TFS Financial Corporation Announces Fiscal Quarter Ended June 30, 2009 Financial Results


CLEVELAND, Aug. 5, 2009 (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 three and nine month periods ended June 30, 2009.

The Company reported net income of $10.0 million for the three months ended June 30, 2009, compared to net income of $6.8 million for the three months ended June 30, 2008. The increase resulted mainly from non-interest income increasing due to gains on the sale of loans, offset by increasing non-interest expenses, mainly increased federal insurance premiums. Net income of $27.3 million was reported for the nine months ended June 30, 2009, compared to net income of $40.4 million for the nine months ended June 30, 2008. This change was attributable to increases in the provision for loan losses and non-interest expenses offset by increases in both net interest income and non-interest income in the current nine-month period.

Net interest income increased $2.1 million, or 4%, to $58.4 million for the three months ended June 30, 2009 from $56.3 million for the three months ended June 30, 2008. Interest rate spread increased 19 basis points to 1.73% for the three months ended June 30, 2009 from 1.54% for the three months ended June 30, 2008. Net interest income increased $11.6 million, or 7%, to $173.9 million for the nine months ended June 30, 2009 from $162.3 million for the nine months ended June 30, 2008. Interest rate spread increased 30 basis points to 1.68% for the nine months ended June 30, 2009 from 1.38% for the nine months ended June 30, 2008. The increase in net interest income in both periods resulted from a decrease in the interest paid on interest-bearing liabilities, partially offset by a decrease in interest received on interest-earning assets.

The Company recorded a provision for loan losses of $20.0 million for the three months ended June 30, 2009 and $18.0 million for the three months ended June 30, 2008. This compares to net charge-offs of $23.8 million and $3.9 million for the three months ended June 30, 2009 and 2008, respectively. The Company's provision for loan losses was $58.0 million for the nine months ended June 30, 2009 and $25.5 million for the nine months ended June 30, 2008. The provisions exceeded net charge-offs of $45.9 million and $8.4 million for the nine months ended June 30, 2009 and 2008, respectively. Of the $45.9 million of net charge-offs for the nine months ended June 30, 2009, $37.9 million occurred in the equity loans and lines of credit portfolio. The increased level of charge-offs in this portfolio is not unexpected. As increasing delinquencies in this portfolio have been resolved through pay-off, short sale or foreclosure, or management determines the collateral is not sufficient to satisfy the loan, uncollected balances have been charged against the allowance for loan losses previously provided. Loans continue to be evaluated as they become delinquent for potential loss and provisions recorded for our estimate of those losses. The allowance for loan losses was $55.9 million, or 0.59% of total loans receivable, at June 30, 2009, compared to $43.8 million, or 0.47% of total loans receivable, at September 30, 2008.

Nonperforming loans increased by $65.6 million to $238.4 million at June 30, 2009 from $172.9 million at September 30, 2008. Of the $65.6 million increase in non-performing loans for the nine months ended June 30, 2009, $40.5 million occurred in the residential, non-Home Today portfolio, $15.0 million occurred in the residential, Home Today portfolio and $5.3 million occurred in the equity loans and lines of credit portfolio. The increase in our residential, non-Home Today portfolio was general in nature and reflective of the progressive deterioration of general market conditions with specific negative implications in the housing markets of our primary geographic operating areas. As of June 30, 2009, the equity loans and lines of credit portfolio was $2.95 billion, compared to $2.49 billion, at September 30, 2008.

Non-interest income increased $9.6 million, or 80%, to $21.5 million for the three months ended June 30, 2009 from $11.9 million for the three months ended June 30, 2008. The increase primarily resulted from an $8.6 million increase in net gain on the sale of loans. Non-interest income increased $14.9 million, or 42%, to $50.6 million for the nine months ended June 30, 2009 from $35.7 million for the nine months ended June 30, 2008. The increase primarily resulted from a $25.6 million increase in net gain on the sale of loans, offset by a $4.2 million reduction of income (loss) on private equity investments and a $3.6 million reduction in fees and service charges.

