Core Viewpoint - TFS Financial (TFSL) is experiencing solid improvement in earnings estimates, which may lead to continued short-term price momentum for the stock [1][2]. Estimate Revisions - The rising trend in estimate revisions reflects growing analyst optimism regarding TFS Financial's earnings prospects, which is expected to positively impact its stock price [2]. - For the current quarter, TFS Financial is projected to earn $0.07 per share, with a 16.67% increase in the Zacks Consensus Estimate over the last 30 days, indicating no negative revisions [4]. - For the full year, the expected earnings are $0.29 per share, showing a year-over-year change of +3.57%, with an 11.54% increase in consensus estimates over the past month [5]. Zacks Rank - TFS Financial currently holds a Zacks Rank 2 (Buy), supported by favorable estimate revisions, which historically lead to significant outperformance compared to the S&P 500 [6]. - Stocks with Zacks Rank 1 (Strong Buy) and 2 (Buy) have demonstrated a strong track record, with Zacks 1 Ranked stocks averaging a +25% annual return since 2008 [3][6]. Investment Outlook - The stock has increased by 7.6% over the past four weeks due to strong estimate revisions, suggesting potential for further upside, making it a candidate for portfolio addition [7].

Financial Performance - The company reported net income of $22.4 million for Q1 FY2025, an increase of 23.08% from $18.2 million in Q4 FY2024[3] - Net income for the three months ended December 31, 2024, was $22,426 thousand, an increase of 23.8% compared to $18,215 thousand for the previous quarter[30] - The company reported a basic earnings per share of $0.08 for the quarter, compared to $0.06 in the previous quarter, marking a 33.3% increase[30] Income and Expenses - Net interest income decreased by $0.4 million, or 0.58%, to $68.3 million compared to the previous quarter, primarily due to a decline in short-term interest rates[4] - Total interest and dividend income for the quarter was $186,768 thousand, a decrease of 0.4% from $188,516 thousand in the prior quarter[30] - Net interest income after provision for credit losses was $69,828 thousand, up from $67,715 thousand in the previous quarter, reflecting a growth of 3.1%[30] - Non-interest income totaled $6,503 thousand, showing a slight increase from $6,420 thousand in the previous quarter[30] - Total non-interest expense decreased by $3.2 million, or 6.26%, to $47.9 million, driven by reductions in marketing costs and other expenses[7] Asset and Liability Management - Total assets decreased by $33.2 million, or less than 1%, to $17.06 billion, primarily due to declines in investment securities[13] - Total liabilities decreased to $15,143,309 thousand from $15,228,161 thousand, a reduction of 0.56%[29] - Total liabilities stood at $15,099,879 thousand, with total shareholders' equity at $1,915,478 thousand[31] Credit Quality and Risk Management - Total loan delinquencies increased to $36.3 million, or 0.24% of total loans receivable, up from $31.9 million, or 0.21% in the prior quarter[6] - The total allowance for credit losses was $97.8 million, or 0.64% of total loans receivable, unchanged from the previous quarter[5] - The allowance for credit losses on loans increased slightly to $(70,559) thousand from $(70,002) thousand, indicating a cautious approach to credit risk management[29] - The company experienced a provision release for credit losses of $(1,500) thousand, compared to a provision of $1,000 thousand in the previous quarter, indicating improved credit quality[30] Capital and Dividends - The company's Tier 1 capital ratio was reported at 10.89%, indicating strong capital adequacy[23] - The company declared a quarterly dividend of $0.2825 per share during the quarter[22] Deposits and Loans - Deposits increased by $12.2 million, or less than 1%, to $10.21 billion, with a significant contribution from a special CD offering that attracted $350 million in deposits[18] - Loans held for investment increased by $20.9 million, or less than 1%, to $15.34 billion, despite a decrease in the portfolio of loans held for sale[15] - Deposits increased to $10,207,257 thousand from $10,195,079 thousand, reflecting a growth of 0.12%[29] Interest Rates and Margins - The yield on loans was 4.49% for the three months ended December 31, 2024, compared to 4.26% for the same period in 2023[31] - The net interest margin for the