Loan growth, interest income lead TFS Financial Corporation in third quarter
Loan growth, interest income lead TFS Financial Corporation in third quarter

CLEVELAND–(BUSINESS WIRE)–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.

“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.

 

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