Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Loan Originations Highlight TFS Financial Corporation First Quarter Results By: Third Federal Savings and Loan via Business Wire January 27, 2022 at 19:16 PM EST 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 ended December 31, 2021. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20220127006105/en/Chairman and CEO Marc A. Stefanski (Photo: Business Wire) “Our first quarter loan growth has set the pace for this year,” said Chairman and CEO Marc A. Stefanski. “We expect to continue to aggressively pursue purchase volume in 2022 with new programs to attract homebuyers, while maintaining our dividend to enhance shareholder value.” Highlights - First Quarter Fiscal Year 2022 Reported net income of $16.1 million Continued improvement of net interest margin to 1.69% Generated $165 million of loan growth during the first fiscal quarter of 2022 Maintained strong asset quality and recorded a $2 million negative provision for credit losses Paid a $0.2825 dividend The Company reported net income of $16.1 million for the quarter ended December 31, 2021, compared to net income of $17.0 for the quarter ended September 30, 2021. The change included an increase to net interest income, a decrease in non-interest income and an increase in non-interest expense. Net interest income increased $0.4 million, or 1%, to $57.8 million for the quarter ended December 31, 2021 from $57.4 for the quarter ended September 30, 2021. The increase was primarily due to a seven basis point improvement in the average cost of interest-bearing liabilities. The interest rate spread for the quarter ended December 31, 2021 was 1.57% compared to 1.55% for the quarter ended September 30, 2021. The net interest margin was 1.69% compared to 1.68% for the quarters ended December 31, 2021 and September 30, 2021, respectively. The provision for loan losses was a credit of $2.0 million for each of the quarters ended December 31, 2021 and September 30, 2021. The Company recorded $2.0 million of net loan recoveries for the quarter ended December 31, 2021 compared to $1.5 million of net loan recoveries for the quarter ended September 30, 2021. Gross loan charge-offs were $0.2 million for the quarter ended December 31, 2021 and $1.4 million for the quarter ended September 30, 2021, while loan recoveries were $2.2 million for the current quarter and $2.9 million in the prior quarter. The allowance for credit losses was $89.2 million, or 0.70% of total loans receivable, at December 31, 2021, including a $25.6 million liability for unfunded commitments. The allowance for credit losses was $89.3 million, or 0.71% of total loans receivable, including a $25.0 million liability for unfunded commitments, at September 30, 2021. Total loan delinquencies were $25.0 million, representing 0.20% of total loans receivable, at December 31, 2021 and $24.7 million, or 0.20% of total loans receivable, at September 30, 2021. Non-accrual loans decreased $0.6 million to $43.4 million, or 0.34% of total loans receivable, at December 31, 2021 compared with $44.0 million, or 0.35% of total loans receivable, at September 30, 2021. At December 31, 2021, there were $12.0 million of loans, or 0.09% of total loans receivable, in COVID-19 forbearance plans compared to $21.8 million of loans, or 0.17% of total loans receivable, in COVID-19 forbearance plans at September 30, 2021. There were $121.1 million and $127.1 million of loans in troubled debt restructurings at December 31, 2021 and September 30, 2021, respectively. Total non-interest income decreased by $0.5 million, to $8.2 million for the quarter ended December 31, 2021, from $8.7 million for the quarter ended September 30, 2021. The decrease included a $2.1 million decrease in net gain on the sale of loans, due to decreases in secondary market pricing and a lower volume of loans sold. Offsetting increases included a $0.8 million increase in returns and death benefits from bank owned life insurance policies and a $0.8 million combined increase in loan fees and service charges, the fair value of interest rate lock commitments and other miscellaneous operating income. During the quarter ended December 31, 2021, $102.0 million of loans were sold or committed for sale at a $2.2 million net gain compared to $128.3 million of loans sold at a $4.3 million net gain during the quarter ended September 30, 2021. Total non-interest expense increased $0.3 million, to $47.7 million for the quarter ended December 31, 2021, from $47.4 million for the quarter ended September 30, 2021. The increase was mainly the result of a $1.6 million increase in marketing costs, offset by a $0.7 million decrease in the provision for repurchase reserves on sold loans and a $0.6 million decrease in third party appraisal and other loan-related expenses. Marketing costs are recognized as incurred. Total assets increased by $75.1 million, or 1%, to $14.13 billion at December 31, 2021 from $14.06 billion at September 30, 2021. This change was mainly the result of new loan origination levels exceeding the total of loan sales and principal repayments, partially offset by a decrease in cash and cash equivalents. Cash and cash equivalents decreased by $80.3 million, or 16% to $408.0 million at December 31, 2021 from $488.3 million at September 30, 2021. The combination of loans held for investment, net of deferred loan fees and allowance for credit losses, and mortgage loans held for sale increased $165.2 million, or 1%, to $12.68 billion at December 31, 2021 from $12.52 billion at September 30, 2021. Residential core mortgage loans, including those held for sale, increased $101.4 million and the home equity loans and lines of credit portfolio increased $63.5 million during the quarter. Total first mortgage loan originations were $877.1 million for the quarter ended December 31, 2021 compared to $719.6 million for the quarter ended September 30, 2021. The current period mortgage loan originations included 60% refinance transactions, 24% adjustable rate mortgages and 14% fixed-rate mortgages with terms of 10 years or less. Commitments originated for home equity loans and lines of credit were $499.7 million for the quarter ended December 31, 2021 compared to $511.3 million for the quarter ended September 30, 2021. Deposits decreased by $60.3 million, or 1%, to $8.93 billion at December 31, 2021 from $8.99 billion at September 30, 2021. The decrease in deposits was the result of a $137.9 million decrease in certificates of deposit ("CDs"), offset by a $48.8 million increase in checking accounts, a $3.4 million decrease in money market accounts and a $32.5 million increase in savings accounts during the quarter ended December 31, 2021. Total deposits include $496.9 million and $492.0 million of brokered CDs at December 31, 2021 and September 30, 2021, respectively. Borrowed funds, all from the FHLB, increased $88.8 million, or 3%, to $3.18 billion at December 31, 2021 from $3.09 billion at September 30, 2021. The increase