TFS Financial Corp (TFSL, Financial) released its 8-K filing on July 30, 2024, detailing its financial performance for the quarter and nine months ended June 30, 2024. TFS Financial Corp is the holding company for the Third Federal Savings and Loan Association of Cleveland, primarily engaged in originating and servicing residential real estate mortgage loans and attracting retail savings deposits.
Quarterly Performance Overview
The company reported net income of $20.0 million for the quarter ended June 30, 2024, a slight decrease from $20.7 million in the previous quarter. This decline was attributed to a decrease in net interest income and a lower release of provision for credit losses, partially offset by a reduction in non-interest expenses.
Key Financial Metrics
For the quarter, TFS Financial Corp reported:
| Metric | Q3 2024 | Q2 2024 | Q3 2023 |
|---|---|---|---|
| Net Income | $20.0 million | $20.7 million | $17.6 million |
| Net Interest Income | $69.3 million | $71.4 million | $68.8 million |
| Net Interest Margin | 1.67% | 1.71% | 1.75% |
| Earnings Per Share (EPS) | $0.07 | $0.07 | $0.06 |
Challenges and Achievements
Despite higher interest rates and economic uncertainty, TFS Financial Corp's earnings for the year are more than 10% higher than the previous year. The company saw a 6% growth in retail deposits over the last three months, driven by strong CD product offerings. Loan originations totaled $2.2 billion with an average yield of 7.31%, and ongoing expense management resulted in a 5% reduction from 2023.
“Despite higher interest rates and economic uncertainty, our earnings are more than 10% higher this year than last year,” said Chairman and CEO Marc A. Stefanski.
Income Statement Highlights
Net interest income decreased by $2.1 million, or 3%, to $69.3 million for the quarter ended June 30, 2024, from $71.4 million in the previous quarter. This was due to an increase in the weighted average cost of interest-bearing liabilities. The interest rate spread was 1.36% for the quarter, down from 1.43% in the previous quarter.
Balance Sheet and Cash Flow
Total assets increased by $17.8 million to $17.03 billion at June 30, 2024. Cash and cash equivalents decreased by $33.9 million to $560.4 million, while loans held for sale increased by $20.7 million to $30.4 million. Deposits grew by $90.3 million to $10.03 billion, and borrowed funds decreased by $126.1 million to $4.83 billion.
Annual Performance
For the nine months ended June 30, 2024, TFS Financial Corp reported net income of $61.4 million, up from $55.7 million in the same period last year. The increase was primarily due to a decrease in non-interest expense and an increase in the release of provision for credit losses, partially offset by a decrease in net interest income.
Conclusion
TFS Financial Corp's performance in the third fiscal quarter of 2024 reflects its resilience amid challenging economic conditions. The company's strategic focus on competitive product offerings and expense management has contributed to its stable financial position. However, the ongoing high-interest-rate environment poses challenges that the company will need to navigate carefully in the coming quarters.
Explore the complete 8-K earnings release (here) from TFS Financial Corp for further details.
