TFSL TFS Financial Corporation

Mortgage Portfolio Grew Despite Economic Headwinds

TFS Financial Corporation (NASDAQ: TFSL) (the "Company"), the holding company for Third Federal Savings and Loan Association of Cleveland (the "Association"), today announced results for the quarter and nine months ended June 30, 2023.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230727015146/en/

Chairman and CEO Marc A. Stefanski (Photo: Business Wire)

“This year, we are celebrating our 85th year in business. Since 1938, we have seen many changes in the economy, but we are built to last, and are still seeing positives in our business,” said Chairman and CEO Marc A. Stefanski. “Our loan portfolio grew by more than $320 million this quarter, despite rising interest rates. The average credit score of our borrowers this fiscal year increased to 774, and 97 percent of our deposits are FDIC insured. Our 11 percent Tier 1 capital leverage ratio remains more than double the regulatory requirement, and we continue to find opportunities to expand our business and our product offerings.”

Highlights - Third Quarter Fiscal 2023

• Reported net income of $17.6 million
• Added $490 million of residential mortgage loans with an average yield of 5.69%
• Increased total deposits by $66 million
• Paid a $0.2825 dividend per share

The Company reported net income of $17.6 million for the quarter ended June 30, 2023, an increase of $1.7 million from $15.9 million for the quarter ended March 31, 2023. Results improved quarter over quarter primarily due to a decrease in non-interest expenses.

Net interest income decreased $0.5 million to $68.8 million for the quarter ended June 30, 2023 from $69.3 million for the quarter ended March 31, 2023. During the quarter, balances and yields on interest-earning assets increased, but were more than offset by an increase in the cost of funding. The interest rate spread was 1.50% for the quarter ended June 30, 2023 compared to 1.56% for the quarter ended March 31, 2023. The net interest margin was 1.75% for the quarter ended June 30, 2023 compared to 1.78% for the prior quarter.

During the quarter ended June 30, 2023, there was no provision for credit losses compared to a $1.0 million release of provision for the quarter ended March 31, 2023. The total allowance for credit losses increased $1.8 million, to $102.6 million, or 0.69% of total loans receivable, primarily due to an increase in loans held for investment. There was $1.8 million in net loan recoveries during the quarter ended June 30, 2023.

Total non-interest expense decreased $2.7 million to $52.9 million for the quarter ended June 30, 2023, from $55.6 million for the quarter ended March 31, 2023. The decrease consisted mainly of a $5.1 million decrease in salaries and employee benefits, partially offset by a $1.5 million increase in other expenses and $0.4 million increases in both marketing and property, equipment and software expenses. The decrease in salaries and employee benefits was primarily due to a reassessment and reduction of the accrual for discretionary incentive payments as well as a decrease in associate count due to natural attrition. The increase in other expenses related primarily to one-time public relations and event costs for the Association's 85th anniversary celebration and increases in appraisal and other loan-related expenses.

Total assets increased by $333.3 million, or 2%, to $16.59 billion at June 30, 2023 from $16.26 billion at March 31, 2023. The increase was mainly the result of new loan originations exceeding the total of loan sales and principal repayments and an increase in investment securities available for sale, partially offset by a decrease in other assets.

Investment securities available for sale increased $30.7 million, or 6%, to $513.3 million at June 30, 2023 from $482.6 million at March 31, 2023. During the quarter, $59.5 million of U.S. Treasury notes were purchased and pledged as collateral for initial margin requirements on swap contracts. This increase was partially offset by a $20.8 million decrease from principal repayments, net of purchases and premium or discount amortization, and a $7.9 million increase in unrealized losses on the investment securities portfolio.

Loans held for investment, net of allowance and deferred loan expenses, increased $320.4 million, or 2%, to $14.88 billion at June 30, 2023 from $14.56 billion at March 31, 2023.

Other assets decreased $49.4 million, or 31%, to $109.9 million at June 30, 2023 from $159.3 million at March 31, 2023. The decrease was primarily due to a decrease of $38.4 million in receivables for initial margin requirement on swap contracts. Additionally, there was a $13.4 million decrease in net deferred taxes, partially offset by a $2.9 million increase in interest receivable on swap contracts.

Compared to March 31, 2023, deposits increased by $66.2 million to $9.07 billion at June 30, 2023, which consists of brokered deposit increases of $111.1 million and retail deposits decreases of $44.9 million, or less than 1%, to $8.40 billion.

Borrowed funds increased $247.3 million to $5.45 billion at June 30, 2023 from $5.20 billion at March 31, 2023. The increase was primarily used to fund loan growth.

