TFS Financial Corporation Reports Second Quarter Balance Sheet Growth

CLEVELAND--()--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 six months ended March 31, 2022.

“While we are starting to see the impact of rising interest rates on refinances, our strength and stability allows us to continue our aggressive pursuit of purchase mortgages and equity lines of credit,” said Chairman and CEO, Marc A. Stefanski. "As a result, we’ve had a 50 percent increase in purchases, and a 30 percent increase in equity line originations compared to the first two quarters last year.”

Highlights - Second Quarter Fiscal Year 2022

  • Reported net income of $15.8 million
  • Continued improvement of net interest margin to 1.82%
  • Generated $453 million of loan growth
  • Maintained strong asset quality and recorded a $1 million release of provision for credit losses
  • Paid a $0.2825 dividend per share

The Company reported net income of $15.8 million for the quarter ended March 31, 2022 compared to net income of $16.1 million for the quarter ended December 31, 2021. Net interest income increased compared to the prior quarter, net gain on sale of loans decreased, non-interest expense increased and there was a decrease in the release of provision for credit losses. Net income of $32.0 million was reported for the six months ended March 31, 2022 compared to net income of $48.0 million for the six months ended March 31, 2021. The change primarily consisted of a decrease in net gain on sale of loans and a decrease in the release of provision for credit losses, partially offset by an increase in net interest income and a decrease in non-interest expense.

Net interest income increased $4.9 million, or 8.5%, to $62.7 million for the quarter ended March 31, 2022 from $57.8 million for the quarter ended December 31, 2021. Net interest income increased by $3.4 million, or 2.9%, to $120.6 million, for the six months ended March 31, 2022 from $117.2 million for the six months ended March 31, 2021. The increases were primarily due to growth in the average balances of loans and decreased costs of funding. 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 March 31, 2022 was 1.71% compared to 1.57% for the quarter ended December 31, 2021 and 1.54% for the quarter ended March 31, 2021. The net interest margin was 1.82%, 1.69%, and 1.67% for the quarters ended March 31, 2022, December 31, 2021 and March 31, 2021, respectively.

During the quarter ended March 31, 2022, there was a $1.0 million release of provision from the allowance for credit losses, bringing the total release of provision to $3.0 million for the six months ended March 31, 2022. A $6.0 million release of provision was recorded for the six months ended March 31, 2021. During both current and prior year periods, releases of provisions were primarily due to recoveries exceeding charge-offs and improvements in the economic trends and forecasts used to estimate credit losses for the reasonable and supportable periods. The allowance for credit losses was $90.9 million, or 0.69% of total loans receivable, at March 31, 2022 and included a $26.6 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 and $4.7 million of net loan recoveries for the quarter and six months ended March 31, 2022, respectively, compared to $1.4 million and $2.6 million of net loan recoveries for the quarter and six months ended March 31, 2021, respectively.

Total loan delinquencies decreased $2.1 million to $22.9 million, or 0.17% of total loans receivable, at March 31, 2022 from $25.0 million, or 0.20% of total loans receivable, at December 31, 2021 and decreased $1.8 million from $24.7 million at September 30, 2021. Non-accrual loans decreased $4.1 million to $39.3 million, or 0.30% of total loans, at March 31, 2022 from $43.4 million at December 31, 2021 and decreased $4.7 million from $44.0 million, or 0.35% of total loans, at September 30, 2021.

Non-interest income decreased $2.6 million to $5.6 million for the quarter ended March 31, 2022 from $8.2 million for the quarter ended December 31, 2021. The decrease was primarily due to a $2.1 million decrease in net gain on the sale of loans and a $0.7 million decrease in death benefits from bank owned life insurance contracts. Non-interest income decreased $23.5 million to $13.7 million for the six months ended March 31, 2022 from $37.2 million for the six months ended March 31, 2021, mainly due to a decrease in the net gain on the sale of loans. There were $101.7 million of loans sold at a net gain of $2.3 million during the six months ended March 31, 2022 compared to $517.5 million of loans sold at a net gain of $25.4 million during the six months ended March 31, 2021.