three months ended December 31, 2024, was 1.66%, down from 1.68% in December 2023[31] - The interest rate spread decreased to 1.34% for the three months ended December 31, 2024, from 1.39% in December 2023[31] Asset Composition - Total assets decreased slightly to $17,057,586 thousand as of December 31, 2024, from $17,090,785 thousand on September 30, 2024, representing a decline of 0.19%[29] - Total interest-earning assets increased to $16,490,723 thousand for the three months ended December 31, 2024, with a net interest income of $68,328 thousand[31] - The average balance of loans was $15,326,120 thousand, showing a slight increase from $15,232,349 thousand in December 2023[31] - The average balance of certificates of deposit increased to $8,058,740 thousand, with an interest expense of $74,499 thousand, yielding 3.70%[31] - Average interest-earning assets to average interest-bearing liabilities ratio was 111.21% for the three months ended December 31, 2024[31]

Company Overview - TFS Financial (NASDAQ: TFSL) has a unique ownership structure where 81% of shares are owned by Third Federal MHC, with the remaining shares held by institutional and retail investors [1] Investment Insights - The unusual ownership structure may present unique investment opportunities and risks for potential investors [1]

Loan Portfolio - As of September 30, 2024, the total loans receivable amounted to $15.33 billion, an increase from $15.17 billion in the previous year, reflecting a growth of 1.1%[30] - Fixed-rate and adjustable-rate first mortgage residential real estate loans totaled $11.43 billion, representing 74.5% of the loan portfolio, while home equity lines of credit reached $3.32 billion, accounting for 21.7%[30] - The company reported a total of $3.89 billion in home equity loans and lines of credit, which is a 28.2% increase from $3.03 billion in the previous year[32] - Adjustable-rate residential real estate first mortgage loans totaled $4.38 billion, comprising 28.5% of the loan portfolio[30] - The total amount of residential core loans was $11.41 billion, down from $12.08 billion, reflecting a decrease of 5.6%[32] - The total loans receivable as of September 30, 2024, was $15.34 billion, with $11.39 billion in Residential Core loans[40] - The Company originated $888.03 million in net real estate loans, a significant increase from $1.67 billion in the previous year[35] - Home equity loans in Ohio increased to $916.75 million, up from $773.32 million, marking a growth of 18.5%[32] - The Company originated construction loans totaling $21.7 million, which accounted for 0.2% of total loans receivable as of September 30, 2024[55] Credit Quality - The allowance for credit losses on loans decreased to $70.00 million from $77.31 million, indicating improved credit quality[32] - Total loans seriously delinquent (90 days or more) were 0.09% of total net loans as of September 30, 2024, unchanged from the previous year[66] - The percentage of seriously delinquent loans in the residential Core portfolio increased from 0.05% to 0.06% year-over-year[66] - Total non-accrual loans increased to $33.610 million in September 2024 from $31.914 million in September 2023[72] - Total non-performing assets were $33.784 million as of September 30, 2024, compared to $33.358 million in the previous year[72] - The allowance for credit losses includes $42.8 million in substandard assets, with $13.9 million of loans 90 or more days past due[80] - The company modified $7.7 million of loans during the fiscal year, with $3.1 million being less than 90 days past due[72] - Home equity loans and lines of credit portfolio remained at 0.03% for seriously delinquent loans[66] - The total amortized cost of collateral-dependent loans was $39.577 million as of September 30, 2024, compared to $38.229 million in 2023[78] Allowance for Credit Losses - The allowance for credit losses decreased to $97.8 million as of September 30, 2024, down from $104.8 million at September 30, 2023[94] - The allowance balance for loans at the end of the year was $70.0 million, compared to $77.3 million at the beginning of the year[94] - The total allowance for credit losses allocated to home equity loans and lines of credit was $28.2 million, representing 40.3% of the total allowance[94] - The allowance for credit losses on loans to non-accrual loans was 208.28% at the end of the year, compared to 242.26% the previous