Non-interest expense increased $6.5 million, or 17%, to $45.8 million for the three months ended June 30, 2009 from $39.3 million for the three months ended June 30, 2008. The increase primarily resulted from a $7.8 million increase in federal insurance premiums. Non-interest expense increased $17.3 million, or 16%, to $126.8 million for the nine months ended June 30, 2009 from $109.5 million for the nine months ended June 30, 2008. The increase primarily resulted from a $12.3 million increase in federal insurance premiums.

Total assets decreased by $3.3 million, or less than 1%, to $10.78 billion at June 30, 2009 from $10.79 billion at September 30, 2008. Although minimal, this change was the result of a decrease in investment securities offset by increases in cash and cash equivalents and in the loan portfolio.

Deposits increased $236.4 million, or 3%, to $8.50 billion at June 30, 2009 from $8.26 billion at September 30, 2008. The increase in deposits was primarily the result of a $368.7 million increase in certificates of deposit offset by $95.1 million and $39.8 million decreases in our high yield checking accounts and high yield savings accounts, respectively, for the nine-month period ended June 30, 2009.

Borrowed funds decreased $307.9 million, or 62%, to $190.2 million at June 30, 2009 from $498.0 million at September 30, 2008, mainly through the success of deposit gathering activities and the use of cash flows from maturing investments and loan sales.

Principal, interest and related escrow owed on loans serviced increased $151.0 million, or 187%, to $231.7 million at June 30, 2009 from $80.7 million at September 30, 2008, due to the timing of when payments have been collected from borrowers for loans serviced for other investors and when those funds are remitted to the investors and to the appropriate taxing agencies.

Shareholders' equity decreased $66.9 million, to $1.78 billion at June 30, 2009 from $1.84 billion at September 30, 2008. This reflects $27.3 million of net income during the nine-month period reduced by $14.5 million in dividends paid on our shares of common stock (other than the shares held by Third Federal Savings, MHC and unallocated ESOP shares) and $90.3 million of repurchases of outstanding common stock during the nine-month period. The remainder of the change reflects adjustments related to the allocation of shares of our common stock related to awards under the stock-based compensation plans and our employee stock ownership plan. A total of 410,850 shares were repurchased during the three months ended June 30, 2009, and a total of approximately 7.3 million shares have been repurchased during the nine months ended June 30, 2009. There are 2,889,150 shares remaining to be purchased under the Company's fourth repurchase program, which was approved March 12, 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, Freddie Mac or
   the Federal Home Loan Bank;
 * 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)
 ---------------------------------------------------------------------

                                                June 30,     Sept. 30,
                                                 2009          2008
                                              -----------  -----------
 ASSETS

 Cash and due from banks                      $    42,701  $    57,888
 Other interest-bearing cash equivalents          130,079       74,491
                                              -----------  -----------
            Cash and cash equivalents             172,780      132,379
                                              -----------  -----------
 Investment securities:
   Available for sale (amortized cost
    $25,152 and $30,861, respectively)             25,611       31,102
   Held to maturity (fair value $630,061
    and $820,047, respectively)                   619,570      817,750
                                              -----------  -----------
            Total investment securities           645,181      848,852
                                              -----------  -----------
 Mortgage loans held for sale (includes
  $250,100 measured at fair value for the
  period ended June 30, 2009)                     263,168      200,670
 Loans held for investment, net:
   Mortgage loans                               9,373,919    9,259,529
   Other loans                                      7,425        7,599
   Deferred loan fees, net                        (10,338)     (14,596)
   Allowance for loan losses                      (55,868)     (43,796)
                                              -----------  -----------
            Loans, net                          9,315,138    9,208,736
                                              -----------  -----------
 Mortgage loan servicing assets, net               36,603       41,526
 Federal Home Loan Bank stock, at cost             35,620       35,620
 Real estate owned                                 14,859       14,108
 Premises, equipment, and software, net            66,504       68,112
 Accrued interest receivable                       38,813       46,371
 Bank owned life insurance contracts              156,196      151,294
 Other assets                                      38,278       38,783
                                              -----------  -----------
 TOTAL ASSETS                                 $10,783,140  $10,786,451
                                              ===========  ===========