Total non-interest expense increased $2.3 million, to $50.0 million for the quarter ended March 31, 2022, from $47.7 million for the quarter ended December 31, 2021. The increase was spread between marketing expense, third-party costs on loan originations and compensation expense. Total non-interest expense decreased $2.9 million, to $97.6 million for the six months ended March 31, 2022, from $100.5 million for the six months ended March 31, 2021. The decrease mainly consisted of a $2.7 million decrease in other operating expenses and a $1.6 million decrease in compensation expense, partially offset by a $1.1 million increase in marketing costs. The decrease in other operating expenses included a $1.6 million positive variance related to actuarial calculations on the defined benefit plan and a $1.1 million decrease in third-party costs for loan originations.

Total assets increased by $523.4 million, or 3.7%, to $14.58 billion at March 31, 2022 from $14.06 billion at September 30, 2021. This change was mainly the result of new loan origination levels exceeding the total of loan sales and principal repayments, partially offset by a decrease in cash and cash equivalents.

Cash and cash equivalents decreased $117.6 million, or 24%, to $370.7 million at March 31, 2022 from $488.3 million at September 30, 2021. The decrease can be attributed to the reinvestment of liquid assets into loan products.

Loans held for investment, net of allowance and deferred loan expenses, increased $626.9 million, or 5.0%, to $13.14 billion at March 31, 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 $451.5 million, to $10.73 billion, and home equity loans and lines of credit increased $161.2 million, to $2.38 billion, during the six months ended March 31, 2022. Total first mortgage loan originations were $1.74 billion for the six months ended March 31, 2022 and $2.06 billion for the six months ended March 31, 2021 and included $587.0 of purchase originations during the current fiscal year-to-date period compared to $392.2 million during the same period last year. New equity line of credit commitments were $1.03 billion and $786.3 million, respectively, for the six months ended March 31, 2022 and March 31, 2021.

Deposits increased $14.7 million, or less than 1%, to $9.01 billion at March 31, 2022 from $8.99 billion at September 30, 2021. The increase was the result of a $271.8 million increase in checking accounts and a $72.8 million increase in savings accounts, partially offset by a $317.4 million decrease in certificates of deposit ("CDs") and a $11.7 million decrease in money market deposit accounts for the six months ended March 31, 2022. Total deposits included $453.9 million and $492.0 million of brokered CDs and $200.0 million and $0 of brokered checking accounts at March 31, 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 $463.5 million, or 15.0%, to $3.56 billion at March 31, 2022 from $3.09 billion at September 30, 2021. The increase was primarily used to fund loan growth. During the six months ended March 31, 2022, additions included $590.0 million of overnight advances and $250.0 million of long term advances, partially offset by principal repayments. Also, during the six-month period, $250.0 million of 90 day advances and their related swap contracts matured and were paid off. The total balance of borrowed funds at March 31, 2022 consisted of $590.0 million of overnight advances, $888.3 million of term advances with a weighted average maturity of approximately 2.5 years and $2.1 billion of term advances, aligned with interest rate swap contracts, with a remaining weighted average effective maturity of approximately 2.4 years.

Total shareholders' equity increased $63.5 million, or 3.7%, to $1.80 billion at March 31, 2022 from $1.73 billion at September 30, 2021. Activity reflects $32.0 million of net income, a $57.0 million decrease in accumulated other comprehensive loss and $4.8 million of positive adjustments related to our stock compensation and employee stock ownership plans, reduced by $29.1 million of quarterly dividends and $1.2 million of repurchases of common stock. The decrease in accumulated other comprehensive loss is primarily due to a net positive change in unrealized gains and losses on swap contracts. During the six months ended March 31, 2022, a total of 69,059 shares of our common stock were repurchased at an average cost of $17.23 per share. The Company's eighth stock repurchase program allows for a total of 10,000,000 shares to be repurchased, with 5,822,020 shares remaining to be repurchased at March 31, 2022.

