CLEVELAND, Dec. 17, 2007 (PRIME NEWSWIRE) -- TFS Financial Corporation (Nasdaq:TFSL) (the "Company"), the holding company for Third Federal Savings and Loan Association of Cleveland, today announced quarterly and fiscal year results for the period ended September 30, 2007.
The Company reported net income of $15.1 million for the three months ended September 30, 2007, compared to a net loss of $4.7 million for the three months ended September 30, 2006. The Company also reported net income of $25.6 million for the year ended September 30, 2007 compared to net income of $43.5 million for the year ended September 30, 2006. At September 30, 2007, the Company had assets of $10.3 billion; deposits of $8.1 billion and shareholders' equity of $1.99 billion.
Net interest income increased by $4.4 million, or 9.1%, to $52.0 million for the three months ended September 30, 2007 from $47.6 million for the three months ended September 30, 2006. The increase resulted primarily from interest income earned on the proceeds from our initial public offering. Net interest income decreased by $3.5 million, or 1.76%, to $193.2 million for the year ended September 30, 2007 from $196.7 million for the year ended September 30, 2006. The decrease resulted from the compression of our interest rate spread and our net interest margin, as our interest rate spread decreased 50 basis points to 1.51% for the year ended September 30, 2007 from 2.01% for the year ended September 30, 2006, and our net interest margin decreased 24 basis points to 2.13% for the year ended September 30, 2007 from 2.37% for the year ended September 30, 2006.
Our provision for loan losses was $9.6 million for the year ended September 30, 2007 and $6.1 million for the year ended September 30, 2006. The provisions exceeded net chargeoffs of $5.2 million and $3.9 million for the years ended September 30, 2007 and 2006, respectively. The allowance for loan losses was $25.1 million, or 0.31% of total loans receivable at September 30, 2007, compared to $20.7 million, or 0.27% of total loans receivable, at September 30, 2006. We increased the allowance for loan losses to reflect an increase in non-performing loans from September 30, 2006 to September 30, 2007. Nonperforming loans increased by $33.8 million to $113.5 million, or 1.39% of total loans, at September 30, 2007 from $79.7 million, or 1.05% of total loans, at September 30, 2006. Of the $33.8 million increase in nonperforming loans, $15.5 million occurred in our Home Today portfolio and $15.6 million occurred in our home equity loans and lines of credit portfolio. Through our Home Today program, we originate loans with our standard terms to borrowers who might not otherwise qualify for such loans. To qualify for our Home Today program, a borrower must complete financial management education and counseling and must be referred to us by a sponsoring organization with whom we have partnered as part of the program. As of September 30, 2007, we had $304.0 million of loans outstanding that were originated through our Home Today program.
Non-interest income increased $31.5 million to $13.7 million for the three months ended September 30, 2007 from a $17.8 million loss for the three months ended September 30, 2006. Non-interest income increased $57.8 million to $51.4 million for the year ended September 30, 2007 from a $6.4 million loss for the year ended September 30, 2006. The increases were primarily caused by our recognizing gains of $1.0 million and $15 thousand on loan sales for the three months and year ended September 30, 2007, respectively, compared to losses of $28.4 million and $47.1 million on loan sales for the three months and year ended September 30, 2006, respectively.
Non-interest expense increased $68.6 million, or 56%, to $191.1 million for the year ended September 30, 2007 from $122.5 million for the year ended September 30, 2006. The increase resulted primarily from the $55 million charitable contribution to the Third Federal Foundation made in conjunction with our public stock offering in April 2007.
Total assets increased $1.68 billion, or 19.6%, to $10.3 billion at September 30, 2007 from $8.60 billion at September 30, 2006. The growth in our assets is based principally on the net proceeds of our initial stock offering, $886 million, which was completed on April 20, 2007, and a $740 million increase in deposits.