year[89] - The company established an allowance for unfunded commitments of $27.8 million at the end of the year, up from $27.5 million[94] Deposits and Borrowings - As of September 30, 2024, total deposits amounted to $10.20 billion, with checking accounts totaling $829.9 million and savings accounts totaling $1.32 billion[113] - Certificates of deposit (CDs) totaled $8.02 billion, including $1.22 billion of brokered CDs, with $4.95 billion having remaining maturities of one year or less[114] - The average balance of total deposits increased to $9.89 billion with a weighted average rate of 2.96% for the year ended September 30, 2024[115] - The Association had $4.79 billion in borrowings outstanding, primarily from the FHLB of Cincinnati, with a maximum borrowing capacity of $6.86 billion[116] - Borrowings with terms of 30 days and under decreased from $592 million in 2023 to $40 million in 2024, while the average interest rate increased from 4.16% to 5.40%[118] - Borrowings with terms of 90 days to 12 months totaled $2.925 billion in 2024, with an average interest rate of 5.50%[118] Regulatory Compliance and Capital - The Association exceeded all regulatory capital requirements to be considered "Well Capitalized" [164] - The Association was in compliance with the loans-to-one borrower limitations as of September 30, 2024 [139] - The Association satisfied the Qualified Thrift Lender (QTL) test as of September 30, 2024 [141] - Minimum capital requirements include a common equity Tier 1 capital ratio of 4.5%, a Tier 1 risk-based capital ratio of 6%, and a total capital ratio of 8%[221] - A capital conservation buffer of 2.5% raises the minimum common equity Tier 1 capital ratio to 7.0%, Tier 1 to risk-based assets capital ratio to 8.5%, and total capital ratio to 10.5%[222] - The total capital to risk-weighted assets ratio is 17.91%, with total capital amounting to $1,795,509 million[165] - The Tier 1 capital to risk-weighted assets ratio stands at 17.17%, with Tier 1 capital amounting to $1,721,625 million[165] Operational Performance - The company employed 919 associates, a decrease from 995 associates in the previous year, with approximately 74% being women[193] - The voluntary turnover rate for the twelve months ending September 30, 2024, was 5.5%, one of the lowest in the industry, with 39% of associates having been with the company for fifteen years or more[194] - The company’s performance is significantly impacted by economic conditions in primary markets, particularly in Ohio and Florida, which could lead to increased non-performing loans[200] - The company’s net interest income is sensitive to changes in interest rates, which could negatively affect net income due to the mismatch in maturities of assets and liabilities[208] Community and Social Responsibility - The Company has maintained a commitment to affordable housing programs, targeting low- and moderate-income home buyers[42] - The company actively promotes a culture of diversity and inclusion, with a focus on recruiting minorities and women[194] - The Association received a "Satisfactory" rating from the OCC for compliance with the Community Reinvestment Act for the period from January 1, 2020, to December 31, 2022 [152]

Capital and Liquidity - As of June 30, 2024, the Company's Common Equity Tier 1 Capital ratio is 18.82%, exceeding regulatory requirements for being "Well Capitalized" [159] - The Company has a combined additional borrowing capacity of $3.77 billion as of June 30, 2024, from various sources [160] - The Company maintains stable core deposits and adequate access to contingent sources of liquidity [158] - As of June 30, 2024, total deposits amounted to $10.03 billion, including $1.22 billion in brokered CDs, while borrowings totaled $4.83 billion [187] - The company has the ability to borrow a maximum of $7.48 billion from the FHLB of Cincinnati as of June 30, 2024 [187] - The liquidity ratio averaged 6.19% for the three months ended June 30, 2024, exceeding the minimum target of 5% [259] - Cash and cash equivalents totaled $560.4 million at June 30, 2024, representing a 20% increase from $466.7 million at September 30, 2023 [260] Loan Portfolio and Performance - The total first mortgage loan originations and purchases amounted to $598.726 million for the period [168] - The balance of first mortgage loans held for investment is $11.588 billion as of June 30, 2024 [170] - Adjustable-rate