TFSL TFS Financial Corporation

Quarter Reflects Portfolio Strength; Expense Management

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 six months ended March 31, 2024.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20240430084946/en/

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

“We continue to follow the same philosophy my parents did when they started Third Federal more than 85 years ago – structuring the company to survive and thrive in any economic scenario,” said Chairman and CEO Marc A. Stefanski. “Our tier 1 capital ratio is nearly 11 percent. We don’t have commercial loans in our portfolio. It consists of single-family, owner-occupied mortgages with an average credit score of 762 and only 0.19 percent in total delinquencies. Our strong retail deposit base is nearly 100 percent FDIC insured, and deposits have grown $500 million the first six months of the fiscal year. In an effort to offset the challenging rate environment, we are effectively managing both our cost of funds and our expense-to-assets, currently at 1.20 percent, to ensure that Third Federal remains strong, stable, and safe.”

The Company reported net income of $20.7 million for the quarter ended March 31, 2024, consistent with $20.7 million of net income for the quarter ended December 31, 2023. Changes of note included an increase in net interest income offset by an increase in non-interest expenses.

Net interest income increased $2.3 million, or 3%, to $71.4 million for the quarter ended March 31, 2024 from $69.1 million for the quarter ended December 31, 2023. Interest income was higher due to an increase in the average balance and yield of interest-earning cash equivalents and an increase in total yield on loans. The interest rate spread was 1.43% for the quarter ended March 31, 2024 compared to 1.39% for the quarter ended December 31, 2023. The net interest margin was 1.71% for the quarter ended March 31, 2024 compared to 1.68% for the prior quarter.

During each of the quarters ended March 31, 2024 and December 31, 2023, there was a $1.0 million release of provision for credit losses. Recoveries of loan amounts previously charged off and low levels of current loan charge-offs resulted in the release of provision. Net recoveries were $1.3 million for the quarter ended March 31, 2024 compared to $1.0 million for the previous quarter. The total allowance for credit losses increased $0.3 million during the quarter ended March 31, 2024 to $94.8 million, or 0.63% of total loans receivable, from $94.6 million, or 0.62% of total loans receivable, at December 31, 2023. The increase was mainly due to an increase in the liability for unfunded commitments. This change was partially offset by a decrease in the provision for losses on loans, resulting from a decrease in the balance of loans held for investment. The total allowance for credit losses included a liability for unfunded commitments of $26.7 million and $25.5 million at March 31, 2024 and December 31, 2023, respectively.

Total non-interest expenses increased $1.9 million, or 4%, to $52.2 million for the quarter ended March 31, 2024, from $50.3 million for the quarter ended December 31, 2023. The increase was primarily due to a $0.7 million increase in marketing costs, but also included increases of $0.4 million in salaries and employee benefits, $0.5 million in office property, equipment and software, and $0.2 million in federal insurance premium and assessments.

Total assets decreased by $36.6 million, or less than 1%, to $17.02 billion at March 31, 2024 from $17.05 billion at December 31, 2023. The decrease was mainly due to a decrease in loans held for investment and Federal Home Loan Bank ("FHLB") stock partially offset by an increase in cash and cash equivalents.

Cash and cash equivalents increased $42.6 million, or 8%, to $594.3 million at March 31, 2024 from $551.8 million at December 31, 2023 due to normal fluctuations and liquidity management.

FHLB stock decreased $14.3 million to $240.4 million at March 31, 2024 from $254.7 million at December 31, 2023. The decrease is a result of stock redemptions by the FHLB. The FHLB has collateral requirements on funds borrowed that dictate the minimum amount of stock owned at any given time.

Loans held for investment, net of allowance and deferred loan expenses, decreased $57.6 million, or less than 1%, to $15.15 billion at March 31, 2024 from $15.21 billion at December 31, 2023. During the quarter ended March 31, 2024, residential core mortgage loans decreased $178.7 million and the home equity loans and lines of credit portfolio increased

$121.9 million. Repayments and sales of residential mortgage loans held for investment outpaced originations during the quarter ended March 31, 2024. The volume of mortgage loan originations remains lower due to a relatively high interest rate environment, resulting in minimal refinance activity.

