 6.41% | Loan originations totaling $299.6 million for the year ended September 30, 2024 |
| Commercial Loans | Average interest rate of 6.58% | Commercial loan originations totaling $350.6 million for the year ended September 30, 2024 |
| Community Investment | Support for local initiatives and charities | Over $1 million allocated in fiscal year 2024 |
Capitol Federal Financial, Inc. (CFFN) - Business Model: Customer Relationships
Dedicated customer service teams
Capitol Federal Financial, Inc. (CFFN) employs dedicated customer service teams to ensure personalized support for its clients. As of September 30, 2024, the company reported a total of 1,225 employees, with a significant portion allocated to customer-facing roles to enhance service delivery. This team is trained to handle a variety of inquiries, from account management to loan servicing, ensuring that customers receive timely and relevant assistance.
Regular communication through newsletters and updates
CFFN maintains regular communication with its customers through newsletters and updates. In 2024, the company distributed over 1 million newsletters, focusing on financial education, product updates, and community engagement. The average open rate for these newsletters is approximately 22%, indicating a healthy level of engagement among recipients.
Tailored financial advice and planning services
Capitol Federal offers tailored financial advice and planning services to its customers. In 2024, the company reported that approximately 15% of its customers utilized these services, which include retirement planning, investment advice, and mortgage counseling. The average customer satisfaction rating for these services is 4.5 out of 5, reflecting the quality of personalized financial guidance provided to clients.
Community engagement through local events
CFFN is actively involved in community engagement through various local events. In 2024, the bank sponsored over 50 community events, including financial literacy workshops, charity fundraisers, and local fairs. This initiative not only enhances the bank's visibility but also fosters a strong connection with the community. Participation in these events has increased customer loyalty, with a reported 25% of attendees becoming new customers within six months of event participation.
| Type of Engagement | Details | Impact |
|---|---|---|
| Employee Count | 1,225 employees | Enhanced customer service quality |
| Newsletters Distributed | 1 million newsletters | 22% average open rate |
| Customers Utilizing Financial Services | 15% of total customer base | Average satisfaction rating of 4.5/5 |
| Community Events Sponsored | Over 50 events | 25% conversion rate to new customers |
Capitol Federal Financial, Inc. (CFFN) - Business Model: Channels
Branch network across key regions
Capitol Federal Financial, Inc. operates a robust branch network primarily located in Kansas and Missouri. As of September 30, 2024, the company had a total of 54 branches. This network facilitates direct customer interactions and offers a range of financial services including savings accounts, loans, and investment products.
Online banking platform and mobile app
The online banking platform of Capitol Federal Financial is a critical channel for customer engagement. As of 2024, over 70% of transactions are conducted through digital channels. The mobile app, which has been enhanced to improve user experience, reports over 300,000 downloads with a customer satisfaction rate exceeding 85%. The platform supports features such as online account opening, fund transfers, and loan applications.
Social media and digital marketing campaigns
Capitol Federal utilizes various social media platforms including Facebook, Twitter, and Instagram to enhance brand awareness and customer engagement. In fiscal year 2024, the company allocated approximately $4.3 million to digital marketing campaigns, resulting in a 25% increase in online lead generation compared to the previous year. The social media engagement rate averaged 3.5% across platforms, significantly above the industry standard of 1.5%.
Partnerships with local businesses and organizations
Partnerships with local businesses and community organizations are integral to Capitol Federal's strategy. The bank collaborated with over 100 local businesses in 2024 to offer co-branded financial products. These partnerships have contributed to a 15% increase in new customer acquisitions and enhanced community presence. Additionally, Capitol Federal is involved in various community initiatives, which further solidify its local engagement.
| Channel Type | Description | Key Metrics |
|---|---|---|
| Branch Network | 54 branches across Kansas and Missouri | Direct customer interaction |
| Online Banking | 70% of transactions via digital channels | 300,000 app downloads, 85% satisfaction rate |
| Social Media | Engagement through platforms like Facebook and Twitter | $4.3 million spent on digital marketing, 25% lead increase |
| Local Partnerships | Collaboration with over 100 local businesses | 15% increase in new customer acquisitions |
Capitol Federal Financial, Inc. (CFFN) - Business Model: Customer Segments
Residential Homeowners and Buyers
Capitol Federal Financial, Inc. primarily serves residential homeowners and buyers through a variety of mortgage products. As of September 30, 2024, the Bank's portfolio of one- to four-family loans amounted to approximately $6.30 billion, with originated loans making up 62.5% of this total. The weighted average interest rate for these loans was 3.55%, and the average loan-to-value (LTV) ratio was 60%.
In the fiscal year ended September 30, 2024, the Bank originated loans totaling $354.5 million at an average rate of 6.81%. The current market conditions, characterized by high interest rates and limited housing inventory, have led to a slowdown in origination activities, particularly in the one- to four-family loan sector.
Small to Medium-Sized Businesses
CFFN significantly caters to small to medium-sized businesses by offering commercial loans. In fiscal year 2024, the Bank originated commercial loans totaling $350.6 million, which included $156.4 million in commercial construction loans, $122.4 million in commercial real estate loans, and $71.8 million in commercial and industrial loans. As of September 30, 2024, the outstanding balance for commercial and industrial loans was approximately $163.6 million.
The weighted average interest rate for commercial loans disbursed during the same period was 6.58%. This segment's growth reflects CFFN's commitment to supporting local businesses by providing tailored financial solutions.
First-Time Homebuyers
Capitol Federal Financial, Inc. has a dedicated focus on first-time homebuyers, offering products tailored to their specific needs. The institution's one- to four-family loan portfolio includes favorable terms that appeal to this demographic. The Bank's ongoing efforts to engage first-time buyers are reflected in the support of lower down payment options and competitive interest rates.