was primarily used to fund loan growth. During the quarter ended December 31, 2021, additions included $40.0 million of overnight advances and $150.0 million of long term advances, with terms from 21 to 48 months, partially offset by other principal repayments. Also, during the quarter, $100.0 million of 90 day advances and their related swap contracts matured and were paid off. The total balance of borrowed funds at December 31, 2021 consisted of $40.0 million of overnight advances, $790.6 million of term advances with a weighted average maturity of approximately 2.7 years and term advances of $2.4 billion, aligned with interest rate swap contracts, with a remaining weighted average effective maturity of approximately 2.4 years. Borrowers' advances for insurance and taxes increased by $33.7 million, or 31%, to $143.3 million at December 31, 2021 from $109.6 million at September 30, 2021. This change primarily reflects the cyclical nature of real estate tax payments that have been collected from borrowers and are in the process of being remitted to various taxing agencies. Total shareholders' equity increased $21.1 million, or 1%, to $1.75 billion at December 31, 2021 from $1.73 billion at September 30, 2021. Activity reflects $16.1 million of net income in the current quarter reduced by a quarterly dividend of $14.5 million and $0.3 million of repurchases of outstanding common stock. Other changes include $17.7 million of unrealized net gain recognized in accumulated other comprehensive income, primarily related to changes in market values and maturities of swap contracts, and a $2.1 million net positive impact related to activity in the Company's stock compensation and employee stock ownership plans. During the quarter ended December 31, 2021, 16,000 shares of the Company's outstanding stock were repurchased at an average cost of $17.80 per share. The Company's eighth stock repurchase program allows for a total of 10,000,000 shares to be repurchased, with 5,875,079 shares remaining to be repurchased at December 31, 2021. The Company declared and paid a quarterly dividend of $0.2825 per share during the quarter ended December 31, 2021. 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 current 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 13, 2021 member vote and the subsequent non-objection of the Federal Reserve, the MHC has the approval to waive the receipt of up to a total of $1.13 per share of possible dividends to be declared on the Company's common stock, including up to $0.565 in dividends during the six months ending June 30, 2022. The MHC has conducted the member vote to approve the dividend waiver each of the past eight years under Federal Reserve regulations and for each of those eight years, approximately 97% of the votes cast were in favor of the waiver. The Association operates under the capital requirements for the standardized approach of the Basel III capital framework for U.S. banking organizations (“Basel III Rules”). At December 31, 2021 all of the Association's capital ratios substantially exceed the amounts required for the Association to be considered "well capitalized" for regulatory capital purposes. The Association’s Tier 1 leverage ratio was 10.93%, its Common Equity Tier 1 and Tier 1 ratios, as calculated under the fully phased-in Basel III Rules, were each 19.73% and its total capital ratio was 20.29%. Additionally, the Company's Tier 1 leverage ratio was 12.72%, its Common Equity Tier 1 and Tier 1 ratios were each 22.97% and its total capital ratio was 23.53%. The Association's current capital ratios reflect the dilutive impact of $56 million of dividends that the Association paid to the Company, its sole shareholder, during the quarter ended December 31, 2021. Because of its intercompany nature, these dividends had no impact on the Company's capital ratios or its consolidated statement of condition. Ben S. Stefanski III, a director of the Company, has announced his resignation from the Board of Directors effective January 27, 2022. The organization is grateful to Mr. Stefanski for his years of service and contributions to the Company as both a board member and as an executive officer. His position on the Board is not expected to be filled. Presentation slides as of December 31, 2021 will be available on the Company's website, www.thirdfederal.com, under the Investor Relations link within the "Recent Presentations" menu, beginning January 28, 2022. 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 80th anniversary in May, 2018. 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, seven lending offices in Central and Southern Ohio, and 16 full service branches throughout Florida. As of December 31, 2021, the Company’s assets totaled $14.13 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 asset 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; ● inflation and changes in the interest rate environment that reduce our interest margins or reduce the fair value of financial instruments; ● 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, and regulatory and compliance risk; ● our ability to access cost-effective funding; ● 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, and the possible short-term dilutive effect of potential acquisitions or de novo branches, if any; ● 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 and the FRS and changes in the level of government support of housing finance; ● 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, or compensation and benefit plans 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; ● civic 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) December 31, 2021 September 30, 2021 ASSETS Cash and due from banks $ 23,885 $ 27,346 Other interest-earning cash equivalents 384,124 460,980 Cash and cash equivalents 408,009 488,326 Investment securities available for sale (amortized cost $426,577 and $420,542, respectively) 423,842 421,783 Mortgage loans held for sale ($32,968 and $0 measured at fair value, respectively) 38,064 8,848 Loans held for investment, net: Mortgage loans 12,659,957 12,525,687 Other loans 2,705 2,778 Deferred loan expenses, net 45,954 44,859 Allowance for credit losses on loans (63,576 ) (64,289 ) Loans, net 12,645,040 12,509,035 Mortgage loan servicing rights, net 8,761 8,941 Federal Home Loan Bank stock, at cost 162,783 162,783 Real estate owned, net 131 289 Premises, equipment, and software, net 36,364 37,420 Accrued interest receivable 30,320 31,107 Bank owned life insurance contracts 298,398 297,332 Other assets 80,799 91,586 TOTAL ASSETS $ 14,132,511 $ 14,057,450 LIABILITIES AND SHAREHOLDERS’ EQUITY Deposits $ 8,933,279 $ 8,993,605 Borrowed funds 3,180,614 3,091,815 Borrowers’ advances for insurance and taxes 143,338 109,633 Principal, interest, and related escrow owed on loans serviced 35,655 41,476 Accrued expenses and other liabilities 86,255 88,641 Total liabilities 12,379,141 12,325,170 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; 280,861,384 and 280,761,299 