Compared to December 31, 2023, deposits increased by $14.6 million to $9.94 billion at March 31, 2024, consisting of a $412.6 million increase in retail certificates of deposit ("CDs"), and decreases of $223.3 million in brokered CDs, $95.3 million in savings accounts, $41.3 million in money market deposit accounts, and $39.6 million in checking accounts.

Borrowed funds decreased $75.1 million to $4.96 billion at March 31, 2024 from $5.03 billion at December 31, 2023, as maturing borrowings were paid off with cash and partially replaced with retail deposits.

Fiscal Year-To-Date 2024

The Company reported net income of $41.4 million for the six months ended March 31, 2024 compared to net income of $38.1 million for the six months ended March 31, 2023. The $3.3 million increase was mainly due to an increase in non-interest income and a decrease in non-interest expenses, partially offset by a decrease in net interest income.

Net interest income decreased by $4.0 million, or 3%, to $140.5 million for the six months ended March 31, 2024 compared to $144.4 million for the six months ended March 31, 2023. The decrease was primarily due to a change in deposit mix, along with growth in the CD portfolio and repricing of existing CDs. This was partially offset by an increase in the average balance and yield of total interest-earning assets. The interest rate spread was 1.40% for the six months ended March 31, 2024, a 26 basis point decrease from 1.66% for the six months ended March 31, 2023. The net interest margin was 1.70% for the six months ended March 31, 2024 compared to 1.86% for the prior year period.

During each of the six months ended March 31, 2024 and March 31, 2023, there was a $2.0 million release of provision for credit losses. Net loan recoveries totaled $2.3 million for the six months ended March 31, 2024 and $2.9 million for the same period in the prior year.

The total allowance for credit losses at March 31, 2024 was $94.8 million, or 0.63% of total loans receivable, compared to $104.8 million, or 0.69% of total loans receivable, at September 30, 2023. The decrease was almost entirely due to the adoption of recently issued accounting guidance related to the accounting for troubled debt restructurings, which resulted in a $10.2 million reduction to the allowance and a $7.9 million adjustment to retained earnings, net of tax. The allowance for credit losses included $26.7 million and $27.5 million in liabilities for unfunded commitments at March 31, 2024 and September 30, 2023, respectively. Total loan delinquencies increased $4.9 million to $28.3 million, or 0.19% of total loans receivable, at March 31, 2024 from $23.4 million, or 0.16% of total loans receivable, at September 30, 2023. Non-accrual loans increased $3.4 million to $35.3 million, or 0.23% of total loans receivable, at March 31, 2024 from $31.9 million, or 0.21% of total loans receivable, at September 30, 2023.

Total non-interest income increased $1.5 million, or 14%, to $12.0 million for the six months ended March 31, 2024 from $10.5 million for the six months ended March 31, 2023. The increase was mainly due to a $1.0 million increase in income and death benefits from life insurance contracts. Additionally, there was a $0.5 million increase in other non-interest income that primarily related to changes in fair value on commitments to originate mortgage loans.

Total non-interest expenses decreased $6.3 million, or 6%, to $102.5 million for the six months ended March 31, 2024, from $108.8 million for the six months ended March 31, 2023 and included decreases of $4.9 million in marketing costs and $4.2 million in salaries and employee benefits, partially offset by increases of $1.6 million in federal ("FDIC") insurance premiums, $0.7 million in other operating expenses and $0.5 million in office property, equipment and software expenses. The decrease in salaries and employee benefits is primarily related to decreases in staffing and accruals for discretionary incentive payments. 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. The increase in other operating expenses was mainly due to increases in loan subsidy and down payment assistance programs. These programs expand opportunities for borrowers, particularly those working with our community housing partners, to obtain home financing.