As of September 30, 2024, the average credit score for originated loans was 770, and the weighted average LTV ratio was 60%. This indicates a prudent lending strategy aimed at minimizing risk while facilitating homeownership for new buyers.
Investors in Commercial Real Estate
CFFN also targets investors in commercial real estate, providing financing options for various property types. The Bank's commercial real estate loans amounted to $1.38 billion as of September 30, 2024. The weighted average debt service coverage ratio (DSCR) for these loans was 1.87x, indicating a strong ability of borrowers to meet their debt obligations.
The Bank's strategy includes offering loans for properties such as hotels, retail buildings, and multi-family units. For example, as of September 30, 2024, the Bank had $562.1 million in commercial real estate loans, with a significant portion allocated to multi-family properties. The average loan amount for commercial loans greater than $50 million was approximately $385.3 million, with an average LTV of 54.4%.
| Customer Segment | Loan Amount ($ Million) | Weighted Average Rate (%) | Average LTV (%) | Average Credit Score |
|---|---|---|---|---|
| Residential Homeowners and Buyers | 6,304.7 | 3.55 | 60 | 770 |
| Small to Medium-Sized Businesses | 350.6 | 6.58 | - | - |
| First-Time Homebuyers | 354.5 | 6.81 | 60 | 770 |
| Investors in Commercial Real Estate | 1,380.0 | - | 54.4 | - |
Capitol Federal Financial, Inc. (CFFN) - Business Model: Cost Structure
Interest expense on deposits and borrowings
The total interest expense for Capitol Federal Financial, Inc. for the year ended September 30, 2024, was $214.78 million, which includes:
| Component | Amount (in thousands) | Change (in thousands) | Percent Change |
|---|---|---|---|
| Deposits | $139,549 | $57,282 | 69.6% |
| Borrowings | $75,233 | ($49,017) | (39.5%) |
| Total Interest Expense | $214,782 | $8,265 | 4.0% |
The increase in interest expense on deposits was primarily due to an increase in the weighted average rate paid on deposits, particularly retail certificates of deposit and money market accounts.
Operational costs including salaries and technology
For the quarter ended September 30, 2024, Capitol Federal reported total non-interest expenses of $27,040,000, which includes:
| Expense Type | Amount (in thousands) |
|---|---|
| Information Technology and Related Expense | $4,637 |
| Occupancy, Net | $3,442 |
| Federal Insurance Premium | $1,113 |
| Regulatory and Outside Services | $1,398 |
| Advertising and Promotional | $1,054 |
| Deposit and Loan Transaction Costs | $584 |
| Office Supplies and Related Expense | $506 |
| Other Non-Interest Expense | $1,220 |
Overall, there was a decrease of $910,000 in non-interest expenses compared to the previous quarter, primarily due to lower software-related expenses.
Marketing and promotional expenses
Advertising and promotional expenses for the quarter were noted at $1,054,000, reflecting an increase of 10.8% compared to the previous quarter.
Compliance and regulatory costs
The compliance and regulatory costs, particularly the Federal Insurance Premium, were reported at $1,113,000 for the quarter ending September 30, 2024, which showed a decrease of 17.7% from the prior quarter.
Capitol Federal Financial, Inc. (CFFN) - Business Model: Revenue Streams
Interest income from loans and mortgages
As of September 30, 2024, Capitol Federal Financial, Inc. reported a total loans receivable of $7.92 billion with an average yield of 4.02%. The composition of the loan portfolio was as follows:
| Loan Type | Amount (in thousands) | Weighted Average Rate | Percentage of Total |
|---|---|---|---|
| One- to four-family originated | $3,941,952 | 3.60% | 49.8% |
| Commercial real estate | $1,191,624 | 5.43% | 15.0% |
| Commercial and industrial | $129,678 | 6.66% | 1.6% |
| Consumer loans | $109,603 | 8.62% | 1.4% |
In the year ending September 30, 2024, the interest income from loans receivable was $308.7 million, reflecting an overall yield of 3.87%.
Fees from banking services and transactions
Capitol Federal Financial derives revenue from various banking services, including transaction fees and service charges. For the fiscal year ending September 30, 2024, the bank reported non-interest income of $12.2 million, which includes fees from account maintenance and transaction services.
Non-interest income from insurance and investments
Non-interest income, which encompasses revenue from insurance products and investment services, was reported at $16.5 million for the year ending September 30, 2024. This includes income from the sale of insurance products and investment advisory services.
Gains from securities transactions and investments
Capitol Federal Financial's investment portfolio includes mortgage-backed securities (MBS) and corporate bonds. As of September 30, 2024, the bank's securities portfolio was valued at $856.3 million, yielding an average return of 5.63%. The following table summarizes the key components of this portfolio:
| Security Type | Amount (in thousands) | Yield | Weighted Average Life (Years) |
|---|---|---|---|
| Mortgage-Backed Securities | $756,775 | 5.63% | 5.7 |
| U.S. Government-Sponsored Enterprise Debentures | $69,077 | 5.63% | 0.4 |
| Corporate Bonds | $4,000 | 5.12% | 7.6 |
For the year ended September 30, 2024, the bank reported gains from securities transactions amounting to $27.9 million.
Article updated on 8 Nov 2024
Resources:
- Capitol Federal Financial, Inc. (CFFN) Financial Statements – Access the full quarterly financial statements for Q4 2024 to get an in-depth view of Capitol Federal Financial, Inc. (CFFN)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Capitol Federal Financial, Inc. (CFFN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.