CLEVELAND, Feb. 1, 2010 (GLOBE NEWSWIRE) -- TFS Financial Corporation (Nasdaq:TFSL) (the “Company”), the holding company for Third Federal Savings and Loan Association of Cleveland, today announced results for the quarter ended December 31, 2009.
The Company reported net income of $8.9 million for the three months ended December 31, 2009, compared to net income of $11.5 million for the three months ended December 31, 2008. The change in net income is largely the result of an increase in the provision for loan losses offset by an increase in net interest income.
Net interest income increased $1.8 million, or 3%, to $57.3 million for the three months ended December 31, 2009 from $55.6 million for the three months ended December 31, 2008. The increase in net interest income resulted from a decrease in the interest received on interest-earning assets, offset by a larger decrease in interest paid on interest-bearing liabilities. The interest rate spread increased 22 basis points to 1.77% for the three months ended December 31, 2009 from 1.55% for the three months ended December 31, 2008. The net interest margin increased six basis points to 2.20% compared to 2.14% for the same quarter last year.
The Company recorded a provision for loan losses of $16.0 million for the three months ended December 31, 2009 and $10.0 million for the three months ended December 31, 2008. The provisions exceeded net charge-offs of $14.0 million and $5.0 million for the quarters ended December 31, 2009 and 2008, respectively. Of the $14.0 million of net charge-offs, $10.0 million occurred in the equity loans and lines of credit portfolio. The allowance for loan losses was $97.3 million, or 1.03% of total loans receivable, at December 31, 2009, compared to $95.2 million, or 1.02% of total loans receivable, at September 30, 2009, and further compared to $48.8 million or 0.51% of total loans receivable at December 31, 2008.
Non-performing loans increased $9.6 million to $265.3 million, or 2.82% of total loans, at December 31, 2009 from $255.7 million, or 2.73% of total loans, at September 30, 2009, and further, non-performing loans increased $62.2 million compared to $203.1 million, or 2.13% of total loans, at December 31, 2008. Of the $9.6 million increase in non-performing loans for the three months ended December 31, 2009, $3.5 million occurred in the residential, non-Home Today portfolio, $3.8 million occurred in the residential, Home Today portfolio and $2.4 million occurred in the equity loans and lines of credit portfolio. The Home Today portfolio is an affordable housing program targeted toward low and moderate income home buyers, which totaled $288.8 million at December 31, 2009 and $291.7 million at September 30, 2009.
Total assets increased by $128.7 million, or 1%, to $10.73 billion at December 31, 2009 from $10.60 billion at September 30, 2009. This change was the result of increases in our loan portfolio, other assets and investment securities partially offset by a decrease in cash and cash equivalents.
Cash and cash equivalents decreased by $31.1 million, or 10%, to $275.9 million at December 31, 2009 from $307.0 million at September 30, 2009. This change can be attributed to the reinvestment of our most liquid assets into investment securities and loan products that provide higher yields along with longer maturities and funding of a required prepaid FDIC assessment.
Other assets increased $46.9 million to $100.1 million at December 31, 2009 from $53.2 million at September 30, 2009, largely as the result of a $51.9 million required prepayment of FDIC deposit insurance assessments.
Deposits increased $36.9 million, or less than 1%, to $8.61 billion at December 31, 2009 from $8.57 billion at September 30, 2009. The increase was mainly the result of a $123.8 million increase in high-yield savings and checking accounts offset by a $90.7 million decrease in our certificates of deposit.
Accrued expenses and other liabilities increased by $49.4 million, or 85%, to $107.8 million at December 31, 2009 from $58.4 million at September 30, 2009. This increase reflects the in-transit status of $46.5 million of real estate tax payments that have been collected from borrowers and will be remitted to various taxing agencies.
Shareholders’ equity increased by $5.3 million during the three-month period to $1.75 billion at December 31, 2009. There were $5.2 million in dividends paid on our shares of common stock (other than the shares held by Third Federal Savings, MHC and unallocated employee stock ownership plan (ESOP) shares) and 161,400 shares of outstanding common stock repurchased during the three-month period ended December 31, 2009. The current repurchase program has 2,156,250 shares yet to be purchased as of December 31, 2009.
