CLEVELAND, Nov. 13, 2009 (GLOBE 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 periods ended September 30, 2009.
The Company reported a net loss of $12.9 million for the three months ended September 30, 2009, compared to net income of $14.1 million for the three months ended September 30, 2008. This change was mainly attributed to an increase in the provision for loan losses in the fourth quarter, partially offset by an increase in net gain on the sale of loans and decreases in marketing services and income tax expense. Net income of $14.4 million was reported for the year ended September 30, 2009, compared to net income of $54.5 million for the year ended September 30, 2008. This change was attributed to increases in the provision for loan losses and non-interest expenses partially offset by increases in both net interest income and non-interest income and a decrease in income tax expense in the 2009 fiscal year period.
The Company recorded a provision for loan losses of $57.0 million for the three months ended September 30, 2009 and $9.0 million for the three months ended September 30, 2008. The provisions exceeded net charge-offs of $17.6 million and $7.4 million for the three months ended September 30, 2009 and 2008, respectively. The Company's provision for loan losses was $115.0 million for the year ended September 30, 2009 and $34.5 million for the year ended September 30, 2008. The provisions recorded exceeded net charge-offs of $63.5 million and $15.8 million for the fiscal years ended September 30, 2009 and 2008, respectively. The increased provisions reflect the unprecedented level of net charge-offs over the past few quarters and the uncertain economic times that face many of our loan customers. A combination of various market conditions, mainly a decrease in home values and an increase in unemployment rates, have caused higher delinquencies and charge-offs in the loan portfolio. The market valuation allowance, which supplements historic loss factors used in determining an appropriate allowance level, has been expanded due to the magnitude and persistence of these negative trends. The allowance for loan losses was $95.2 million, or 1.02% of total loans receivable, at September 30, 2009, compared to $43.8 million, or 0.47% of total loans receivable, at September 30, 2008.
Non-performing loans increased by $82.9 million to $255.8 million, or 2.73% of total loans, at September 30, 2009 from $172.9 million, or 1.86% of total loans, at September 30, 2008. Of the $82.9 million increase in non-performing loans for the twelve months ended September 30, 2009, $56.1 million occurred in the residential, non-Home Today portfolio, $21.0 million occurred in the residential, Home Today portfolio and $4.9 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 $291.7 million at September 30, 2009 and $303.2 million at September 30, 2008.
Net interest income increased by $10.2 million, or 5%, to $230.1 million for the year ended September 30, 2009 from $219.9 million for the year ended September 30, 2008. The increase resulted primarily from an improvement in our interest rate spread, which increased 25 basis points to 1.70% for the year ended September 30, 2009 from 1.45% for the year ended September 30, 2008.
Non-interest income increased $19.6 million, or 41%, to $67.4 million for the year ended September 30, 2009 from $47.8 million for the year ended September 30, 2008. This increase primarily resulted from a $29.0 million increase in net gain on the sale of loans, offset by a $4.3 million reduction of income on private equity investments and a $3.9 million reduction in fees and service charges, net of amortization.
Non-interest expense increased $10.9 million, or 7%, to $162.4 million for the year ended September 30, 2009 from $151.5 million for the year ended September 30, 2008. The increase primarily resulted from a $13.5 million increase in federal insurance premiums. Marketing services decreased $7.0 million as a result of a reduction in the amount and cost of advertising, as the level of promotional programs targeting equity lending products was moderated pending the attainment of a more stable economic environment.
Total assets decreased by $187.6 million, or 2%, to $10.60 billion at September 30, 2009 from $10.79 billion at September 30, 2008. The reduction in assets was the result of decreases in the mortgage loans held for sale portfolio and investment securities, which were partially offset by an increase in other interest earning cash equivalents.
Cash and cash equivalents increased $174.7 million, or 132%, to $307.0 million at September 30, 2009 from $132.4 million at September 30, 2008. This increase is the result of successful deposit gathering programs combined with the cash flows from maturing investment securities and loan sales in the secondary market.
Our net loans held for investment increased $10.8 million, or less than 1%, to $9.22 billion at September 30, 2009 from $9.21 billion at September 30, 2008.
Deposits increased $309.4 million, or 4%, to $8.57 billion at September 30, 2009 from $8.26 billion at September 30, 2008. The increase in deposits was primarily the result of a $410.5 million increase in certificates of deposit combined with a $36.6 million increase in high-yield savings accounts, offset by a $138.6 million decrease in our high-yield checking accounts. Other deposit products saw a net decrease in the current fiscal year.