The TFS Financial Corporation logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=3622
Forward-looking Statements
This press release 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:
* statements of our goals, intentions and expectations;
* statements regarding our business plans and prospects and growth and operating strategies;
* statements regarding the 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 nationally or in our market areas, that are worse than expected;
* adverse changes in the securities markets;
* legislative or regulatory changes that adversely affect our business;
* 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;
* changes in consumer spending, borrowing and savings habits;
* changes in accounting policies and practices, as may be adopted by the bank regulatory agencies and the Financial Accounting Standards Board;
* inability of third-party providers to perform their obligations to us; and
* changes in our organization, compensation and benefit plans.
Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.
TFS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION (Unaudited)
(In thousands, except share data)
---------------------------------------------------------------------
September 30,
2007 2006
------------------------
Cash and due from banks $ 45,666 $ 42,021
Interest bearing deposits at
other financial institutions 185,649 122,006
Federal funds sold 598,400 88,900
----------- -----------
Cash and cash equivalents 829,715 252,927
Investment securities:
Available for sale (amortized cost
$57,025 and $64,753, respectively) 56,681 63,655
Held to maturity (fair value
$825,342 and $67,386, respectively) 823,815 67,319
Mortgage loans held for sale, at
lower of cost or market 107,962 314,956
Loans held for investment, net:
Mortgage loans 8,103,300 7,487,975
Other loans 14,692 28,469
Deferred loan fees, net (19,174) (18,698)
Allowance for loan losses (25,111) (20,705)
----------- -----------
Loans, net 8,073,707 7,477,041
Mortgage loan servicing assets, net 41,064 40,366
Federal Home Loan Bank stock, at cost 34,231 73,125
Real estate owned 9,903 6,895
Premises, equipment, and software, net 69,669 82,067
Accrued interest receivable 48,364 41,994
Bank owned life insurance contracts 144,498 139,260
Other assets 38,420 35,962
----------- -----------
TOTAL ASSETS $10,278,029 $ 8,595,567
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits $ 8,141,215 $ 7,401,077
Federal Home Loan Bank advances -- 25,103
Borrowers' advances for insurance
and taxes 40,481 38,279
Principal, interest, and related
escrow owed on loans serviced 77,908 74,910
Accrued expenses and other liabilities 32,224 43,604
----------- -----------
Total liabilities 8,291,828 7,582,973
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 as of
September 30, 2007, 300,000,000 shares
authorized as of September 30, 2006;
332,318,750 shares issued and
outstanding as of September 30, 2007,
1,000 shares issued and outstanding
of September 30, 2006 3,323 --
Paid-in capital 1,668,215 627,979
Unallocated ESOP shares (100,597) --
Retained earnings--substantially restricted 421,503 395,892
Accumulated other comprehensive loss (6,243) (11,277)
----------- -----------
Total shareholders' equity 1,986,201 1,012,594
----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $10,278,029 $ 8,595,567
=========== ===========
TFS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except share data)
---------------------------------------------------------------------
For the Three Months For the Year
Ended September 30, Ended September 30,
------------------- -------------------
2007 2006 2007 2006
-------- -------- -------- --------
INTEREST AND DIVIDEND INCOME:
Loans, including fees $122,102 $124,631 $469,755 $474,100
Investment securities
available for sale 591 692 2,575 3,046
Investment securities held
to maturity 10,154 880 22,777 3,776
Federal funds sold 11,454 559 38,352 579
Other interest earning
assets 1,057 1,127 4,266 4,303
-------- -------- -------- --------
Total interest income 145,358 127,889 537,725 485,804
-------- -------- -------- --------
INTEREST EXPENSE:
Deposits 93,296 75,715 343,511 275,191
Federal Home Loan Bank
