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 growth, interest income lead TFS Financial Corporation in third quarter By: Third Federal Savings and Loan via Business Wire July 28, 2022 at 16:52 PM EDT 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 three months and nine months ended June 30, 2022. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20220728005981/en/Chairman and CEO Marc A. Stefanski (Photo: Business Wire) “Our focus continues to be on loan growth in this purchase-driven market,” said Chairman and CEO Marc A. Stefanski. “That concentration led to a 67% increase in loan growth compared to last quarter. Our 8% increase in net income over that same timeframe is supported by higher interest income and holding more of our originated loans in portfolio, and our interest rate spread has increased 15 basis points from 1.71% to 1.86% since the March quarter end.” Highlights - Third Quarter Fiscal Year 2022 Reported net income of $17.1 million Net interest rate spread improved to 1.86% Generated $766 million of loan growth, surpassing the $453 million of growth last quarter Maintained strong asset quality Paid a $0.2825 dividend per share The Company reported net income of $17.1 million for the quarter ended June 30, 2022 compared to net income of $15.8 million for the quarter ended March 31, 2022. Net interest income increased during the quarter, partially offset by increases in the provision for credit losses and non-interest expense. Net income of $49.1 million was reported for the nine months ended June 30, 2022 compared to net income of $64.0 million for the nine months ended June 30, 2021. The change primarily consisted of a decrease in net gain on the sale of loans and an increase in the provision for loan losses, partially offset by an increase in net interest income. Net interest income increased by $8.6 million, or 13.6%, to $71.3 million for the quarter ended June 30, 2022 from $62.7 million for the quarter ended March 31, 2022. Net interest income increased by $17.7 million, or 10.1%, to $191.9 million for the nine months ended June 30, 2022 from $174.2 million for the nine months ended June 30, 2021. The increases were primarily due to growth in the residential loan portfolio and higher interest rates. The yield increased for all categories of interest-earning assets compared to the previous quarter. The cost of funds decreased by two basis points as borrowings that matured during the periods were replaced with lower cost funding and the majority of maturing certificates of deposits either repriced at lower interest rates or migrated to lower-priced non-maturity deposits. The interest rate spread for the quarter ended June 30, 2022 was 1.86% compared to 1.71% for the quarter ended March 31, 2022 and 1.50% for the quarter ended June 30, 2021. The net interest margin was 1.97%, 1.82% and 1.63% for the quarters ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively. During the quarter ended June 30, 2022, there was a $4.0 million provision to the allowance for credit losses compared to a $1.0 million release of provision for the quarter ended March 31, 2022. The total provision was $1.0 million for the nine months ended June 30, 2022 compared to a $7.0 million release of provision for the nine months ended June 30, 2021. Growth in both the core residential and equity line of credit portfolios was the primary reason for increases in provision. Net recoveries continued to curtail provision requirements. The allowance for credit losses was $97.6 million, or 0.70% of total loans receivable, at June 30, 2022 and included a $28.1 million liability for unfunded commitments. At September 30, 2021, the allowance for credit losses was $89.3 million, or 0.71% of total loans receivable, and included a $25.0 million liability for unfunded commitments. The Company recorded $2.7 million of net loan recoveries for each of the quarters ended June 30, 2022 and March 31, 2022, and recorded $7.3 million and $3.6 million of net loan recoveries for the nine months ended June 30, 2022 and June 30, 2021, respectively. Total loan delinquencies decreased $0.7 million to $22.2 million, or 0.16% of total loans receivable, at June 30, 2022 from $22.9 million, or 0.17% of total loans receivable, at March 31, 2022 and decreased $2.5 million from $24.7 million at September 30, 2021. Non-accrual loans decreased $1.6 million to $37.7 million, or 0.27% of total loans, at June 30, 2022 from $39.3 million at March 31, 2022 and decreased $6.3 million from $44.0 million, or 0.35% of total loans, at September 30, 2021. Non-interest income decreased $27.2 million to $19.4 million for the nine months ended June 30, 2022 from $46.6 million for the nine months ended June 30, 2021, almost entirely due to a $26.6 million decrease in net gain on the sale of loans, as well as a $0.6 million decrease in income related to bank owned life insurance. During the current fiscal year, market pricing for loans has been, for the most part, less favorable than in the prior fiscal year. There were $104.3 million of loans sold at a net gain of $2.2 million during the nine months ended June 30, 2022 compared to $634.0 million of loans sold at a net gain of $28.8 million during the nine months ended June 30, 2021. Total assets increased by $1.35 billion, or 9.6%, to $15.41 billion at June 30, 2022 from $14.06 billion at September 30, 2021. The increase was mainly the result of new loan originations exceeding the total of loan sales and principal repayments and an increase in FHLB stock, partially offset by a decrease in cash and cash equivalents. Cash and cash equivalents decreased $100.8 million, or 21%, to $387.5 million at June 30, 2022 from $488.3 million at September 30, 2021. The decrease can be attributed to the reinvestment of liquid assets into loan products. The amount of Federal Home Loan Bank stock owned increased $26.1 million, or 16%, to $188.9 million at June 30, 2022 from $162.8 million at September 30, 2021, as a result of stock ownership requirements of the FHLB. Loans held for investment, net of allowance and deferred loan expenses, increased $1.39 billion, or 11%, to $13.90 billion at June 30, 2022 from $12.51 billion at September 30, 2021, primarily due to the level of loans originated and held for investment. The residential core mortgage loan portfolio increased $1.08 billion, to $11.36 billion, and home equity loans and lines of credit increased $300.0 million, to $2.51 billion, during the nine months ended June 30, 2022. Total first mortgage loan originations were $1.17 billion for the quarter ended June 30, 2022 and $2.91 billion for each of the nine months ended June 30, 2022 and June 30, 2021. Purchase originations were $1.29 billion during the current fiscal year-to-date period compared to $686.0 million during the same period last year. New equity line of credit commitments were $1.52 billion and $1.17 billion, respectively, for the nine months ended June 30, 2022 and June 30, 2021. Deposits increased $164.0 million, or 1.8%, to $9.16 billion at June 30, 2022 from $8.99 billion at September 30, 2021. The increase was the result of a $371.9 million increase in checking accounts and an $86.9 million increase in savings accounts, partially offset by a $251.8 million decrease in certificates of deposit ("CDs") and a $42.2 million decrease in money market deposit accounts for the nine months ended June 30, 2022. Total deposits included $489.8 million and $492.0 million of brokered CDs and $300.1 million and $0 of brokered checking accounts at June 30, 2022 and September 30, 2021, respectively. Brokered checking accounts were added during the quarter ended March 31, 2022, as an alternative source of funding in the management of interest rate risk. Borrowed funds, all from the FHLB, increased $1.15 billion, or 37%, to $4.25 billion at June 30, 2022 from $3.09 billion at September 30, 2021. The increase was primarily used to fund loan growth. During the nine months ended June 30, 2022, additions included $1.46 billion of overnight advances and $400.0 million of long term advances, partially offset by principal repayments. Also, during the nine-month period, $700.0 million of 90 day advances and their related swap contracts matured and were paid off. The total balance of borrowed funds at June 30, 2022 consisted of $1.46 billion of overnight advances, $1.04 billion of term advances with a weighted average maturity of approximately 2.7 years and $1.75 billion of term advances, aligned with interest rate swap contracts, with a remaining weighted average effective maturity of approximately 2.6 years. Borrowers' advances for insurance and taxes decreased by $41.6 million to $68.1 million at June 30, 2022 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 were remitted to various taxing agencies. Total shareholders' equity increased $80.8 million, or 4.7%, to $1.81 billion at June 30, 2022 from $1.73 billion at September 30, 2021. Activity reflects $49.1 million of net income, a $72.8 million positive change in accumulated other comprehensive income and $7.2 million of positive adjustments related to our stock compensation and employee stock ownership plans, reduced by $43.6 million of quarterly dividends and $4.7 million in repurchases of common stock. The change in accumulated other comprehensive income is primarily due to a net positive change in unrealized gains and losses on swap contracts. During the nine months ended June 30, 2022, a total of 312,259 shares of our common stock were repurchased at an average cost of $15.08 per share. The Company's eighth stock repurchase program allows for a total of 10,000,000 shares to be repurchased, with 5,578,820 shares remaining to be repurchased at June 30, 2022. The Company declared and paid a quarterly dividend of $0.2825 per share during each of the first, second and third quarters of the current fiscal year. 