Total assets increased by $99.2 million, or 1%, to $17.02 billion at March 31, 2024 from $16.92 billion at September 30, 2023. The increase was mainly the result of an increases in cash and cash equivalents partially offset by a decrease in loans held for investment.

Cash and cash equivalents increased $127.6 million, or 27%, to $594.3 million at March 31, 2024 from $466.7 million at September 30, 2023 due to normal fluctuations and liquidity management.

Loans held for investment, net of allowance and deferred loan expenses, decreased $16.1 million, or less than 1%, to $15.15 billion at March 31, 2024 from $15.17 billion at September 30, 2023. The residential mortgage loan portfolio decreased $307.4 million, to $11.77 billion, and home equity loans and lines of credit increased $289.1 million, to $3.32 billion. Loans originated and purchased during the six months ended March 31, 2024 included $408.8 million of residential mortgage loans and $915.4 million of equity loans and lines of credit compared to $821.9 million of residential mortgage loans and $720.0 million of equity loans and lines of credit originated or purchased during the six months ended March 31, 2023. The decrease in mortgage loan originations was primarily due to a relatively high interest rate environment, resulting in minimal refinance activity. New mortgage loans included 93% purchases and 24% adjustable rate loans during the six months ended March 31, 2024. There were $115.4 million of long-term fixed-rate mortgage loans sold during the six months ended March 31, 2024.

Deposits increased $485.8 million, or 5%, to $9.94 billion at March 31, 2024 from $9.45 billion at September 30, 2023. The increase was the result of an $868.4 million increase in certificates of deposit, partially offset by a $194.2 million decrease in savings accounts, a $106.6 million decrease in money market deposit accounts and a $92.3 million decrease in checking accounts. There were $1.26 billion in brokered deposits at March 31, 2024 compared to $1.16 billion at September 30, 2023. At March 31, 2024, brokered deposits included $725.0 million of three-month certificates of deposit accounts, aligned with interest rate swap contracts, with a remaining weighted average effective maturity of approximately 3.0 years.

Borrowed funds decreased $318.2 million, or 6%, to $4.96 billion at March 31, 2024 from $5.27 billion at September 30, 2023. The decrease was primarily due to borrowings paid off at maturity. The total balance of borrowed funds at March 31, 2024, all from the FHLB, included $1.83 billion of term advances with a weighted average maturity of approximately 2.2 years, and $3.10 billion of term advances, aligned with interest rate swap contracts, with a remaining weighted average effective maturity of approximately 3.4 years. Additional borrowing capacity at the FHLB was $1.88 billion at March 31, 2024, available for terms less than one year.

Total shareholders' equity decreased $19.9 million, or 1%, to $1.91 billion at March 31, 2024 from $1.93 billion at September 30, 2023. Activity reflects $41.4 million of net income, a $7.9 million adjustment to retained earnings related to a change in accounting principle described above with respect to changes in the allowance for credit losses, a $42.8 million net decrease in accumulated other comprehensive income, dividends paid of $29.4 million and net positive adjustments of $3.0 million related to our stock compensation and employee stock ownership plans. The change in accumulated other comprehensive income is primarily due to a net decrease in unrealized gains and losses on swap contracts. There were no stock repurchases during the six months ended March 31, 2024. The Company's eighth stock repurchase program allows for a total of 10,000,000 shares to be repurchased, with 5,191,951 shares authorized for repurchase at March 31, 2024.

The Company declared and paid a quarterly dividend of $0.2825 per share during each of the quarters in fiscal year 2024. 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 and the subsequent non-objection of the Federal Reserve, 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), including a total of up to $0.565 remaining. 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 March 31, 2024 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 10.72%, its Common Equity Tier 1 and Tier 1 ratios were each 19.05% and its total capital ratio was 19.78%.