outstanding at December 31, 2021 and September 30, 2021, respectively 3,323 3,323 Paid-in capital 1,746,992 1,746,887 Treasury stock, at cost; 51,457,366 and 51,557,451 shares at December 31, 2021 and September 30, 2021, respectively (767,457 ) (768,035 ) Unallocated ESOP shares (34,667 ) (35,751 ) Retained earnings—substantially restricted 855,318 853,657 Accumulated other comprehensive loss (50,139 ) (67,801 ) Total shareholders’ equity 1,753,370 1,732,280 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 14,132,511 $ 14,057,450 TFS FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited) (In thousands, except share and per share data) For the three months ended December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 INTEREST AND DIVIDEND INCOME: Loans, including fees $ 90,119 $ 92,002 $ 93,584 $ 96,175 $ 100,126 Investment securities available for sale 960 1,041 828 966 987 Other interest and dividend earning assets 1,011 1,033 979 814 816 Total interest and dividend income 92,090 94,076 95,391 97,955 101,929 INTEREST EXPENSE: Deposits 19,251 21,617 23,461 24,545 27,696 Borrowed funds 14,995 15,061 14,852 14,999 15,490 Total interest expense 34,246 36,678 38,313 39,544 43,186 NET INTEREST INCOME 57,844 57,398 57,078 58,411 58,743 PROVISION (RELEASE) FOR CREDIT LOSSES (2,000 ) (2,000 ) (1,000 ) (4,000 ) (2,000 ) NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 59,844 59,398 58,078 62,411 60,743 NON-INTEREST INCOME: Fees and service charges, net of amortization 2,404 2,156 2,491 2,460 2,495 Net gain on the sale of loans 2,187 4,305 3,423 8,911 16,443 Increase in and death benefits from bank owned life insurance contracts 2,911 2,146 2,361 3,807 1,647 Other 652 74 1,174 530 876 Total non-interest income 8,154 8,681 9,449 15,708 21,461 NON-INTEREST EXPENSE: Salaries and employee benefits 26,515 26,912 26,945 26,672 28,338 Marketing services 5,626 4,043 4,073 5,325 5,733 Office property, equipment and software 6,639 6,453 6,427 6,395 6,435 Federal insurance premium and assessments 2,012 2,233 2,139 2,323 2,390 State franchise tax 1,224 1,202 1,151 1,159 1,151 Other expenses 5,657 6,603 7,115 6,936 7,682 Total non-interest expense 47,673 47,446 47,850 48,810 51,729 INCOME BEFORE INCOME TAXES 20,325 20,633 19,677 29,309 30,475 INCOME TAX EXPENSE 4,185 3,618 3,696 6,300 5,473 NET INCOME $ 16,140 $ 17,015 $ 15,981 $ 23,009 $ 25,002 Earnings per share Basic $ 0.06 $ 0.06 $ 0.06 $ 0.08 $ 0.09 Diluted $ 0.06 $ 0.06 $ 0.06 $ 0.08 $ 0.09 Weighted average shares outstanding Basic 277,225,121 276,982,904 276,864,229 276,716,978 276,216,596 Diluted 278,903,373 278,880,379 278,931,432 278,593,303 278,028,072 TFS FINANCIAL CORPORATION AND SUBSIDIARIES AVERAGE BALANCES AND YIELDS (unaudited) Three Months Ended Three Months Ended Three Months Ended December 31, 2021 September 30, 2021 December 31, 2020 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 $ 494,186 $ 190 0.15 % $ 570,903 $ 221 0.15 % $ 476,589 $ 128 0.11 % Mortgage-backed securities 421,358 951 0.90 % 417,320 1,041 1.00 % 447,544 987 0.88 % Loans (2) 12,582,758 90,119 2.86 % 12,544,760 92,002 2.93 % 13,090,927 100,126 3.06 % Federal Home Loan Bank stock 162,783 821 2.02 % 162,783 812 2.00 % 136,793 688 2.01 % Total interest-earning assets 13,664,017 92,090 2.70 % 13,695,766 94,076 2.75 % 14,151,853 101,929 2.88 % Noninterest-earning assets 512,102 533,988 525,312 Total assets $ 14,176,119 $ 14,229,754 $ 14,677,165 Interest-bearing liabilities: Checking accounts $ 1,151,600 265 0.09 % $ 1,117,897 263 0.09 % $ 1,017,811 320 0.13 % Savings accounts 1,835,361 557 0.12 % 1,805,394 645 0.14 % 1,662,095 913 0.22 % Certificates of deposit 5,944,470 18,429 1.24 % 6,144,461 20,709 1.35 % 6,493,523 26,463 1.63 % Borrowed funds 3,175,158 14,995 1.89 % 3,146,515 15,061 1.91 % 3,471,593 15,490 1.78 % Total interest-bearing liabilities 12,106,589 34,246 1.13 % 12,214,267 36,678 1.20 % 12,645,022 43,186 1.37 % Noninterest-bearing liabilities 312,104 289,573 376,897 Total liabilities 12,418,693 12,503,840 13,021,919 Shareholders’ equity 1,757,426 1,725,914 1,655,246 Total liabilities and shareholders’ equity $ 14,176,119 $ 14,229,754 $ 14,677,165 Net interest income $ 57,844 $ 57,398 $ 58,743 Interest rate spread (1)(3) 1.57 % 1.55 % 1.51 % Net interest-earning assets (4) $ 1,557,428 $ 1,481,499 $ 1,506,831 Net interest margin (1)(5) 1.69 % 1.68 % 1.66 % Average interest-earning assets to average interest-bearing liabilities 112.86 % 112.13 % 111.92 % Selected performance ratios: Return on average assets (1) 0.46 % 0.48 % 0.68 % Return on average equity (1) 3.67 % 3.94 % 6.04 % Average equity to average assets 12.40 % 12.13 % 11.28 % (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/20220127006105/en/Contacts Jennifer Rosa (216) 429-5037 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Loan Originations Highlight TFS Financial Corporation First Quarter Results By: Third Federal Savings and Loan via Business Wire January 27, 2022 at 19:16 PM EST 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 ended December 31, 2021. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20220127006105/en/Chairman and CEO Marc A. Stefanski (Photo: Business Wire) “Our first quarter loan growth has set the pace for this year,” said Chairman and CEO Marc A. Stefanski. “We expect to continue to aggressively pursue purchase volume in 2022 with new programs to attract homebuyers, while maintaining our dividend to enhance shareholder value.” Highlights - First Quarter Fiscal Year 2022 Reported net income of $16.1 million Continued improvement of net interest margin to 1.69% Generated $165 million of loan growth during the first fiscal quarter of 2022 Maintained strong asset quality and recorded a $2 million negative provision for credit losses Paid a $0.2825 dividend The Company reported net income of $16.1 million for the quarter ended December 31, 2021, compared to net income of $17.0 for the quarter ended September 30, 2021. The change included an increase to net interest income, a decrease in non-interest income and an increase in non-interest expense. Net interest income increased $0.4 million, or 1%, to $57.8 million for the quarter ended December 31, 2021 from $57.4 for the quarter ended September 30, 2021. The increase was primarily due to a seven basis point improvement in the average cost of interest-bearing liabilities. The interest rate spread for the quarter ended December 31, 2021 was 1.57% compared to 1.55% for the quarter ended September 30, 2021. The net interest margin was 1.69% compared to 1.68% for the quarters ended December 31, 2021 and September 30, 2021, respectively. The provision for loan losses was a credit of $2.0 million for each of the quarters ended December 31, 2021 and September 30, 2021. The Company recorded $2.0 million of net loan recoveries for the quarter ended December 31, 2021 compared to $1.5 million of net loan recoveries for the quarter ended September 30, 2021. Gross loan charge-offs were $0.2 million for the quarter ended December 