The Company declared and paid a quarterly dividend of $0.2825 per share during each the first and second 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. As a result of a July 13, 2021 member vote and the subsequent non-objection of the Federal Reserve, the MHC has the approval to waive the receipt of up to a total of $1.13 per share of possible dividends to be declared on the Company's common stock, including up to $0.2825 in dividends during the three months ending June 30, 2022. The MHC has conducted the member vote to approve the dividend waiver each of the past eight years under Federal Reserve regulations and for each of those eight years, approximately 97% of the votes cast were in favor of the waiver.

The Association operates under the capital requirements for the standardized approach of the Basel III capital framework for U.S. banking organizations (“Basel III Rules”). At March 31, 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 10.99%, its Common Equity Tier 1 and Tier 1 ratios, as calculated under the fully phased-in Basel III Rules, were each 19.30% and its total capital ratio was 19.85%. Additionally, the Company's Tier 1 leverage ratio was 12.66%, its Common Equity Tier 1 and Tier 1 ratios were each 22.24% and its total capital ratio was 22.79%. 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 March 31, 2022 will be available on the Company's website, www.thirdfederal.com, under the Investor Relations link within the "Recent Presentations" menu, beginning April 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 March 31, 2022, the Company’s assets totaled $14.58 billion.

Forward Looking Statements

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

statements of our goals, intentions and expectations;

statements regarding our business plans and prospects and growth and operating strategies;

statements concerning trends in our provision for credit losses and charge-offs on loans and off-balance sheet exposures;

statements regarding the trends in factors affecting our financial condition and results of operations, including asset quality of our loan and investment portfolios; and

estimates of our risks and future costs and benefits.

 

 

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

significantly increased competition among depository and other financial institutions;

inflation and changes in the interest rate environment that reduce our interest margins or reduce the fair value of financial instruments;

general economic conditions, either globally, nationally or in our market areas, including employment prospects, real estate values and conditions that are worse than expected;

the strength or weakness of the real estate markets and of the consumer and commercial credit sectors and its impact on the credit quality of our loans and other assets, and changes in estimates of the allowance for credit losses;

decreased demand for our products and services and lower revenue and earnings because of a recession or other events;

changes in consumer spending, borrowing and savings habits;

adverse changes and volatility in the securities markets, credit markets or real estate markets;

our ability to manage market risk, credit risk, liquidity risk, reputational risk, and regulatory and compliance risk;

our ability to access cost-effective funding;

legislative or regulatory changes that adversely affect our business, including changes in regulatory costs and capital requirements and changes related to our ability to pay dividends and the ability of Third Federal Savings, MHC to waive dividends;

changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board or the Public Company Accounting Oversight Board;

the adoption of implementing regulations by a number of different regulatory bodies, and uncertainty in the exact nature, extent and timing of such regulations and the impact they will have on us;

our ability to enter new markets successfully and take advantage of growth opportunities, and the possible short-term dilutive effect of potential acquisitions or de novo branches, if any;

our ability to retain key employees;

future adverse developments concerning Fannie Mae or Freddie Mac;

changes in monetary and fiscal policy of the U.S. Government, including policies of the U.S. Treasury and the FRS and changes in the level of government support of housing finance;

the continuing governmental efforts to restructure the U.S. financial and regulatory system;

the ability of the U.S. Government to remain open, function properly and manage federal debt limits;

changes in policy and/or assessment rates of taxing authorities that adversely affect us or our customers;

changes in accounting and tax estimates;

changes in our organization, or compensation and benefit plans and changes in expense trends (including, but not limited to trends affecting non-performing assets, charge-offs and provisions for credit losses);

the inability of third-party providers to perform their obligations to us;

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)

 

March 31,
2022

 

