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Press Release

TFS Financial Corporation Continues Focus on Growth

Company Release - 10/30/2019 4:12 PM ET

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 fiscal year ended September 30, 2019.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20191030006006/en/

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

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

The Company reported net income of $80.2 million for the fiscal year ended September 30, 2019, compared to net income of $85.4 million for the fiscal year ended September 30, 2018. The change was largely attributable to a decrease in net interest income, partially offset by a lower effective tax rate. Less impactful changes included a decrease in the credit to the loan loss provision, a decrease in non-interest income and an increase in non-interest expenses. The Company reported net income of $21.5 million for the three months ended September 30, 2019, compared to net income of $21.6 million for the three months ended September 30, 2018.

“Third Federal had a solid year of growth in our loan and deposit portfolios,” said Chairman and CEO Marc A. Stefanski. “Our mortgage loan portfolio grew $317 million, including a 19% increase in home equity loan balances. At the same time, our deposits grew $275 million. Our disciplined strategy is focused on continuing to grow the company for sustained long-term success. We will remain focused on maintaining strong capital, combined with consistent asset growth, allowing us to drive long-term, sustainable earnings, and support cash dividends and strategic share repurchases."

Net interest income decreased by $15.5 million, or 5.5%, to $265.4 million for the fiscal year ended September 30, 2019 compared to $280.9 million for the fiscal year ended September 30, 2018 and decreased by $4.7 million, or 6.7%, to $64.3 million for the three months ended September 30, 2019 from $69.0 million for the three months ended September 30, 2018. The average balance and yield of interest-earning assets increased $333.6 million and 20 basis points when comparing the fiscal year ended September 30, 2019 to the prior year, while the average balance and cost of interest-bearing liabilities grew by $369.3 million and 40 basis points. The opportunity to extend the duration of funding sources and the offering of competitive deposit rates during the current rate environment has contributed to the increased cost of funding. The interest rate spread was 1.65% and 1.73% for the three months and fiscal year ended September 30, 2019 compared to 1.85% and 1.93%, respectively, for the three months and fiscal year ended September 30, 2018. The net interest margin was 1.84% and 1.92% for the three months and fiscal year ended September 30, 2019 as compared to 2.03% and 2.08%, respectively, for the three months and fiscal year ended September 30, 2018.

The provision for loan losses was a credit of $10.0 million for the fiscal year ended September 30, 2019 compared to a credit of $11.0 million for the fiscal year ended September 30, 2018. The provision for loan losses was a credit of $2.0 million during both the three months ended September 30, 2019 and the three months ended September 30, 2018. Recoveries of loan amounts previously charged off, low levels of current loan charge-offs and reduced exposure from home equity lines of credit coming to the end of the draw period resulted in the loan provision credits during the periods. Gross loan charge-offs were $5.0 million for the fiscal year ended September 30, 2019 and $8.2 million for the fiscal year ended September 30, 2018, while loan recoveries were $11.5 million during the current fiscal year compared to $12.6 million during the prior fiscal year. As a result of loan recoveries exceeding charge-offs, the Company reported net loan recoveries of $6.5 million for the fiscal year ended September 30, 2019 and $4.5 million for the fiscal year ended September 30, 2018. The allowance for loan losses was $38.9 million, or 0.29% of total loans receivable, at September 30, 2019, compared to $39.3 million, or 0.30% of total loans receivable, at June 30, 2019 and $42.4 million, or 0.33% of total loans receivable, at September 30, 2018. Of the total allowance for loan losses, $24.0 million was allocated to residential mortgage loans and $14.9 million was allocated to home equity loans and lines of credit at September 30, 2019 and $21.5 million was allocated to residential mortgage loans and $20.9 million was allocated to equity loans and lines of credit at September 30, 2018. The decrease in the portion of the allowance allocated to home equity loans and lines of credit is attributable to the decrease in the end of draw exposure.

Credit performance continued to improve across our loan portfolios. Total loan delinquencies decreased $6.0 million to $35.4 million, or 0.27% of total loans receivable, at September 30, 2019 from $41.4 million, or 0.32% of total loans receivable, at September 30, 2018, and included a $2.2 million decrease in delinquencies on core residential mortgages, a $1.4 million decrease on home today residential mortgages and a $2.4 million decrease on home equity loans and lines of credit. Non-accrual loans decreased $6.5 million to $71.3 million, or 0.54% of total loans, at September 30, 2019 from $77.8 million, or 0.60% of total loans, at September 30, 2018. Troubled debt restructurings in non-accrual status were $60.5 million at September 30, 2019 and $62.6 million at September 30, 2018. Total troubled debt restructurings decreased $8.0 million, to $157.4 million at September 30, 2019, from $165.4 million at September 30, 2018.