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. At a July 12, 2022 special meeting of members of the MHC, the members (depositors and certain loan customers of the Association) voted to approve the MHC’s proposed waiver of dividends, aggregating up to $1.13 per share, to be declared on the Company’s common stock during the twelve months subsequent to the members’ approval (i.e., through July 12, 2023). The MHC has filed a notice with, and a request for non-objection from, the Federal Reserve Bank of Cleveland for the proposed dividend waivers. Both the non-objection from the Federal Reserve Bank and the timing of the non-objection are unknown at this point. The MHC has conducted the member vote to approve the dividend waiver each of the past nine years under Federal Reserve regulations and for each of those nine 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 June 30, 2022 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 10.63%, its Common Equity Tier 1 and Tier 1 ratios, as calculated under the fully phased-in Basel III Rules, were each 18.38% and its total capital ratio was 18.96%. Additionally, the Company's Tier 1 leverage ratio was 12.11%, its Common Equity Tier 1 and Tier 1 ratios were each 20.94% and its total capital ratio was 21.52%. The current capital ratios of the Association reflect the dilutive impact of $56.0 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. Presentation slides as of June 30, 2022 will be available on the Company's website, www.thirdfederal.com, under the Investor Relations link within the "Recent Presentations" menu, beginning July 29, 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, five lending offices in Central and Southern Ohio, and 16 full service branches throughout Florida. As of June 30, 2022, the Company’s assets totaled $15.41 billion. Forward Looking Statements This report contains forward-looking statements, which can be identified by the use of such words as estimate, project, believe, intend, anticipate, plan, seek, expect and similar expressions. These forward-looking statements include, among other things: ● statements of our goals, intentions and expectations; ● statements regarding our business plans and prospects and growth and operating strategies; ● statements concerning trends in our provision for credit losses and charge-offs on loans and off-balance sheet exposures; ● statements regarding the trends in factors affecting our financial condition and results of operations, including credit quality of our loan and investment portfolios; and ● estimates of our risks and future costs and benefits. These forward-looking statements are subject to significant risks, assumptions and uncertainties, including, among other things, the following important factors that could affect the actual outcome of future events: ● significantly increased competition among depository and other financial institutions, including with respect to our ability to charge overdraft fees; ● inflation and changes in the interest rate environment that reduce our interest margins or reduce the fair value of financial instruments, or our ability to originate loans; ● general economic conditions, either globally, nationally or in our market areas, including employment prospects, real estate values and conditions that are worse than expected; ● the strength or weakness of the real estate markets and of the consumer and commercial credit sectors and its impact on the credit quality of our loans and other assets, and changes in estimates of the allowance for credit losses; ● decreased demand for our products and services and lower revenue and earnings because of a recession or other events; ● changes in consumer spending, borrowing and savings habits; ● adverse changes and volatility in the securities markets, credit markets or real estate markets; ● our ability to manage market risk, credit risk, liquidity risk, reputational risk, 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; ● the effects of global or national war, conflict or acts of terrorism; ● civil unrest; ● cyber-attacks, computer viruses and other technological risks that may breach the security of our websites or other systems to obtain unauthorized access to confidential information, destroy data or disable our systems; and ● the impact of wide-spread pandemic, including COVID-19, and related government action, on our business and the economy. Because of these and other uncertainties, our actual future results may be materially different from the results indicated by any forward-looking statements. Any forward-looking statement made by us in this report speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by law. TFS FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CONDITION (unaudited) (In thousands, except share data) June 30, 2022 March 31, 2022 September 30, 2021 ASSETS Cash and due from banks $ 29,995 $ 24,395 $ 27,346 Other interest-earning cash equivalents 357,535 346,276 460,980 Cash and cash equivalents 387,530 370,671 488,326 Investment securities available for sale 449,874 443,222 421,783 Mortgage loans held for sale 1,314 — 8,848 Loans held for investment, net: Mortgage loans 13,913,354 13,150,338 12,525,687 Other loans 3,255 2,589 2,778 Deferred loan expenses, net 48,669 47,372 44,859 Allowance for credit losses on loans (69,450 ) (64,324 ) (64,289 ) Loans, net 13,895,828 13,135,975 12,509,035 Mortgage loan servicing rights, net 8,110 8,464 8,941 Federal Home Loan Bank stock, at cost 188,890 162,783 162,783 Real estate owned, net 253 131 289 Premises, equipment, and software, net 34,670 35,417 37,420 Accrued interest receivable 34,907 30,908 31,107 Bank owned life insurance contracts 302,334 300,268 297,332 Other assets 101,499 93,050 91,586 TOTAL ASSETS $ 15,405,209 $ 14,580,889 $ 14,057,450 LIABILITIES AND SHAREHOLDERS’ EQUITY Deposits $ 9,157,648 9,008,347 $ 8,993,605 Borrowed funds 4,246,188 3,555,325 3,091,815 Borrowers’ advances for insurance and taxes 68,054 95,199 109,633 Principal, interest, and related escrow owed on loans serviced 18,713 33,034 41,476 Accrued expenses and other liabilities 101,552 93,236 88,641 Total liabilities 13,592,155 12,785,141 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 3,323 3,323 3,323 Paid-in capital 1,749,819 1,748,589 1,746,887 Treasury stock, at cost (771,684 ) (768,304 ) (768,035 ) Unallocated ESOP shares (32,500 ) (33,584 ) (35,751 ) Retained earnings—substantially restricted 859,142 856,555 853,657 Accumulated other comprehensive income (loss) 4,954 (10,831 ) (67,801 ) Total shareholders’ equity 1,813,054 1,795,748 1,732,280 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 15,405,209 $ 14,580,889 $ 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 June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 INTEREST AND DIVIDEND INCOME: Loans, including fees $ 99,576 $ 91,125 $ 90,119 $ 92,002 $ 93,584 Investment securities available for sale 1,282 1,355 960 1,041 828 Other interest and dividend earning assets 1,913 981 1,011 1,033 979 Total interest and dividend income 102,771 93,461 92,090 94,076 95,391 INTEREST EXPENSE: Deposits 17,214 16,896 19,251 21,617 23,461 Borrowed funds 14,255 13,824 14,995 15,061 14,852 Total interest expense 31,469 30,720 34,246 36,678 38,313 NET INTEREST INCOME 71,302 62,741 57,844 57,398 57,078 PROVISION (RELEASE) FOR CREDIT LOSSES 4,000 (1,000 ) (2,000 ) (2,000 ) (1,000 ) NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 67,302 63,741 59,844 59,398 58,078 NON-INTEREST INCOME: Fees and service charges, net of amortization 2,742 2,568 2,404 2,156 2,491 Net gain (loss) on the sale of loans (51 ) 113 2,187 4,305 3,423 Increase in and death benefits from bank owned life insurance contracts 2,090 2,222 2,911 2,146 2,361 Other 896 688 652 74 1,174 Total non-interest income 5,677 5,591 8,154 8,681 9,449 NON-INTEREST EXPENSE: Salaries and employee benefits 28,756 26,862 26,515 26,912 26,945 Marketing services 4,830 6,551 5,626 4,043 4,073 Office property, equipment and software 6,762 6,824 6,639 6,453 6,427 Federal insurance premium and assessments 2,351 2,276 2,012 2,233 2,139 State