UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

  [X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF

1934

For the quarter ended June 30, 2002

OR

  [ ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the transition period from _____________________to_____________________

Commission file number 333-68363

CAPITOL FEDERAL FINANCIAL

(Exact name of registrant as specified in its charter)

United States

48-1212142

  (State or other jurisdiction of incorporation

(I.R.S. Employer Identification No.)

                 or organization)

700 Kansas Avenue, Topeka, Kansas

66603

(Address of principal executive offices)

(Zip Code)

  Registrant's telephone number, including area code: (785) 235-1341

         Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such requirements for the past 90 days. YES X NO __.

         Transitional Small Business Format:                                             Yes [  ]          No [X]

          Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

                               Common Stock                                                            73,549,542     

                                        Class                                                            Shares Outstanding
                                                                                                             as of August 7, 2002

PART I -- FINANCIAL INFORMATION

Page
Number

Item 1.  Financial Statements

             Consolidated Balance Sheets at June 30, 2002 and September 30, 2001

3

             Consolidated Statements of Income for the three and nine months ended                   June 30, 2002 and June 30, 2001

4

             Consolidated Statement of Stockholders' Equity for the nine months ended                   June 30, 2002

5

             Consolidated Statements of Cash Flows for the nine months ended                   June 30, 2002 and June 30, 2001

6

             Notes to Consolidated Interim Financial Statements

8

Item 2.  Management's Discussion and Analysis of Financial Condition and                   Results of Operations

13

Item 3.  Quantitative and Qualitative Disclosure about Market Risk

22

PART II -- OTHER INFORMATION

Item 1.  Legal Proceedings

25

Item 2.  Changes in Securities and Use of Proceeds

25

Item 3.  Defaults Upon Senior Securities

25

Item 4.  Submission of Matters to a Vote of Security Holders

25

Item 5.  Other Information

25

Item 6.  Exhibits and Reports on Form 8-K

25

Signature Page

26

Financial Statement Certification

27

June 30,

September 30,

2002

2001

(Unaudited)

ASSETS:

Cash and cash equivalents

$     95,992 

$     153,462 

Investment securities held to maturity, at cost (market value of $521,565

        and $520,099)

501,181 

502,283 

Capital stock of Federal Home Loan Bank, at cost

161,000 

162,350 

Mortgage-related securities:

        Available-for-sale, at market (amortized cost of $1,152,382 and $1,041,069)

1,175,312 

1,059,110 

        Held-to-maturity, at cost (market value of $1,448,045 and $1,294,248)

1,419,396 

1,248,813 

Loans held for sale, net

17,790 

16,904 

Loans receivable, net

5,349,404 

5,416,507 

Premises and equipment, net

23,135 

22,494 

Real estate owned, net

2,642 

1,031 

Accrued interest receivable

45,258 

47,219 

Other assets

4,131 

5,270 

        TOTAL ASSETS

$ 8,795,241 

$ 8,635,443 

LIABILITIES:

Deposits

$ 4,431,321 

$ 4,285,835 

Advances from Federal Home Loan Bank

3,200,000 

3,200,000 

Other borrowings, net

106,344 

-- 

Advance payments by borrowers for taxes and insurance

19,946 

40,161 

Accrued and deferred income taxes payable

19,899 

24,625 

Accounts payable and accrued expenses

41,960 

36,560 

        Total Liabilities

7,819,470 

7,587,181 

COMMITMENTS AND CONTINGENCIES (NOTE 8)

STOCKHOLDERS' EQUITY:

Preferred stock ($0.01 par value) 50,000,000 shares

        authorized; none issued

-- 

-- 

Common stock ($0.01 par value) 450,000,000 authorized; 91,512,287

        shares issued as of June 30, 2002 and September 30, 2001

915 

915 

Additional paid-in-capital

392,706 

387,018 

Retained earnings

861,629 

809,127 

Accumulated other comprehensive income

14,234 

11,457 

Unearned compensation, Employee Stock Ownership Plan

(22,684)

(24,197)

Unearned compensation, Recognition and Retention Plan

(4,450)

(6,156)

Less shares held in treasury (17,363,459 and 11,103,005 shares as of

        June 30, 2002 and September 30, 2001, at cost)

(266,579)

(129,902)

           Total Stockholders' Equity

975,771 

1,048,262 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$ 8,795,241 

$ 8,635,443 

For the Nine Months Ended

June 30,

2002

2001

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$63,531 

$58,207 

Adjustments to reconcile net income to net cash provided

  by operating activities:

Amortization of net deferred loan origination fees

(5,036)

(2,707)

Provision for loan losses

184 

-- 

Net loan origination fees capitalized

5,528 

3,303 

Gain on sale of loans held for sale

(14)

(6)

Gain on sales of real estate owned, net

(116)

(120)

Originations of loans held for sale

(6,602)

(6,415)

Proceeds from sales of loans held for sale

5,745 

12,196 

Amortization and accretion of premiums and discounts on

          mortgage-related securities and investment securities

2,560 

3,778 

Depreciation and amortization on premises and equipment

2,504 

2,562 

Amortization of capitalized cost on other borrowings

129 

-- 

Common stock committed to be released for allocation - ESOP

3,462 

2,416 

Amortization of unearned compensation - RRP

1,706 

1,735 

Recognition and Retention Plan shares sold for employee withholding tax purposes

(66)

31 

Changes in:

          Accrued interest receivable

1,961 

(2,656)

          Other assets

1,137 

2,948 

          Income taxes payable

670 

1,210 

          Accounts payable and accrued expenses

1,004 

(6,743)

             Net cash provided by operating activities

78,287 

69,739 

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from maturities of investment securities

201,350 

15,100 

Purchases of investment securities

(200,000)

(502,798)

Principal collected on mortgage-related securities available-

          for-sale

249,957 

218,601 

Principal collected on mortgage-related securities held-to-

          maturity

546,106 

368,681 

Purchases of mortgage-related securities available-for-sale

(363,521)

-- 

Purchases of mortgage-related securities held-to-maturity

(715,898)

(250,131)

Loan originations net of principal collected

(283,561)

(279,518)

Principal collected net of loans purchased

346,939 

271,314 

Purchases of premises and equipment, net

(3,145)

(1,697)

Proceeds from sales of real estate owned

2,043 

2,122 

             Net cash used in investing activities

(219,730)

(158,326)

CASH FLOWS FROM FINANCING ACTIVITIES:

Dividends paid

(10,430)

(10,244)

Deposits, net of payments

145,486 

270,799 

Proceeds from advances from Federal Home Loan Bank

20,000 

-- 

Proceeds from other borrowings

116,389 

-- 

Repayments on advances from Federal Home Loan Bank

(20,000)

(25,000)

Repayments on other borrowings

(10,174)

-- 

Payments for the repurchase of common stock

(143,219)

(20,595)

Stock options exercised

6,136 

746 

Change in advance payments by borrowers for taxes and

          insurance

(20,215)

(17,746)

             Net cash provided by financing activities

83,973 

197,960 

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS

(57,470)

109,373 

CASH AND CASH EQUIVALENTS:

Beginning of Period

153,462 

133,034 

End of Period

$ 95,992 

$ 242,407 

SUPPLEMENTAL SCHEDULE OF NON-CASH

      INVESTING AND FINANCING TRANSACTIONS:

             Loans transferred to real estate owned

$3,551 

$2,079

             Loans made on the sale of real estate owned

-- 

$98

             Treasury stock issued to RRP, net of forfeited shares

$30 

$21

             Equity adjustment for tax effect of RRP shares

$1,485 

-- 

             Equity adjustment for tax effect of disqualifying

                 disposition of incentive stock options

$2,127 

--

June 30, 2002

September 30, 2001

Amount

% of Total

Yield

Amount

% of Total

Yield

Real Estate Loans:

     One- to four-family

$5,100,120

94.51

%

6.86

%

$5,166,660

94.66

%

7.19

%

     Multi-family

46,483

0.86

7.83

48,991

0.90

7.96

     Commercial

5,191

0.10

8.13

7,966

0.15

8.12

     Construction and development

49,508

0.92

6.64

44,712

0.82

7.21

          Total real estate loans

5,201,302

96.39

6.87

5,268,329

96.53

7.20

Consumer loans:

     Savings loans

12,440

0.23

6.23

14,466

0.26

7.29

     Home improvement

1,621

0.03

8.38

1,970

0.04

9.32

     Automobile

7,725

0.14

8.40

10,346

0.19

8.46

     Home equity

171,358

3.17

5.88

161,239

2.95

7.50

     Other

1,904

0.04

11.24

1,703

0.03

11.40

          Total consumer loans

195,048

3.61

6.08

189,724

3.47

7.59

Total loans receivable

5,396,350

100.00

%

6.84

%

5,458,053

100.00

%

7.21

%

Less:

     Loans in process

24,937

20,057

     Deferred fees and discounts

17,145

16,652

     Allowance for losses