Highlights - Fiscal Year-To-Date 2023

• Reported net income of $55.7 million
• Added $1.3 billion of new residential mortgage loans with weighted average yield of 5.23%
• Grew net interest income by 11% compared to the same period in fiscal 2022
• Remained well capitalized, with a Tier 1 leverage ratio of 11.18%
• Paid a $0.8475 dividend per share

The Company reported net income of $55.7 million for the nine months ended June 30, 2023 compared to net income of $49.1 million for the nine months ended June 30, 2022. The $6.6 million increase was primarily due to an increase in net interest income and a decrease in provisions for credit losses offset by a decrease in non-interest income and an increase in non-interest expenses.

Net interest income increased by $21.3 million, or 11.1%, to $213.2 million for the nine months ended June 30, 2023, compared to $191.9 million for the nine months ended June 30, 2022, driven by loan growth and a higher interest rate environment. The interest rate spread was 1.60% for the nine months ended June 30, 2023 compared to 1.71% for the nine months ended June 30, 2022. The net interest margin was 1.82% for the nine months ended June 30, 2023 compared to 1.83% for the prior year period.

During the nine months ended June 30, 2023, there was a $2.0 million release of provision for credit losses compared to $1.0 million of provision expense for the nine months ended June 30, 2022. Net loan recoveries totaled $4.6 million during the nine months ended June 30, 2023 and $7.3 million during the prior year period. The total allowance for credit losses at June 30, 2023 was $102.6 million, or 0.69% of total loans receivable, compared to $99.9 million, or 0.70% of total loans receivable, at September 30, 2022 and $97.6 million, or 0.70% of total loans receivable, at June 30, 2022. The allowance for credit losses included $27.8 million, $27.0 million, and $28.1 million in liabilities for unfunded commitments at June 30, 2023, September 30, 2022 and June 30, 2022, respectively.

Total loan delinquencies increased $1.6 million to $22.8 million, or 0.15% of total loans receivable, at June 30, 2023 from $21.2 million, or 0.16% of total loans, at September 30, 2022. Non-accrual loans decreased $5.1 million to $30.5 million, or 0.20% of total loans, at June 30, 2023 from $35.6 million, or 0.25% of total loans, at September 30, 2022.

Total non-interest income decreased $3.1 million, or 16.0%, to $16.3 million for the nine months ended June 30, 2023 from $19.4 million for the nine months ended June 30, 2022. The decrease consisted mainly of a $1.9 million decrease in fees and service charges and a $1.6 million decrease in net gain on the sale of loans. The decrease in net gain on the sale of loans was the result of less favorable secondary market pricing and a lower volume of loans sold. The decrease in fees and service charges was primarily due to a decrease in partnership income.

Total non-interest expenses increased $12.2 million, or 8.2%, to $161.6 million for the nine months ended June 30, 2023, from $149.4 million for the nine months ended June 30, 2022 and included increases of $2.0 million in salaries and employee benefits, $4.4 million in marketing costs, and $3.2 million in federal ("FDIC") insurance premiums and assessments. Additionally, there was a $1.2 million increase in pension expense, reported in other expenses, related to net actuarial gains and losses that are reassessed each year. FDIC premiums increased due to growth in deposits and a two basis point increase in FDIC assessment rates that went into effect on January 1, 2023.

Total assets increased by $805.1 million, or 5%, to $16.59 billion at June 30, 2023 from $15.79 billion at September 30, 2022. The increase was mainly the result of new loan originations exceeding the total of loan sales and principal repayments, a $55.4 million increase in investment securities available for sale and an increase in cash and cash equivalents.

Cash and cash equivalents increased $66.6 million, or 18%, to $436.2 million at June 30, 2023 from $369.6 million at September 30, 2022.

Loans held for investment, net of allowance and deferred loan expenses, increased $626.6 million, or 4%, to $14.88 billion at June 30, 2023 from $14.26 billion at September 30, 2022. The residential mortgage loan portfolio increased $405.9 million, to $11.95 billion, and home equity loans and lines of credit increased $232.3 million, to $2.87 billion. Loan originations during the nine months ended June 30, 2023 included $1.31 billion of residential mortgage loans and $1.24 billion of equity loans and lines of credit compared to $2.91 billion of residential mortgage loans and $1.60 billion of equity loans and lines of credit originated during the nine months ended June 30, 2022. Total originations include residential mortgage loans acquired from strategic partners. The decrease in originations was primarily due to a generally increasing interest rate environment, resulting in minimal refinance activity. Mortgage loan originations included 89% purchases and 36% adjustable rate loans for the nine months ended June 30, 2023.