The TFS Financial Corporation logo is available at http://www.globenewswire.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;
- decreased demand for our products and services and lower revenue and earnings because of a recession;
- adverse changes and volatility 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, the Financial Accounting Standards Board and the Public Company Accounting Oversight Board;
- 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 Federal Reserve Board;
- changes in policy and/or assessment rates of taxing authorities that adversely affect us;
- changes in policy and/or assessment rates of the Federal Deposit Insurance Corporation;
- inability of third-party providers to perform their obligations to us;
- changes in our organization, compensation and benefit plans; and
- 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.
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) | ||
| December 31, 2009 | September 30, 2009 | |
| ASSETS | ||
| Cash and due from banks | $38,838 | $20,823 |
| Other interest-bearing cash equivalents | 237,106 | 286,223 |
| Cash and Cash equivalents | 275,944 | 307,046 |
| Investment securities | ||
| Available for sale (amortized cost $21,674 and $23,065, respectively) | 21,946 | 23,434 |
| Held to maturity (fair value $634,866 and $587,440, respectively) | 627,414 | 578,331 |
| Investment securities | 649,360 | 601,765 |
| Mortgage loans held for sale (fair value $58,272 and $40,436, respectively) | 98,210 | 61,170 |
| Loans held for investment, net: | ||
| Mortgage loans | 9,352,006 | 9,318,189 |
| Other loans | 7,358 | 7,107 |
| Deferred loan fees, net | (11,775) | (10,463) |
| Allowance for loan losses | (97,280) | (95,248) |
| Loans, net | 9,250,309 | 9,219,585 |
| Mortgage loan servicing assets, net | 40,716 | 41,375 |
| Federal Home Loan Bank stock, at cost | 35,620 | 35,620 |
| Real estate owned | 15,944 | 17,733 |
| Premises, equipment, and software, net | 63,959 | 65,134 |
| Accrued interest receivable | 37,997 | 38,365 |
| Bank owned life insurance contracts | 159,460 | 157,864 |
| Other assets (includes $51,906 FDIC prepayment at December 31, 2009) | 100,055 | 53,183 |
| TOTAL ASSETS | $10,727,574 | $10,598,840 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Deposits | $8,607,417 | $8,570,506 |
| Borrowed funds | 70,163 | 70,158 |
| Borrowers' advances for insurance and taxes | 48,068 | 48,192 |
| Principal, interest, and related escrow owed on loans serviced | 142,909 | 105,719 |
| Accrued expenses and other liabilities | 107,820 | 58,400 |
| Total liabilities | 8,976,377 | 8,852,975 |
| 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; 308,315,000 and 308,476,400 outstanding at December 31, 2009 and September 30, 2009, respectively | 3,323 | 3,323 |
| Paid-in capital | 1,680,879 | 1,679,000 |
| Treasury stock, at cost; 24,003,750 and 23,842,350 shares at December 31, 2009 and September 30, 2009, respectively | (289,324) | (287,514) |
| Unallocated ESOP shares | (86,668) | (87,896) |
| Retained earnings---substantially restricted | 460,633 | 456,875 |
| Accumulated other comprehensive loss | (17,646) | (17,923) |
| Total shareholders' equity | 1,751,197 | 1,745,865 |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $10,727,574 | $10,598,840 |
| TFS FINANCIAL CORPORATION AND SUBSIDIARIES | ||
| CONSOLIDATED STATEMENTS OF INCOME (unaudited) | ||
| (In thousands except share and per share data) | ||
| For the Three Months | ||
| Ended December 31, | ||
| 2009 | 2008 | |
| INTEREST AND DIVIDEND INCOME: | ||
| Loans, including fees | $107,048 | $121,356 |
| Investment securities available for sale | 113 | 258 |