mortgage (ARM) production accounted for 21.5% of total first mortgage loan originations [168] - Fixed-rate loans greater than 10 years represent 53.4% of the total first mortgage loans held for investment [170] - Home equity loans and lines of credit total $3,588,820,000, yielding 7.43% [172] - The total loans receivable amount to $15,208,831,000, with a yield of 4.52% [172] - The average credit score for first mortgage loans originated during the current quarter was 777, with an average loan-to-value (LTV) ratio of 71% [183] - As of June 30, 2024, only $28.5 million, or 0.2%, of loans originated or purchased were delinquent [183] - The total residential Core loan portfolio was $11,545,509 thousand as of June 30, 2024, representing 75.9% of total loans [206] - The total balance of adjustable-rate mortgages (ARMs) scheduled for interest rate reset is $4,497,753,000 [171] - The total principal balance of home equity lines of credit in the draw period was $3.05 billion, with a delinquency rate of 0.10% [215] - Total loans seriously delinquent (90 days or more) were 0.10% of total net loans at June 30, 2024, compared to 0.09% at September 30, 2023 [219] Income and Expenses - Net income increased by $2.4 million, or 14%, to $20.0 million for the quarter ended June 30, 2024, compared to $17.6 million for the same quarter in 2023 [235] - Interest and dividend income rose by $28.2 million, or 18%, to $184.9 million during the current quarter, up from $156.7 million in the same quarter last year [236] - Interest income on loans increased by $22.0 million, or 15%, to $166.3 million, attributed to a 45 basis point rise in average yield to 4.38% [237] - Interest expense increased by $27.7 million, or 32%, to $115.6 million, primarily due to higher costs of certificates of deposit and borrowed funds [238] - Non-interest income increased by $0.4 million, or 7%, to $6.2 million during the current quarter compared to $5.8 million for the quarter ended June 30, 2023 [243] - Net interest income decreased by $3.5 million, or 2%, to $209.7 million during the nine months ended June 30, 2024, from $213.2 million in the prior year [252] - Non-interest expense decreased by $8.3 million, or 5%, to $153.3 million during the nine months ended June 30, 2024, driven by a reduction in marketing expenses [256] Credit Losses and Allowances - The allowance for credit losses on loans at the end of the period was $67.529 million, compared to $74.803 million at the end of the previous period [195] - The total allowance for credit losses increased to $95.7 million as of June 30, 2024, up from $94.8 million at March 31, 2024 [199] - The allowance for credit losses was $95.7 million, or 0.63% of total loans receivable, at June 30, 2024 [227] - The total charge-offs for the nine months ended June 30, 2024, were $1.014 million, a decrease from $1.099 million for the same period in 2023 [195] - The allowance for credit losses on loans to non-accrual loans at the end of the period was 190.93%, down from 244.28% in the previous period [195] Interest Rate Risk Management - The Company emphasizes a multi-disciplined risk management program, including stress testing and scenario analysis [161] - The Company promotes adjustable-rate loans and shorter-term fixed-rate loans to mitigate interest rate risk [165] - The Company manages interest rate risk through established risk parameter limits and oversight by the Board of Directors [274] - The simulation model used by the Company incorporates extensive regression analytics to assess interest rate risk and is subject to continuous refinement [284] - As of June 30, 2024, a 200 basis point increase in interest rates would result in a 23.46% decrease in the Company's Economic Value of Equity (EVE), amounting to a reduction of $332,249 thousand [277] - The Company's EVE at 0 basis points is estimated at $1,416,123 thousand, with an EVE ratio of 9.00% [277] - A 100 basis point decrease in interest rates would increase the Company's EVE by 7.75%, resulting in an increase of $109,756 thousand [277] - The estimated Earnings at Risk (EaR) for the Company would decrease by 1.00% over the next 12 months with a 200 basis point increase in market interest rates [285] Shareholder Equity and Dividends - Total shareholders' equity decreased by $12.3 million, or 0.6%, to $1.92 billion at June 30, 2024, from $1.93 billion at September 30, 2023 [232] - The Association plans to continue dividend payments and strategic stock repurchases as part of its future capital deployment activities [273]

