CLEVELAND, Feb. 11, 2008 (PRIME NEWSWIRE) -- TFS Financial Corporation (Nasdaq:TFSL) (the "Company"), the holding company for Third Federal Savings and Loan Association of Cleveland, today announced quarterly results for the period ended December 31, 2007, the adoption of a Stock Repurchase Program and declaration of its first quarterly dividend.
The Company reported net income of $18.8 million for the three months ended December 31, 2007, compared to net income of $15.8 million for the three months ended December 31, 2006. At December 31, 2007, the Company had assets of $10.5 billion; deposits of $8.3 billion and shareholders' equity of $2.0 billion.
Net interest income increased by $8.3 million, or 18.7%, to $53.0 million for the three months ended December 31, 2007 from $44.6 million for the three months ended December 31, 2006. The increase resulted primarily from interest income earned on the proceeds from our public offering. While net interest income increased during the quarter, we nevertheless experienced a further compression of our interest rate spread and to a lesser extent, our net interest margin. Our interest rate spread decreased 36 basis points to 1.28% for the three months ended December 31, 2007 from 1.64% for the three months ended December 31, 2006, and our net interest margin decreased 1 basis point to 2.11% for the three months ended December 31, 2007 from 2.12% for the three months ended December 31, 2006.
Our provision for loan losses was $3.0 million for the three months ended December 31, 2007 and $2.0 million for the three months ended December 31, 2006. The provisions exceeded net chargeoffs of $2.0 million and $1.5 million for the three months ended December 31, 2007 and 2006, respectively. The allowance for loan losses was $26.1 million, or 0.31% of total loans receivable at December 31, 2007, compared to $25.1 million, or 0.31% of total loans receivable, at September 30, 2007. We increased the allowance for loan losses to address the potential risk from an increase in non-performing loans from September 30, 2007 to December 31, 2007. Nonperforming loans increased by $16.3 million to $129.8 million, or 1.55% of total loans, at December 31, 2007 from $113.5 million, or 1.39% of total loans, at September 30, 2007. Of the $16.3 million increase in nonperforming loans, $5.7 million occurred in our Home Today portfolio and $7.7 million occurred in our home equity loans and lines of credit portfolio. Home Today is an affordable housing program targeted to benefit low- and moderate-income home buyers. 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. Borrowers in the Home Today program are not charged higher fees or interest rates than non-Home Today borrowers. Unlike sub-prime loans, these loans are not interest only or negative amortizing and contain no low initial payment features or adjustable interest rates. While loans under the Home Today program do have higher risk characteristics than non-Home Today loans, we do not classify Home Today as a sub-prime lending program. As of December 31, 2007, we had $308.3 million of loans outstanding that were originated through our Home Today program, compared to $304.0 million, at September 30, 2007. As of December 31, 2007, our home equity loans and lines of credit portfolio was $1.97 billion, compared to $1.87 billion, at September 30, 2007.
Total assets increased $198.9 million, or 1.9%, to $10.5 billion at December 31, 2007 from $10.3 billion at September 30, 2007. The growth in our assets is attributable primarily to an increase in our net loans.
Stock Repurchase Program
The Company announced today that the Board of Directors has authorized the repurchase of up to 15,800,000 shares, or approximately 15%, of the Company's outstanding common stock (excluding common stock held by Third Federal Savings and Loan Association of Cleveland, MHC, the Company's mutual holding company). In accordance with Office of Thrift Supervision regulations, such repurchases may not commence until after one year following the completion of the Company's stock offering, or April 21, 2008. The stock repurchase program may be carried out at the direction of management, subject to the limitations set forth in rule 10b-18 of the Securities and Exchange Commission and other legal requirements, and any further limitations that may be established by the Board of Directors. The repurchase authorization may be suspended, terminated or modified at any time for any reason. Repurchases may be made through open market purchases, block trades, and in negotiated private transactions. The stock may be repurchased on an ongoing basis and will be subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company's financial performance. Any repurchased shares will be held as treasury stock and will be available for general corporate purposes.