December 31,
2021

 

September 30,
2021

ASSETS

 

 

 

 

 

Cash and due from banks

$

24,395

 

 

$

23,885

 

 

$

27,346

 

Other interest-earning cash equivalents

 

346,276

 

 

 

384,124

 

 

 

460,980

 

Cash and cash equivalents

 

370,671

 

 

 

408,009

 

 

 

488,326

 

Investment securities available for sale

 

443,222

 

 

 

423,842

 

 

 

421,783

 

Mortgage loans held for sale

 

 

 

 

38,064

 

 

 

8,848

 

Loans held for investment, net:

 

 

 

 

 

Mortgage loans

 

13,150,338

 

 

 

12,659,957

 

 

 

12,525,687

 

Other loans

 

2,589

 

 

 

2,705

 

 

 

2,778

 

Deferred loan expenses, net

 

47,372

 

 

 

45,954

 

 

 

44,859

 

Allowance for credit losses on loans

 

(64,324

)

 

 

(63,576

)

 

 

(64,289

)

Loans, net

 

13,135,975

 

 

 

12,645,040

 

 

 

12,509,035

 

Mortgage loan servicing rights, net

 

8,464

 

 

 

8,761

 

 

 

8,941

 

Federal Home Loan Bank stock, at cost

 

162,783

 

 

 

162,783

 

 

 

162,783

 

Real estate owned, net

 

131

 

 

 

131

 

 

 

289

 

Premises, equipment, and software, net

 

35,417

 

 

 

36,364

 

 

 

37,420

 

Accrued interest receivable

 

30,908

 

 

 

30,320

 

 

 

31,107

 

Bank owned life insurance contracts

 

300,268

 

 

 

298,398

 

 

 

297,332

 

Other assets

 

93,050

 

 

 

80,799

 

 

 

91,586

 

TOTAL ASSETS

$

14,580,889

 

 

$

14,132,511

 

 

$

14,057,450

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Deposits

$

9,008,347

 

 

 

8,933,279

 

 

$

8,993,605

 

Borrowed funds

 

3,555,325

 

 

 

3,180,614

 

 

 

3,091,815

 

Borrowers’ advances for insurance and taxes

 

95,199

 

 

 

143,338

 

 

 

109,633

 

Principal, interest, and related escrow owed on loans serviced

 

33,034

 

 

 

35,655

 

 

 

41,476

 

Accrued expenses and other liabilities

 

93,236

 

 

 

86,255

 

 

 

88,641

 

Total liabilities

 

12,785,141

 

 

 

12,379,141

 

 

 

12,325,170

 

Commitments and contingent liabilities

 

 

 

 

 

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

 

 

 

 

 

 

 

 

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

 

3,323

 

 

 

3,323

 

 

 

3,323

 

Paid-in capital

 

1,748,589

 

 

 

1,746,992

 

 

 

1,746,887

 

Treasury stock, at cost

 

(768,304

)

 

 

(767,457

)

 

 

(768,035

)

Unallocated ESOP shares

 

(33,584

)

 

 

(34,667

)

 

 

(35,751

)

Retained earnings—substantially restricted

 

856,555

 

 

 

855,318

 

 

 

853,657

 

Accumulated other comprehensive loss

 

(10,831

)

 

 

(50,139

)

 

 

(67,801

)

Total shareholders’ equity

 

1,795,748

 

 

 

1,753,370

 

 

 

1,732,280

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

14,580,889

 

 

$

14,132,511

 

 

$

14,057,450

 

TFS FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(In thousands, except share and per share data)

 

For the three months ended

 

March 31,
2022

 

December 31,
2021

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

INTEREST AND DIVIDEND INCOME:

 

 

 

 

 

 

 

 

 

Loans, including fees

$

91,125

 

 

$

90,119

 

 

$

92,002

 

 

$

93,584

 

 

$

96,175

 

Investment securities available for sale

 

1,355

 