Presentation slides as of March 31, 2024 will be available on the Company's website, www.thirdfederal.com, under the Investor Relations link within the "Recent Presentations" menu, beginning May 1, 2024. 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 26 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 March 31, 2024, the Company’s assets totaled $17.02 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, including repayment speeds on loans;

●

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 FASB or the PCAOB;

●

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)

 

 

March 31, 2024

 

December 31, 2023

 

September 30, 2023

ASSETS

 

 

 

 

 

Cash and due from banks

$

27,381

 

 

$

45,858

 

 

$

29,134

 

Other interest-earning cash equivalents

 

566,953

 

 

 

505,910

 

 

 

437,612

 

Cash and cash equivalents

 

594,334

 

 

 

551,768

 

 

 

466,746

 

Investment securities available for sale

 

520,172

 

 

 

525,175

 

 

 

508,324

 

Mortgage loans held for sale

 

9,698

 

 

 

1,095

 

 

 

3,260

 

Loans held for investment, net:

 

 

 

 

 

Mortgage loans

 

15,152,032

 

 

 

15,210,653

 

 

 

15,177,844

 

Other loans

 

4,709

 

 

 

4,811

 

 

 

4,411

 

Deferred loan expenses, net

 

61,047

 

 

 

60,862

 

 

 

60,807

 

Allowance for credit losses on loans

 

(68,169

)

 

 

(69,084

)

 

 

(77,315

)

Loans, net

 

15,149,619

 

 

 

15,207,242

 

 

 

15,165,747

 

Mortgage loan servicing rights, net

 

7,547

 

 

 

7,634

 

 

 

7,400

 

Federal Home Loan Bank stock, at cost

 

240,365

 

 

 

254,700

 

 

 

247,098

 

Real estate owned, net

 

230

 

 

 

1,070

 

 

 

1,444

 

Premises, equipment, and software, net

 

33,885

 

 

 

34,209

 

 

 

34,708

 

Accrued interest receivable

 

56,887

 

 

 

55,614

 

 

 

53,910

 

Bank owned life insurance contracts

 

313,458

 

 

 

311,848

 

 

 

312,072

 

Other assets

 

90,955

 

 

 

103,436

 

 

 

117,270

 

TOTAL ASSETS

$

17,017,150

 

 

$

17,053,791

 

 

$

16,917,979

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Deposits

$

9,935,631

 

 

$

9,921,056

 

 

$

9,449,820

 

Borrowed funds

 

4,955,438

 

 

 

5,030,561

 

 

 

5,273,637

 

Borrowers’ advances for insurance and taxes

 

99,492

 

 

 

109,093

 

 

 

124,417

 

Principal, interest, and related escrow owed on loans serviced

 

25,946

 

 

 

29,204

 

 

 

29,811

 

Accrued expenses and other liabilities

 

93,146

 

 

 

97,150

 

 

 

112,933

 

Total liabilities

 

15,109,653

 

 

 

15,187,064

 

 

 

14,990,618

 

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

 

1,751,960

 

 

 

1,750,440

 

 

 

1,755,027

 

Treasury stock, at cost

 

(772,195

)

 

 

(772,195

)

 

 

(776,101

)

Unallocated ESOP shares

 

(24,917

)

 

 

(26,000

)

 

 

(27,084

)

Retained earnings—substantially restricted

 

906,908

 

 

 

900,973

 

 

 

886,984

 

Accumulated other comprehensive income

 

42,418

 

 

 

10,186

 

 

 

85,212

 

Total shareholders’ equity

 

1,907,497

 

 

 

1,866,727

 

 

 

1,927,361

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

17,017,150

 

 

$

17,053,791

 

 

$

16,917,979

 

TFS FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(In thousands, except share and per share data)

 

 

For the three months ended

 

March 31, 2024

 

December 31, 2023

 

September 30, 2023

 

June 30, 2023

 

March 31, 2023

INTEREST AND DIVIDEND INCOME:

 

 

 

 

 