franchise tax 1,197 1,237 1,224 1,202 1,151 Other expenses 7,860 6,225 5,657 — 7,115 Total non-interest expense 51,756 49,975 47,673 47,446 47,850 INCOME BEFORE INCOME TAXES 21,223 19,357 20,325 20,633 19,677 INCOME TAX EXPENSE 4,076 3,512 4,185 3,618 3,696 NET INCOME $ 17,147 $ 15,845 $ 16,140 $ 17,015 $ 15,981 Earnings per share - basic and diluted $ 0.06 $ 0.06 $ 0.06 $ 0.06 $ 0.06 Weighted average shares outstanding Basic 277,453,439 277,423,493 277,225,121 276,982,904 276,864,229 Diluted 278,555,759 278,819,539 278,903,373 278,880,379 278,931,432 TFS FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited) (In thousands, except share and per share data) For the Nine Months Ended June 30, 2022 2021 INTEREST AND DIVIDEND INCOME: Loans, including fees $ 280,820 $ 289,885 Investment securities available for sale 3,597 2,781 Other interest and dividend earning assets 3,905 2,609 Total interest and dividend income 288,322 295,275 INTEREST EXPENSE: Deposits 53,361 75,702 Borrowed funds 43,074 45,341 Total interest expense 96,435 121,043 NET INTEREST INCOME 191,887 174,232 PROVISION (RELEASE) FOR CREDIT LOSSES 1,000 (7,000 ) NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 190,887 181,232 NON-INTEREST INCOME: Fees and service charges, net of amortization 7,714 7,446 Net gain on the sale of loans 2,249 28,777 Increase in and death benefits from bank owned life insurance contracts 7,223 7,815 Other 2,236 2,580 Total non-interest income 19,422 46,618 NON-INTEREST EXPENSE: Salaries and employee benefits 82,133 81,955 Marketing services 17,007 15,131 Office property, equipment and software 20,225 19,257 Federal insurance premium and assessments 6,639 6,852 State franchise tax 3,658 3,461 Other expenses 19,742 21,733 Total non-interest expense 149,404 148,389 INCOME BEFORE INCOME TAXES 60,905 79,461 INCOME TAX EXPENSE 11,773 15,469 NET INCOME $ 49,132 $ 63,992 Earnings per share - basic and diluted $ 0.17 $ 0.23 Weighted average shares outstanding Basic 277,366,624 276,597,435 Diluted 278,767,989 278,492,283 TFS FINANCIAL CORPORATION AND SUBSIDIARIES AVERAGE BALANCES AND YIELDS (unaudited) Three Months Ended Three Months Ended Three Months Ended June 30, 2022 March 31, 2022 June 30, 2021 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 $ 337,551 $ 709 0.84 % $ 337,915 $ 161 0.19 % $ 726,485 $ 197 0.11 % Investment securities 3,836 12 1.25 % 4,044 11 1.09 % — — — % Mortgage-backed securities 444,972 1,270 1.14 % 432,012 1,344 1.24 % 413,649 828 0.80 % Loans (2) 13,497,362 99,576 2.95 % 12,845,756 91,125 2.84 % 12,674,284 93,584 2.95 % Federal Home Loan Bank stock 170,155 1,204 2.83 % 162,783 820 2.01 % 162,783 782 1.92 % Total interest-earning assets 14,453,876 102,771 2.84 % 13,782,510 93,461 2.71 % 13,977,201 95,391 2.73 % Noninterest-earning assets 467,329 475,938 523,620 Total assets $ 14,921,205 $ 14,258,448 $ 14,500,821 Interest-bearing liabilities: Checking accounts $ 1,475,586 958 0.26 % $ 1,292,977 293 0.09 % $ 1,120,195 260 0.09 % Savings accounts 1,882,881 931 0.20 % 1,869,103 485 0.10 % 1,775,702 673 0.15 % Certificates of deposit 5,711,412 15,325 1.07 % 5,788,249 16,118 1.11 % 6,325,022 22,528 1.42 % Borrowed funds 3,774,204 14,255 1.51 % 3,282,890 13,824 1.68 % 3,245,274 14,852 1.83 % Total interest-bearing liabilities 12,844,083 31,469 0.98 % 12,233,219 30,720 1.00 % 12,466,193 38,313 1.23 % Noninterest-bearing liabilities 250,437 238,884 314,808 Total liabilities 13,094,520 12,472,103 12,781,001 Shareholders’ equity 1,826,685 1,786,345 1,719,820 Total liabilities and shareholders’ equity $ 14,921,205 $ 14,258,448 $ 14,500,821 Net interest income $ 71,302 $ 62,741 $ 57,078 Interest rate spread (1)(3) 1.86 % 1.71 % 1.50 % Net interest-earning assets (4) $ 1,609,793 $ 1,549,291 $ 1,511,008 Net interest margin (1)(5) 1.97 % 1.82 % 1.63 % Average interest-earning assets to average interest-bearing liabilities 112.53 % 112.66 % 112.12 % Selected performance ratios: Return on average assets (1) 0.46 % 0.44 % 0.44 % Return on average equity (1) 3.75 % 3.55 % 3.72 % Average equity to average assets 12.24 % 12.53 % 11.86 % (1) Annualized. (2) Loans include both mortgage loans held for sale and loans held for investment. (3) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. (4) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. (5) Net interest margin represents net interest income divided by total interest-earning assets. TFS FINANCIAL CORPORATION AND SUBSIDIARIES AVERAGE BALANCES AND YIELDS (unaudited) Nine Months Ended Nine Months Ended June 30, 2022 June 30, 2021 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 $ 389,884 $ 1,060 0.36 % $ 565,745 $ 452 0.11 % Mortgage-backed securities 432,781 3,565 1.10 % 432,347 2,781 0.86 % Loans (2) 12,975,292 280,820 2.89 % 12,885,802 289,885 3.00 % Federal Home Loan Bank stock 165,240 2,845 2.30 % 152,835 2,157 1.88 % Total interest-earning assets 13,963,197 288,290 2.75 % 14,036,729 295,275 2.80 % Noninterest-earning assets 485,123 532,387 Total assets $ 14,448,320 $ 14,569,116 Interest-bearing liabilities: Checking accounts $ 1,306,720 1,516 0.15 % $ 1,066,967 877 0.11 % Savings accounts 1,862,449 1,973 0.14 % 1,720,925 2,347 0.18 % Certificates of deposit 5,814,710 49,872 1.14 % 6,404,396 72,478 1.51 % Borrowed funds 3,410,751 43,074 1.68 % 3,356,395 45,341 1.80 % Total interest-bearing liabilities 12,394,630 96,435 1.04 % 12,548,683 121,043 1.29 % Noninterest-bearing liabilities 267,142 332,753 Total liabilities 12,661,772 12,881,436 Shareholders’ equity 1,790,152 1,687,680 Total liabilities and shareholders’ equity $ 14,451,924 $ 14,569,116 Net interest income $ 191,855 $ 174,232 Interest rate spread (3) 1.71 % 1.51 % Net interest-earning assets (4) $ 1,568,567 $ 1,488,046 Net interest margin (5) 1.83 % 1.66 % Average interest-earning assets to average interest-bearing liabilities 112.66 % 111.86 % Selected performance ratios: Return on average assets 0.45 % 0.59 % Return on average equity 3.66 % 5.06 % Average equity to average assets 12.39 % 11.58 % (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/20220728005981/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 growth, interest income lead TFS Financial Corporation in third quarter By: Third Federal Savings and Loan via Business Wire July 28, 2022 at 16:52 PM EDT 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 three months and nine months ended June 30, 2022. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20220728005981/en/Chairman and CEO Marc A. Stefanski (Photo: Business Wire) “Our focus continues to be on loan growth in this purchase-driven market,” said Chairman and CEO Marc A. Stefanski. “That concentration led to a 67% increase in loan growth compared to last quarter. Our 8% increase in net income over that same timeframe is supported by higher interest income and holding more of our originated loans in portfolio, and our interest rate spread has increased 15 basis points from 1.71% to 1.86% since the March quarter end.” Highlights - Third Quarter Fiscal Year 2022 Reported net income of $17.1 million Net interest rate spread improved to 1.86% Generated $766 million of loan growth, surpassing the $453 million of growth last quarter Maintained strong asset quality Paid a $0.2825 dividend per share The Company reported net income of $17.1 million for the quarter ended June 30, 2022 compared to net income of $15.8 million for the quarter ended March 31, 2022. Net interest income increased during the quarter, partially offset by increases in the provision for credit losses and non-interest expense. Net income of $49.1 million was reported for the nine months ended June 30, 2022 compared to net income of $64.0 million for the nine months ended June 30, 2021. The change primarily consisted of a decrease in net gain on the sale of loans and an increase in the provision for loan losses, partially offset by an increase in net interest income. Net interest income increased by $8.6 million, or 13.6%, to $71.3 million for the quarter ended June 30, 2022 from $62.7 million for the quarter ended March 31, 2022. Net interest income increased by $17.7 million, or 10.1%, to $191.9 million for the nine months ended June 30, 2022 from $174.2 million for the nine months ended June 30, 2021. The increases were primarily due to growth in the residential loan portfolio and higher interest rates. The yield increased for all categories of interest-earning assets compared to the previous quarter. The cost of funds decreased by two basis points as borrowings that matured during the periods were replaced with lower cost funding and the majority of maturing certificates of deposits either repriced at lower interest rates or migrated to lower-priced non-maturity deposits. The interest rate spread for the quarter ended June 30, 2022 was 1.86% compared to 1.71% for the quarter ended March 31, 2022 and 1.50% for the quarter ended June 30, 2021. The net interest margin was 1.97%, 1.82% and 1.63% for the quarters ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively. During