Deposits increased $148.1 million, or 2%, to $9.07 billion at June 30, 2023 from $8.92 billion at September 30, 2022. The increase was the result of a $224.0 million increase in certificates of deposit ("CDs") and a $150.8 million increase in savings accounts, partially offset by a $70.3 million decrease in money market deposit accounts and a $158.9 million decrease in checking accounts. There were $667.8 million in brokered deposits at June 30, 2023 compared to $575.2 million at September 30, 2022.

Borrowed funds increased $659.0 million, or 14%, to $5.45 billion at June 30, 2023 from $4.79 billion at September 30, 2022. The increase was primarily used to fund loan growth. The total balance of borrowed funds at June 30, 2023, all from the FHLB, included $243.1 million of overnight advances, $1.58 billion of term advances with a weighted average maturity of approximately 2.3 years, and $3.60 billion of term advances, aligned with interest rate swap contracts, with a remaining weighted average effective maturity of approximately 3.9 years. Additional borrowing capacity at the FHLB was $3.25 billion at June 30, 2023.

Total shareholders' equity increased $41.8 million, or 2.3%, to $1.89 billion at June 30, 2023 from $1.84 billion at September 30, 2022. Activity reflects $55.7 million of net income and a $27.8 million net increase in accumulated other comprehensive income, reduced by $43.7 million for dividends paid and $5.0 million in repurchases of common stock. Additionally, there was $7.0 million of net positive adjustments related to our stock compensation and employee stock ownership plans. The change in accumulated other comprehensive income is primarily due to a net positive change in unrealized gains and losses on swap contracts. During the nine months ended June 30, 2023, a total of 361,869 shares of our common stock were repurchased at an average cost of $13.82 per share. The Company's eighth stock repurchase program allows for a total of 10,000,000 shares to be repurchased, with 5,191,951 shares remaining to be repurchased at June 30, 2023.

The Company declared and paid a quarterly dividend of $0.2825 per share during each of the quarters of fiscal year 2023. As a result of a mutual member vote, Third Federal Savings and Loan Association of Cleveland, MHC (the "MHC"), the mutual holding company that owns approximately 81% of the outstanding stock of the Company, was able to waive its receipt of its share of the dividend paid. Under Federal Reserve regulations, the MHC is required to obtain the approval of its members every 12 months for the MHC to waive its right to receive dividends. As a result of a July 11, 2023 member vote, the MHC has the approval to waive receipt of up to $1.13 per share of possible dividends to be declared on the Company’s common stock during the twelve months subsequent to the members’ approval (i.e., through July 11, 2024). The MHC has filed a notice with, and a request for non-objection from, the Federal Reserve Bank of Cleveland for the proposed dividend waiver. Both the non-objection from the Federal Reserve Bank and the timing of the non-objection are unknown at this point. The MHC has conducted the member vote to approve the dividend waiver each of the past ten years under Federal Reserve regulations and for each of those ten years, approximately 97% of the votes cast were in favor of the waiver.

The Company operates under the capital requirements for the standardized approach of the Basel III capital framework for U.S. banking organizations (“Basel III Rules”). At June 30, 2023 all of the Company's capital ratios substantially exceed the amounts required for the Company to be considered "well capitalized" for regulatory capital purposes. The Company's Tier 1 leverage ratio was 11.18%, its Common Equity Tier 1 and Tier 1 ratios were each 20.01% and its total capital ratio was 20.75%.

Presentation slides as of June 30, 2023 will be available on the Company's website, www.thirdfederal.com, under the Investor Relations link within the "Recent Presentations" menu, beginning July 28, 2023. The Company will not be hosting a conference call to discuss its operating results.

Third Federal Savings and Loan Association is a leading provider of savings and mortgage products, and operates under the values of love, trust, respect, a commitment to excellence and fun. Founded in Cleveland in 1938 as a mutual association by Ben and Gerome Stefanski, Third Federal’s mission is to help people achieve the dream of home ownership and financial security. It became part of a public company in 2007 and celebrated its 85th anniversary in May 2023. Third Federal, which lends in 25 states and the District of Columbia, is dedicated to serving consumers with competitive rates and outstanding service. Third Federal, an equal housing lender, has 21 full service branches in Northeast Ohio, four lending offices in Central and Southern Ohio, and 16 full service branches throughout Florida. As of June 30, 2023, the Company’s assets totaled $16.59 billion.

Forward Looking Statements

This report contains forward-looking statements, which can be identified by the use of such words as estimate, project, believe, intend, anticipate, plan, seek, expect and similar expressions. These forward-looking statements include, among other things:

• statements of our goals, intentions and expectations;
• statements regarding our business plans and prospects and growth and operating strategies;
• statements concerning trends in our provision for credit losses and charge-offs on loans and off-balance sheet exposures;
• statements regarding the trends in factors affecting our financial condition and results of operations, including credit quality of our loan and investment portfolios; and
• estimates of our risks and future costs and benefits.

