Capitol Federal Financial Inc. said it earned $20.5 million, or 15 cents a share, in the last three months of 2014.
The profit was 15 percent higher than a year earlier, when it earned $17.8 million, or 12 cents a share, in what is the first quarter of the company’s fiscal year.
Capitol Federal said it ended December with $9.06 billion in assets, including $6.26 billion in loans.
Earnings got a boost from the company’s “daily leverage strategy,” in which it benefits from the difference it pays to borrow money from one federal window and the interest it can earn at another.
Capitol Federal said it borrows the money from the Federal Home Loan Bank, a federally sponsored agency that provides funding to commercial and savings banks. It then deposits the money at the Federal Reserve Bank of Kansas City.
The difference between the cost to borrow the money and what it earned at the Fed added $795,000 to net income for the quarter, Capitol Federal said. The Topeka-based lender said the strategy’s contribution to profits in the previous quarter had been $501 million.
Part of the strategy involves borrowing and paying off the advance from the Federal Home Loan Bank just as quarterly reporting periods begin and end. It helps “minimize regulatory fees,” Capitol Federal’s announcement said.