Financial Performance - The company reported net income of $20.0 million for the quarter ended June 30, 2024, a decrease from $20.7 million in the previous quarter, with net interest income decreasing by $2.1 million, or 3%[3]. - The company reported a fiscal year-to-date net income of $61.4 million for the nine months ended June 30, 2024, an increase of $5.7 million compared to the same period last year[14]. - The Company reported a net income of $61.4 million, with a $42.6 million net decrease in accumulated other comprehensive income primarily due to unrealized gains and losses on swap contracts[27]. - Net income for Q3 2024 was $19,953, representing a 13.5% increase from $17,603 in Q3 2023[37]. - Earnings per share for Q3 2024 remained stable at $0.07, consistent with Q3 2023[37]. Asset and Liability Management - Total assets increased by $17.8 million, or less than 1%, to $17.03 billion, primarily due to increases in loans held for sale and loans held for investment[7][19]. - Total assets amounted to $17.03 billion as of June 30, 2024, compared to $17.02 billion at March 31, 2024, and $16.92 billion at September 30, 2023[36]. - Total liabilities rose to $15,123,014 thousand as of June 30, 2024, compared to $14,240,878 thousand a year earlier, marking an increase of 6.18%[42]. - Total assets increased to $17,062,309 thousand for the nine months ended June 30, 2024, from $16,109,909 thousand in the previous year, reflecting a growth of 5.91%[42]. Deposits and Loans - Retail deposit growth was 6% in the last three months, attributed to strong CD product offerings, with total deposits increasing by $90.3 million to $10.03 billion[4][12]. - Loan originations totaled $2.2 billion with an average yield of 7.31%, while loans held for investment increased by $40.3 million, or less than 1%, to $15.19 billion[4][11]. - Loans held for sale increased by $20.7 million, or 213%, to $30.4 million, due to an increase in loans committed to forward sales[10][20]. - Deposits increased to $10.03 billion as of June 30, 2024, from $9.94 billion at March 31, 2024, and $9.45 billion at September 30, 2023[36]. Interest Income and Expenses - Total interest and dividend income for Q3 2024 reached $184,906, an increase of 18.0% compared to $156,657 in Q3 2023[37]. - The company reported a total interest expense of $115,633 in Q3 2024, up from $87,878 in Q3 2023, reflecting a significant increase of 31.5%[37]. - Net interest income for the nine months ended June 30, 2024, was $209,743 thousand, slightly down from $213,204 thousand in the previous year, indicating a decrease of 2.16%[42]. - The yield on interest-earning assets rose to 4.40% for the nine months ended June 30, 2024, compared to 3.79% for the same period in 2023, representing an increase of 61 basis points[42]. Credit Losses and Allowances - The total allowance for credit losses increased by $0.9 million to $95.7 million, representing 0.63% of total loans receivable[5][17]. - The allowance for credit losses on loans was $67.5 million as of June 30, 2024, down from $77.3 million at September 30, 2023[36]. - The provision for credit losses for Q3 2024 was a release of $500, compared to a provision of $1,000 in Q2 2024[37]. Equity and Capital Ratios - Total shareholders' equity decreased by $12.3 million, or 1%, to $1.92 billion as of June 30, 2024, from $1.93 billion at September 30, 2023[27]. - The Company's Tier 1 leverage ratio was 10.82%, with Common Equity Tier 1 and Tier 1 ratios each at 18.82%, and total capital ratio at 19.55% as of June 30, 2024[30]. - The Company operates under the capital requirements for the standardized approach of the Basel III capital framework, with all capital ratios exceeding the "well capitalized" requirements[29][30]. - Average equity to average assets ratio was 11.37% for the nine months ended June 30, 2024, slightly down from 11.60% in the same period of 2023[42]. Non-Interest Income and Expenses - Total non-interest expense decreased by $1.4 million, or 3%, to $50.8 million for the quarter, driven by reductions in salaries and employee benefits[6]. - Non-interest income totaled $6,245 in Q3 2024, up from $5,843 in Q3 2023, marking a 6.9% increase[37]. - Total non-interest expense decreased to $50,788 in Q3 2024 from $52,877 in Q3 2023, a reduction of 4.1%[37].