These forward-looking statements are subject to significant risks, assumptions and uncertainties, including, among other things, the following important factors that could affect the actual outcome of future events:

• significantly increased competition among depository and other financial institutions, including with respect to our ability to charge overdraft fees;
• inflation and changes in the interest rate environment that reduce our interest margins or reduce the fair value of financial instruments, or our ability to originate loans;
• general economic conditions, either globally, nationally or in our market areas, including employment prospects, real estate values and conditions that are worse than expected;
• the strength or weakness of the real estate markets and of the consumer and commercial credit sectors and its impact on the credit quality of our loans and other assets, and changes in estimates of the allowance for credit losses;
• decreased demand for our products and services and lower revenue and earnings because of a recession or other events;
• changes in consumer spending, borrowing and savings habits;
• adverse changes and volatility in the securities markets, credit markets or real estate markets;
• our ability to manage market risk, credit risk, liquidity risk, reputational risk, regulatory risk and compliance risk;
• our ability to access cost-effective funding;
• changes in liquidity, including the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio;
• legislative or regulatory changes that adversely affect our business, including changes in regulatory costs and capital requirements and changes related to our ability to pay dividends and the ability of Third Federal Savings, MHC to waive dividends;
• changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board or the Public Company Accounting Oversight Board;
• the adoption of implementing regulations by a number of different regulatory bodies, and uncertainty in the exact nature, extent and timing of such regulations and the impact they will have on us;
• our ability to enter new markets successfully and take advantage of growth opportunities;
• our ability to retain key employees;
• future adverse developments concerning Fannie Mae or Freddie Mac;
• changes in monetary and fiscal policy of the U.S. Government, including policies of the U.S. Treasury, the Federal Reserve System, Fannie Mae, the OCC, FDIC, and others;
• the continuing governmental efforts to restructure the U.S. financial and regulatory system;
• the ability of the U.S. Government to remain open, function properly and manage federal debt limits;
• changes in policy and/or assessment rates of taxing authorities that adversely affect us or our customers;
• changes in accounting and tax estimates;
• changes in our organization and changes in expense trends, including but not limited to trends affecting non-performing assets, charge-offs and provisions for credit losses;
• the inability of third-party providers to perform their obligations to us;
• our ability to retain key employees;
• civil unrest;
• cyber-attacks, computer viruses and other technological risks that may breach the security of our websites or other systems to obtain unauthorized access to confidential information, destroy data or disable our systems; and
• the impact of wide-spread pandemic, including COVID-19, and related government action, on our business and the economy.

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by any forward-looking statements. Any forward-looking statement made by us in this report speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by law.

TFS FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CONDITION (unaudited)

(In thousands, except share data)

 

 

June 30, 2023

 

March 31, 2023

 

September 30, 2022

ASSETS

 

 

 

 

 

Cash and due from banks

$

23,278

 

 

$

28,468

 

 

$

18,961

 

Other interest-earning cash equivalents

 

412,937

 

 

 

392,660

 

 

 

350,603

 

Cash and cash equivalents

 

436,215

 

 

 

421,128

 

 

 

369,564

 

Investment securities available for sale

 

513,303

 

 

 

482,576

 

 

 

457,908

 

Mortgage loans held for sale

 

595

 

 

 

4,398

 

 

 

9,661

 

Loans held for investment, net:

 

 

 

 

 

Mortgage loans

 

14,897,681

 

 

 

14,580,410

 

 

 

14,276,478

 

Other loans

 

4,022

 

 

 

3,868

 

 

 

3,263

 

Deferred loan expenses, net

 

56,780

 

 

 

53,183

 

 

 

50,221

 

Allowance for credit losses on loans

 

(74,803

)

 

 

(74,138

)

 

 

(72,895

)

Loans, net

 

14,883,680

 

 

 

14,563,323

 

 

 

14,257,067

 

Mortgage loan servicing rights, net

 

7,545

 

 

 

7,669

 

 

 

7,943

 

Federal Home Loan Bank stock, at cost

 

247,098

 

 

 

232,855

 

 

 

212,290

 

Real estate owned, net

 

1,400

 

 

 

1,165

 

 

 

1,191

 

Premises, equipment, and software, net

 

34,901

 

 

 

34,529

 

 

 

34,531

 

Accrued interest receivable

 

49,837

 

 

 

46,399

 

 

 

40,256

 

Bank owned life insurance contracts

 

310,498

 

 

 

308,339

 

 

 