Non-interest income decreased $1.0 million to $20.5 million for the fiscal year ended September 30, 2019 from $21.5 million for the fiscal year ended September 30, 2018. The decrease primarily related to a $1.5 million decrease in the net gain on sale of loans, partially offset by a $0.5 million increase in the proceeds and benefits of bank owned life insurance. Net gain on the sale of loans was $1.9 million during the fiscal year ended September 30, 2019 compared to $3.4 million during the fiscal year ended September 30, 2018. The prior year results benefited from a $277.4 million bulk sale of fixed-rate loans to a private investor.

Total non-interest expense increased $1.4 million to $193.7 million for the fiscal year ended September 30, 2019 compared to $192.3 million for the fiscal year ended September 30, 2018. The increase included a $2.7 million increase in salaries and employee benefits, consisting mainly of health insurance costs, partially offset by a $0.8 million decrease in federal deposit insurance premium and a $0.5 million decrease in office property and equipment. The discontinuation of a temporary surcharge on the federal deposit insurance premium more than offset increases due to deposit growth, reducing the premium during the current fiscal year.

Total income tax expense decreased by $13.8 million, to $22.0 million for the fiscal year ended September 30, 2019, from $35.8 million for the fiscal year ended September 30, 2018. The decrease in the expense was caused mainly by the impact of the Tax Cuts and Jobs Act which lowered our statutory federal tax rate to 21% in the current fiscal year from approximately 24.5% in the prior fiscal year. Total income tax expense for the fiscal year ended September 30, 2018 also included approximately $4.6 million of additional income tax expense for the re-measurement of our net deferred tax assets as a result of the tax rate reduction.

Total assets increased by $405.0 million, or 2.86%, to $14.54 billion at September 30, 2019 from $14.14 billion at September 30, 2018. This change was mainly the result of growth in our home equity line of credit portfolio during the current fiscal year and, to a lesser extent, increases in investment securities available for sale and prepaid expenses and other assets.

Investment securities available for sale increased $15.9 million, or 3.0%, to $547.9 million at September 30, 2019 from $532.0 million at September 30, 2018. The change included $158.0 million in purchases, $14.5 million of unrealized gain, $152.6 million in principal paydowns, and $4.1 million of net acquisition premium amortization during the fiscal year ended September 30, 2019.

The combination of loans held for investment, net of allowance and deferred loan expenses, and mortgage loans held for sale increased $327.5 million to $13.20 billion at September 30, 2019 from $12.87 billion at September 30, 2018. Growth in our home equity line of credit portfolio was partially offset by a decrease in our first mortgage loan portfolio. The home equity lines of credit provide a more effective loan product for managing the balance sheet and net interest margin, considering the relatively flat yield curve market that we are currently experiencing. The home equity loans and lines of credit portfolio increased $356.0 million during the fiscal year ended September 30, 2019. The residential core mortgage loan portfolio, including loans held for sale, decreased $24.8 million during the fiscal year ended September 30, 2019. Commitments originated for home equity loans and lines of credit were $1.69 billion for the fiscal year ended September 30, 2019 and $1.51 billion for the fiscal year ended September 30, 2018. Total first mortgage loan originations were $1.8 billion for the fiscal year ended September 30, 2019, of which 41% were adjustable-rate mortgages and 5% were fixed-rate mortgages with terms of 10 years or less. Total first mortgage loan originations were $2.3 billion for the fiscal year ended September 30, 2018, of which 49% were adjustable-rate mortgages and 10% were fixed-rate mortgages with terms of 10 years or less. During the fiscal year ended September 30, 2019, $117.3 million of fixed-rate loans were sold resulting in a pre-tax gain of $1.9 million. During the fiscal year ended September 30, 2018, $400.1 million of fixed-rate loans were sold resulting in a pre-tax gain of $3.4 million.

Other assets increased $43.7 million to $88.0 million at September 30, 2019 from $44.3 million at September 30, 2018. The increase related primarily to a $29.8 million increase in initial margin requirements on interest rate swap contracts and an $11.6 million increase in current and deferred tax assets between the two periods.