Borrowed funds decreased $427.9 million, or 86%, to $70.2 million at September 30, 2009 from $498.0 million at September 30, 2008. The decrease was primarily due to the success of our deposit gathering activities and the use of cash flows provided by maturing investments, the sale of loans and other operating activities to reduce borrowed funds.
Stockholders' equity decreased $97.8 million, to $1.75 billion at September 30, 2009 from $1.84 billion at September 30, 2008. This reflects $14.4 million of net income during the year reduced by $96.5 million of repurchases of outstanding common stock and $19.7 million in dividends paid on our shares of common stock (other than the shares held by Third Federal Savings, MHC and unallocated ESOP shares) in the current fiscal year. The remainder reflects adjustments related to the allocation of shares of our common stock related to the ESOP, stock compensation plans and adjustments to our accumulated other comprehensive loss attributable primarily to the change in our pension obligation. We repurchased approximately 7.9 million shares of common stock during the year ended September 30, 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; * 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)
---------------------------------------------------------------------
September 30, September 30,
2009 2008
------------- -------------
ASSETS
Cash and due from banks $ 20,823 $ 57,888
Other interest-bearing cash equivalents 286,223 74,491
------------- -------------
Cash and Cash equivalents 307,046 132,379
------------- -------------
Investment securities
Available for sale (amortized cost
$23,065 and $30,861, respectively) 23,434 31,102
Held to maturity (fair value $587,440
and $820,047, respectively) 578,331 817,750
------------- -------------
Investment securities 601,765 848,852
------------- -------------
Mortgage loans held for sale (includes
$40,436 measured at fair value for the
period ended September 30, 2009) 61,170 200,670
Loans held for investment, net:
Mortgage loans 9,318,189 9,259,529
Other loans 7,107 7,599
Deferred loan fees, net (10,463) (14,596)
Allowance for loan losses (95,248) (43,796)
------------- -------------
Loans, net 9,219,585 9,208,736
------------- -------------
Mortgage loan servicing assets, net 41,375 41,526
Federal Home Loan Bank stock, at cost 35,620 35,620
Real estate owned 17,733 14,108
Premises, equipment, and software, net 65,134 68,112
Accrued interest receivable 38,365 46,371
Bank owned life insurance contracts 157,864 151,294
Other assets 53,183 38,783
------------- -------------
TOTAL ASSETS $ 10,598,840 $ 10,786,451
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits $ 8,570,506 $ 8,261,101
Borrowed funds 70,158 498,028
Borrowers' advances for insurance and
taxes 48,192 48,439
Principal, interest, and related escrow
owed on loans serviced 105,719 80,675
Accrued expenses and other liabilities 58,400 54,556
------------- -------------
Total liabilities 8,852,975 8,942,799
------------- -------------
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; 308,476,400
and 316,233,550 outstanding at
September 30, 2009 and September 30,
2008, respectively 3,323 3,323
Paid-in capital 1,679,000 1,672,953
Treasury stock, at cost; 23,842,350 &
16,085,200 shares at September 30, 2009
& September 30, 2008, respectively (287,514) (192,662)
Unallocated ESOP shares (87,896) (93,545)
Retained earnings -- substantially
restricted 456,875 462,190
Accumulated other comprehensive loss (17,923) (8,607)
------------- -------------
Total shareholders' equity 1,745,865 1,843,652
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 10,598,840 $ 10,786,451
============= =============
TFS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS) (unaudited)
(In thousands except share and per share data)
For the Three Months For the Fiscal Year
Ended September 30, Ended September 30,
------------------------ ------------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
INTEREST AND
DIVIDEND INCOME:
Loans, including
fees $ 107,978 $ 123,227 $ 455,933 $ 486,940
Investment
securities
available for
sale 146 273 790 1,721
Investment
securities held
to maturity 5,345 9,811 28,601 43,247
Federal funds
sold -- 5 1 14,485
Other interest
and dividend
earning assets 585 743 1,897 3,790
----------- ----------- ----------- -----------