304,040

 

Other assets

 

109,916

 

 

 

159,299

 

 

 

95,428

 

TOTAL ASSETS

$

16,594,988

 

 

$

16,261,680

 

 

$

15,789,879

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Deposits

$

9,069,069

 

 

$

9,002,867

 

 

$

8,921,017

 

Borrowed funds

 

5,452,228

 

 

 

5,204,964

 

 

 

4,793,221

 

Borrowers’ advances for insurance and taxes

 

74,359

 

 

 

102,888

 

 

 

117,250

 

Principal, interest, and related escrow owed on loans serviced

 

16,510

 

 

 

27,166

 

 

 

29,913

 

Accrued expenses and other liabilities

 

96,698

 

 

 

89,319

 

 

 

84,139

 

Total liabilities

 

14,708,864

 

 

 

14,427,204

 

 

 

13,945,540

 

Commitments and contingent liabilities

 

 

 

 

 

Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued and outstanding

 

—

 

 

 

—

 

 

 

—

 

Common stock, $0.01 par value, 700,000,000 shares authorized; 332,318,750 shares issued

 

3,323

 

 

 

3,323

 

 

 

3,323

 

Paid-in capital

 

1,753,801

 

 

 

1,752,508

 

 

 

1,751,223

 

Treasury stock, at cost

 

(775,852

)

 

 

(775,852

)

 

 

(771,986

)

Unallocated ESOP shares

 

(28,167

)

 

 

(29,250

)

 

 

(31,417

)

Retained earnings—substantially restricted

 

882,034

 

 

 

879,046

 

 

 

870,047

 

Accumulated other comprehensive income

 

50,985

 

 

 

4,701

 

 

 

23,149

 

Total shareholders’ equity

 

1,886,124

 

 

 

1,834,476

 

 

 

1,844,339

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

16,594,988

 

 

$

16,261,680

 

 

$

15,789,879

 

TFS FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(In thousands, except share and per share data)

 

 

For the three months ended

 

June 30, 2023

 

March 31, 2023

 

December 31, 2022

 

September 30, 2022

 

June 30, 2022

INTEREST AND DIVIDEND INCOME:

 

 

 

 

 

 

 

 

 

Loans, including fees

$

144,347

 

$

136,835

 

 

$

129,665

 

 

$

114,871

 

 

$

99,576

 

Investment securities available for sale

 

3,712

 

 

3,455

 

 

 

3,062

 

 

 

1,904

 

 

 

1,282

 

Other interest and dividend earning assets

 

8,598

 

 

7,262

 

 

 

6,243

 

 

 

4,236

 

 

 

1,913

 

Total interest and dividend income

 

156,657

 

 

147,552

 

 

 

138,970

 

 

 

121,011

 

 

 

102,771

 

INTEREST EXPENSE:

 

 

 

 

 

 

 

 

 

Deposits

 

48,905

 

 

39,876

 

 

 

29,855

 

 

 

23,582

 

 

 

17,214

 

Borrowed funds

 

38,973

 

 

38,408

 

 

 

33,958

 

 

 

21,920

 

 

 

14,255

 

Total interest expense

 

87,878

 

 

78,284

 

 

 

63,813

 

 

 

45,502

 

 

 

31,469

 

NET INTEREST INCOME

 

68,779

 

 

69,268

 

 

 

75,157

 

 

 

75,509

 

 

 

71,302

 

PROVISION (RELEASE) FOR CREDIT LOSSES

 

—

 

 

(1,000

)

 

 

(1,000

)

 

 

—

 

 

 

4,000

 

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

 

68,779

 

 

70,268

 

 

 

76,157

 

 

 

75,509

 

 

 

67,302

 

NON-INTEREST INCOME:

 

 

 

 

 

 

 

 

 

Fees and service charges, net of amortization

 

1,919

 

 

1,924

 

 

 

1,936

 

 

 

2,220

 

 

 

2,742

 

Net gain (loss) on the sale of loans

 

21

 

 

579

 

 

 

17

 

 

 

(1,113

)

 

 

(51

)

Increase in and death benefits from bank owned life insurance contracts

 

2,790

 

 

2,123

 

 

 

2,238

 

 

 

2,761

 

 

 

2,090

 

Other

 

1,113

 

 

703

 

 

 

966

 

 

 

514

 

 

 

896

 

Total non-interest income

 

5,843

 

 

5,329

 

 

 

5,157

 

 

 

4,382

 

 

 

5,677

 

NON-INTEREST EXPENSE:

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

25,332

 

 

30,390

 

 

 

28,403

 

 

 

27,206

 

 

 

28,756

 

Marketing services

 

7,023

 

 