31, 2021 and $1.4 million for the quarter ended September 30, 2021, while loan recoveries were $2.2 million for the current quarter and $2.9 million in the prior quarter. The allowance for credit losses was $89.2 million, or 0.70% of total loans receivable, at December 31, 2021, including a $25.6 million liability for unfunded commitments. The allowance for credit losses was $89.3 million, or 0.71% of total loans receivable, including a $25.0 million liability for unfunded commitments, at September 30, 2021. Total loan delinquencies were $25.0 million, representing 0.20% of total loans receivable, at December 31, 2021 and $24.7 million, or 0.20% of total loans receivable, at September 30, 2021. Non-accrual loans decreased $0.6 million to $43.4 million, or 0.34% of total loans receivable, at December 31, 2021 compared with $44.0 million, or 0.35% of total loans receivable, at September 30, 2021. At December 31, 2021, there were $12.0 million of loans, or 0.09% of total loans receivable, in COVID-19 forbearance plans compared to $21.8 million of loans, or 0.17% of total loans receivable, in COVID-19 forbearance plans at September 30, 2021. There were $121.1 million and $127.1 million of loans in troubled debt restructurings at December 31, 2021 and September 30, 2021, respectively. Total non-interest income decreased by $0.5 million, to $8.2 million for the quarter ended December 31, 2021, from $8.7 million for the quarter ended September 30, 2021. The decrease included a $2.1 million decrease in net gain on the sale of loans, due to decreases in secondary market pricing and a lower volume of loans sold. Offsetting increases included a $0.8 million increase in returns and death benefits from bank owned life insurance policies and a $0.8 million combined increase in loan fees and service charges, the fair value of interest rate lock commitments and other miscellaneous operating income. During the quarter ended December 31, 2021, $102.0 million of loans were sold or committed for sale at a $2.2 million net gain compared to $128.3 million of loans sold at a $4.3 million net gain during the quarter ended September 30, 2021. Total non-interest expense increased $0.3 million, to $47.7 million for the quarter ended December 31, 2021, from $47.4 million for the quarter ended September 30, 2021. The increase was mainly the result of a $1.6 million increase in marketing costs, offset by a $0.7 million decrease in the provision for repurchase reserves on sold loans and a $0.6 million decrease in third party appraisal and other loan-related expenses. Marketing costs are recognized as incurred. Total assets increased by $75.1 million, or 1%, to $14.13 billion at December 31, 2021 from $14.06 billion at September 30, 2021. This change was mainly the result of new loan origination levels exceeding the total of loan sales and principal repayments, partially offset by a decrease in cash and cash equivalents. Cash and cash equivalents decreased by $80.3 million, or 16% to $408.0 million at December 31, 2021 from $488.3 million at September 30, 2021. The combination of loans held for investment, net of deferred loan fees and allowance for credit losses, and mortgage loans held for sale increased $165.2 million, or 1%, to $12.68 billion at December 31, 2021 from $12.52 billion at September 30, 2021. Residential core mortgage loans, including those held for sale, increased $101.4 million and the home equity loans and lines of credit portfolio increased $63.5 million during the quarter. Total first mortgage loan originations were $877.1 million for the quarter ended December 31, 2021 compared to $719.6 million for the quarter ended September 30, 2021. The current period mortgage loan originations included 60% refinance transactions, 24% adjustable rate mortgages and 14% fixed-rate mortgages with terms of 10 years or less. Commitments originated for home equity loans and lines of credit were $499.7 million for the quarter ended December 31, 2021 compared to $511.3 million for the quarter ended September 30, 2021. Deposits decreased by $60.3 million, or 1%, to $8.93 billion at December 31, 2021 from $8.99 billion at September 30, 2021. The decrease in deposits was the result of a $137.9 million decrease in certificates of deposit ("CDs"), offset by a $48.8 million increase in checking accounts, a $3.4 million decrease in money market accounts and a $32.5 million increase in savings accounts during the quarter ended December 31, 2021. Total deposits include $496.9 million and $492.0 million of brokered CDs at December 31, 2021 and September 30, 2021, respectively. Borrowed funds, all from the FHLB, increased $88.8 million, or 3%, to $3.18 billion at December 31, 2021 from $3.09 billion at September 30, 2021. The increase was primarily used to fund loan growth. During the quarter ended December 31, 2021, additions included $40.0 million of overnight advances and $150.0 million of long term advances, with terms from 21 to 48 months, partially offset by other principal repayments. Also, during the quarter, $100.0 million of 90 day advances and their related swap contracts matured and were paid off. The total balance of borrowed funds at December 31, 2021 consisted of $40.0 million of overnight advances, $790.6 million of term advances with a weighted average maturity of approximately 2.7 years and term advances of $2.4 billion, aligned with interest rate swap contracts, with a remaining weighted average effective maturity of approximately 2.4 years. Borrowers' advances for insurance and taxes increased by $33.7 million, or 31%, to $143.3 million at December 31, 2021 from $109.6 million at September 30, 2021. This change primarily reflects the cyclical nature of real estate tax payments that have been collected from borrowers and are in the process of being remitted to various taxing agencies. Total shareholders' equity increased $21.1 million, or 1%, to $1.75 billion at December 31, 2021 from $1.73 billion at September 30, 2021. Activity reflects $16.1 million of net income in the current quarter reduced by a quarterly dividend of $14.5 million and $0.3 million of repurchases of outstanding common stock. Other changes include $17.7 million of unrealized net gain recognized in accumulated other comprehensive income, primarily related to changes in market values and maturities of swap contracts, and a $2.1 million net positive impact related to activity in the Company's stock compensation and employee stock ownership plans. During the quarter ended December 31, 2021, 16,000 shares of the Company's outstanding stock were repurchased at an average cost of $17.80 per share. The Company's eighth stock repurchase program allows for a total of 10,000,000 shares to be repurchased, with 5,875,079 shares remaining to be repurchased at December 31, 2021. The Company declared and paid a quarterly dividend of $0.2825 per share during the quarter ended December 31, 2021. 