When asked about the possibility of the company's net interest margin suffering when short-term interest rates begin to rise, Chief Financial Officer Kent Townsend told TheStreet.com that Capitol Financial had locked in some lower rates for the long term, with "our customers wanting to go out three to four years" on CD deposits. The company also restructured $875 million in borrowings from the Federal Home Loan Bank, increasing the average term for those types to 66 months from about one year, and lowering its average cost for that funding by 130 basis points.

Townsend said the company's mortgage-backed securities portfolio mainly comprises securities issued by Fannie Mae ( FNM) and Freddie Mac ( FRE), and hasn't suffered from ratings downgrades.

Capitol Federal's shares have fallen 31% this year and are selling for 2.4 times tangible book value and a trailing price-to-earnings ratio of 9.4.

-- Reported by Philip van Doorn in Jupiter, Fla.
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Philip W. van Doorn joined TheStreet.com Ratings., Inc., in February 2007. He is the senior analyst responsible for assigning financial strength ratings to banks and savings and loan institutions. He also comments on industry and regulatory trends. Mr. van Doorn has fifteen years experience, having served as a loan operations officer at Riverside National Bank in Fort Pierce, Florida, and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a Bachelor of Science in business administration from Long Island University.

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