the quarter ended June 30, 2022, there was a $4.0 million provision to the allowance for credit losses compared to a $1.0 million release of provision for the quarter ended March 31, 2022. The total provision was $1.0 million for the nine months ended June 30, 2022 compared to a $7.0 million release of provision for the nine months ended June 30, 2021. Growth in both the core residential and equity line of credit portfolios was the primary reason for increases in provision. Net recoveries continued to curtail provision requirements. The allowance for credit losses was $97.6 million, or 0.70% of total loans receivable, at June 30, 2022 and included a $28.1 million liability for unfunded commitments. At September 30, 2021, the allowance for credit losses was $89.3 million, or 0.71% of total loans receivable, and included a $25.0 million liability for unfunded commitments. The Company recorded $2.7 million of net loan recoveries for each of the quarters ended June 30, 2022 and March 31, 2022, and recorded $7.3 million and $3.6 million of net loan recoveries for the nine months ended June 30, 2022 and June 30, 2021, respectively. Total loan delinquencies decreased $0.7 million to $22.2 million, or 0.16% of total loans receivable, at June 30, 2022 from $22.9 million, or 0.17% of total loans receivable, at March 31, 2022 and decreased $2.5 million from $24.7 million at September 30, 2021. Non-accrual loans decreased $1.6 million to $37.7 million, or 0.27% of total loans, at June 30, 2022 from $39.3 million at March 31, 2022 and decreased $6.3 million from $44.0 million, or 0.35% of total loans, at September 30, 2021. Non-interest income decreased $27.2 million to $19.4 million for the nine months ended June 30, 2022 from $46.6 million for the nine months ended June 30, 2021, almost entirely due to a $26.6 million decrease in net gain on the sale of loans, as well as a $0.6 million decrease in income related to bank owned life insurance. During the current fiscal year, market pricing for loans has been, for the most part, less favorable than in the prior fiscal year. There were $104.3 million of loans sold at a net gain of $2.2 million during the nine months ended June 30, 2022 compared to $634.0 million of loans sold at a net gain of $28.8 million during the nine months ended June 30, 2021. Total assets increased by $1.35 billion, or 9.6%, to $15.41 billion at June 30, 2022 from $14.06 billion at September 30, 2021. The increase was mainly the result of new loan originations exceeding the total of loan sales and principal repayments and an increase in FHLB stock, partially offset by a decrease in cash and cash equivalents. Cash and cash equivalents decreased $100.8 million, or 21%, to $387.5 million at June 30, 2022 from $488.3 million at September 30, 2021. The decrease can be attributed to the reinvestment of liquid assets into loan products. The amount of Federal Home Loan Bank stock owned increased $26.1 million, or 16%, to $188.9 million at June 30, 2022 from $162.8 million at September 30, 2021, as a result of stock ownership requirements of the FHLB. Loans held for investment, net of allowance and deferred loan expenses, increased $1.39 billion, or 11%, to $13.90 billion at June 30, 2022 from $12.51 billion at September 30, 2021, primarily due to the level of loans originated and held for investment. The residential core mortgage loan portfolio increased $1.08 billion, to $11.36 billion, and home equity loans and lines of credit increased $300.0 million, to $2.51 billion, during the nine months ended June 30, 2022. Total first mortgage loan originations were $1.17 billion for the quarter ended June 30, 2022 and $2.91 billion for each of the nine months ended June 30, 2022 and June 30, 2021. Purchase originations were $1.29 billion during the current fiscal year-to-date period compared to $686.0 million during the same period last year. New equity line of credit commitments were $1.52 billion and $1.17 billion, respectively, for the nine months ended June 30, 2022 and June 30, 2021. Deposits increased $164.0 million, or 1.8%, to $9.16 billion at June 30, 2022 from $8.99 billion at September 30, 2021. The increase was the result of a $371.9 million increase in checking accounts and an $86.9 million increase in savings accounts, partially offset by a $251.8 million decrease in certificates of deposit ("CDs") and a $42.2 million decrease in money market deposit accounts for the nine months ended June 30, 2022. Total deposits included $489.8 million and $492.0 million of brokered CDs and $300.1 million and $0 of brokered checking accounts at June 30, 2022 and September 30, 2021, respectively. Brokered checking accounts were added during the quarter ended March 31, 2022, as an alternative source of funding in the management of interest rate risk. Borrowed funds, all from the FHLB, increased $1.15 billion, or 37%, to $4.25 billion at June 30, 2022 from $3.09 billion at September 30, 2021. The increase was primarily used to fund loan growth. During the nine months ended June 30, 2022, additions included $1.46 billion of overnight advances and $400.0 million of long term advances, partially offset by principal repayments. Also, during the nine-month period, $700.0 million of 90 day advances and their related swap contracts matured and were paid off. The total balance of borrowed funds at June 30, 2022 consisted of $1.46 billion of overnight advances, $1.04 billion of term advances with a weighted average maturity of approximately 2.7 years and $1.75 billion of term advances, aligned with interest rate swap contracts, with a remaining weighted average effective maturity of approximately 2.6 years. Borrowers' advances for insurance and taxes decreased by $41.6 million to $68.1 million at June 30, 2022 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 were remitted to various taxing agencies. Total shareholders' equity increased $80.8 million, or 4.7%, to $1.81 billion at June 30, 2022 from $1.73 billion at September 30, 2021. Activity reflects $49.1 million of net income, a $72.8 million positive change in accumulated other comprehensive income and $7.2 million of positive adjustments related to our stock compensation and employee stock ownership plans, reduced by $43.6 million of quarterly dividends and $4.7 million in repurchases of common stock. The change in accumulated other comprehensive income is primarily due to a net positive change in unrealized gains and losses on swap contracts. During the nine months ended June 30, 2022, a total of 312,259 shares of our common stock were repurchased at an average cost of $15.08 per share. The Company's eighth stock repurchase program allows for a total of 10,000,000 shares to be repurchased, with 5,578,820 shares remaining to be repurchased at June 30, 2022. The Company declared and paid a quarterly dividend of $0.2825 per share during each of the first, second and third quarters of the current fiscal year. 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. At a July 12, 2022 special meeting of members of the MHC, the members (depositors and certain loan customers of the Association) voted to approve the MHC’s proposed waiver of dividends, aggregating up to $1.13 per share, to be declared on the Company’s common stock during the twelve months subsequent to the members’ approval (i.e., through July 12, 2023). The MHC has filed a notice with, and a request for non-objection from, the Federal Reserve Bank of Cleveland for the proposed dividend waivers. Both the non-objection from the Federal Reserve Bank and the timing of the non-objection are unknown at this point. The MHC has conducted the member vote to approve the dividend waiver each of the past nine years under Federal Reserve regulations and for each of those nine 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 June 30, 2022 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 10.63%, its Common Equity Tier 1 and Tier 1 ratios, as calculated under the fully phased-in Basel III Rules, were each 18.38% and its total capital ratio was 18.96%. Additionally, the Company's Tier 1 leverage ratio was 12.11%, its Common Equity Tier 1 and Tier 1 ratios were each 20.94% and its total capital ratio was 21.52%. The current capital ratios of the Association reflect the dilutive impact of $56.0 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. Presentation slides as of June 30, 2022 will be available on the Company's website, www.thirdfederal.com, under the Investor Relations link within the "Recent Presentations" menu, beginning July 29, 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, five lending offices in Central and Southern Ohio, and 16 full service branches throughout Florida. As of June 30, 2022, the Company’s assets totaled $15.41 billion. Forward Looking Statements This report contains forward-looking statements, which can be identified by the use of such words as estimate, project, believe, intend, anticipate, plan, seek, expect and similar expressions. These