 

 

 

 

Loans, including fees

$

162,970

 

 

$

162,035

 

 

$

154,763

 

 

$

144,347

 

$

136,835

 

Investment securities available for sale

 

4,476

 

 

 

4,395

 

 

 

4,141

 

 

 

3,712

 

 

3,455

 

Other interest and dividend earning assets

 

16,047

 

 

 

10,729

 

 

 

9,836

 

 

 

8,598

 

 

7,262

 

Total interest and dividend income

 

183,493

 

 

 

177,159

 

 

 

168,740

 

 

 

156,657

 

 

147,552

 

INTEREST EXPENSE:

 

 

 

 

 

 

 

 

 

Deposits

 

72,685

 

 

 

64,326

 

 

 

55,565

 

 

 

48,905

 

 

39,876

 

Borrowed funds

 

39,430

 

 

 

43,741

 

 

 

42,812

 

 

 

38,973

 

 

38,408

 

Total interest expense

 

112,115

 

 

 

108,067

 

 

 

98,377

 

 

 

87,878

 

 

78,284

 

NET INTEREST INCOME

 

71,378

 

 

 

69,092

 

 

 

70,363

 

 

 

68,779

 

 

69,268

 

PROVISION (RELEASE) FOR CREDIT LOSSES

 

(1,000

)

 

 

(1,000

)

 

 

500

 

 

 

—

 

 

(1,000

)

NET INTEREST INCOME AFTER PROVISION (RELEASE) FOR CREDIT LOSSES

 

72,378

 

 

 

70,092

 

 

 

69,863

 

 

 

68,779

 

 

70,268

 

NON-INTEREST INCOME:

 

 

 

 

 

 

 

 

 

Fees and service charges, net of amortization

 

1,845

 

 

 

1,748

 

 

 

2,061

 

 

 

1,919

 

 

1,924

 

Net gain (loss) on the sale of loans

 

442

 

 

 

481

 

 

 

(119

)

 

 

21

 

 

579

 

Increase in and death benefits from bank owned life insurance contracts

 

2,193

 

 

 

3,191

 

 

 

2,204

 

 

 

2,790

 

 

2,123

 

Other

 

1,242

 

 

 

895

 

 

 

954

 

 

 

1,113

 

 

703

 

Total non-interest income

 

5,722

 

 

 

6,315

 

 

 

5,100

 

 

 

5,843

 

 

5,329

 

NON-INTEREST EXPENSE:

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

27,501

 

 

 

27,116

 

 

 

28,660

 

 

 

25,332

 

 

30,390

 

Marketing services

 

5,099

 

 

 

4,431

 

 

 

3,881

 

 

 

7,023

 

 

6,671

 

Office property, equipment and software

 

7,303

 

 

 

6,845

 

 

 

6,886

 

 

 

7,246

 

 

6,802

 

Federal insurance premium and assessments

 

4,013

 

 

 

3,778

 

 

 

3,629

 

 

 

3,574

 

 

3,488

 

State franchise tax

 

1,238

 

 

 

1,176

 

 

 

1,185

 

 

 

1,230

 

 

1,268

 

Other expenses

 

7,044

 

 

 

6,931

 

 

 

7,243

 

 

 

8,472

 

 

6,955

 

Total non-interest expense

 

52,198

 

 

 

50,277

 

 

 

51,484

 

 

 

52,877

 

 

55,574

 

INCOME BEFORE INCOME TAXES

 

25,902

 

 

 

26,130

 

 

 

23,479

 

 

 

21,745

 

 

20,023

 

INCOME TAX EXPENSE

 

5,189

 

 

 

5,423

 

 

 

3,933

 

 

 

4,142

 

 

4,115

 

NET INCOME

$

20,713

 

 

$

20,707

 

 

$

19,546

 

 

$

17,603

 

$

15,908

 

Earnings per share - basic and diluted

$

0.07

 

 

$

0.07

 