Company Overview - TFS Financial Corporation (NASDAQ:TFSL) operates primarily in Ohio and Florida, with a unique two-tiered ownership structure where majority owners hold 80% of shares without dividends, while minority owners hold 20% and receive dividends [2] - The company has maintained a stable business environment, with slight revenue increases quarter-over-quarter but a decrease year-over-year [2] Financial Performance - As of March 31, 2024, total assets were $17,017.15 million, with net loans at $15,156.31 million and deposits at $9,935.63 million, showing minimal changes from previous quarters [4] - The bank's net interest income was $71.378 million, with a net income of $20.713 million, reflecting a stable profitability despite challenging market conditions [4][5] Market Conditions - Rising mortgage rates have increased interest income for the bank, but have also reduced demand for new loans and refinancing, leading to a balance in overall interest income [5][6] - The current 30-year mortgage rate is 6.86%, while the 15-year mortgage rate is 6.16%, indicating a challenging environment for loan origination [6] Dividend Policy - TFS Financial supports a dividend yield of 9%, fully covered by its income due to the unique ownership structure, although there have been no dividend increases in the past four years [7] - The company has a history of consistent dividend payments, which may appeal to income-oriented investors [7] Valuation Metrics - The bank's P/E ratio appears high at 42-46 based on traditional metrics, but when adjusted for its ownership structure, the P/E ratio is more reasonable at around 8-9, making it cheaper than the sector median of 10-11 [9][10] - Valuation metrics vary significantly based on the perspective taken regarding the ownership structure, which may affect investor sentiment [10] Economic Environment - The current economic landscape is characterized by uncertainty, with inflation rates dropping from nearly 10% to 3.5%, yet still above the Federal Reserve's target of 2% [13] - The housing market remains unpredictable, with limited corrections in home prices despite rising unemployment and tighter credit conditions, posing challenges for regional banks like TFS Financial [14]

Capital and Liquidity - As of March 31, 2024, the company's Common Equity Tier 1 Capital ratio is 19.05%, exceeding regulatory requirements for being classified as "Well Capitalized"[152]. - The company has a combined additional borrowing capacity exceeding $3.15 billion as of March 31, 2024, from various sources including FHLB and FRB[154]. - The company has the ability to borrow up to $6.82 billion from the FHLB of Cincinnati, with a remaining capacity of $1.88 billion as of March 31, 2024[178]. - The company exceeded all regulatory requirements to be considered "Well Capitalized" as of March 31, 2024, with total capital to risk-weighted assets at 18.13%[284]. - The company has $152.6 million of funds readily available to support its stand-alone operations as of March 31, 2024[287]. - Total deposits as of March 31, 2024, were $9.94 billion, including $1.26 billion of brokered CDs[177]. - Deposits increased by $485.8 million, or 5.1%, to $9.94 billion as of March 31, 2024, primarily driven by a $868.4 million increase in CDs[231]. - The company had a balance of $1.26 billion in brokered CDs at March 31, 2024, up from $556.8 million at March 31, 2023[277]. Loan Performance and Originations - For the six months ended March 31, 2024, total first mortgage loan originations and purchases amounted to $408.84 million, a decrease from $821.85 million for the same period in 2023[162]. - The balance of first mortgage loans held for investment as of March 31, 2024, is $11.81 billion, a decrease from $12.12 billion as of September 30, 2023[162]. - Home equity lines of credit principal balance reached $2.90 billion, providing interest rate sensitivity indexed to the prime rate[164]. - The company originated $408.8 million of residential mortgage loans and $915.4 million of commitments for home equity loans and lines of credit during the six months ended March 31, 2024, compared to $821.9 million and $720.0 million respectively in the same period of 2023[276]. - Approximately 22.0% of total mortgage loans originated in the six months ended March 31, 2024, were secured by properties in states other than Ohio or Florida[175]. - The average credit score for first mortgage loans originated in the current quarter was 775, with an average loan-to-value (LTV) ratio of 71%[174]. - The total loans receivable amounted to $15.17 billion, with a yield of 4.41%[163]. Interest Income and Expenses - Interest and dividend income increased by $35.9 million, or 24%, to $183.5 million during the current quarter compared to $147.6 million in the same quarter last year[242]. - Interest income on loans increased by $26.2 million, or 19%, to $163.0 million, attributed to a 53 basis point increase in the average yield on loans to 4.30%[243]. - Interest expense increased by $33.8 million, or 43%, to $112.1 million during the current quarter, primarily due to higher costs of certificates of deposit and borrowed funds[244]. - Net interest income increased by $2.1 million to $71.4 million during the current quarter compared to $69.3 million for the same period last year[247]. - Net interest income decreased by $3.9 million, or 3%, to $140.5 million during the six months ended March 31, 2024, driven by a $74.2 million increase in interest income offset by a $78.1 million increase in interest expense[262]. Credit Quality and Allowance for Losses - The allowance for credit losses increased to $94.8 million as of March 31, 2024, from $94.6 million at December 31, 