6,671

 

 

 

7,713

 

 

 

4,256

 

 

 

4,830

 

Office property, equipment and software

 

7,246

 

 

6,802

 

 

 

6,800

 

 

 

6,558

 

 

 

6,762

 

Federal insurance premium and assessments

 

3,574

 

 

3,488

 

 

 

2,761

 

 

 

2,722

 

 

 

2,351

 

State franchise tax

 

1,230

 

 

1,268

 

 

 

1,208

 

 

 

1,201

 

 

 

1,197

 

Other expenses

 

8,472

 

 

6,955

 

 

 

6,309

 

 

 

6,799

 

 

 

7,860

 

Total non-interest expense

 

52,877

 

 

55,574

 

 

 

53,194

 

 

 

48,742

 

 

 

51,756

 

INCOME BEFORE INCOME TAXES

 

21,745

 

 

20,023

 

 

 

28,120

 

 

 

31,149

 

 

 

21,223

 

INCOME TAX EXPENSE

 

4,142

 

 

4,115

 

 

 

5,927

 

 

 

5,716

 

 

 

4,076

 

NET INCOME

$

17,603

 

$

15,908

 

 

$

22,193

 

 

$

25,433

 

 

$

17,147

 

Earnings per share - basic and diluted

$

0.06

 

$

0.06

 

 

$

0.08

 

 

$

0.09

 

 

$

0.06

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

Basic

 

277,472,312

 

 

277,361,293

 

 

 

277,320,904

 

 

 

277,383,038

 

 

 

277,453,439

 

Diluted

 

278,590,810

 

 

278,499,145

 

 

 

278,462,937

 

 

 

278,505,233

 

 

 

278,555,759

 

TFS FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(In thousands, except share and per share data)

 

 

For the Nine Months Ended

 

June 30,

 

2023

 

2022

INTEREST AND DIVIDEND INCOME:

 

 

 

Loans, including fees

$

410,847

 

 

$

280,820

Investment securities available for sale

 

10,229

 

 

 

3,597

Other interest and dividend earning assets

 

22,103

 

 

 

3,905

Total interest and dividend income

 

443,179

 

 

 

288,322

INTEREST EXPENSE:

 

 

 

Deposits

 

118,636

 

 

 

53,361

Borrowed funds

 

111,339

 

 

 

43,074

Total interest expense

 

229,975

 

 

 

96,435

NET INTEREST INCOME

 

213,204

 

 

 

191,887

PROVISION (RELEASE) FOR CREDIT LOSSES

 

(2,000

)

 

 

1,000

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

 

215,204

 

 

 

190,887

NON-INTEREST INCOME:

 

 

 

Fees and service charges, net of amortization

 

5,779

 

 

 

7,714

Net gain on the sale of loans

 

617

 

 

 

2,249

Increase in and death benefits from bank owned life insurance contracts

 

7,151

 

 

 

7,223

Other

 

2,782

 

 

 

2,236

Total non-interest income

 

16,329

 

 

 

19,422

NON-INTEREST EXPENSE:

 

 

 

Salaries and employee benefits

 

84,125

 

 

 

82,133

Marketing services

 

21,407

 

 

 

17,007

Office property, equipment and software

 

20,848

 

 

 

20,225

Federal insurance premium and assessments

 

9,823

 

 

 

6,639

State franchise tax

 

3,706

 

 

 

3,658

Other expenses

 

21,736

 

 

 

19,742

Total non-interest expense

 

161,645

 

 

 

149,404

INCOME BEFORE INCOME TAXES

 

69,888

 

 

 

60,905

INCOME TAX EXPENSE

 

14,184

 

 

 

11,773

NET INCOME

$

55,704

 

 

$

49,132

Earnings per share - basic and diluted

$

0.20

 

 

$

0.17

Weighted average shares outstanding

 

 

 

Basic

 

277,384,689

 

 

 

277,366,624

Diluted

 

278,507,602

 

 

 

278,767,989

TFS FINANCIAL CORPORATION AND SUBSIDIARIES

AVERAGE BALANCES AND YIELDS (unaudited)

 

 

 

Three Months Ended

 

Three Months Ended

 

Three Months Ended

 

 

June 30, 2023

 

March 31, 2023

 

June 30, 2022

 

 

Average Balance

 

Interest Income/ Expense

 

Yield/ Cost (1)

 

Average Balance

 

Interest Income/ Expense

 

Yield/ Cost (1)

 

Average Balance

 

Interest Income/ Expense

 

Yield/ Cost (1)

 

 

(Dollars in thousands)

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning cash equivalents

 

$

350,574

 

 

$

4,481

 

 

5.11

%

 