 LIABILITIES AND SHAREHOLDERS' EQUITY

 Deposits                                     $ 8,497,485  $ 8,261,101
 Borrowed funds                                   190,158      498,028
 Borrowers' advances for insurance
  and taxes                                        21,974       48,439
 Principal, interest, and related escrow
  owed on loans serviced                          231,683       80,675
 Accrued expenses and other liabilities            65,096       54,556
                                              -----------  -----------
            Total liabilities                   9,006,396    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;
  308,957,900 and 316,233,550 outstanding
  at June 30, 2009 and September 30, 2008,
  respectively                                      3,323        3,323
 Paid-in capital                                1,678,141    1,672,953
 Treasury stock, at cost; 23,360,850 shares
  at June 30, 2009 and 16,085,200 shares
  at September 30, 2008                          (282,368)    (192,662)
 Unallocated ESOP shares                          (89,250)     (93,545)
 Retained earnings--substantially restricted      474,966      462,190
 Accumulated other comprehensive loss              (8,068)      (8,607)
                                              -----------  -----------
            Total shareholders' equity          1,776,744    1,843,652
                                              -----------  -----------
 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $10,783,140  $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 Nine Months
                         Ended June 30,            Ended June 30,
                        2009         2008         2009        2008
                    -----------  -----------  -----------  -----------
 INTEREST AND
  DIVIDEND INCOME:
  Loans,
   including fees   $   110,863  $   118,645  $   347,955  $   363,713
  Investment
   securities
   available
   for sale                 176          388          644        1,448
  Investment
   securities
   held to
   maturity               6,374       10,471       23,256       33,436
  Federal funds
   sold                       1        1,254            1       14,480
  Other interest
   and dividend
   earning assets           456          806        1,312        3,047
                    -----------  -----------  -----------  -----------
    Total
     interest and
     dividend
     income             117,870      131,564      373,168      416,124
                    -----------  -----------  -----------  -----------

 INTEREST EXPENSE:
  Deposits               59,032       75,244      197,165      253,772
  Borrowed funds            485           19        2,102           19
                    -----------  -----------  -----------  -----------
    Total
     interest
     expense             59,517       75,263      199,267      253,791
                    -----------  -----------  -----------  -----------

 NET INTEREST
  INCOME                 58,353       56,301      173,901      162,333
 PROVISION FOR
  LOAN LOSSES            20,000       18,000       58,000       25,500
                    -----------  -----------  -----------  -----------
 NET INTEREST
  INCOME AFTER
  PROVISION FOR
  LOAN LOSSES            38,353       38,301      115,901      136,833
                    -----------  -----------  -----------  -----------

 NON-INTEREST
  INCOME
  Fees and
   service
   charges, net
   of amortization        4,233        6,454       15,249       18,871
  Mortgage
   servicing
   assets recovery
   (impairment)           3,972           67       (2,596)          32
  Net gain on the
   sale of loans          9,413          828       28,863        3,282
  Increase in and
   death benefits
   from bank owned
   life insurance
   contracts              1,646        1,659        4,917        4,921
  Income (loss) on
   private equity
   investments              542        1,158       (1,028)       3,173
  Other                   1,721        1,780        5,176        5,420
                    -----------  -----------  -----------  -----------
    Total
     non-interest
     income              21,527       11,946       50,581       35,699
                    -----------  -----------  -----------  -----------

 NON-INTEREST
  EXPENSE:
  Salaries and
   employee
   benefits              20,330       17,931       59,105       54,422
  Marketing
   services                 900        3,525        7,952       10,578
  Office property,
   equipment,
   and software           5,654        4,932       16,536       13,891
  Federal
   insurance
   premium                9,771        1,964       15,528        3,258
  State franchise
   tax                    1,211        1,657        3,988        4,027
  Real estate
   owned expense,
   net                    1,582        2,036        5,787        4,815
  Other operating
   expenses               6,374        7,286       17,890       18,459
                    -----------  -----------  -----------  -----------
    Total
     non-interest
     expense             45,822       39,331      126,786      109,450
                    -----------  -----------  -----------  -----------