 

$

0.07

 

 

$

0.06

 

$

0.06

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

Basic

 

278,183,041

 

 

 

277,841,526

 

 

 

277,589,775

 

 

 

277,472,312

 

 

277,361,293

 

Diluted

 

279,046,837

 

 

 

279,001,898

 

 

 

278,826,441

 

 

 

278,590,810

 

 

278,499,145

 

TFS FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(In thousands, except share and per share data)

 

 

For the Six Months Ended

 

March 31,

 

 

2024

 

 

 

2023

 

INTEREST AND DIVIDEND INCOME:

 

 

 

Loans, including fees

$

325,005

 

 

$

266,500

 

Investment securities available for sale

 

8,871

 

 

 

6,517

 

Other interest and dividend earning assets

 

26,776

 

 

 

13,505

 

Total interest and dividend income

 

360,652

 

 

 

286,522

 

INTEREST EXPENSE:

 

 

 

Deposits

 

137,011

 

 

 

69,731

 

Borrowed funds

 

83,171

 

 

 

72,366

 

Total interest expense

 

220,182

 

 

 

142,097

 

NET INTEREST INCOME

 

140,470

 

 

 

144,425

 

PROVISION (RELEASE) FOR CREDIT LOSSES

 

(2,000

)

 

 

(2,000

)

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

 

142,470

 

 

 

146,425

 

NON-INTEREST INCOME:

 

 

 

Fees and service charges, net of amortization

 

3,593

 

 

 

3,860

 

Net gain on the sale of loans

 

923

 

 

 

596

 

Increase in and death benefits from bank owned life insurance contracts

 

5,384

 

 

 

4,361

 

Other

 

2,137

 

 

 

1,669

 

Total non-interest income

 

12,037

 

 

 

10,486

 

NON-INTEREST EXPENSE:

 

 

 

Salaries and employee benefits

 

54,617

 

 

 

58,793

 

Marketing services

 

9,530

 

 

 

14,384

 

Office property, equipment and software

 

14,148

 

 

 

13,602

 

Federal insurance premium and assessments

 

7,791

 

 

 

6,249

 

State franchise tax

 

2,414

 

 

 

2,476

 

Other expenses

 

13,975

 

 

 

13,264

 

Total non-interest expense

 

102,475

 

 

 

108,768

 

INCOME BEFORE INCOME TAXES

 

52,032

 

 

 

48,143

 

INCOME TAX EXPENSE

 

10,612

 

 

 

10,042

 

NET INCOME

$

41,420

 

 

$

38,101

 

Earnings per share - basic and diluted

$

0.15

 

 

$

0.13

 

Weighted average shares outstanding

 

 

 

Basic

 

278,011,351

 

 

 

277,340,877

 

Diluted

 

279,019,468

 

 

 

278,472,705

 

TFS FINANCIAL CORPORATION AND SUBSIDIARIES

AVERAGE BALANCES AND YIELDS (unaudited)

 

 

 

Three Months Ended

 

Three Months Ended

 

Three Months Ended

 

 

March 31, 2024

 

December 31, 2023

 

March 31, 2023

 

 

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

 

$

720,657

 

 

$

9,919

 

 

5.51

%

 

$

398,506

 

 

$

5,124

 

 

5.14

%

 

$

350,437

 

 

$

3,947

 

 

4.51

%

Investment securities

 

 

72,091

 

 

 

907

 

 

5.03

%

 

 

64,778

 

 

 

850

 

 

5.25

%

 

 

3,649

 

 

 

11

 

 

1.21

%

Mortgage-backed securities

 

 

448,653

 

 

 

3,569

 

 

3.18

%

 

 

444,411

 

 

 

3,545

 

 

3.19

%

 

 

475,902

 

 

 

3,444

 

 

2.89

%

Loans (2)

 

 

15,163,185

 

 

 

162,970

 

 

4.30

%

 

 

15,232,349

 

 

 