$

350,437

 

 

$

3,947

 

 

4.51

%

 

$

337,551

 

 

$

709

 

 

0.84

%

Investment securities

 

 

24,046

 

 

 

320

 

 

5.32

%

 

 

3,649

 

 

 

11

 

 

1.21

%

 

 

3,836

 

 

 

12

 

 

1.25

%

Mortgage-backed securities

 

 

470,457

 

 

 

3,392

 

 

2.88

%

 

 

475,902

 

 

 

3,444

 

 

2.89

%

 

 

444,972

 

 

 

1,270

 

 

1.14

%

Loans (2)

 

 

14,676,829

 

 

 

144,347

 

 

3.93

%

 

 

14,517,771

 

 

 

136,835

 

 

3.77

%

 

 

13,497,362

 

 

 

99,576

 

 

2.95

%

Federal Home Loan Bank stock

 

 

235,177

 

 

 

4,117

 

 

7.00

%

 

 

230,496

 

 

 

3,315

 

 

5.75

%

 

 

170,155

 

 

 

1,204

 

 

2.83

%

Total interest-earning assets

 

 

15,757,083

 

 

 

156,657

 

 

3.98

%

 

 

15,578,255

 

 

 

147,552

 

 

3.79

%

 

 

14,453,876

 

 

 

102,771

 

 

2.84

%

Noninterest-earning assets

 

 

543,310

 

 

 

 

 

 

 

527,935

 

 

 

 

 

 

 

467,329

 

 

 

 

 

Total assets

 

$

16,300,393

 

 

 

 

 

 

$

16,106,190

 

 

 

 

 

 

$

14,921,205

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking accounts

 

$

1,064,738

 

 

 

1,317

 

 

0.49

%

 

$

1,128,560

 

 

 

2,229

 

 

0.79

%

 

$

1,475,586

 

 

 

958

 

 

0.26

%

Savings accounts

 

 

1,890,427

 

 

 

8,087

 

 

1.71

%

 

 

1,668,115

 

 

 

5,028

 

 

1.21

%

 

 

1,882,881

 

 

 

931

 

 

0.20

%

Certificates of deposit

 

 

6,042,798

 

 

 

39,501

 

 

2.61

%

 

 

6,110,460

 

 

 

32,619

 

 

2.14

%

 

 

5,711,412

 

 

 

15,325

 

 

1.07

%

Borrowed funds

 

 

5,175,982

 

 

 

38,973

 

 

3.01

%

 

 

5,112,767

 

 

 

38,408

 

 

3.00

%

 

 

3,774,204

 

 

 

14,255

 

 

1.51

%

Total interest-bearing liabilities

 

 

14,173,945

 

 

 

87,878

 

 

2.48

%

 

 

14,019,902

 

 

 

78,284

 

 

2.23

%

 

 

12,844,083

 

 

 

31,469

 

 

0.98

%

Noninterest-bearing liabilities

 

 

264,952

 

 

 

 

 

 

 

209,161

 

 

 

 

 

 

 

250,437

 

 

 

 

 

Total liabilities

 

 

14,438,897

 

 

 

 

 

 

 

14,229,063

 

 

 

 

 

 

 

13,094,520

 

 

 

 

 

Shareholders’ equity

 

 

1,861,496

 

 

 

 

 

 

 

1,877,127

 

 

 

 

 

 

 

1,826,685

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

16,300,393

 

 

 

 

 

 

$

16,106,190

 

 

 

 

 

 

$

14,921,205

 

 

 

 

 

Net interest income

 

 

 

$

68,779

 

 

 

 

 

 

$

69,268

 

 

 

 

 

 

$

71,302

 

 

 

Interest rate spread (1)(3)

 

 

 

 

 

1.50

%

 

 

 

 

 

1.56

%

 

 

 

 

 

1.86

%

Net interest-earning assets (4)

 

$

1,583,138

 

 

 

 

 

 

$

1,558,353

 

 

 

 

 

 

$

1,609,793

 

 

 

 

 

Net interest margin (1)(5)

 

 

 

 

1.75

%

 

 

 

 

 

 

1.78

%

 

 

 

 

 

 

1.97

%

 

 

Average interest-earning assets to average interest-bearing liabilities

 

 

111.17

%

 

 

 

 

 

 

111.12

%

 

 

 

 

 

 

112.53

%

 

 

 

 

Selected performance ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (1)

 

 

 

 

0.43

%

 

 

 

 

 

 

0.40

%

 

 

 

 

 

 

0.46

%

 

 

Return on average equity (1)

 

 

 

 

3.78

%

 

 

 

 

 

 

3.39

%

 

 

 

 

 

 

3.75

%

 

 

Average equity to average assets

 

 

 

 

11.42

%

 

 

 

 

 

 

11.65

%

 

 

 

 

 

 

12.24

%

 

 

(1)

Annualized.