 INCOME BEFORE
  INCOME TAXES           14,058       10,916       39,696       63,082
 INCOME TAX
  EXPENSE                 4,022        4,126       12,411       22,653
                    -----------  -----------  -----------  -----------
 NET INCOME         $    10,036  $     6,790  $    27,285  $    40,429
                    ===========  ===========  ===========  ===========
 Earnings per
  share - basic
  and fully
  diluted           $      0.03  $      0.02  $      0.09  $      0.13
 Weighted
  average shares
  outstanding
   Basic            300,245,981  320,510,396  301,741,110  321,795,514
   Diluted          300,635,381  320,510,396  302,111,141  321,795,514


 TFS FINANCIAL CORPORATION AND SUBSIDIARIES

 AVERAGE BALANCES AND YIELDS (unaudited)

                                           Three Months Ended
                                             June 30, 2009
                                     -------------------------------
                                                   Interest
                                      Average       Income/   Yield/
                                      Balance       Expense   Cost(a)
                                     -----------  -----------  -----
                                        (Dollars in thousands)

 Interest-earning assets:
 Federal funds sold                  $     1,600  $         1  0.25%
 Other interest-bearing
  cash equivalents                       169,897           61  0.14%
 Investment securities                    18,124          111  2.45%
 Mortgage-backed securities              680,675        6,439  3.78%
 Loans                                 9,567,973      110,863  4.63%
 Federal Home Loan Bank stock             35,620          395  4.44%
                                     -----------  -----------
   Total interest-earning assets      10,473,889      117,870  4.50%
                                                  -----------
 Non-interest-earning assets             307,035
                                     -----------
   Total assets                      $10,780,924
                                     ===========

 Interest-bearing liabilities:
 NOW accounts                        $ 1,042,960        1,779  0.68%
 Passbook savings                      1,127,302        3,497  1.24%
 Certificates of deposit               6,248,253       53,756  3.44%
 Borrowed funds                          182,293          485  1.06%
                                     -----------  -----------
   Total interest-bearing
    liabilities                        8,600,808       59,517  2.77%
                                                  -----------
 Non-interest-bearing liabilities        392,571
                                     -----------
   Total liabilities                   8,993,379
 Shareholders' equity                  1,787,545
                                     -----------
     Total liabilities and
      shareholders' equity           $10,780,924
                                     ===========
 Net interest income                              $    58,353
                                                  ===========
 Interest rate spread(b)                                       1.73%
                                                               =====
 Net interest-earning assets(c)      $ 1,873,081
                                     ===========
 Net interest margin(d)                                 2.23%(a)
                                                  ===========
 Average interest-earning assets
   to average interest-bearing
   liabilities                           121.78%
                                     ===========


                                           Three Months Ended
                                             June 30, 2008
                                     -------------------------------
                                                    Interest
                                      Average       Income/   Yield/
                                      Balance       Expense   Cost(a)
                                     -----------  -----------  -----
                                         (Dollars in thousands)

 Interest-earning assets:
 Federal funds sold                  $   231,237  $     1,254  2.17%
 Other interest-bearing
  cash equivalents                        53,258          331  2.49%
 Investment securities                    28,987          222  3.06%
 Mortgage-backed securities              915,114       10,638  4.65%
 Loans                                 8,808,113      118,645  5.39%
 Federal Home Loan Bank stock             34,683          474  5.47%
                                     -----------  -----------
   Total interest-earning assets      10,071,392      131,564  5.23%
                                                  -----------
 Non-interest-earning assets             341,596
                                     -----------
   Total assets                      $10,412,988
                                     ===========

 Interest-bearing liabilities:
 NOW accounts                        $ 1,266,661        5,974  1.89%
 Passbook savings                      1,411,285        8,647  2.45%
 Certificates of deposit               5,481,524       60,623  4.42%
 Borrowed funds                            3,570           19  2.13%
                                     -----------  -----------
   Total interest-bearing
    liabilities                        8,163,040       75,263  3.69%
                                                  -----------
 Non-interest-bearing liabilities        235,368
                                     -----------
   Total liabilities                   8,398,408
 Shareholders' equity                  2,014,580
                                     -----------
     Total liabilities and
      shareholders' equity           $10,412,988
                                     ===========
 Net interest income                              $    56,301
                                                  ===========
 Interest rate spread(b)                                       1.54%
                                                               =====
 Net interest-earning assets(c)      $ 1,908,352
                                     ===========
 Net interest margin(d)                                 2.24%(a)
                                                  ===========
 Average interest-earning assets
   to average interest-bearing
   liabilities                           123.38%
                                     ===========

 (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.