162,035

 

 

4.26

%

 

 

14,517,771

 

 

 

136,835

 

 

3.77

%

Federal Home Loan Bank stock

 

 

244,560

 

 

 

6,128

 

 

10.02

%

 

 

270,540

 

 

 

5,605

 

 

8.29

%

 

 

230,496

 

 

 

3,315

 

 

5.75

%

Total interest-earning assets

 

 

16,649,146

 

 

 

183,493

 

 

4.41

%

 

 

16,410,584

 

 

 

177,159

 

 

4.32

%

 

 

15,578,255

 

 

 

147,552

 

 

3.79

%

Noninterest-earning assets

 

 

505,145

 

 

 

 

 

 

 

553,461

 

 

 

 

 

 

 

527,935

 

 

 

 

 

Total assets

 

$

17,154,291

 

 

 

 

 

 

$

16,964,045

 

 

 

 

 

 

$

16,106,190

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking accounts

 

$

887,584

 

 

 

98

 

 

0.04

%

 

$

937,817

 

 

 

118

 

 

0.05

%

 

$

1,128,560

 

 

 

2,229

 

 

0.79

%

Savings accounts

 

 

1,561,331

 

 

 

5,598

 

 

1.43

%

 

 

1,721,466

 

 

 

6,912

 

 

1.61

%

 

 

1,668,115

 

 

 

5,028

 

 

1.21

%

Certificates of deposit

 

 

7,548,314

 

 

 

66,989

 

 

3.55

%

 

 

6,847,482

 

 

 

57,296

 

 

3.35

%

 

 

6,110,460

 

 

 

32,619

 

 

2.14

%

Borrowed funds

 

 

5,033,253

 

 

 

39,430

 

 

3.13

%

 

 

5,228,239

 

 

 

43,741

 

 

3.35

%

 

 

5,112,767

 

 

 

38,408

 

 

3.00

%

Total interest-bearing liabilities

 

 

15,030,482

 

 

 

112,115

 

 

2.98

%

 

 

14,735,004

 

 

 

108,067

 

 

2.93

%

 

 

14,019,902

 

 

 

78,284

 

 

2.23

%

Noninterest-bearing liabilities

 

 

212,206

 

 

 

 

 

 

 

278,801

 

 

 

 

 

 

 

209,161

 

 

 

 

 

Total liabilities

 

 

15,242,688

 

 

 

 

 

 

 

15,013,805

 

 

 

 

 

 

 

14,229,063

 

 

 

 

 

Shareholders’ equity

 

 

1,911,603

 

 

 

 

 

 

 

1,950,240

 

 

 

 

 

 

 

1,877,127

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

17,154,291

 

 

 

 

 

 

$

16,964,045

 

 

 

 

 

 

$

16,106,190

 

 

 

 

 

Net interest income

 

 

 

$

71,378

 

 

 

 

 

 

$

69,092

 

 

 

 

 

 

$

69,268

 

 

 

Interest rate spread (1)(3)

 

 

 

 

 

1.43

%

 

 

 

 

 

1.39

%

 

 

 

 

 

1.56

%

Net interest-earning assets (4)

 

$

1,618,664

 

 

 

 

 

 

$

1,675,580

 

 

 

 

 

 

$

1,558,353

 

 

 

 

 

Net interest margin (1)(5)

 

 

 

 

1.71

%

 

 

 

 

 

 

1.68

%

 

 

 

 

 

 

1.78

%

 

 

Average interest-earning assets to average interest-bearing liabilities

 

 

110.77

%

 

 

 

 

 

 

111.37

%

 

 

 

 

 

 

111.12

%

 

 

 

 

Selected performance ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (1)

 

 

 

 

0.48

%

 

 

 

 

 

 

0.49

%

 

 

 

 

 

 

0.40

%

 

 

Return on average equity (1)

 

 

 

 

4.33

%

 

 

 

 

 

 

4.25

%

 