forward-looking statements include, among other things: ● statements of our goals, intentions and expectations; ● statements regarding our business plans and prospects and growth and operating strategies; ● statements concerning trends in our provision for credit losses and charge-offs on loans and off-balance sheet exposures; ● statements regarding the trends in factors affecting our financial condition and results of operations, including credit quality of our loan and investment portfolios; and ● estimates of our risks and future costs and benefits. These forward-looking statements are subject to significant risks, assumptions and uncertainties, including, among other things, the following important factors that could affect the actual outcome of future events: ● significantly increased competition among depository and other financial institutions, including with respect to our ability to charge overdraft fees; ● inflation and changes in the interest rate environment that reduce our interest margins or reduce the fair value of financial instruments, or our ability to originate loans; ● general economic conditions, either globally, nationally or in our market areas, including employment prospects, real estate values and conditions that are worse than expected; ● the strength or weakness of the real estate markets and of the consumer and commercial credit sectors and its impact on the credit quality of our loans and other assets, and changes in estimates of the allowance for credit losses; ● decreased demand for our products and services and lower revenue and earnings because of a recession or other events; ● changes in consumer spending, borrowing and savings habits; ● adverse changes and volatility in the securities markets, credit markets or real estate markets; ● our ability to manage market risk, credit risk, liquidity risk, reputational risk, 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; ● the effects of global or national war, conflict or acts of terrorism; ● civil unrest; ● cyber-attacks, computer viruses and other technological risks that may breach the security of our websites or other systems to obtain unauthorized access to confidential information, destroy data or disable our systems; and ● the impact of wide-spread pandemic, including COVID-19, and related government action, on our business and the economy. Because of these and other uncertainties, our actual future results may be materially different from the results indicated by any forward-looking statements. Any forward-looking statement made by us in this report speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by law. TFS FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CONDITION (unaudited) (In thousands, except share data) June 30, 2022 March 31, 2022 September 30, 2021 ASSETS Cash and due from banks $ 29,995 $ 24,395 $ 27,346 Other interest-earning cash equivalents 357,535 346,276 460,980 Cash and cash equivalents 387,530 370,671 488,326 Investment securities available for sale 449,874 443,222 421,783 Mortgage loans held for sale 1,314 — 8,848 Loans held for investment, net: Mortgage loans 13,913,354 13,150,338 12,525,687 Other loans 3,255 2,589 2,778 Deferred loan expenses, net 48,669 47,372 44,859 Allowance for credit losses on loans (69,450 ) (64,324 ) (64,289 ) Loans, net 13,895,828 13,135,975 12,509,035 Mortgage loan servicing rights, net 8,110 8,464 8,941 Federal Home Loan Bank stock, at cost 188,890 162,783 162,783 Real estate owned, net 253 131 289 Premises, equipment, and software, net 34,670 35,417 37,420 Accrued interest receivable 34,907 30,908 31,107 Bank owned life insurance contracts 302,334 300,268 297,332 Other assets 101,499 93,050 91,586 TOTAL ASSETS $ 15,405,209 $ 14,580,889 $ 14,057,450 LIABILITIES AND SHAREHOLDERS’ EQUITY Deposits $ 9,157,648 9,008,347 $ 8,993,605 Borrowed funds 4,246,188 3,555,325 3,091,815 Borrowers’ advances for insurance and taxes 68,054 95,199 109,633 Principal, interest, and related escrow owed on loans serviced 18,713 33,034 41,476 Accrued expenses and other liabilities 101,552 93,236 88,641 Total liabilities 13,592,155 12,785,141 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 3,323 3,323 3,323 Paid-in capital 1,749,819 1,748,589 1,746,887 Treasury stock, at cost (771,684 ) (768,304 ) (768,035 ) Unallocated ESOP shares (32,500 ) (33,584 ) (35,751 ) Retained earnings—substantially restricted 859,142 856,555 853,657 Accumulated other comprehensive income (loss) 4,954 (10,831 ) (67,801 ) Total shareholders’ equity 1,813,054 1,795,748 1,732,280 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 15,405,209 $ 14,580,889 $ 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 June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 INTEREST AND DIVIDEND INCOME: Loans, including fees $ 99,576 $ 91,125 $ 90,119 $ 92,002 $ 93,584 Investment securities available for sale 1,282 1,355 960 1,041 828 Other interest and dividend earning assets 1,913 981 1,011 1,033 979 Total interest and dividend income 102,771 93,461 92,090 94,076 95,391 INTEREST EXPENSE: Deposits 17,214 16,896 19,251 21,617 23,461 Borrowed funds 14,255 13,824 14,995 15,061 14,852 Total interest expense 31,469 30,720 34,246 36,678 38,313 NET INTEREST INCOME 71,302 62,741 57,844 57,398 57,078 PROVISION (RELEASE) FOR CREDIT LOSSES 4,000 (1,000 ) (2,000 ) (2,000 ) (1,000 ) NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 67,302 63,741 59,844 59,398 58,078 NON-INTEREST INCOME: Fees and service charges, net of amortization 2,742 2,568 2,404 2,156 2,491 Net gain (loss) on the sale of loans (51 ) 113 2,187 4,305 3,423 Increase in and death benefits from bank owned life insurance contracts 2,090 2,222 2,911 2,146 2,361 Other 896 688 652 74 1,174 Total non-interest income 5,677 5,591 8,154 8,681 9,449 NON-INTEREST EXPENSE: Salaries and employee benefits 28,756 26,862 26,515 26,912 26,945 Marketing services 4,830 6,551 5,626 4,043 4,073 Office property, equipment and software 6,762 6,824 6,639 6,453 6,427 Federal insurance premium and assessments 2,351 2,276 2,012 2,233 2,139 State franchise tax 1,197 1,237 1,224 1,202 1,151 Other expenses 7,860 6,225 5,657 — 7,115 Total non-interest expense 51,756 49,975 47,673 47,446 47,850 INCOME BEFORE INCOME TAXES 21,223 19,357 20,325 20,633 19,677 INCOME TAX EXPENSE 4,076 3,512 4,185 3,618 3,696 NET INCOME $ 17,147 $ 15,845 $ 16,140 $ 17,015 $ 15,981 Earnings per share - basic and diluted $ 0.06 $ 0.06 $ 0.06 $ 0.06 $ 0.06 Weighted average shares outstanding Basic 277,453,439 277,423,493 277,225,121 276,982,904 276,864,229 Diluted 278,555,759 278,819,539 278,903,373 278,880,379 278,931,432 TFS FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited) (In thousands, except share and per share data) For the Nine Months Ended June 30, 2022 2021 INTEREST AND DIVIDEND INCOME: Loans, including fees $ 280,820 $ 289,885 Investment securities available for sale 3,597 2,781 Other interest and dividend earning assets 3,905 2,609 Total interest and dividend income 288,322 295,275 INTEREST EXPENSE: Deposits 53,361 75,702 Borrowed funds 43,074 45,341 Total interest expense 96,435 121,043 NET INTEREST INCOME 191,887 174,232 PROVISION (RELEASE) FOR CREDIT LOSSES 1,000 (7,000 ) NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 190,887 181,232 NON-INTEREST INCOME: Fees and service charges, net of amortization 7,714 7,446 Net gain on the sale of loans 2,249 28,777 Increase in and death benefits from bank owned life insurance contracts 7,223 7,815 Other 2,236 2,580 Total non-interest income 19,422 46,618 NON-INTEREST EXPENSE: Salaries and employee benefits 82,133 81,955 Marketing services 17,007 15,131 Office property, equipment and software 20,225 19,257 Federal insurance premium and assessments 6,639 6,852 State franchise tax 3,658 3,461 Other expenses 19,742 21,733 Total non-interest expense 149,404 148,389 INCOME BEFORE INCOME TAXES 60,905 79,461 INCOME TAX EXPENSE 11,773 15,469 NET INCOME $ 49,132 $ 63,992 Earnings per share - basic and diluted $ 0.17 $ 0.23 Weighted average shares outstanding Basic 277,366,624 276,597,435 Diluted 278,767,989 278,492,283 TFS FINANCIAL CORPORATION AND SUBSIDIARIES AVERAGE BALANCES AND YIELDS (unaudited) Three Months Ended Three Months Ended Three Months Ended June 30, 2022 March 31, 2022 June 30, 2021 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 $ 337,551 $ 709 0.84 % $ 337,915 $ 161 0.19 % $ 726,485 $ 197 0.11 % Investment securities 3,836 12 1.25 % 4,044 11 1.09 % — — — % Mortgage-backed securities 444,972 1,270 1.14 % 432,012 1,344 1.24 % 413,649 828 0.80 % Loans (2) 13,497,362 99,576 2.95 % 12,845,756 91,125 2.84 % 12,674,284 93,584 2.95 % Federal Home Loan Bank stock 170,155 1,204 2.83 % 162,783 820 2.01 % 162,783 782 1.92 % Total interest-earning assets 14,453,876 102,771 2.84 % 13,782,510 93,461 2.71 % 13,977,201 95,391 2.73 % Noninterest-earning assets 467,329 475,938 523,620 Total assets $ 14,921,205 $ 14,258,448 $ 14,500,821 Interest-bearing liabilities: Checking accounts $ 1,475,586 958 0.26 % $ 1,292,977 293 0.09 % $ 1,120,195 260 0.09 % Savings accounts 1,882,881 931 0.20 % 1,869,103 485 0.10 % 1,775,702 673 0.15 % Certificates of deposit 5,711,412 15,325 1.07 % 5,788,249 16,118 1.11 % 6,325,022 22,528 1.42 % Borrowed funds 3,774,204 14,255 1.51 % 3,282,890 13,824 1.68 % 3,245,274 14,852 1.83 % Total interest-bearing liabilities 12,844,083 31,469 0.98 % 12,233,219 30,720 1.00 % 12,466,193 38,313 1.23 % Noninterest-bearing liabilities 250,437 238,884 314,808 Total liabilities 13,094,520 12,472,103 12,781,001 Shareholders’ equity 1,826,685 1,786,345 1,719,820 Total liabilities and shareholders’ equity $ 14,921,205 $ 14,258,448 $ 14,500,821 Net interest income $ 71,302 $ 62,741 $ 57,078 Interest rate spread (1)(3) 1.86 % 1.71 % 1.50 % Net interest-earning assets (4) $ 1,609,793 $ 1,549,291 $ 1,511,008 Net interest margin (1)(5) 1.97 % 1.82 % 1.63 % Average interest-earning assets to average interest-bearing liabilities 112.53 % 112.66 % 112.12 % Selected performance ratios: Return on average assets (1) 0.46 % 0.44 % 0.44 % Return on average equity (1) 3.75 % 3.55 % 3.72 % Average equity to average assets 12.24 % 12.53 % 11.86 % (1) Annualized. (2) Loans include both mortgage loans held for sale and loans held for investment. (3) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. (4) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. (5) Net interest margin represents net interest income divided by total interest-earning assets. TFS FINANCIAL CORPORATION AND SUBSIDIARIES AVERAGE BALANCES AND YIELDS (unaudited) Nine Months Ended Nine Months Ended June 30, 2022 June 30, 2021 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 $ 389,884 $ 1,060 0.36 % $ 565,745 $ 452 0.11 % Mortgage-backed securities 432,781 3,565 1.10 % 432,347 2,781 0.86 % Loans (2) 12,975,292 280,820 2.89 % 12,885,802 289,885 3.00 % Federal Home Loan Bank stock 165,240 2,845 2.30 % 152,835 2,157 1.88 % Total interest-earning assets 13,963,197 288,290 2.75 % 14,036,729 295,275 2.80 % Noninterest-earning assets 485,123 532,387 Total assets $ 14,448,320 $ 14,569,116 Interest-bearing liabilities: Checking accounts $ 1,306,720 1,516 0.15 % $ 1,066,967 877 0.11 % Savings accounts 1,862,449 1,973 0.14 % 1,720,925 2,347 0.18 % Certificates of deposit 5,814,710 49,872 1.14 % 6,404,396 72,478 1.51 % Borrowed funds 3,410,751 43,074 1.68 % 3,356,395 45,341 1.80 % Total interest-bearing liabilities 12,394,630 96,435 1.04 % 12,548,683 121,043 1.29 % Noninterest-bearing liabilities 267,142 332,753 Total liabilities 12,661,772 12,881,436 Shareholders’ equity 1,790,152 1,687,680 Total liabilities and shareholders’ equity $ 14,451,924 $ 14,569,116 Net interest income $ 191,855 $ 174,232 Interest rate spread (3) 1.71 % 1.51 % Net interest-earning assets (4) $ 1,568,567 $ 1,488,046 Net interest margin (5) 1.83 % 1.66 % Average interest-earning assets to average interest-bearing liabilities 112.66 % 111.86 % Selected performance ratios: Return on average assets 0.45 % 0.59 % Return on average equity 3.66 % 5.06 % Average equity to average assets 12.39 % 11.58 % (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/20220728005981/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 three months and nine months ended June 30, 2022. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20220728005981/en/Chairman and CEO Marc A. Stefanski (Photo: Business Wire) “Our focus continues to be on loan growth in this purchase-driven market,” said Chairman and CEO Marc A. Stefanski. “That concentration led to a 67% increase in loan growth compared to last quarter. Our 8% increase in net income over that same timeframe is supported by higher interest income and holding more of our originated loans in portfolio, and our interest rate spread has increased 15 basis points from 1.71% to 1.86% since the March quarter end.” Highlights - Third Quarter Fiscal Year 2022 Reported net income of $17.1 million Net interest rate spread improved to 1.86% Generated $766 million of loan growth, surpassing the $453 million of growth last quarter Maintained strong asset quality Paid a $0.2825 dividend per share The Company reported net income of $17.1 million for the quarter ended June 30, 2022 compared to net income of $15.8 million for the quarter ended March 31, 2022. Net interest income increased during the quarter, partially offset by increases in the provision for credit losses and non-interest expense. Net income of $49.1 million was reported for the nine months ended June 30, 2022 compared to net income of $64.0 million for the nine months ended June 30, 2021. The change primarily consisted of a decrease in net gain on the sale of loans and an increase in the provision for loan losses, partially offset by an increase in net interest income. Net interest income increased by $8.6 million, or 13.6%, to $71.3 million for the quarter ended June 30, 2022 from $62.7 million for the quarter ended March 31, 2022. Net interest income increased by $17.7 million, or 10.1%, to $191.9 million for the nine months ended June 30, 2022 from $174.2 million for the nine months ended June 30, 2021. The increases were primarily due to growth in the residential loan portfolio and higher interest rates. The yield increased for all categories of interest-earning assets compared to the previous quarter. The cost of funds decreased by two basis points as borrowings that matured during the periods were replaced with lower cost funding and the majority of maturing certificates of deposits either repriced at lower interest rates or migrated to lower-priced non-maturity deposits. The interest rate spread for the quarter ended June 30, 2022 was 1.86% compared to 1.71% for the quarter ended March 31, 2022 and 1.50% for the quarter ended June 30, 2021. The net interest margin was 1.97%, 1.82% and 1.63% for the quarters ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively. During the quarter ended June 30, 2022, there was a $4.0 million provision to the allowance for credit losses compared to a $1.0 million release of provision for the quarter ended March 31, 2022. The total provision was $1.0 million for the nine months ended June 30, 2022 compared to a $7.0 million release of provision for the nine months ended June 30, 2021. Growth in both the core residential and equity line of credit portfolios was the primary reason for increases in provision. Net recoveries continued to curtail provision requirements. The allowance for credit losses was $97.6 million, or 0.70% of total loans receivable, at June 30, 2022 and included a $28.1 million liability for unfunded commitments. At September 30, 2021, the allowance for credit losses was $89.3 million, or 0.71% of total loans receivable, and included a $25.0 million liability for unfunded commitments. The Company recorded $2.7 million of net loan recoveries for each of the quarters ended June 30, 2022 and March 31, 2022, and recorded $7.3 million and $3.6 million of net loan recoveries for the nine months ended June 30, 2022 and June 30, 2021, respectively. Total loan delinquencies decreased $0.7 million to $22.2 million, or 0.16% of total loans receivable, at June 30, 2022 from $22.9 million, or 0.17% of total loans receivable, at March 31, 2022 and decreased $2.5 million from $24.7 million at September 30, 2021. Non-accrual loans decreased $1.6 million to $37.7 million, or 0.27% of total loans, at June 30, 2022 from $39.3 million at March 31, 2022 and decreased $6.3 million from $44.0 million, or 0.35% of total loans, at September 30, 2021. Non-interest income decreased $27.2 million to $19.4 million for the nine months ended June 30, 2022 from $46.6 million for the nine months ended June 30, 2021, almost entirely due to a $26.6 million decrease in net gain on the sale of loans, as well as a $0.6 million decrease in income related to bank owned life insurance. During the current fiscal year, market pricing for loans has been, for the most part, less favorable than in the prior fiscal year. There were $104.3 million of loans sold at a net gain of $2.2 million during the nine months ended June 30, 2022 compared to $634.0 million of loans sold at a net gain of $28.8 million during the nine months ended June 30, 2021. Total assets increased by $1.35 billion, or 9.6%, to $15.41 billion at June 30, 2022 from $14.06 billion at September 30, 2021. The increase was mainly the result of new loan originations exceeding the total of loan sales and principal repayments and an increase in FHLB stock, partially offset by a decrease in cash and cash equivalents. Cash and cash equivalents decreased $100.8 million, or 21%, to $387.5 million at June 30, 2022 from $488.3 million at September 30, 2021. The decrease can be attributed to the reinvestment of liquid assets into loan products. The amount of Federal Home Loan Bank stock owned increased $26.1 million, or 16%, to $188.9 million at June 30, 2022 from $162.8 million at September 30, 2021, as a result of stock ownership requirements of the FHLB. Loans held for investment, net of