 TFS FINANCIAL CORPORATION AND SUBSIDIARIES

 AVERAGE BALANCES AND YIELDS (unaudited)

                                           Nine Months Ended
                                             June 30, 2009
                                     -------------------------------
                                                   Interest
                                      Average       Income/   Yield/
                                      Balance       Expense   Cost(a)
                                     -----------  -----------  -----
                                          (Dollars in thousands)
 Interest-earning assets:
 Federal funds sold                  $       455  $         1  0.29%
 Other interest-bearing
  cash equivalents                        57,587           72  0.17%
 Investment securities                    17,775          360  2.70%
 Mortgage-backed securities              753,043       23,540  4.17%
 Loans                                 9,626,338      347,955  4.82%
 Federal Home Loan Bank stock             35,620        1,240  4.64%
                                     -----------  -----------
   Total interest-earning assets      10,490,818      373,168  4.74%
                                                  -----------
 Non-interest-earning assets             322,585
                                     -----------
   Total assets                      $10,813,403
                                     ===========

 Interest-bearing liabilities:
 NOW accounts                        $ 1,061,972        7,584  0.95%
 Passbook savings                      1,124,485       12,743  1.51%
 Certificates of deposit               6,153,471      176,838  3.83%
 Borrowed funds                          346,722        2,102  0.81%
                                     -----------  -----------
   Total interest-bearing
    liabilities                        8,686,650      199,267  3.06%
                                                  -----------
 Non-interest-bearing liabilities        323,682
                                     -----------
   Total liabilities                   9,010,332
 Shareholders' equity                  1,803,071
                                     -----------
     Total liabilities and
      shareholders' equity           $10,813,403
                                     ===========
 Net interest income                              $   173,901
                                                  ===========
 Interest rate spread(b)                                       1.68%
                                                               =====
 Net interest-earning assets(c)      $ 1,804,168
                                     ===========
 Net interest margin(d)                                 2.21%(a)
                                                  ===========
 Average interest-earning assets
  to average interest-bearing
  liabilities                            120.77%
                                     ===========


                                           Nine Months Ended
                                             June 30, 2008
                                     -------------------------------
                                                    Interest
                                      Average       Income/   Yield/
                                      Balance       Expense   Cost(a)
                                     -----------  -----------  -----
                                           (Dollars in thousands)
 Interest-earning assets:
 Federal funds sold                  $   515,548  $    14,480  3.74%
 Other interest-bearing
  cash equivalents                        53,294        1,522  3.81%
 Investment securities                    44,972        1,205  3.57%
 Mortgage-backed securities              892,649       33,679  5.03%
 Loans                                 8,526,432      363,713  5.69%
 Federal Home Loan Bank stock             34,383        1,525  5.91%
                                     -----------  -----------
   Total interest-earning assets      10,067,278      416,124  5.51%
                                                  -----------
 Non-interest-earning assets             347,824
                                     -----------
   Total assets                      $10,415,102
                                     ===========

 Interest-bearing liabilities:
 NOW accounts                        $ 1,323,877       25,847  2.60%
 Passbook savings                      1,258,262       29,856  3.16%
 Certificates of deposit               5,608,577      198,069  4.71%
 Borrowed funds                            1,190           19  2.13%
                                     -----------  -----------
   Total interest-bearing
    liabilities                        8,191,906      253,791  4.13%
                                                  -----------
 Non-interest-bearing liabilities        207,338
                                      ----------
   Total liabilities                   8,399,244
 Shareholders' equity                  2,015,858
                                      ----------
     Total liabilities and
      shareholders' equity           $10,415,102
                                     ===========
 Net interest income                              $   162,333
                                                  ===========
 Interest rate spread(b)                                       1.38%
                                                               =====
 Net interest-earning assets(c)      $ 1,875,372
                                     ===========
 Net interest margin(d)                                 2.15%(a)
                                                  ===========
 Average interest-earning assets
  to average interest-bearing
  liabilities                            122.89%
                                     ===========

 (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.


            

Mot-clé


Coordonnées