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 current 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 13, 2021 member vote and the subsequent non-objection of the Federal Reserve, the MHC has the approval to waive the receipt of up to a total of $1.13 per share of possible dividends to be declared on the Company's common stock, including up to $0.565 in dividends during the six months ending June 30, 2022. The MHC has conducted the member vote to approve the dividend waiver each of the past eight years under Federal Reserve regulations and for each of those eight years, approximately 97% of the votes cast were in favor of the waiver. The Association operates under the capital requirements for the standardized approach of the Basel III capital framework for U.S. banking organizations (“Basel III Rules”). At December 31, 2021 all of the Association's capital ratios substantially exceed the amounts required for the Association to be considered "well capitalized" for regulatory capital purposes. The Association’s Tier 1 leverage ratio was 10.93%, its Common Equity Tier 1 and Tier 1 ratios, as calculated under the fully phased-in Basel III Rules, were each 19.73% and its total capital ratio was 20.29%. Additionally, the Company's Tier 1 leverage ratio was 12.72%, its Common Equity Tier 1 and Tier 1 ratios were each 22.97% and its total capital ratio was 23.53%. The Association's current capital ratios reflect the dilutive impact of $56 million of dividends that the Association paid to the Company, its sole shareholder, during the quarter ended December 31, 2021. Because of its intercompany nature, these dividends had no impact on the Company's capital ratios or its consolidated statement of condition. Ben S. Stefanski III, a director of the Company, has announced his resignation from the Board of Directors effective January 27, 2022. The organization is grateful to Mr. Stefanski for his years of service and contributions to the Company as both a board member and as an executive officer. His position on the Board is not expected to be filled. Presentation slides as of December 31, 2021 will be available on the Company's website, www.thirdfederal.com, under the Investor Relations link within the "Recent Presentations" menu, beginning January 28, 2022. 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 80th anniversary in May, 2018. 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, seven lending offices in Central and Southern Ohio, and 16 full service branches throughout Florida. As of December 31, 2021, the Company’s assets totaled $14.13 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 asset 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; ● inflation and changes in the interest rate environment that reduce our interest margins or reduce the fair value of financial instruments; ● 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, and regulatory and compliance risk; ● our ability to access cost-effective funding; ● 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, and the possible short-term dilutive effect of potential acquisitions or de novo branches, if any; ● 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 and the FRS and changes in the level of government support of housing finance; ● 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, or compensation and benefit plans 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; ● civic 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) December 31, 2021 September 30, 2021 ASSETS Cash and due from banks $ 23,885 $ 27,346 Other interest-earning cash equivalents 384,124 460,980 Cash and cash equivalents 408,009 488,326 Investment securities available for sale (amortized cost $426,577 and $420,542, respectively) 423,842 421,783 Mortgage loans held for sale ($32,968 and $0 measured at fair value, respectively) 38,064 8,848 Loans held for investment, net: Mortgage loans 12,659,957 12,525,687 Other loans 2,705 2,778 Deferred loan expenses, net 45,954 44,859 Allowance for credit losses on loans (63,576 ) (64,289 ) Loans, net 12,645,040 12,509,035 Mortgage loan servicing rights, net 8,761 8,941 Federal Home Loan Bank stock, at cost 162,783 162,783 Real estate owned, net 131 289 Premises, equipment, and software, net 36,364 37,420 Accrued interest receivable 30,320 31,107 Bank owned life insurance contracts 298,398 297,332 Other assets 80,799 91,586 TOTAL ASSETS $ 14,132,511 $ 14,057,450 LIABILITIES AND SHAREHOLDERS’ EQUITY Deposits $ 8,933,279 $ 8,993,605 Borrowed funds 3,180,614 3,091,815 Borrowers’ advances for insurance and taxes 143,338 109,633 Principal, interest, and related escrow owed on loans serviced 35,655 41,476 Accrued expenses and other liabilities 86,255 88,641 Total liabilities 12,379,141 12,325,170 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; 280,861,384 and 280,761,299 outstanding at December 31, 2021 and September 30, 2021, respectively 3,323 3,323 Paid-in capital 1,746,992 1,746,887 Treasury stock, at cost; 51,457,366 and 51,557,451 shares at December 31, 2021 and September 30, 2021, respectively (767,457 ) (768,035 ) Unallocated ESOP shares (34,667 ) (35,751 ) Retained earnings—substantially restricted 855,318 853,657 Accumulated other comprehensive loss (50,139 ) (67,801 ) Total shareholders’ equity 1,753,370 1,732,280 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 14,132,511 $ 14,057,450 TFS FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited) (In thousands, except share and per share data) For the three months ended December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 INTEREST AND DIVIDEND INCOME: Loans, including fees $ 90,119 $ 92,002 $ 93,584 $ 96,175 $ 100,126 Investment securities available for sale 960 1,041 828 966 987 Other interest and dividend earning assets 1,011 1,033 979 814 816 Total interest and dividend income 92,090 94,076 95,391 97,955 101,929 INTEREST EXPENSE: Deposits 19,251 21,617 23,461 24,545 27,696 Borrowed funds 14,995 15,061 14,852 14,999 15,490 Total interest expense 34,246 36,678 38,313 39,544 43,186 NET INTEREST INCOME 57,844 57,398 57,078 58,411 58,743 PROVISION (RELEASE) FOR CREDIT LOSSES (2,000 ) (2,000 ) (1,000 ) (4,000 ) (2,000 ) NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 59,844 59,398 58,078 62,411 60,743 NON-INTEREST INCOME: Fees and service charges, net of amortization 2,404 2,156 2,491 2,460 2,495 Net gain on the sale of loans 2,187 4,305 3,423 8,911 16,443 Increase in and death benefits from bank owned life insurance contracts 2,911 2,146 2,361 3,807 1,647 Other 652 74 1,174 530 876 Total non-interest income 8,154 8,681 9,449 15,708 21,461 NON-INTEREST EXPENSE: Salaries and employee benefits 26,515 26,912 26,945 26,672 28,338 Marketing services 5,626 4,043 4,073 5,325 5,733 Office property, equipment and software 6,639 6,453 6,427 6,395 6,435 Federal insurance premium and assessments 2,012 2,233 2,139 2,323 2,390 State franchise tax 1,224 1,202 1,151 1,159 1,151 Other expenses 5,657 6,603 7,115 6,936 7,682 Total non-interest expense 47,673 47,446 47,850 48,810 51,729 INCOME BEFORE INCOME TAXES 20,325 20,633 