2023[194]. - The allowance for credit losses on loans decreased to $68,169 from $77,315, indicating improved credit quality[201]. - The total charge-offs for the six months ended March 31, 2024, were $751,000, a decrease from $1,008,000 for the same period in 2023[190]. - The total allowance for credit losses on unfunded commitments was $26.7 million at the end of the period[194]. - The allowance for credit losses on loans to non-accrual loans was 193.37% at the end of the period[190]. - The qualitative general valuation allowances (GVAs) are based on factors such as delinquency statistics and economic conditions[184]. Operational Efficiency - Operating expenses were reduced, with a ratio of annualized non-interest expense to average assets at 1.20% for the six months ended March 31, 2024[180]. - Non-interest expense decreased by $6.3 million, or 6%, to $102.5 million during the six months ended March 31, 2024, driven by reductions in salaries and marketing expenses[266]. Community Development - The company has established a long-term revitalization program in the Broadway-Slavic Village neighborhood in Cleveland, Ohio, to support community development[150]. Interest Rate Sensitivity - As of March 31, 2024, a 200 basis point increase in interest rates would result in a 21.57% decrease in the Company's EVE, equating to a reduction of $297,320 thousand[300]. - A 100 basis point decrease in interest rates would lead to a 6.49% increase in the Company's EVE, translating to an increase of $89,452 thousand[300]. - The Company's pre-shock EVE ratio improved to 8.78% from 8.21% as of September 30, 2023, while the post-shock ratio dropped to 7.27%[303]. Financial Performance - Net income rose by $4.8 million, or 30%, to $20.7 million for the quarter ended March 31, 2024, compared to $15.9 million for the same quarter in 2023[241]. - Net income increased by $3.3 million, or 8.7%, to $41.4 million for the six months ended March 31, 2024, compared to $38.1 million for the same period in 2023[256]. - Total assets increased by $99.2 million, or 0.6%, to $17.02 billion at March 31, 2024, from $16.92 billion at September 30, 2023[223].

Financial Performance - The company reported net income of $20.7 million for the quarter ended March 31, 2024, consistent with the previous quarter[2]. - The company reported a net income of $20.71 million for the three months ended March 31, 2024, which is consistent with the net income of $20.71 million from the previous quarter[31]. - Net income for the six months ended March 31, 2024, was $41,420,000, representing an increase of 8.6% from $38,101,000 in the same period of 2023[32]. - Earnings per share for the six months ended March 31, 2024, was $0.15, compared to $0.13 for the same period in 2023, reflecting a growth of 15.4%[32]. Income and Expenses - Net interest income increased by $2.3 million, or 3%, to $71.4 million for the quarter ended March 31, 2024[3]. - Total non-interest expenses increased by $1.9 million, or 4%, to $52.2 million for the quarter ended March 31, 2024[5]. - The company’s total non-interest expense for the three months ended March 31, 2024, was $52.20 million, up from $50.28 million in the previous quarter, representing an increase of approximately 3.8%[31]. - Total non-interest income increased to $12,037,000 for the six months ended March 31, 2024, up 14.8% from $10,486,000 in the same period of 2023[32]. - Total non-interest expense decreased to $102,475,000 for the six months ended March 31, 2024, down 5.9% from $108,768,000 in the same period of 2023[32]. Assets and Liabilities - Total assets decreased by $36.6 million, or less than 1%, to $17.02 billion at March 31, 2024[6]. - As of March 31, 2024, the company's total assets amounted to $17.02 billion, a slight decrease from $17.05 billion at the end of 2023[30]. - The total liabilities as of March 31, 2024, were $15.11 billion, a decrease from $15.19 billion at the end of 2023[30]. - The total allowance for credit losses increased to $94.8 million, or 0.63% of total loans receivable, at March 31, 2024[4]. Loans and Deposits - Loans held for investment decreased by $57.6 million, or less than 1%, to $15.15 billion at March 31, 2024[8]. - Deposits increased by $14.6 million to $9.94 billion at March 31, 2024, with a significant increase in retail certificates of deposit[9]. - Total deposits increased to $9.94 billion as of March 31, 2024, compared to $9.92 billion at the end of 2023, indicating a growth of approximately 0.1%[30]. - The allowance for credit losses on loans decreased to $68.17 million from $69.08 million at the end of 2023, showing a reduction of about 1.3%[30]. Capital and Ratios - The company's Tier 1 capital ratio is nearly 11 percent, indicating strong capital management[2]. - The net interest margin for the six months ended March 31, 2024, was 1.70%, down from 1.86% in the same period of 2023[35]. - The return on average assets for the three months ended March 31, 2024, was 0.48%, compared to 0.40% in the same period of 2023[33]. Branch Presence - The company has 21 full-service branches in Northeast Ohio and 16 full-service branches in Florida, indicating a strong regional presence[26]. Yield and Income Growth - The average yield on loans for the three months ended March 31, 2024, was 4.30%, an increase from 3.77% in the same period of 2023[33]. - Total interest and dividend income for the six months ended March 31, 2024, was $360,652,000, an increase of 25.8% from $286,522,000 in the same period of 2023[32]. - Net interest income after provision for credit losses for the six months ended March 31, 2024, was $142,470,000, compared to $146,425,000 in the prior year, reflecting a decrease of 2.0%[32].