 

 

960

 

 

 

1,041

 

 

 

828

 

 

 

966

 

Other interest and dividend earning assets

 

981

 

 

 

1,011

 

 

 

1,033

 

 

 

979

 

 

 

814

 

Total interest and dividend income

 

93,461

 

 

 

92,090

 

 

 

94,076

 

 

 

95,391

 

 

 

97,955

 

INTEREST EXPENSE:

 

 

 

 

 

 

 

 

 

Deposits

 

16,896

 

 

 

19,251

 

 

 

21,617

 

 

 

23,461

 

 

 

24,545

 

Borrowed funds

 

13,824

 

 

 

14,995

 

 

 

15,061

 

 

 

14,852

 

 

 

14,999

 

Total interest expense

 

30,720

 

 

 

34,246

 

 

 

36,678

 

 

 

38,313

 

 

 

39,544

 

NET INTEREST INCOME

 

62,741

 

 

 

57,844

 

 

 

57,398

 

 

 

57,078

 

 

 

58,411

 

PROVISION (RELEASE) FOR CREDIT LOSSES

 

(1,000

)

 

 

(2,000

)

 

 

(2,000

)

 

 

(1,000

)

 

 

(4,000

)

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

 

63,741

 

 

 

59,844

 

 

 

59,398

 

 

 

58,078

 

 

 

62,411

 

NON-INTEREST INCOME:

 

 

 

 

 

 

 

 

 

Fees and service charges, net of amortization

 

2,568

 

 

 

2,404

 

 

 

2,156

 

 

 

2,491

 

 

 

2,460

 

Net gain on the sale of loans

 

113

 

 

 

2,187

 

 

 

4,305

 

 

 

3,423

 

 

 

8,911

 

Increase in and death benefits from bank owned life insurance contracts

 

2,222

 

 

 

2,911

 

 

 

2,146

 

 

 

2,361

 

 

 

3,807

 

Other

 

688

 

 

 

652

 

 

 

74

 

 

 

1,174

 

 

 

530

 

Total non-interest income

 

5,591

 

 

 

8,154

 

 

 

8,681

 

 

 

9,449

 

 

 

15,708

 

NON-INTEREST EXPENSE:

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

26,862

 

 

 

26,515

 

 

 

26,912

 

 

 

26,945

 

 

 

26,672

 

Marketing services

 

6,551

 

 

 

5,626

 

 

 

4,043

 

 

 

4,073

 

 

 

5,325

 

Office property, equipment and software

 

6,824

 

 

 

6,639

 

 

 

6,453

 

 

 

6,427

 

 

 

6,395

 

Federal insurance premium and assessments

 

2,276

 

 

 

2,012

 

 

 

2,233

 

 

 

2,139

 

 

 

2,323

 

State franchise tax

 

1,237

 

 

 

1,224

 

 

 

1,202

 

 

 

1,151

 

 

 

1,159

 

Other expenses

 

6,225

 

 

 

5,657

 

 

 

6,603

 

 

 

7,115

 

 

 

6,936

 

Total non-interest expense

 

49,975

 

 

 

47,673

 

 

 

47,446

 

 

 

47,850

 

 

 

48,810

 

INCOME BEFORE INCOME TAXES

 

19,357

 

 

 

20,325

 

 

 

20,633

 

 

 

19,677

 

 

 

29,309

 

INCOME TAX EXPENSE

 

3,512

 

 

 

4,185

 

 

 

3,618

 

 

 

3,696

 

 

 

6,300

 

NET INCOME

$

15,845

 

 

$

16,140

 

 

$

17,015

 

 

$

15,981

 

 

$

23,009

 

Earnings per share

 

 

 

 

 

 

 

 

 

Basic

$

0.06

 

 

$

0.06

 

 

$

0.06

 

 

$

0.06

 

 

$

0.08

 

Diluted

$

0.06

 

 

$

0.06

 

 

$

0.06

 