19,677 29,309 30,475 INCOME TAX EXPENSE 4,185 3,618 3,696 6,300 5,473 NET INCOME $ 16,140 $ 17,015 $ 15,981 $ 23,009 $ 25,002 Earnings per share Basic $ 0.06 $ 0.06 $ 0.06 $ 0.08 $ 0.09 Diluted $ 0.06 $ 0.06 $ 0.06 $ 0.08 $ 0.09 Weighted average shares outstanding Basic 277,225,121 276,982,904 276,864,229 276,716,978 276,216,596 Diluted 278,903,373 278,880,379 278,931,432 278,593,303 278,028,072 TFS FINANCIAL CORPORATION AND SUBSIDIARIES AVERAGE BALANCES AND YIELDS (unaudited) Three Months Ended Three Months Ended Three Months Ended December 31, 2021 September 30, 2021 December 31, 2020 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 $ 494,186 $ 190 0.15 % $ 570,903 $ 221 0.15 % $ 476,589 $ 128 0.11 % Mortgage-backed securities 421,358 951 0.90 % 417,320 1,041 1.00 % 447,544 987 0.88 % Loans (2) 12,582,758 90,119 2.86 % 12,544,760 92,002 2.93 % 13,090,927 100,126 3.06 % Federal Home Loan Bank stock 162,783 821 2.02 % 162,783 812 2.00 % 136,793 688 2.01 % Total interest-earning assets 13,664,017 92,090 2.70 % 13,695,766 94,076 2.75 % 14,151,853 101,929 2.88 % Noninterest-earning assets 512,102 533,988 525,312 Total assets $ 14,176,119 $ 14,229,754 $ 14,677,165 Interest-bearing liabilities: Checking accounts $ 1,151,600 265 0.09 % $ 1,117,897 263 0.09 % $ 1,017,811 320 0.13 % Savings accounts 1,835,361 557 0.12 % 1,805,394 645 0.14 % 1,662,095 913 0.22 % Certificates of deposit 5,944,470 18,429 1.24 % 6,144,461 20,709 1.35 % 6,493,523 26,463 1.63 % Borrowed funds 3,175,158 14,995 1.89 % 3,146,515 15,061 1.91 % 3,471,593 15,490 1.78 % Total interest-bearing liabilities 12,106,589 34,246 1.13 % 12,214,267 36,678 1.20 % 12,645,022 43,186 1.37 % Noninterest-bearing liabilities 312,104 289,573 376,897 Total liabilities 12,418,693 12,503,840 13,021,919 Shareholders’ equity 1,757,426 1,725,914 1,655,246 Total liabilities and shareholders’ equity $ 14,176,119 $ 14,229,754 $ 14,677,165 Net interest income $ 57,844 $ 57,398 $ 58,743 Interest rate spread (1)(3) 1.57 % 1.55 % 1.51 % Net interest-earning assets (4) $ 1,557,428 $ 1,481,499 $ 1,506,831 Net interest margin (1)(5) 1.69 % 1.68 % 1.66 % Average interest-earning assets to average interest-bearing liabilities 112.86 % 112.13 % 111.92 % Selected performance ratios: Return on average assets (1) 0.46 % 0.48 % 0.68 % Return on average equity (1) 3.67 % 3.94 % 6.04 % Average equity to average assets 12.40 % 12.13 % 11.28 % (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/20220127006105/en/Contacts Jennifer Rosa (216) 429-5037
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 ended December 31, 2021. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20220127006105/en/Chairman and CEO Marc A. Stefanski (Photo: Business Wire) “Our first quarter loan growth has set the pace for this year,” said Chairman and CEO Marc A. Stefanski. “We expect to continue to aggressively pursue purchase volume in 2022 with new programs to attract homebuyers, while maintaining our dividend to enhance shareholder value.” Highlights - First Quarter Fiscal Year 2022 Reported net income of $16.1 million Continued improvement of net interest margin to 1.69% Generated $165 million of loan growth during the first fiscal quarter of 2022 Maintained strong asset quality and recorded a $2 million negative provision for credit losses Paid a $0.2825 dividend The Company reported net income of $16.1 million for the quarter ended December 31, 2021, compared to net income of $17.0 for the quarter ended September 30, 2021. The change included an increase to net interest income, a decrease in non-interest income and an increase in non-interest expense. Net interest income increased $0.4 million, or 1%, to $57.8 million for the quarter ended December 31, 2021 from $57.4 for the quarter ended September 30, 2021. The increase was primarily due to a seven basis point improvement in the average cost of interest-bearing liabilities. The interest rate spread for the quarter ended December 31, 2021 was 1.57% compared to 1.55% for the quarter ended September 30, 2021. The net interest margin was 1.69% compared to 1.68% for the quarters ended December 31, 2021 and September 30, 2021, respectively. The provision for loan losses was a credit of $2.0 million for each of the quarters ended December 31, 2021 and September 30, 2021. The Company recorded $2.0 million of net loan recoveries for the quarter ended December 31, 2021 compared to $1.5 million of net loan recoveries for the quarter ended September 30, 2021. Gross loan charge-offs were $0.2 million for the quarter ended December 31, 2021 and $1.4 million for the quarter ended September 30, 2021, while loan recoveries were $2.2 million for the current quarter and $2.9 million in the prior quarter. The allowance for credit losses was $89.2 million, or 0.70% of total loans receivable, at December 31, 2021, including a $25.6 million liability for unfunded commitments. The allowance for credit losses was $89.3 million, or 0.71% of total loans receivable, including a $25.0 million liability for unfunded commitments, at September 30, 2021. Total loan delinquencies were $25.0 million, representing 0.20% of total loans receivable, at December 31, 2021 and $24.7 million, or 0.20% of total loans receivable, at September 30, 2021. Non-accrual loans decreased $0.6 million to $43.4 million, or 0.34% of total loans receivable, at December 31, 2021 compared with $44.0 million, or 0.35% of total loans receivable, at September 30, 2021. At December 31, 2021, there were $12.0 million of loans, or 0.09% of total loans receivable, in COVID-19 forbearance plans compared to $21.8 million of loans, or 0.17% of total loans receivable, in COVID-19 forbearance plans at September 30, 2021. There were $121.1 million and $127.1 million of loans in troubled debt restructurings at December 31, 2021 and September 30, 2021, respectively. Total non-interest income decreased by $0.5 million, to $8.2 million for the quarter ended December 31, 2021, from $8.7 million for the quarter ended September 30, 2021. The decrease included a $2.1 million decrease in net gain on the sale of loans, due to decreases in secondary market pricing and a lower volume of loans sold. Offsetting increases included a $0.8 million increase in returns and death benefits from bank owned life insurance policies and a $0.8 million combined increase in loan fees and service charges, the fair value of interest rate lock commitments and other miscellaneous operating income. During the quarter ended December 31, 2021, $102.0 million of loans were sold or committed for sale at a $2.2 million net gain compared to $128.3 million of loans sold at a $4.3 million net gain during the quarter ended September 30, 2021. Total non-interest expense increased $0.3 million, to $47.7 million for the quarter ended December 31, 2021, from $47.4 million for the quarter ended September 30, 2021. The increase was mainly the result of a $1.6 million increase in marketing costs, offset by a $0.7 million decrease in the provision for repurchase reserves