Total interest
and dividend
income 114,054 134,059 487,222 550,183
----------- ----------- ----------- -----------
INTEREST EXPENSE:
Deposits 57,326 75,027 254,491 328,799
Borrowed funds 554 1,503 2,656 1,522
----------- ----------- ----------- -----------
Total interest
expense 57,880 76,530 257,147 330,321
----------- ----------- ----------- -----------
NET INTEREST INCOME 56,174 57,529 230,075 219,862
PROVISION FOR
LOAN LOSSES 57,000 9,000 115,000 34,500
----------- ----------- ----------- -----------
NET INTEREST
INCOME(LOSS)
AFTER PROVISION
FOR LOAN LOSSES (826) 48,529 115,075 185,362
----------- ----------- ----------- -----------
NON-INTEREST
INCOME:
Fees and service
charges, net of
amortization 6,342 6,542 21,591 25,445
Net gain on the
sale of loans 6,583 614 32,850 3,896
Increase in and
death benefits
from bank owned
life insurance
contracts 1,674 3,376 6,591 8,297
Income (loss) on
private equity
investments 207 317 (821) 3,490
Other 1,997 1,232 7,173 6,652
----------- ----------- ----------- -----------
Total
non-interest
income 16,803 12,081 67,384 47,780
----------- ----------- ----------- -----------
NON-INTEREST
EXPENSE
Salaries and
employee
benefits 18,945 21,497 78,050 75,919
Marketing
services (837) 3,569 7,116 14,147
Office property,
equipment, and
software 5,367 5,406 21,902 19,297
Federal
insurance
premium 3,390 2,119 18,918 5,377
State franchise
tax 1,049 1,384 5,037 5,411
Real estate
owned expense,
net 2,131 1,472 7,918 6,287
Other operating
expenses 5,557 6,550 23,447 25,009
----------- ----------- ----------- -----------
Total
non-interest
expense 35,602 41,997 162,388 151,447
----------- ----------- ----------- -----------
INCOME (LOSS)
BEFORE INCOME
TAXES (19,625) 18,613 20,071 81,695
INCOME TAX EXPENSE
(BENEFIT) (6,735) 4,552 5,676 27,205
----------- ----------- ----------- -----------
NET INCOME (LOSS) (12,890) 14,061 14,395 54,490
=========== =========== =========== ===========
Earnings (loss)
per share - basic
and fully diluted $ (0.04) $ 0.04 $ 0.05 $ 0.17
Weighted average
shares outstanding
Basic 299,703,812 312,213,480 301,227,599 319,386,915
Fully diluted 300,061,486 312,674,195 301,588,632 319,502,094
TFS FINANCIAL CORPORATION AND SUBSIDIARIES
AVERAGE BALANCES AND YIELDS (unaudited)
Year Ended Year Ended
September 30, 2009 September 30, 2008
---------------------------- ---------------------------
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Cost Balance Expense Cost
----------- -------- ----- ----------- -------- -----
(Dollars in thousands)
Interest-
earning
assets:
Federal
funds sold $ 350 $ 1 0.29% $ 386,892 $ 14,485 3.74%
Other
interest-
bearing
cash
equivalents 96,026 213 0.22% 51,606 1,797 3.48%
Investment
securities 17,910 465 2.60% 37,925 1,333 3.51%
Mortgage-
backed
securities 711,756 28,926 4.06% 883,795 43,635 4.94%
Loans 9,600,665 455,933 4.75% 8,706,421 486,940 5.59%
Federal Home
Loan Bank
stock 35,620 1,684 4.73% 34,575 1,993 5.76%
----------- -------- ----- ----------- -------- -----
Total
interest-
earning
assets 10,462,327 487,222 4.66% 10,101,214 550,183 5.45%
-------- --------
Non-interest
-earning
assets 320,039 344,725
----------- -----------
Total
assets $10,782,366 $10,445,939
=========== ===========
Interest-
bearing
liabilities:
NOW
accounts $ 1,046,640 9,145 0.87% $ 1,283,387 31,231 2.43%
Passbook
savings 1,139,916 16,135 1.42% 1,261,396 37,571 2.98%
Certificates
of deposit 6,200,984 229,211 3.70% 5,638,716 259,997 4.61%
Borrowed
funds 289,911 2,656 0.92% 70,218 1,522 2.17%
----------- -------- ----- ----------- -------- -----
Total
interest-
bearing
liabi-
lities 8,677,451 257,147 2.96% 8,253,717 330,321 4.00%
-------- --------
Non-interest
-bearing
liabilities 305,878 201,287
----------- -----------
Total
liabi-
lities 8,983,329 8,455,004
Shareholders'
equity 1,799,037 1,990,935
----------- -----------
Total
liabi-
lities
and
share-
holders'
equity $10,782,366 $10,445,939
=========== ===========
Net interest
income $230,075 $219,862
======== ========
Interest
rate spread
(a) 1.70% 1.45%
===== =====
Net interest
-earning
assets (b) $ 1,784,876 $ 1,847,497
=========== ===========
Net interest
margin (c) 2.20% 2.18%
======== ========
Average
interest-
earning
assets to
average
interest-
bearing
liabilities 120.57% 122.38%
=========== ===========
(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.