advances 79 4,545 1,012 13,946
-------- -------- -------- --------
Total interest expense 93,375 80,260 344,523 289,137
-------- -------- -------- --------
NET INTEREST INCOME 51,983 47,629 193,202 196,667
PROVISION FOR LOAN LOSSES 3,250 3,100 9,600 6,050
-------- -------- -------- --------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 48,733 44,529 183,602 190,617
NON-INTEREST INCOME:
Fees and service charges 6,474 5,739 25,314 22,612
Gain (Loss) on the
sale of loans 1,010 (28,388) 15 (47,087)
Increase in and death
benefits from bank owned
life insurance contracts 3,370 2,229 8,090 6,983
Net income (loss) on
private equity investments 961 (144) 5,431 856
Other 1,874 2,716 12,539 10,243
-------- -------- -------- --------
Total non-interest income 13,689 (17,848) 51,389 (6,393)
-------- -------- -------- --------
NON-INTEREST EXPENSE:
Salaries and employee
benefits 18,721 22,354 72,996 68,372
Marketing services 3,473 2,967 13,528 10,942
Office property, equipment
and software 5,316 4,760 19,709 18,394
Federal insurance premium 652 575 2,401 2,297
State franchise tax 455 982 3,110 3,876
Contribution to charitable
foundation -- -- 55,000 --
Other operating expenses 7,601 4,848 24,365 18,634
-------- -------- -------- --------
Total non-interest expense 36,218 36,486 191,109 122,515
-------- -------- -------- --------
INCOME(LOSS) BEFORE
INCOME TAXES 26,204 (9,805) 43,882 61,709
INCOME TAX EXPENSE(BENEFIT) 11,154 (5,064) 18,271 18,170
-------- -------- -------- --------
NET INCOME(LOSS) $ 15,050 $ (4,741) $ 25,611 $ 43,539
======== ======== ======== ========
Earnings(loss) per share
- basic and fully diluted $ 0.05 $ (0.02) $ 0.10 $ 0.19
======== ======== ======== ========
TFS FINANCIAL CORPORATION AND SUBSIDIARIES
AVERAGE BALANCES AND YIELDS
(Unaudited)
(Dollars in thousands)
---------------------------------------------------------------------
Year Ended Year Ended
September 30, 2007 September 30, 2006
------------------------- -------------------------
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Cost Balance Expense Cost
---------- -------- ----- ---------- -------- -----
Interest-earning
assets:
Cash on hand
and in banks $ 20,795 $ 1,087 5.23% $ 21,149 $ 245 1.16%
Federal funds
sold 736,711 38,352 5.21% 11,064 579 5.23%
Investment
securities 54,365 2,191 4.03% 40,370 1,516 3.76%
Mortgage-backed
securities 429,244 23,161 5.40% 112,543 5,306 4.71%
Loans 7,775,810 469,755 6.04% 8,056,105 474,100 5.88%
Federal Home
Loan Bank
stock 52,334 3,179 6.07% 70,739 4,058 5.74%
---------- -------- ---------- --------
Total interest-
earning
assets 9,069,259 537,725 5.93% 8,311,970 485,804 5.84%
-------- --------
Noninterest-
earning assets 332,323 388,936
---------- ----------
Total assets $9,401,582 $8,700,906
========== ==========
Interest-bearing
liabilities:
NOW accounts $1,621,548 66,221 4.08% $1,465,382 52,051 3.55%
Passbook
savings and
subscription
proceeds 649,414 17,605 2.71% 380,876 3,545 0.93%
Certificates
of deposit 5,495,449 259,685 4.73% 5,360,232 219,595 4.10%
FHLB advances 20,274 1,012 4.99% 341,759 13,946 4.08%
---------- -------- ---------- --------
Total interest-
bearing
liabilities 7,786,685 344,523 4.42% 7,548,249 289,137 3.83%
-------- --------
Noninterest-
bearing
liabilities 156,930 150,480
---------- ----------
Total
liabilities 7,943,615 7,698,729
Shareholders'
equity 1,457,967 1,002,177
---------- ----------
Total
liabilities
and Share-
holders'
equity $9,401,582 $8,700,906
========== ==========
Net interest
income $193,202 $196,667
======== ========
Interest rate
spread (a) 1.51% 2.01%
===== =====
Net interest-
earning
assets (b) $1,282,574 $763,721
========== ========
Net interest
margin (c) 2.13% 2.37%
======== ========
Average interest-
earning assets
to average
interest-
bearing
liabilities 116.47% 110.12%
========== ==========
(a) Interest rate spread represents the difference between the
yield on average interest-earning assets and the cost of average
interest-bearing liabilities.
(b) Net interest-earning assets represent total interest-earning
assets less total interest-bearing liabilities.
(c) Net interest margin represents net interest income divided by
total interest-earning assets.