 

$

0.06

 

 

$

0.08

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

Basic

 

277,423,493

 

 

 

277,225,121

 

 

 

276,982,904

 

 

 

276,864,229

 

 

 

276,716,978

 

Diluted

 

278,819,539

 

 

 

278,903,373

 

 

 

278,880,379

 

 

 

278,931,432

 

 

 

278,593,303

 

TFS FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(In thousands, except share and per share data)

 

For the Six Months Ended

 

March 31,

 

2022

 

2021

INTEREST AND DIVIDEND INCOME:

 

 

 

Loans, including fees

$

181,244

 

 

$

196,301

 

Investment securities available for sale

 

2,315

 

 

 

1,953

 

Other interest and dividend earning assets

 

1,992

 

 

 

1,630

 

Total interest and dividend income

 

185,551

 

 

 

199,884

 

INTEREST EXPENSE:

 

 

 

Deposits

 

36,147

 

 

 

52,241

 

Borrowed funds

 

28,819

 

 

 

30,489

 

Total interest expense

 

64,966

 

 

 

82,730

 

NET INTEREST INCOME

 

120,585

 

 

 

117,154

 

PROVISION (RELEASE) FOR CREDIT LOSSES

 

(3,000

)

 

 

(6,000

)

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

 

123,585

 

 

 

123,154

 

NON-INTEREST INCOME:

 

 

 

Fees and service charges, net of amortization

 

4,972

 

 

 

4,955

 

Net gain on the sale of loans

 

2,300

 

 

 

25,354

 

Increase in and death benefits from bank owned life insurance contracts

 

5,133

 

 

 

5,454

 

Other

 

1,340

 

 

 

1,406

 

Total non-interest income

 

13,745

 

 

 

37,169

 

NON-INTEREST EXPENSE:

 

 

 

Salaries and employee benefits

 

53,377

 

 

 

55,010

 

Marketing services

 

12,177

 

 

 

11,058

 

Office property, equipment and software

 

13,463

 

 

 

12,830

 

Federal insurance premium and assessments

 

4,288

 

 

 

4,713

 

State franchise tax

 

2,461

 

 

 

2,310

 

Other expenses

 

11,882

 

 

 

14,618

 

Total non-interest expense

 

97,648

 

 

 

100,539

 

INCOME BEFORE INCOME TAXES

 

39,682

 

 

 

59,784

 

INCOME TAX EXPENSE

 

7,697

 

 

 

11,773

 

NET INCOME

$

31,985

 

 

$

48,011

 

Earnings per share

 

 

 

Basic

$

0.11

 

 

$

0.17

 

Diluted

$

0.11

 

 

$

0.17

 

Weighted average shares outstanding

 

 

 

Basic

 

277,323,217

 

 

 

276,464,037

 

Diluted

 

278,864,945

 

 

 

278,291,638

 

TFS FINANCIAL CORPORATION AND SUBSIDIARIES

AVERAGE BALANCES AND YIELDS (unaudited)

 

 

Three Months Ended

 

Three Months Ended

 

Three Months Ended

 

 

March 31, 2022

 

December 31, 2021

 

March 31, 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

 

$

337,915

 

 

$

161

 

 

0.19

%

 

$

494,186

 

 

$

190

 

 

0.15

%

 

$

494,161

 

 

$

127

 

 

0.10

%

Investment securities

 

 

4,044

 

 

 

11

 

 

1.09

%

 

 

2,932

 

 

 

9

 

 

1.23

%

 

 

 

 

 

 

 

%

Mortgage-backed securities

 

 

432,012

 

 

 

1,344

 

 

1.24

%

 

 

421,358

 

 

 

951

 

 

0.90

%

 

 

435,847

 

 

 

966

 

 

0.89

%

Loans (2)

 

 

12,845,756

 

 

 

91,125

 

 

2.84

%

 

 

12,582,758

 

 

 

90,119

 

 