Deposits increased $274.8 million, or 3.2%, to $8.77 billion at September 30, 2019 from $8.49 billion at September 30, 2018. The increase was the result of a $97.5 million increase in our certificates of deposit ("CDs") and $382.5 million of growth in our money market deposit accounts, first introduced in July 2018, partially offset by a $154.4 million decrease in our savings accounts and a $50.9 million decrease in our checking accounts for the fiscal year ended September 30, 2019. Total deposits include $507.8 million and $670.1 million of brokered CDs at September 30, 2019 and September 30, 2018, respectively.

Borrowed funds, all from the FHLB, increased $181.3 million, to $3.90 billion at September 30, 2019 from $3.72 billion at September 30, 2018. This increase reflects a $1.03 billion increase in 90 day advances that were utilized for longer term interest rate swap contracts, partially offset by a $700.0 million reduction in overnight and other short-term advances and a $146.2 million reduction in long-term advances. At September 30, 2019, FHLB advances include $2.75 billion of 90 day advances which have an effective duration at inception of five to eight years, as a result of interest rate swap contracts, and $500.0 million of overnight and other short-term advances.

Total shareholders' equity decreased $61.7 million to $1.70 billion at September 30, 2019 from $1.76 billion at September 30, 2018. During the fiscal year ended September 30, 2019, other comprehensive income decreased by $92.6 million, primarily due to the net impact of changes in unrealized gains and losses on our swap contracts and available for sale investment securities and recognition of a $7.2 million actuarial loss, net of tax, related to our pension obligation. Unrealized losses on interest rate swap contracts represent the majority of the change and occur when current market interest rates are lower than those in effect at contract origination. The combined effect of the decrease in other comprehensive income, four quarterly dividends totaling $50.5 million and $9.1 million in repurchases of common stock was offset by $80.2 million of net income and $10.2 million of adjustments related to our stock compensation and employee stock ownership plans. During the three months ended September 30, 2019, a total of 64,000 shares of our common stock were repurchased at an average cost of $17.95 per share. During the fiscal year ended September 30, 2019, a total of 555,400 shares were repurchased at an average cost of $16.32 per share.

The Company declared and paid quarterly dividends of $0.27 during the fourth fiscal quarter of 2019 and $0.25 per share during each of the first three fiscal quarters of 2019. 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 each dividend paid. Under current Federal Reserve regulations, the MHC is required to obtain the approval of its members every 12 months for the MHC to waive its right to receive dividends. As a result of a July 16, 2019 member vote and the subsequent non-objection of the Federal Reserve, the MHC has the approval to waive the receipt of up to $1.10 per share of possible dividends to be declared on the Company's common stock during the twelve months subsequent to the members' approval (i.e., through July 16, 2020), including a total of up to $0.83 during the three quarters ending December 31, 2019, March 31, 2020, and June 30, 2020. The MHC has conducted the member vote to approve the dividend waiver each of the past six years under Federal Reserve regulations and for each of those six 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 September 30, 2019 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 10.54%, its Common Equity Tier 1 and Tier 1 ratios, as calculated under the fully phased-in Basel III Rules, were each 19.07% and its total capital ratio was 19.56%. Additionally, the Company's Tier 1 leverage ratio was 12.05%, its Common Equity Tier 1 and Tier 1 ratios were each 21.73% and its total capital ratio was 22.22%. The current capital ratios of the Association reflect the dilutive impact of $85 million of dividends that the Association paid to the Company, its sole shareholder, during the quarter ended December 31, 2018. 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 September 30, 2019 will be available on the Company's website, www.thirdfederal.com, under the Investor Relations link within the "Recent Presentations" menu, beginning October 31, 2019. 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, eight lending offices in Central and Southern Ohio, and 16 full service branches throughout Florida. As of September 30, 2019, the Company’s assets totaled $14.54 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 loan losses and charge-offs;

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;

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;

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 under the DFA, 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;

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 loan losses);

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

a slowing or failure of the prevailing economic recovery; and

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.