on sold loans and a $0.6 million decrease in third party appraisal and other loan-related expenses. Marketing costs are recognized as incurred. Total assets increased by $75.1 million, or 1%, to $14.13 billion at December 31, 2021 from $14.06 billion at September 30, 2021. This change was mainly the result of new loan origination levels exceeding the total of loan sales and principal repayments, partially offset by a decrease in cash and cash equivalents. Cash and cash equivalents decreased by $80.3 million, or 16% to $408.0 million at December 31, 2021 from $488.3 million at September 30, 2021. The combination of loans held for investment, net of deferred loan fees and allowance for credit losses, and mortgage loans held for sale increased $165.2 million, or 1%, to $12.68 billion at December 31, 2021 from $12.52 billion at September 30, 2021. Residential core mortgage loans, including those held for sale, increased $101.4 million and the home equity loans and lines of credit portfolio increased $63.5 million during the quarter. Total first mortgage loan originations were $877.1 million for the quarter ended December 31, 2021 compared to $719.6 million for the quarter ended September 30, 2021. The current period mortgage loan originations included 60% refinance transactions, 24% adjustable rate mortgages and 14% fixed-rate mortgages with terms of 10 years or less. Commitments originated for home equity loans and lines of credit were $499.7 million for the quarter ended December 31, 2021 compared to $511.3 million for the quarter ended September 30, 2021. Deposits decreased by $60.3 million, or 1%, to $8.93 billion at December 31, 2021 from $8.99 billion at September 30, 2021. The decrease in deposits was the result of a $137.9 million decrease in certificates of deposit ("CDs"), offset by a $48.8 million increase in checking accounts, a $3.4 million decrease in money market accounts and a $32.5 million increase in savings accounts during the quarter ended December 31, 2021. Total deposits include $496.9 million and $492.0 million of brokered CDs at December 31, 2021 and September 30, 2021, respectively. Borrowed funds, all from the FHLB, increased $88.8 million, or 3%, to $3.18 billion at December 31, 2021 from $3.09 billion at September 30, 2021. The increase was primarily used to fund loan growth. During the quarter ended December 31, 2021, additions included $40.0 million of overnight advances and $150.0 million of long term advances, with terms from 21 to 48 months, partially offset by other principal repayments. Also, during the quarter, $100.0 million of 90 day advances and their related swap contracts matured and were paid off. The total balance of borrowed funds at December 31, 2021 consisted of $40.0 million of overnight advances, $790.6 million of term advances with a weighted average maturity of approximately 2.7 years and term advances of $2.4 billion, aligned with interest rate swap contracts, with a remaining weighted average effective maturity of approximately 2.4 years. Borrowers' advances for insurance and taxes increased by $33.7 million, or 31%, to $143.3 million at December 31, 2021 from $109.6 million at September 30, 2021. This change primarily reflects the cyclical nature of real estate tax payments that have been collected from borrowers and are in the process of being remitted to various taxing agencies. Total shareholders' equity increased $21.1 million, or 1%, to $1.75 billion at December 31, 2021 from $1.73 billion at September 30, 2021. Activity reflects $16.1 million of net income in the current quarter reduced by a quarterly dividend of $14.5 million and $0.3 million of repurchases of outstanding common stock. Other changes include $17.7 million of unrealized net gain recognized in accumulated other comprehensive income, primarily related to changes in market values and maturities of swap contracts, and a $2.1 million net positive impact related to activity in the Company's stock compensation and employee stock ownership plans. During the quarter ended December 31, 2021, 16,000 shares of the Company's outstanding stock were repurchased at an average cost of $17.80 per share. The Company's eighth stock repurchase program allows for a total of 10,000,000 shares to be repurchased, with 5,875,079 shares remaining to be repurchased at December 31, 2021. The Company declared and paid a quarterly dividend of $0.2825 per share during the quarter ended December 31, 2021. 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 current 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 13, 2021 member vote and the subsequent non-objection of the Federal Reserve, the MHC has the approval to waive the receipt of up to a total of $1.13 per share of possible dividends to be declared on the Company's common stock, including up to $0.565 in dividends during the six months ending June 30, 2022. The MHC has conducted the member vote to approve the dividend waiver each of the past eight years under Federal Reserve regulations and for each of those eight years, approximately 97% of the votes cast were in favor of the waiver. The Association operates under the capital requirements for the standardized approach of the Basel III capital framework for U.S. banking organizations (“Basel III Rules”). At December 31, 2021 all of the Association's capital ratios substantially exceed the amounts required for the Association to be considered "well capitalized" for regulatory capital purposes. The Association’s Tier 1 leverage ratio was 10.93%, its Common Equity Tier 1 and Tier 1 ratios, as calculated under the fully phased-in Basel III Rules, were each 19.73% and its total capital ratio was 20.29%. Additionally, the Company's Tier 1 leverage ratio was 12.72%, its Common Equity Tier 1 and Tier 1 ratios were each 22.97% and its total capital ratio was 23.53%. The Association's current capital ratios reflect the dilutive impact of $56 million of dividends that the Association paid to the Company, its sole shareholder, during the quarter ended December 31, 2021. Because of its intercompany nature, these dividends had no impact on the Company's capital ratios or its consolidated statement of condition. Ben S. Stefanski III, a director of the Company, has announced his resignation from the Board of Directors effective January 27, 2022. The organization is grateful to Mr. Stefanski for his years of service and contributions to the Company as both a board member and as an executive officer. His position on the Board is not expected to be filled. Presentation slides as of December 31, 2021 will be available on the Company's website, www.thirdfederal.com, under the Investor Relations link within the "Recent Presentations" menu, beginning January 28, 2022. 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 80th anniversary in May, 2018. 