2.86

%

 

 

12,892,195

 

 

 

96,175

 

 

2.98

%

Federal Home Loan Bank stock

 

 

162,783

 

 

 

820

 

 

2.01

%

 

 

162,783

 

 

 

821

 

 

2.02

%

 

 

158,930

 

 

 

687

 

 

1.73

%

Total interest-earning assets

 

 

13,782,510

 

 

 

93,461

 

 

2.71

%

 

 

13,664,017

 

 

 

92,090

 

 

2.70

%

 

 

13,981,133

 

 

 

97,955

 

 

2.80

%

Noninterest-earning assets

 

 

475,938

 

 

 

 

 

 

 

512,102

 

 

 

 

 

 

 

548,229

 

 

 

 

 

Total assets

 

$

14,258,448

 

 

 

 

 

 

$

14,176,119

 

 

 

 

 

 

$

14,529,362

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Checking accounts

 

$

1,292,977

 

 

 

293

 

 

0.09

%

 

$

1,151,600

 

 

 

265

 

 

0.09

%

 

$

1,062,894

 

 

 

296

 

 

0.11

%

Savings accounts

 

 

1,869,103

 

 

 

485

 

 

0.10

%

 

 

1,835,361

 

 

 

557

 

 

0.12

%

 

 

1,724,978

 

 

 

760

 

 

0.18

%

Certificates of deposit

 

 

5,788,249

 

 

 

16,118

 

 

1.11

%

 

 

5,944,470

 

 

 

18,429

 

 

1.24

%

 

 

6,394,643

 

 

 

23,489

 

 

1.47

%

Borrowed funds

 

 

3,282,890

 

 

 

13,824

 

 

1.68

%

 

 

3,175,158

 

 

 

14,995

 

 

1.89

%

 

 

3,352,317

 

 

 

14,999

 

 

1.79

%

Total interest-bearing liabilities

 

 

12,233,219

 

 

 

30,720

 

 

1.00

%

 

 

12,106,589

 

 

 

34,246

 

 

1.13

%

 

 

12,534,832

 

 

 

39,544

 

 

1.26

%

Noninterest-bearing liabilities

 

 

238,884

 

 

 

 

 

 

 

312,104

 

 

 

 

 

 

 

306,556

 

 

 

 

 

Total liabilities

 

 

12,472,103

 

 

 

 

 

 

 

12,418,693

 

 

 

 

 

 

 

12,841,388

 

 

 

 

 

Shareholders’ equity

 

 

1,786,345

 

 

 

 

 

 

 

1,757,426

 

 

 

 

 

 

 

1,687,974

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

14,258,448

 

 

 

 

 

 

$

14,176,119

 

 

 

 

 

 

$

14,529,362

 

 

 

 

 

Net interest income

 

 

 

$

62,741

 

 

 

 

 

 

$

57,844

 

 

 

 

 

 

$

58,411

 

 

 

Interest rate spread (1)(3)

 

 

 

 

 

1.71

%

 

 

 

 

 

1.57

%

 

 

 

 

 

1.54

%

Net interest-earning assets (4)

 

$

1,549,291

 

 

 

 

 

 

$

1,557,428

 

 

 

 

 

 

$

1,446,301

 

 

 

 

 

Net interest margin (1)(5)

 

 

 

 

1.82

%

 

 

 

 

 

 

1.69

%

 

 

 

 

 

 

1.67

%

 

 

Average interest-earning assets to average interest-bearing liabilities

 

 

112.66

%

 

 

 

 

 

 

112.86

%

 

 

 

 

 

 

111.54

%

 

 

 

 

Selected performance ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (1)

 

 

 

 

0.44

%

 

 

 

 

 

 

0.46

%

 

 

 

 

 

 

0.63

%

 

 

Return on average equity (1)

 

 

 

 

3.55

%

 

 

 

 

 

 

3.67

%

 

 

 

 

 

 

5.45

%

 

 

Average equity to average assets

 

 

 

 

12.53

%

 

 

 

 

 

 

12.40

%

 

 

 

 

 

 

11.62

%

 

 

(1)

Annualized.