 

 

 

 

 

3.39

%

 

 

Average equity to average assets

 

 

 

 

11.14

%

 

 

 

 

 

 

11.50

%

 

 

 

 

 

 

11.65

%

 

 

(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)

 

 

 

Six Months Ended

 

Six Months Ended

 

 

March 31, 2024

 

March 31, 2023

 

 

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

 

$

559,581

 

 

$

15,043

 

 

5.38

%

 

$

352,325

 

 

$

7,196

 

 

4.08

%

Investment securities

 

 

68,435

 

 

 

1,757

 

 

5.13

%

 

 

3,634

 

 

 

22

 

 

1.21

%

Mortgage-backed securities

 

 

446,532

 

 

 

7,114

 

 

3.19

%

 

 

469,933

 

 

 

6,495

 

 

2.76

%

Loans (1)

 

 

15,197,767

 

 

 

325,005

 

 

4.28

%

 

 

14,457,228

 

 

 

266,500

 

 

3.69

%

Federal Home Loan Bank stock

 

 

257,550

 

 

 

11,733

 

 

9.11

%

 

 

224,889

 

 

 

6,309

 

 

5.61

%

Total interest-earning assets

 

 

16,529,865

 

 

 

360,652

 

 

4.36

%

 

 

15,508,009

 

 

 

286,522

 

 

3.70

%

Noninterest-earning assets

 

 

529,303

 

 

 

 

 

 

 

506,658

 

 

 

 

 

Total assets

 

$

17,059,168

 

 

 

 

 

 

$

16,014,667

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Checking accounts

 

$

912,701

 

 

 

216

 

 

0.05

%

 

$

1,156,728

 

 

 

4,639

 

 

0.80

%

Savings accounts

 

 

1,641,398

 

 

 

12,510

 

 

1.52

%

 

 

1,717,235

 

 

 

8,735

 

 

1.02

%

Certificates of deposit

 

 

7,197,898

 

 

 

124,285

 

 

3.45

%

 

 

6,041,692

 

 

 

56,357

 

 

1.87

%

Borrowed funds

 

 

5,130,746

 

 

 

83,171

 

 

3.24

%

 

 

4,992,956

 

 

 

72,366

 

 

2.90

%

Total interest-bearing liabilities

 

 

14,882,743

 

 

 

220,182

 

 

2.96

%

 

 

13,908,611

 

 

 

142,097

 

 

2.04

%

Noninterest-bearing liabilities

 

 

245,503

 

 

 

 

 

 

 

233,257

 

 

 

 

 

Total liabilities

 

 

15,128,246

 

 

 

 

 

 

 

14,141,868

 

 

 

 

 

Shareholders’ equity

 

 

1,930,922

 

 

 

 

 

 

 

1,872,799

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

17,059,168

 

 

 

 

 

 

$

16,014,667

 

 

 

 

 

Net interest income

 

 

 

$

140,470

 

 

 

 

 

 

$

144,425

 

 

 

Interest rate spread (1)(2)

 

 

 

 

 

1.40

%

 

 

 

 

 

1.66

%

Net interest-earning assets (3)

 

$

1,647,122

 

 

 

 

 

 

$

1,599,398

 

 

 

 

 

Net interest margin (1)(4)

 

 

 

 

1.70

%

 

 

 

 

 

 

1.86

%

 

 

Average interest-earning assets to average interest-bearing liabilities

 

 

111.07

%

 

 

 

 

 

 

111.50

%

 

 

 

 

Selected performance ratios:

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (1)

 

 

 

 

0.49

%

 

 

 

 

 

 

0.48

%

 

 

Return on average equity (1)

 

 

 

 

4.29

%

 

 

 

 

 

 

4.07

%

 

 

Average equity to average assets

 

 

 

 

11.32

%

 

 

 

 

 

 

11.69

%

 

 

(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/20240430084946/en/

Jennifer Rosa         (216) 429-5037