| Investment securities held to maturity | 5,073 | 9,342 |
| Other interest and dividend earning assets | 569 | 448 |
| Total interest and dividend income | 112,803 | 131,404 |
| INTEREST EXPENSE: | ||
| Deposits | 55,013 | 74,714 |
| Borrowed funds | 485 | 1,138 |
| Total interest expense | 55,498 | 75,852 |
| NET INTEREST INCOME | 57,305 | 55,552 |
| PROVISION FOR LOAN LOSSES | 16,000 | 10,000 |
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 41,305 | 45,552 |
| NON-INTEREST INCOME: | ||
| Fees and service charges, net of amortization | 5,470 | 6,436 |
| Net gain on the sale of loans | 2,968 | 3,078 |
| Increase in and death benefits from bank owned life insurance contracts | 1,608 | 1,674 |
| Income (loss) on private equity investments | 115 | (1,107) |
| Other | 1,472 | 1,850 |
| Total non-interest income | 11,633 | 11,931 |
| NON-INTEREST EXPENSE | ||
| Salaries and employee benefits | 21,171 | 20,157 |
| Marketing services | 2,025 | 3,525 |
| Office property, equipment, and software | 5,253 | 5,353 |
| Federal insurance premium | 4,209 | 2,010 |
| State franchise tax | 1,042 | 1,562 |
| Real estate owned expense, net | 1,735 | 1,973 |
| Other operating expenses | 4,664 | 5,639 |
| Total non-interest expense | 40,099 | 40,219 |
| INCOME BEFORE INCOME TAXES | 12,839 | 17,264 |
| INCOME TAX EXPENSE | 3,913 | 5,776 |
| NET INCOME | $8,926 | $11,488 |
| Earnings per share - basic and diluted | $0.03 | $0.04 |
| Weighted average shares outstanding | ||
| Basic | 299,658,526 | 303,432,538 |
| Diluted | 300,150,676 | 303,778,688 |
| TFS FINANCIAL CORPORATION AND SUBSIDIARIES | ||||||
| AVERAGE BALANCES AND YIELDS (unaudited) | ||||||
|
Three Months Ended December 31, 2009 |
Three Months Ended December 31, 2008 |
|||||
| Interest | Interest | |||||
| Average | Income/ | Yield/ | Average | Income/ | Yield/ | |
| Balance | Expense | Cost (a) | Balance | Expense | Cost (a) | |
| (Dollars in thousands) | ||||||
| Interest-earning assets: | ||||||
| Other interest-bearing cash equivalents | 279,740 | 165 | 0.24% | 1,526 | 7 | 1.83% |
| Investment securities | 16,893 | 87 | 2.06% | 17,309 | 128 | 2.96% |
| Mortgage-backed securities | 610,522 | 5,099 | 3.34% | 812,125 | 9,472 | 4.67% |
| Loans | 9,454,267 | 107,048 | 4.53% | 9,539,296 | 121,356 | 5.09% |
| Federal Home Loan Bank stock | 35,620 | 404 | 4.54% | 35,620 | 441 | 4.95% |
| Total interest-earning assets | 10,397,042 | 112,803 | 4.34% | 10,405,876 | 131,404 | 5.05% |
| Noninterest-earning assets | 297,271 | 332,720 | ||||
| Total assets | $10,694,313 | $10,738,596 | ||||
| Interest-bearing liabilities: | ||||||
| NOW accounts | $984,723 | 1,535 | 0.62% | $1,092,378 | 3,945 | 1.44% |
| Savings accounts | 1,283,810 | 3,397 | 1.06% | 1,142,467 | 5,766 | 2.02% |
| Certificates of deposit | 6,295,373 | 50,081 | 3.18% | 6,072,223 | 65,003 | 4.28% |
| Borrowed funds | 70,007 | 485 | 2.77% | 373,998 | 1,138 | 1.22% |
| Total interest-bearing liabilities | 8,633,913 | 55,498 | 2.57% | 8,681,066 | 75,852 | 3.50% |
| Noninterest-bearing liabilities | 297,738 | 238,827 | ||||
| Total liabilities | 8,931,651 | 8,919,893 | ||||
| Shareholders' equity | 1,762,662 | 1,818,703 | ||||
| Total liabilities and | ||||||
| shareholders' equity | $10,694,313 | $10,738,596 | ||||
| Net interest income | $57,305 | $55,552 | ||||
| Interest rate spread (b) | 1.77% | 1.55% | ||||
| Net interest-earning assets (c) | $1,763,129 | $1,724,810 | ||||
| Net interest margin (d) | 2.20% | (a) | 2.14% | (a) | ||
| Average interest-earning assets | ||||||
| to average interest-bearing liabilities | 120.42% | 119.87% | ||||
| (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. | ||||||