Dividend Declaration
The Company also announced today that the Board of Directors has declared the Company's first cash dividend of $0.05 per share, payable on March 10, 2008 to stockholders of record on February 25, 2008. The Company intends to pay a cash dividend each quarter hereafter, with such payment in the Board of Directors' sole discretion and subject to factors such as the consolidated earnings of the Company, economic and market factors, and the capital structure of the Company and Third Federal Savings and Loan Association of Cleveland, among other factors. Third Federal Savings and Loan Association of Cleveland, MHC, has waived the right to its receipt of dividends on the 227,119,132 shares of common stock it owns.
Marc A. Stefanski, chairman and chief executive officer, said, "By making product and market decisions based on our value system and by sticking to our objective of creating value for our stockholders, customers, communities and associates, we avoided involvement in risky loans. The benefit of this prudent management allows us to pay a cash dividend to and implement a stock repurchase program for our stockholders."
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; * adverse changes and volatility in credit 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.
The TFS Financial Corporation logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=3622
TFS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION (Unaudited)
(In thousands, except share data)
---------------------------------------------------------------------
December 31, September 30,
2007 2007
---------------------------
ASSETS
Cash and due from banks $ 50,029 $ 45,666
Interest bearing deposits at other
financial institutions 129,322 185,649
Federal funds sold 573,000 598,400
------------ ------------
Cash and cash equivalents 752,351 829,715
Investment securities:
Available for sale (amortized cost
$55,379 and $57,025, respectively) 55,374 56,681
Held to maturity (fair value $894,672
and $825,342, respectively) 889,132 823,815
Mortgage loans held for sale, at lower of
cost or market 113,192 107,962
Loans held for investment, net:
Mortgage loans 8,319,002 8,103,300
Other loans 13,222 14,692
Deferred loan fees, net (18,358) (19,174)
Allowance for loan losses (26,095) (25,111)
------------ ------------
Loans, net 8,287,771 8,073,707
Mortgage loan servicing assets, net 41,347 41,064
Federal Home Loan Bank stock, at cost 34,231 34,231
Real estate owned 12,455 9,903
Premises, equipment, and software, net 69,801 69,669
Accrued interest receivable 48,071 48,364
Bank owned life insurance contracts 146,131 144,498
Other assets 27,054 38,420
------------ ------------
TOTAL ASSETS $ 10,476,910 $ 10,278,029
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits $ 8,266,373 $ 8,141,215
Borrowers' advances for insurance and
taxes 38,587 40,481
Principal, interest, and related escrow
owed on loans serviced 77,699 77,908
Accrued expenses and other liabilities 86,114 32,224
------------ ------------
Total liabilities 8,468,773 8,291,828
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 and outstanding 3,323 3,323
Paid-in capital 1,668,774 1,668,215
Unallocated ESOP shares (98,316) (100,597)
Retained earnings -- substantially
restricted 440,319 421,503
Accumulated other comprehensive loss (5,963) (6,243)
------------ ------------
Total shareholders' equity 2,008,137 1,986,201
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 10,476,910 $ 10,278,029
============ ============
TFS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except share and per share data)
---------------------------------------------------------------------
For the Three Months
Ended December 31,
---------------------------
2007 2006
------------ ------------
INTEREST AND DIVIDEND INCOME:
Loans, including fees $ 123,967 $ 116,433
Investment securities available for sale 558 699