 

 

 

    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)

 

September 30,
2019

 

September 30,
2018

ASSETS

 

 

 

Cash and due from banks

$

31,728

 

 

$

29,056

 

Interest-earning cash equivalents

243,415

 

 

240,719

 

Cash and cash equivalents

275,143

 

 

269,775

 

Investment securities available for sale (amortized cost $550,605 and $549,211, respectively)

547,864

 

 

531,965

 

Mortgage loans held for sale, at lower of cost or market (none measured at fair value)

3,666

 

 

659

 

Loans held for investment, net:

 

 

 

Mortgage loans

13,189,516

 

 

12,872,125

 

Other consumer loans

3,166

 

 

3,021

 

Deferred loan expenses, net

41,976

 

 

38,566

 

Allowance for loan losses

(38,913

)

 

(42,418

)

Loans, net

13,195,745

 

 

12,871,294

 

Mortgage loan servicing rights, net

8,080

 

 

8,840

 

Federal Home Loan Bank stock, at cost

101,858

 

 

93,544

 

Real estate owned

2,163

 

 

2,794

 

Premises, equipment, and software, net

61,577

 

 

63,399

 

Accrued interest receivable

40,822

 

 

38,696

 

Bank owned life insurance contracts

217,481

 

 

212,021

 

Other assets

87,957

 

 

44,344

 

TOTAL ASSETS

$

14,542,356

 

 

$

14,137,331

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Deposits

$

8,766,384

 

 

$

8,491,583

 

Borrowed funds

3,902,981

 

 

3,721,699

 

Borrowers’ advances for insurance and taxes

103,328

 

 

103,005

 

Principal, interest, and related escrow owed on loans serviced

32,909

 

 

31,490

 

Accrued expenses and other liabilities

40,000

 

 

31,150

 

Total liabilities

12,845,602

 

 

12,378,927

 

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; 279,962,777 and 280,311,070 outstanding at September 30, 2019 and September 30, 2018, respectively

3,323

 

 

3,323

 

Paid-in capital

1,734,154

 

 

1,726,992

 

Treasury stock, at cost; 52,355,973 and 52,007,680 shares at September 30, 2019 and September 30, 2018, respectively

(764,589

)

 

(754,272

)

Unallocated ESOP shares

(44,417

)

 

(48,751

)

Retained earnings—substantially restricted

837,662

 

 

807,890

 

Accumulated other comprehensive income (loss)

(69,379

)

 

23,222

 

Total shareholders’ equity

1,696,754

 

 

1,758,404

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

14,542,356

 

 

$

14,137,331

 

 

TFS FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(In thousands, except share and per share data)

 

For the Three Months Ended

 

For the Fiscal Year Ended

 

September 30,

 

September 30,

 

2019

 

2018

 

2019

 

2018

INTEREST AND DIVIDEND INCOME:

 

 

 

 

 

 

 

Loans, including fees

$

116,853

 

 

$

109,132

 

 

$

458,779

 

 

$

422,953

 

Investment securities available for sale

3,093

 

 

2,895

 

 

13,100

 

 

11,134

 

Other interest and dividend earning assets

2,367

 

 

2,491

 

 

10,208

 

 

8,958

 

Total interest and dividend income

122,313

 

 

114,518

 

 

482,087

 

 

443,045

 

INTEREST EXPENSE:

 

 

 

 

 

 

 

Deposits

38,355

 

 

29,321

 

 

143,353

 

 

102,255

 

Borrowed funds

19,628

 

 

16,215

 

 

73,313

 

 

59,849

 

Total interest expense

57,983

 

 

45,536

 

 

216,666

 

 

162,104

 

NET INTEREST INCOME

64,330

 

 

68,982

 

 

265,421

 

 

280,941

 

PROVISION (CREDIT) FOR LOAN LOSSES

(2,000

)

 

(2,000

)

 

(10,000

)

 

(11,000

)

NET INTEREST INCOME AFTER PROVISION (CREDIT) FOR LOAN LOSSES

66,330

 

 

70,982

 

 

275,421

 

 

291,941

 

NON-INTEREST INCOME:

 

 

 

 

 

 

 

Fees and service charges, net of amortization

1,974

 

 

1,916

 

 

7,318

 

 

7,493

 

Net gain on the sale of loans

764

 

 

311

 

 

1,869

 

 

3,383

 

Increase in and death benefits from bank owned life insurance contracts

1,571

 

 

1,557

 

 

6,695

 

 

6,158

 

Other

1,490

 

 

1,101

 

 

4,582

 

 

4,502

 

Total non-interest income

5,799

 

 

4,885

 

 

20,464

 

 

21,536

 

NON-INTEREST EXPENSE:

 