allowance and deferred loan expenses, increased $1.39 billion, or 11%, to $13.90 billion at June 30, 2022 from $12.51 billion at September 30, 2021, primarily due to the level of loans originated and held for investment. The residential core mortgage loan portfolio increased $1.08 billion, to $11.36 billion, and home equity loans and lines of credit increased $300.0 million, to $2.51 billion, during the nine months ended June 30, 2022. Total first mortgage loan originations were $1.17 billion for the quarter ended June 30, 2022 and $2.91 billion for each of the nine months ended June 30, 2022 and June 30, 2021. Purchase originations were $1.29 billion during the current fiscal year-to-date period compared to $686.0 million during the same period last year. New equity line of credit commitments were $1.52 billion and $1.17 billion, respectively, for the nine months ended June 30, 2022 and June 30, 2021. Deposits increased $164.0 million, or 1.8%, to $9.16 billion at June 30, 2022 from $8.99 billion at September 30, 2021. The increase was the result of a $371.9 million increase in checking accounts and an $86.9 million increase in savings accounts, partially offset by a $251.8 million decrease in certificates of deposit ("CDs") and a $42.2 million decrease in money market deposit accounts for the nine months ended June 30, 2022. Total deposits included $489.8 million and $492.0 million of brokered CDs and $300.1 million and $0 of brokered checking accounts at June 30, 2022 and September 30, 2021, respectively. Brokered checking accounts were added during the quarter ended March 31, 2022, as an alternative source of funding in the management of interest rate risk. Borrowed funds, all from the FHLB, increased $1.15 billion, or 37%, to $4.25 billion at June 30, 2022 from $3.09 billion at September 30, 2021. The increase was primarily used to fund loan growth. During the nine months ended June 30, 2022, additions included $1.46 billion of overnight advances and $400.0 million of long term advances, partially offset by principal repayments. Also, during the nine-month period, $700.0 million of 90 day advances and their related swap contracts matured and were paid off. The total balance of borrowed funds at June 30, 2022 consisted of $1.46 billion of overnight advances, $1.04 billion of term advances with a weighted average maturity of approximately 2.7 years and $1.75 billion of term advances, aligned with interest rate swap contracts, with a remaining weighted average effective maturity of approximately 2.6 years. Borrowers' advances for insurance and taxes decreased by $41.6 million to $68.1 million at June 30, 2022 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 were remitted to various taxing agencies. Total shareholders' equity increased $80.8 million, or 4.7%, to $1.81 billion at June 30, 2022 from $1.73 billion at September 30, 2021. Activity reflects $49.1 million of net income, a $72.8 million positive change in accumulated other comprehensive income and $7.2 million of positive adjustments related to our stock compensation and employee stock ownership plans, reduced by $43.6 million of quarterly dividends and $4.7 million in repurchases of common stock. The change in accumulated other comprehensive income is primarily due to a net positive change in unrealized gains and losses on swap contracts. During the nine months ended June 30, 2022, a total of 312,259 shares of our common stock were repurchased at an average cost of $15.08 per share. The Company's eighth stock repurchase program allows for a total of 10,000,000 shares to be repurchased, with 5,578,820 shares remaining to be repurchased at June 30, 2022. The Company declared and paid a quarterly dividend of $0.2825 per share during each of the first, second and third quarters of the current fiscal year. 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. At a July 12, 2022 special meeting of members of the MHC, the members (depositors and certain loan customers of the Association) voted to approve the MHC’s proposed waiver of dividends, aggregating up to $1.13 per share, to be declared on the Company’s common stock during the twelve months subsequent to the members’ approval (i.e., through July 12, 2023). The MHC has filed a notice with, and a request for non-objection from, the Federal Reserve Bank of Cleveland for the proposed dividend waivers. Both the non-objection from the Federal Reserve Bank and the timing of the non-objection are unknown at this point. The MHC has conducted the member vote to approve the dividend waiver each of the past nine years under Federal Reserve regulations and for each of those nine 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 June 30, 2022 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 10.63%, its Common Equity Tier 1 and Tier 1 ratios, as calculated under the fully phased-in Basel III Rules, were each 18.38% and its total capital ratio was 18.96%. Additionally, the Company's Tier 1 leverage ratio was 12.11%, its Common Equity Tier 1 and Tier 1 ratios were each 20.94% and its total capital ratio was 21.52%. The current capital ratios of the Association reflect the dilutive impact of $56.0 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. Presentation slides as of June 30, 2022 will be available on the Company's website, www.thirdfederal.com, under the Investor Relations link within the "Recent Presentations" menu, beginning July 29, 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, five lending offices in Central and Southern Ohio, and 16 full service branches throughout Florida. As of June 30, 2022, the Company’s assets totaled $15.41 billion. Forward Looking Statements This report contains forward-looking statements, which can be identified by the use of such words as estimate, project, believe, intend, anticipate, plan, seek, expect and similar expressions. These forward-looking statements include, among other things: ● statements of our goals, intentions and expectations; ● statements regarding our business plans and prospects and growth and operating strategies; ● statements concerning trends in our provision for credit losses and charge-offs on loans and off-balance sheet exposures; ● statements regarding the trends in factors affecting our financial condition and results of operations, including credit quality of our loan and investment portfolios; and ● estimates of our risks and future costs and benefits. These forward-looking statements are subject to significant risks, assumptions and uncertainties, including, among other things, the following important factors that could affect the actual outcome of future events: ● significantly increased competition among depository and other financial institutions, including with respect to our ability to charge overdraft fees; ● inflation and changes in the interest rate environment that reduce our interest margins or reduce the fair value of financial instruments, or our ability to originate loans; ● general economic conditions, either globally, nationally or in our market areas, including employment prospects, real estate values and conditions that are worse than expected; ● the strength or weakness of the real estate markets and of the consumer and commercial credit sectors and its impact on the credit quality of our loans and other assets, and changes in estimates of the allowance for credit losses; ● decreased demand for our products and services and lower revenue and earnings because of a recession or other events; ● changes in consumer spending, borrowing and savings habits; ● adverse changes and volatility in the securities markets, credit markets or real estate markets; ● our ability to manage market risk, credit risk, liquidity risk, reputational risk, 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; ● the effects of global or national war, conflict or acts of terrorism; ● civil unrest; ● cyber-attacks, computer viruses and other technological risks that may breach the security of our websites or other systems to obtain unauthorized access to confidential information, destroy data or disable our systems; and ● the impact of wide-spread pandemic, including COVID-19, and related government action, on our business and the economy. Because of these and other uncertainties, our actual future results may be materially different from the results indicated by any forward-looking statements. Any forward-looking statement made by us in this report speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by law. TFS FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CONDITION (unaudited) (In thousands, except share data) June 30, 2022 March 31, 2022 September 30, 2021 ASSETS Cash and due from banks $ 29,995 $ 24,395 $ 27,346 Other interest-earning cash equivalents 357,535 346,276 460,980 Cash and cash equivalents 387,530 370,671 488,326 Investment securities available for sale 449,874 443,222 421,783 Mortgage loans held for sale 1,314 — 8,848 Loans held for investment, net: Mortgage loans 13,913,354 