(2)

Loans include both mortgage loans held for sale and loans held for investment.

(3)

Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(4)

Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(5)

Net interest margin represents net interest income divided by total interest-earning assets.

TFS FINANCIAL CORPORATION AND SUBSIDIARIES

AVERAGE BALANCES AND YIELDS (unaudited)

 

 

 

Nine Months Ended

 

Nine Months Ended

 

 

June 30, 2023

 

June 30, 2022

 

 

Average Balance

 

Interest Income/ Expense

 

Yield/ Cost (1)

 

Average Balance

 

Interest Income/ Expense

 

Yield/ Cost (1)

 

 

(Dollars in thousands)

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning cash

equivalents

 

$

351,742

 

 

$

11,677

 

 

4.43

%

 

$

389,884

 

 

$

1,060

 

 

0.36

%

Investment securities

 

 

10,438

 

 

 

342

 

 

4.37

%

 

 

3,604

 

 

 

32

 

 

1.18

%

Mortgage-backed securities

 

 

470,108

 

 

 

9,887

 

 

2.80

%

 

 

432,781

 

 

 

3,565

 

 

1.10

%

Loans (1)

 

 

14,530,428

 

 

 

410,847

 

 

3.77

%

 

 

12,975,292

 

 

 

280,820

 

 

2.89

%

Federal Home Loan Bank stock

 

 

228,318

 

 

 

10,426

 

 

6.09

%

 

 

165,240

 

 

 

2,845

 

 

2.30

%

Total interest-earning assets

 

 

15,591,034

 

 

 

443,179

 

 

3.79

%

 

 

13,966,801

 

 

 

288,322

 

 

2.75

%

Noninterest-earning assets

 

 

518,875

 

 

 

 

 

 

 

485,123

 

 

 

 

 

Total assets

 

$

16,109,909

 

 

 

 

 

 

$

14,451,924

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Checking accounts

 

$

1,126,064

 

 

 

5,956

 

 

0.71

%

 

$

1,306,720

 

 

 

1,516

 

 

0.15

%

Savings accounts

 

 

1,774,965

 

 

 

16,822

 

 

1.26

%

 

 

1,862,449

 

 

 

1,973

 

 

0.14

%

Certificates of deposit

 

 

6,042,061

 

 

 

95,858

 

 

2.12

%

 

 

5,814,710

 

 

 

49,872

 

 

1.14

%

Borrowed funds

 

 

5,053,965

 

 

 

111,339

 

 

2.94

%

 

 

3,410,751

 

 

 

43,074

 

 

1.68

%

Total interest-bearing liabilities

 

 

13,997,055

 

 

 

229,975

 

 

2.19

%

 

 

12,394,630

 

 

 

96,435

 

 

1.04

%

Noninterest-bearing liabilities

 

 

243,823

 

 

 

 

 

 

 

267,142

 

 

 

 

 

Total liabilities

 

 

14,240,878

 

 

 

 

 

 

 

12,661,772

 

 

 

 

 

Shareholders’ equity

 

 

1,869,031

 

 

 

 

 

 

 

1,790,152

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

16,109,909

 

 

 

 

 

 

$

14,451,924

 

 

 

 

 

Net interest income

 

 

 

$

213,204

 

 

 

 

 

 

$

191,887

 

 

 

Interest rate spread (1)(2)

 

 

 

 

 

1.60

%

 

 

 

 

 

1.71

%

Net interest-earning assets (3)

 

$

1,593,979

 

 

 

 

 

 

$

1,572,171

 

 

 

 

 

Net interest margin (1)(4)

 

 

 

 

1.82

%

 

 

 

 

 

 

1.83

%

 

 

Average interest-earning assets to average interest-bearing liabilities

 

 

111.39

%

 

 

 

 

 

 

112.68

%

 

 

 

 

Selected performance ratios:

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (1)

 

 

 

 

0.46

%

 

 

 

 

 

 

0.45

%

 

 

Return on average equity (1)

 

 

 

 

3.97

%

 

 

 

 

 

 

3.66

%

 

 

Average equity to average assets

 

 

 

 

11.60

%

 

 

 

 

 

 

12.39

%

 

 

(1)

Annualized

(2)

Loans include both mortgage loans held for sale and loans held for investment.

(3)

Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(4)

Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(5)

Net interest margin represents net interest income divided by total interest-earning assets.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230727015146/en/

TFS Financial Corporation Jennifer Rosa, (216) 429-5037