 

 

 

 

 

 

Salaries and employee benefits

26,326

 

 

24,807

 

 

103,991

 

 

101,316

 

Marketing services

1,785

 

 

2,914

 

 

19,364

 

 

19,252

 

Office property, equipment and software

6,379

 

 

6,383

 

 

26,432

 

 

26,897

 

Federal insurance premium and assessments

2,627

 

 

2,663

 

 

10,432

 

 

11,189

 

State franchise tax

1,231

 

 

1,189

 

 

5,040

 

 

4,775

 

Other expenses

6,750

 

 

7,464

 

 

28,414

 

 

28,884

 

Total non-interest expense

45,098

 

 

45,420

 

 

193,673

 

 

192,313

 

INCOME BEFORE INCOME TAXES

27,031

 

 

30,447

 

 

102,212

 

 

121,164

 

INCOME TAX EXPENSE

5,514

 

 

8,842

 

 

21,975

 

 

35,757

 

NET INCOME

$

21,517

 

 

$

21,605

 

 

$

80,237

 

 

$

85,407

 

Earnings per share

 

 

 

 

 

 

 

Basic

$

0.08

 

 

$

0.08

 

 

$

0.29

 

 

$

0.31

 

Diluted

$

0.08

 

 

$

0.08

 

 

$

0.28

 

 

$

0.30

 

Weighted average shares outstanding

 

 

 

 

 

 

 

Basic

275,461,118

 

 

275,419,322

 

 

275,395,529

 

 

275,590,053

 

Diluted

277,644,280

 

 

277,162,336

 

 

277,374,426

 

 

277,298,425

 

 

TFS FINANCIAL CORPORATION AND SUBSIDIARIES

AVERAGE BALANCES AND YIELDS (unaudited)

 

 

Three Months Ended

 

Three Months Ended

 

 

September 30, 2019

 

September 30, 2018

 

 

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

 

$

225,466

 

 

$

1,255

 

 

2.23

%

 

$

219,062

 

 

$

1,063

 

 

1.94

%

Investment securities

 

1,290

 

 

8

 

 

2.48

%

 

3,970

 

 

24

 

 

2.42

%

Mortgage-backed securities

 

555,123

 

 

3,085

 

 

2.22

%

 

535,331

 

 

2,871

 

 

2.15

%

Loans (2)

 

13,087,435

 

 

116,853

 

 

3.57

%

 

12,761,000

 

 

109,132

 

 

3.42

%

Federal Home Loan Bank stock

 

100,587

 

 

1,112

 

 

4.42

%

 

93,544

 

 

1,428

 

 

6.11

%

Total interest-earning assets

 

13,969,901

 

 

122,313

 

 

3.50

%

 

13,612,907

 

 

114,518

 

 

3.36

%

Noninterest-earning assets

 

479,673

 

 

 

 

 

 

366,511

 

 

 

 

 

Total assets

 

$

14,449,574

 

 

 

 

 

 

$

13,979,418

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Checking accounts

 

$

860,990

 

 

711

 

 

0.33

%

 

$

916,141

 

 

503

 

 

0.22

%

Savings accounts

 

1,451,545

 

 

3,409

 

 

0.94

%

 

1,269,202

 

 

1,365

 

 

0.43

%

Certificates of deposit

 

6,404,934

 

 

34,235

 

 

2.14

%

 

6,237,335

 

 

27,453

 

 

1.76

%

Borrowed funds

 

3,811,111

 

 

19,628

 

 

2.06

%

 

3,638,394

 

 

16,215

 

 

1.78

%

Total interest-bearing liabilities

 

12,528,580

 

 

57,983

 

 

1.85

%

 

12,061,072

 

 

45,536

 

 

1.51

%

Noninterest-bearing liabilities

 

197,364

 

 

 

 

 

 

152,669

 

 

 

 

 

Total liabilities

 

12,725,944

 

 

 

 

 

 

12,213,741

 

 

 

 

 

Shareholders’ equity

 

1,723,630

 

 

 

 

 

 

1,765,677

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

14,449,574

 

 

 

 

 

 

$

13,979,418

 

 

 

 

 

Net interest income

 

 

 

$

64,330

 

 

 

 

 

 

$

68,982

 

 

 

Interest rate spread (1)(3)

 

 

 

 

 

1.65

%

 

 

 

 

 

1.85

%

Net interest-earning assets (4)