13,150,338 12,525,687 Other loans 3,255 2,589 2,778 Deferred loan expenses, net 48,669 47,372 44,859 Allowance for credit losses on loans (69,450 ) (64,324 ) (64,289 ) Loans, net 13,895,828 13,135,975 12,509,035 Mortgage loan servicing rights, net 8,110 8,464 8,941 Federal Home Loan Bank stock, at cost 188,890 162,783 162,783 Real estate owned, net 253 131 289 Premises, equipment, and software, net 34,670 35,417 37,420 Accrued interest receivable 34,907 30,908 31,107 Bank owned life insurance contracts 302,334 300,268 297,332 Other assets 101,499 93,050 91,586 TOTAL ASSETS $ 15,405,209 $ 14,580,889 $ 14,057,450 LIABILITIES AND SHAREHOLDERS’ EQUITY Deposits $ 9,157,648 9,008,347 $ 8,993,605 Borrowed funds 4,246,188 3,555,325 3,091,815 Borrowers’ advances for insurance and taxes 68,054 95,199 109,633 Principal, interest, and related escrow owed on loans serviced 18,713 33,034 41,476 Accrued expenses and other liabilities 101,552 93,236 88,641 Total liabilities 13,592,155 12,785,141 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 3,323 3,323 3,323 Paid-in capital 1,749,819 1,748,589 1,746,887 Treasury stock, at cost (771,684 ) (768,304 ) (768,035 ) Unallocated ESOP shares (32,500 ) (33,584 ) (35,751 ) Retained earnings—substantially restricted 859,142 856,555 853,657 Accumulated other comprehensive income (loss) 4,954 (10,831 ) (67,801 ) Total shareholders’ equity 1,813,054 1,795,748 1,732,280 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 15,405,209 $ 14,580,889 $ 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 June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 INTEREST AND DIVIDEND INCOME: Loans, including fees $ 99,576 $ 91,125 $ 90,119 $ 92,002 $ 93,584 Investment securities available for sale 1,282 1,355 960 1,041 828 Other interest and dividend earning assets 1,913 981 1,011 1,033 979 Total interest and dividend income 102,771 93,461 92,090 94,076 95,391 INTEREST EXPENSE: Deposits 17,214 16,896 19,251 21,617 23,461 Borrowed funds 14,255 13,824 14,995 15,061 14,852 Total interest expense 31,469 30,720 34,246 36,678 38,313 NET INTEREST INCOME 71,302 62,741 57,844 57,398 57,078 PROVISION (RELEASE) FOR CREDIT LOSSES 4,000 (1,000 ) (2,000 ) (2,000 ) (1,000 ) NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 67,302 63,741 59,844 59,398 58,078 NON-INTEREST INCOME: Fees and service charges, net of amortization 2,742 2,568 2,404 2,156 2,491 Net gain (loss) on the sale of loans (51 ) 113 2,187 4,305 3,423 Increase in and death benefits from bank owned life insurance contracts 2,090 2,222 2,911 2,146 2,361 Other 896 688 652 74 1,174 Total non-interest income 5,677 5,591 8,154 8,681 9,449 NON-INTEREST EXPENSE: Salaries and employee benefits 28,756 26,862 26,515 26,912 26,945 Marketing services 4,830 6,551 5,626 4,043 4,073 Office property, equipment and software 6,762 6,824 6,639 6,453 6,427 Federal insurance premium and assessments 2,351 2,276 2,012 2,233 2,139 State franchise tax 1,197 1,237 1,224 1,202 1,151 Other expenses 7,860 6,225 5,657 — 7,115 Total non-interest expense 51,756 49,975 47,673 47,446 47,850 INCOME BEFORE INCOME TAXES 21,223 19,357 20,325 20,633 19,677 INCOME TAX EXPENSE 4,076 3,512 4,185 3,618 3,696 NET INCOME $ 17,147 $ 15,845 $ 16,140 $ 17,015 $ 15,981 Earnings per share - basic and diluted $ 0.06 $ 0.06 $ 0.06 $ 0.06 $ 0.06 Weighted average shares outstanding Basic 277,453,439 277,423,493 277,225,121 276,982,904 276,864,229 Diluted 278,555,759 278,819,539 278,903,373 278,880,379 278,931,432 TFS FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited) (In thousands, except share and per share data) For the Nine Months Ended June 30, 2022 2021 INTEREST AND DIVIDEND INCOME: Loans, including fees $ 280,820 $ 289,885 Investment securities available for sale 3,597 2,781 Other interest and dividend earning assets 3,905 2,609 Total interest and dividend income 288,322 295,275 INTEREST EXPENSE: Deposits 53,361 75,702 Borrowed funds 43,074 45,341 Total interest expense 96,435 121,043 NET INTEREST INCOME 191,887 174,232 PROVISION (RELEASE) FOR CREDIT LOSSES 1,000 (7,000 ) NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 190,887 181,232 NON-INTEREST INCOME: Fees and service charges, net of amortization 7,714 7,446 Net gain on the sale of loans 2,249 28,777 Increase in and death benefits from bank owned life insurance contracts 7,223 7,815 Other 2,236 2,580 Total non-interest income 19,422 46,618 NON-INTEREST EXPENSE: Salaries and employee benefits 82,133 81,955 Marketing services 17,007 15,131 Office property, equipment and software 20,225 19,257 Federal insurance premium and assessments 6,639 6,852 State franchise tax 3,658 3,461 Other expenses 19,742 21,733 Total non-interest expense 149,404 148,389 INCOME BEFORE INCOME TAXES 60,905 79,461 INCOME TAX EXPENSE 11,773 15,469 NET INCOME $ 49,132 $ 63,992 Earnings per share - basic and diluted $ 0.17 $ 0.23 Weighted average shares outstanding Basic 277,366,624 276,597,435 Diluted 278,767,989 278,492,283 TFS FINANCIAL CORPORATION AND SUBSIDIARIES AVERAGE BALANCES AND YIELDS (unaudited) Three Months Ended Three Months Ended Three Months Ended June 30, 2022 March 31, 2022 June 30, 2021 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 $ 337,551 $ 709 0.84 % $ 337,915 $ 161 0.19 % $ 726,485 $ 197 0.11 % Investment securities 3,836 12 1.25 % 4,044 11 1.09 % — — — % Mortgage-backed securities 444,972 1,270 1.14 % 432,012 1,344 1.24 % 413,649 828 0.80 % Loans (2) 13,497,362 99,576 2.95 % 12,845,756 91,125 2.84 % 12,674,284 93,584 2.95 % Federal Home Loan Bank stock 170,155 1,204 2.83 % 162,783 820 2.01 % 162,783 782 1.92 % Total interest-earning assets 14,453,876 102,771 2.84 % 13,782,510 93,461 2.71 % 13,977,201 95,391 2.73 % Noninterest-earning assets 467,329 475,938 523,620 Total assets $ 14,921,205 $ 14,258,448 $ 14,500,821 Interest-bearing liabilities: Checking accounts $ 1,475,586 958 0.26 % $ 1,292,977 293 0.09 % $ 1,120,195 260 0.09 % Savings accounts 1,882,881 931 0.20 % 1,869,103 485 0.10 % 1,775,702 673 0.15 % Certificates of deposit 5,711,412 15,325 1.07 % 5,788,249 16,118 1.11 % 6,325,022 22,528 1.42 % Borrowed funds 3,774,204 14,255 1.51 % 3,282,890 13,824 1.68 % 3,245,274 14,852 1.83 % Total interest-bearing liabilities 12,844,083 31,469 0.98 % 12,233,219 30,720 1.00 % 12,466,193 38,313 1.23 % Noninterest-bearing liabilities 250,437 238,884 314,808 Total liabilities 13,094,520 12,472,103 12,781,001 Shareholders’ equity 1,826,685 1,786,345 1,719,820 Total liabilities and shareholders’ equity $ 14,921,205 $ 14,258,448 $ 14,500,821 Net interest income $ 71,302 $ 62,741 $ 57,078 Interest rate spread (1)(3) 1.86 % 1.71 % 1.50 % Net interest-earning assets (4) $ 1,609,793 $ 1,549,291 $ 1,511,008 Net interest margin (1)(5) 1.97 % 1.82 % 1.63 % Average interest-earning assets to average interest-bearing liabilities 112.53 % 112.66 % 112.12 % Selected performance ratios: Return on average assets (1) 0.46 % 0.44 % 0.44 % Return on average equity (1) 3.75 % 3.55 % 3.72 % Average equity to average assets 12.24 % 12.53 % 11.86 % (1) Annualized. (2) Loans include both mortgage loans held for sale and loans held for investment. (3) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. (4) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. (5) Net interest margin represents net interest income divided by total interest-earning assets. TFS FINANCIAL CORPORATION AND SUBSIDIARIES AVERAGE BALANCES AND YIELDS (unaudited) Nine Months Ended Nine Months Ended June 30, 2022 June 30, 2021 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 $ 389,884 $ 1,060 0.36 % $ 565,745 $ 452 0.11 % Mortgage-backed securities 432,781 3,565 1.10 % 432,347 2,781 0.86 % Loans (2) 12,975,292 280,820 2.89 % 12,885,802 289,885 3.00 % Federal Home Loan Bank stock 165,240 2,845 2.30 % 152,835 2,157 1.88 % Total interest-earning assets 13,963,197 288,290 2.75 % 14,036,729 295,275 2.80 % Noninterest-earning assets 485,123 532,387 Total assets $ 14,448,320 $ 14,569,116 Interest-bearing liabilities: Checking accounts $ 1,306,720 1,516 0.15 % $ 1,066,967 877 0.11 % Savings accounts 1,862,449 1,973 0.14 % 1,720,925 2,347 0.18 % Certificates of deposit 5,814,710 49,872 1.14 % 6,404,396 72,478 1.51 % Borrowed funds 3,410,751 43,074 1.68 % 3,356,395 45,341 1.80 % Total interest-bearing liabilities 12,394,630 96,435 1.04 % 12,548,683 121,043 1.29 % Noninterest-bearing liabilities 267,142 332,753 Total liabilities 12,661,772 12,881,436 Shareholders’ equity 1,790,152 1,687,680 Total liabilities and shareholders’ equity $ 14,451,924 $ 14,569,116 Net interest income $ 191,855 $ 174,232 Interest rate spread (3) 1.71 % 1.51 % Net interest-earning assets (4) $ 1,568,567 $ 1,488,046 Net interest margin (5) 1.83 % 1.66 % Average interest-earning assets to average interest-bearing liabilities 112.66 % 111.86 % Selected performance ratios: Return on average assets 0.45 % 0.59 % Return on average equity 3.66 % 5.06 % Average equity to average assets 12.39 % 11.58 % (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/20220728005981/en/