(2)

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

(3)

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

(4)

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

(5)

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

TFS FINANCIAL CORPORATION AND SUBSIDIARIES

AVERAGE BALANCES AND YIELDS (unaudited)

 

 

Six Months Ended

 

Six Months Ended

 

 

March 31, 2022

 

March 31, 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

 

$

416,050

 

 

$

351

 

 

0.17

%

 

$

485,375

 

 

$

255

 

 

0.11

%

Mortgage-backed securities

 

 

426,685

 

 

 

2,295

 

 

1.08

%

 

 

441,696

 

 

 

1,953

 

 

0.88

%

Loans (2)

 

 

12,714,257

 

 

 

181,244

 

 

2.85

%

 

 

12,991,561

 

 

 

196,301

 

 

3.02

%

Federal Home Loan Bank stock

 

 

162,783

 

 

 

1,641

 

 

2.02

%

 

 

147,861

 

 

 

1,375

 

 

1.86

%

Total interest-earning assets

 

 

13,719,775

 

 

 

185,531

 

 

2.70

%

 

 

14,066,493

 

 

 

199,884

 

 

2.84

%

Noninterest-earning assets

 

 

494,020

 

 

 

 

 

 

 

536,771

 

 

 

 

 

Total assets

 

$

14,213,795

 

 

 

 

 

 

$

14,603,264

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Checking accounts

 

$

1,222,288

 

 

 

558

 

 

0.09

%

 

$

1,040,353

 

 

 

617

 

 

0.12

%

Savings accounts

 

 

1,852,232

 

 

 

1,042

 

 

0.11

%

 

 

1,693,536

 

 

 

1,674

 

 

0.20

%

Certificates of deposit

 

 

5,866,360

 

 

 

34,547

 

 

1.18

%

 

 

6,444,083

 

 

 

49,950

 

 

1.55

%

Borrowed funds

 

 

3,229,024

 

 

 

28,819

 

 

1.78

%

 

 

3,411,955

 

 

 

30,489

 

 

1.79

%

Total interest-bearing liabilities

 

 

12,169,904

 

 

 

64,966

 

 

1.07

%

 

 

12,589,927

 

 

 

82,730

 

 

1.31

%

Noninterest-bearing liabilities

 

 

275,494

 

 

 

 

 

 

 

341,727

 

 

 

 

 

Total liabilities

 

 

12,445,398

 

 

 

 

 

 

 

12,931,654

 

 

 

 

 

Shareholders’ equity

 

 

1,771,885

 

 

 

 

 

 

 

1,671,610

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

14,217,283

 

 

 

 

 

 

$

14,603,264

 

 

 

 

 

Net interest income

 

 

 

$

120,565

 

 

 

 

 

 

$

117,154

 

 

 

Interest rate spread (3)

 

 

 

 

 

1.63

%

 

 

 

 

 

1.53

%

Net interest-earning assets (4)

 

$

1,549,871

 

 

 

 

 

 

$

1,476,566

 

 

 

 

 

Net interest margin (5)

 

 

 

 

1.76

%

 

 

 

 

 

 

1.67

%

 

 

Average interest-earning assets to average interest-bearing liabilities

 

 

112.74

%

 

 

 

 

 

 

111.73

%

 

 

 

 

Selected performance ratios:

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

 

 

0.45

%

 

 

 

 

 

 

0.66

%

 

 

Return on average equity

 

 

 

 

3.61

%

 

 

 

 

 

 

5.74

%

 

 

Average equity to average assets

 

 

 

 

12.46

%

 

 

 

 

 

 

11.45

%

 

 

(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.

 

Contacts

Jennifer Rosa (216) 429-5037

Contacts

Jennifer Rosa (216) 429-5037