 

$

1,441,321

 

 

 

 

 

 

$

1,551,835

 

 

 

 

 

Net interest margin (1)(5)

 

 

 

1.84

%

 

 

 

 

 

2.03

%

 

 

Average interest-earning assets to average interest-bearing liabilities

 

111.50

%

 

 

 

 

 

112.87

%

 

 

 

 

Selected performance ratios:

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (1)

 

 

 

0.60

%

 

 

 

 

 

0.62

%

 

 

Return on average equity (1)

 

 

 

4.99

%

 

 

 

 

 

4.89

%

 

 

Average equity to average assets

 

 

 

11.93

%

 

 

 

 

 

12.63

%

 

 

(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)

 

 

Fiscal Year Ended

 

Fiscal Year Ended

 

 

September 30, 2019

 

September 30, 2018

 

 

Average

Balance

 

Interest

Income/

Expense

 

Yield/

Cost

 

Average

Balance

 

Interest

Income/

Expense

 

Yield/

Cost

 

 

(Dollars in thousands)

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning cash equivalents

 

$

220,458

 

 

$

4,998

 

 

2.27

%

 

$

228,041

 

 

$

3,704

 

 

1.62

%

Investment securities

 

3,308

 

 

79

 

 

2.39

%

 

1,125

 

 

27

 

 

2.40

%

Mortgage-backed securities

 

555,076

 

 

13,021

 

 

2.35

%

 

539,564

 

 

11,107

 

 

2.06

%

Loans (1)

 

12,938,824

 

 

458,779

 

 

3.55

%

 

12,619,496

 

 

422,953

 

 

3.35

%

Federal Home Loan Bank stock

 

96,712

 

 

5,210

 

 

5.39

%

 

92,533

 

 

5,254

 

 

5.68

%

Total interest-earning assets

 

13,814,378

 

 

482,087

 

 

3.49

%

 

13,480,759

 

 

443,045

 

 

3.29

%

Noninterest-earning assets

 

422,738

 

 

 

 

 

 

370,570

 

 

 

 

 

Total assets

 

$

14,237,116

 

 

 

 

 

 

$

13,851,329

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Checking accounts

 

$

881,233

 

 

3,188

 

 

0.36

%

 

$

947,728

 

 

1,406

 

 

0.15

%

Savings accounts

 

1,381,646

 

 

11,676

 

 

0.85

%

 

1,364,410

 

 

3,466

 

 

0.25

%

Certificates of deposit

 

6,388,905

 

 

128,489

 

 

2.01

%

 

5,989,453

 

 

97,383

 

 

1.63

%

Borrowed funds

 

3,651,273

 

 

73,313

 

 

2.01

%

 

3,632,255

 

 

59,849

 

 

1.65

%

Total interest-bearing liabilities

 

12,303,057

 

 

216,666

 

 

1.76

%

 

11,933,846

 

 

162,104

 

 

1.36

%

Noninterest-bearing liabilities

 

182,598

 

 

 

 

 

 

178,373

 

 

 

 

 

Total liabilities

 

12,485,655

 

 

 

 

 

 

12,112,219

 

 

 

 

 

Shareholders’ equity

 

1,751,461

 

 

 

 

 

 

1,739,110

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

14,237,116

 

 

 

 

 

 

$

13,851,329

 

 

 

 

 

Net interest income

 

 

 

$

265,421

 

 

 

 

 

 

$

280,941

 

 

 

Interest rate spread (2)

 

 

 

 

 

1.73

%

 

 

 

 

 

1.93

%

Net interest-earning assets (3)

 

$

1,511,321

 

 

 

 

 

 

$

1,546,913

 

 

 

 

 

Net interest margin (4)

 

 

 

1.92

%

 

 

 

 

 

2.08

%

 

 

Average interest-earning assets to average interest-bearing liabilities

 

112.28

%

 

 

 

 

 

112.96

%

 

 

 

 

Selected performance ratios:

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

 

0.56

%

 

 

 

 

 

0.62

%

 

 

Return on average equity

 

 

 

4.58

%

 

 

 

 

 

4.91

%

 

 

Average equity to average assets

 

 

 

12.30

%

 

 

 

 

 

12.56

%

 

 

(1)

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

(2)

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

(3)

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

(4)

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

 

TFS Financial Corporation
Jennifer Rosa (216) 429-5037

Source: Third Federal Savings and Loan