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, seven lending offices in Central and Southern Ohio, and 16 full service branches throughout Florida. As of December 31, 2021, the Company’s assets totaled $14.13 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 asset 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; ● inflation and changes in the interest rate environment that reduce our interest margins or reduce the fair value of financial instruments; ● 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, and regulatory and compliance risk; ● our ability to access cost-effective funding; ● 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, and the possible short-term dilutive effect of potential acquisitions or de novo branches, if any; ● 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 and the FRS and changes in the level of government support of housing finance; ● 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, or compensation and benefit plans 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; ● civic 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) December 31, 2021 September 30, 2021 ASSETS Cash and due from banks $ 23,885 $ 27,346 Other interest-earning cash equivalents 384,124 460,980 Cash and cash equivalents 408,009 488,326 Investment securities available for sale (amortized cost $426,577 and $420,542, respectively) 423,842 421,783 Mortgage loans held for sale ($32,968 and $0 measured at fair value, respectively) 38,064 8,848 Loans held for investment, net: Mortgage loans 12,659,957 12,525,687 Other loans 2,705 2,778 Deferred loan expenses, net 45,954 44,859 Allowance for credit losses on loans (63,576 ) (64,289 ) Loans, net 12,645,040 12,509,035 Mortgage loan servicing rights, net 8,761 8,941 Federal Home Loan Bank stock, at cost 162,783 162,783 Real estate owned, net 131 289 Premises, equipment, and software, net 36,364 37,420 Accrued interest receivable 30,320 31,107 Bank owned life insurance contracts 298,398 297,332 Other assets 80,799 91,586 TOTAL ASSETS $ 14,132,511 $ 14,057,450 LIABILITIES AND SHAREHOLDERS’ EQUITY Deposits $ 8,933,279 $ 8,993,605 Borrowed funds 3,180,614 3,091,815 Borrowers’ advances for insurance and taxes 143,338 109,633 Principal, interest, and related escrow owed on loans serviced 35,655 41,476 Accrued expenses and other liabilities 86,255 88,641 Total liabilities 12,379,141 12,325,170 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; 280,861,384 and 280,761,299 outstanding at December 31, 2021 and September 30, 2021, respectively 3,323 3,323 Paid-in capital 1,746,992 1,746,887 Treasury stock, at cost; 51,457,366 and 51,557,451 shares at December 31, 2021 and September 30, 2021, respectively (767,457 ) (768,035 ) Unallocated ESOP shares (34,667 ) (35,751 ) Retained earnings—substantially restricted 855,318 853,657 Accumulated other comprehensive loss (50,139 ) (67,801 ) Total shareholders’ equity 1,753,370 1,732,280 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 14,132,511 $ 14,057,450 TFS FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited) (In thousands, except share and per share data) For the three months ended December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 INTEREST AND DIVIDEND INCOME: Loans, including fees $ 90,119 $ 92,002 $ 93,584 $ 96,175 $ 100,126 Investment securities available for sale 960 1,041 828 966 987 Other interest and dividend earning assets 1,011 1,033 979 814 816 Total interest and dividend income 92,090 94,076 95,391 97,955 101,929 INTEREST EXPENSE: Deposits 19,251 21,617 23,461 24,545 27,696 Borrowed funds 14,995 15,061 14,852 14,999 15,490 Total interest expense 34,246 36,678 38,313 39,544 43,186 NET INTEREST INCOME 57,844 57,398 57,078 58,411 58,743 PROVISION (RELEASE) FOR CREDIT LOSSES (2,000 ) (2,000 ) (1,000 ) (4,000 ) (2,000 ) NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 59,844 59,398 58,078 62,411 60,743 NON-INTEREST INCOME: Fees and service charges, net of amortization 2,404 2,156 2,491 2,460 2,495 Net gain on the sale of loans 2,187 4,305 3,423 8,911 16,443 Increase in and death benefits from bank owned life insurance contracts 2,911 2,146 2,361 3,807 1,647 Other 652 74 1,174 530 876 Total non-interest income 8,154 8,681 9,449 15,708 21,461 NON-INTEREST EXPENSE: Salaries and employee benefits 26,515 26,912 26,945 26,672 28,338 Marketing services 5,626 4,043 4,073 5,325 5,733 Office property, equipment and software 6,639 6,453 6,427 6,395 6,435 Federal insurance premium and assessments 2,012 2,233 2,139 2,323 2,390 State franchise tax 1,224 1,202 1,151 1,159 1,151 Other expenses 5,657 6,603 7,115 6,936 7,682 Total non-interest expense 47,673 47,446 47,850 48,810 51,729 INCOME BEFORE INCOME TAXES 20,325 20,633 19,677 29,309 30,475 INCOME TAX EXPENSE 4,185 3,618 3,696 6,300 5,473 NET INCOME $ 16,140 $ 17,015 $ 15,981 $ 23,009 $ 25,002 Earnings per share Basic $ 0.06 $ 0.06 $ 0.06 $ 0.08 $ 0.09 Diluted $ 0.06 $ 0.06 $ 0.06 $ 0.08 $ 0.09 Weighted average shares outstanding Basic 277,225,121 276,982,904 276,864,229 276,716,978 276,216,596 Diluted 278,903,373 278,880,379 278,931,432 278,593,303 278,028,072 TFS FINANCIAL CORPORATION AND SUBSIDIARIES AVERAGE BALANCES AND YIELDS (unaudited) Three Months Ended Three Months Ended Three Months Ended December 31, 2021 September 30, 2021 December 31, 2020 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 $ 494,186 $ 190 0.15 % $ 570,903 $ 221 0.15 % $ 476,589 $ 128 0.11 % Mortgage-backed securities 421,358 951 0.90 % 417,320 1,041 1.00 % 447,544 987 0.88 % Loans (2) 12,582,758 90,119 2.86 % 12,544,760 92,002 2.93 % 13,090,927 100,126 3.06 % Federal Home Loan Bank stock 162,783 821 2.02 % 162,783 812 2.00 % 136,793 688 2.01 % Total interest-earning assets 13,664,017 92,090 2.70 % 13,695,766 94,076 2.75 % 14,151,853 101,929 2.88 % Noninterest-earning assets 512,102 533,988 525,312 Total assets $ 14,176,119 $ 14,229,754 $ 14,677,165 Interest-bearing liabilities: Checking accounts $ 1,151,600 265 0.09 % $ 1,117,897 263 0.09 % $ 1,017,811 320 0.13 % Savings accounts 1,835,361 557 0.12 % 1,805,394 645 0.14 % 1,662,095 913 0.22 % Certificates of deposit 5,944,470 18,429 1.24 % 6,144,461 20,709 1.35 % 6,493,523 26,463 1.63 % Borrowed funds 3,175,158 14,995 1.89 % 3,146,515 15,061 1.91 % 3,471,593 15,490 1.78 % Total interest-bearing liabilities 12,106,589 34,246 1.13 % 12,214,267 36,678 1.20 % 12,645,022 43,186 1.37 % Noninterest-bearing liabilities 312,104 289,573 376,897 Total liabilities 12,418,693 12,503,840 13,021,919 Shareholders’ equity 1,757,426 1,725,914 1,655,246 Total liabilities and shareholders’ equity $ 14,176,119 $ 14,229,754 $ 14,677,165 Net interest income $ 57,844 $ 57,398 $ 58,743 Interest rate spread (1)(3) 1.57 % 1.55 % 1.51 % Net interest-earning assets (4) $ 1,557,428 $ 1,481,499 $ 1,506,831 Net interest margin (1)(5) 1.69 % 1.68 % 1.66 % Average interest-earning assets to average interest-bearing liabilities 112.86 % 112.13 % 111.92 % Selected performance ratios: Return on average assets (1) 0.46 % 0.48 % 0.68 % Return on average equity (1) 3.67 % 3.94 % 6.04 % Average equity to average assets 12.40 % 12.13 % 11.28 % (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/20220127006105/en/