Investment securities held to maturity 11,636 1,520
Federal funds sold 8,246 5,840
Other interest earning assets 1,261 1,241
------------ ------------
Total interest income 145,668 125,733
------------ ------------
INTEREST EXPENSE:
Deposits 92,696 80,792
Federal Home Loan Bank advances -- 315
------------ ------------
Total interest expense 92,696 81,107
------------ ------------
NET INTEREST INCOME 52,972 44,626
PROVISION FOR LOAN LOSSES 3,000 2,000
------------ ------------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 49,972 42,626
NON-INTEREST INCOME:
Fees and service charges 6,333 6,169
Gain (Loss) on the sale of loans 1,199 (811)
Increase in and death benefits from bank
owned life insurance contracts 1,657 1,565
Net income on private equity investments 1,928 2,604
Other 1,816 2,894
------------ ------------
Total non-interest income 12,933 12,421
------------ ------------
NON-INTEREST EXPENSE:
Salaries and employee benefits 18,355 17,329
Marketing services 3,525 3,350
Office property, equipment and software 4,519 4,502
Federal insurance premium 631 573
State franchise tax 707 984
Other operating expenses 6,366 4,784
------------ ------------
Total non-interest expense 34,103 31,522
------------ ------------
INCOME BEFORE INCOME TAXES 28,802 23,525
INCOME TAX EXPENSE 9,986 7,694
------------ ------------
NET INCOME $ 18,816 $ 15,831
============ ============
Earnings per share - basic and fully
diluted $ 0.06 $ 0.07
Weighted average shares outstanding 322,327,418 227,119,132
TFS FINANCIAL CORPORATION AND SUBSIDIARIES
AVERAGE BALANCES AND YIELDS (Unaudited)
Three Months Ended Three Months Ended
December 31, 2007 December 31, 2006
--------------------------- ---------------------------
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Cost(a) Balance Expense Cost(a)
----------- -------- ------ ---------- -------- ------
(Dollars in thousands)
Interest-
earning
assets:
Cash on hand
and in
banks $ 52,963 $ 657 4.96% $ 10,080 $ 135 5.36%
Federal funds
sold 709,435 8,246 4.65% 445,780 5,840 5.24%
Investment
securities 60,635 599 3.95% 45,216 431 3.81%
Mortgage-
backed
securities 854,689 11,595 5.43% 139,185 1,788 5.14%
Loans 8,322,205 123,967 5.96% 7,708,679 116,433 6.04%
Federal Home
Loan Bank
stock 34,231 604 7.06% 73,309 1,106 6.03%
----------- -------- ----- ---------- -------- -----
Total
interest-
earning
assets 10,034,158 145,668 5.81% 8,422,249 125,733 5.97%
-------- --------
Noninterest-
earning
assets 356,325 261,741
----------- ----------
Total assets $10,390,483 $8,683,990
=========== ==========
Interest-
bearing
liabilities:
NOW accounts $ 1,401,307 11,617 3.32% $1,644,552 16,949 4.12%
Savings
accounts 1,094,998 10,887 3.98% 328,089 767 0.94%
Certificates
of deposit 5,683,540 70,192 4.94% 5,494,707 63,076 4.59%
FHLB
advances -- -- -- 25,104 315 5.02%
----------- -------- ----- ---------- -------- -----
Total
interest-
bearing
liabilities 8,179,845 92,696 4.53% 7,492,452 81,107 4.33%
-------- --------
Noninterest-
bearing
liabilities 203,214 171,611
----------- ----------
Total
liabilities 8,383,059 7,664,063
Shareholders'
equity 2,007,424 1,019,927
----------- ----------
Total
liabilities
and share-
holders'
equity $10,390,483 $8,683,990
=========== ==========
Net interest
income $ 52,972 $ 44,626
Interest rate
spread(b) 1.28% 1.64%
===== =====
Net interest-
earning
assets(c) $ 1,854,313 $ 929,797
=========== ==========
Net interest
margin (d) 2.11%(a) 2.12%(a)
===== =====
Average
interest-
earning
assets to
average
interest-
bearing
liabilities 122.67% 112.41%
============ ===========
(a) Annualized
(b) Interest rate spread represents the difference between the yield
on average interest-earning assets and the cost of average
interest-bearing liabilities.
(c) Net interest-earning assets represent total interest-earning
assets less total interest-bearing liabilities.
(d) Net interest margin represents net interest income divided by
total interest-earning assets.