Capital and Liquidity - As of December 31, 2023, the company's Common Equity Tier 1 Capital ratio is 19.02%, exceeding the regulatory requirement for being classified as "Well Capitalized" [146]. - The company has a combined additional borrowing capacity exceeding $3.03 billion as of December 31, 2023, from various sources [148]. - The company maintains a multi-disciplined risk management program that includes stress testing and scenario analysis for various financial risks [149]. - The company has retained ample liquidity and diverse funding sources, with a focus on maintaining access to adequate liquidity to support growth [151]. - The company’s Tier 1 (leverage) capital totaled $1.83 billion, or 10.78% of net average assets, as of December 31, 2023 [153]. - Deposits totaled $9.92 billion, including $1.49 billion of brokered CDs, while borrowings amounted to $5.03 billion as of December 31, 2023 [174]. - The liquidity ratio averaged 6.07% for the three months ended December 31, 2023, exceeding the minimum target of 5% [254]. - The Company had $167.0 million readily available in cash and a demand loan from the Association to support its operations as of December 31, 2023 [270]. Loan Performance and Credit Quality - For the three months ended December 31, 2023, total first mortgage loan originations and purchases amounted to $272.95 million, a decrease from $485.47 million in the same period of 2022 [157]. - The balance of first mortgage loans held for investment as of December 31, 2023, is $11.99 billion, down from $12.12 billion as of September 30, 2023 [157]. - The average credit score for first mortgage loans originated in the current quarter was 776, with an average loan-to-value (LTV) ratio of 71% [171]. - The total allowance for credit losses decreased to $94.6 million as of December 31, 2023, from $104.8 million at September 30, 2023, primarily due to the adoption of ASU 2022-02 [189]. - The allowance for credit losses on loans to non-accrual loans at the end of the period was 206.25% [185]. - Total loans seriously delinquent (90 days or more) were 0.10% of total net loans at December 31, 2023, up from 0.09% at September 30, 2023 [213]. - Total non-performing assets increased to $34.57 million at December 31, 2023, from $33.36 million at September 30, 2023 [216]. Interest Income and Expense - Interest and dividend income increased by $38.2 million, or 27%, to $177.2 million during the current quarter compared to $139.0 million during the same quarter in the prior year [241]. - Interest income on loans rose by $32.3 million, or 25%, to $162.0 million, driven by a 66 basis point increase in the average yield on loans to 4.26% [242]. - Interest expense increased by $44.3 million, or 69%, to $108.1 million during the current quarter, primarily due to higher costs of certificates of deposit and borrowed funds [243]. - Net interest income decreased by $6.1 million to $69.1 million compared to $75.2 million for the same quarter last year, with average interest-earning assets increasing by $972.8 million, or 6% [246]. Asset Management - Total loans receivable as of December 31, 2023, amounted to $15.24 billion, with a yield of 4.34% [160]. - The total residential core loans reached $11,949.5 million, representing 78.4% of total loans, down from 79.4% in the previous quarter and 80.3% a year ago [196]. - Home equity loans and lines of credit increased to $3,197.7 million, accounting for 21.0% of total loans, compared to 19.9% in the previous quarter and 18.5% a year ago [196]. - The unpaid principal balance of the home equity loans and lines of credit portfolio included $454.0 million in home equity loans and $2.74 billion in home equity lines of credit as of December 31, 2023 [203]. - The total construction loans decreased to $40.7 million, down from $48.4 million in the previous quarter and significantly lower than $113.8 million a year ago [196]. Shareholder Equity and Dividends - The total shareholders' equity decreased by $60.6 million, or 3.1%, to $1.87 billion at December 31, 2023, reflecting net income and dividends paid [234]. - The Company waived its right to receive $0.2825 per share dividend payments on September 26, 2023, and December 13, 2023, as approved by its members [274]. - The Company plans to continue dividend payments, support asset growth, and strategic stock repurchases in the future [275]. Risk Management - The company promotes adjustable-rate mortgages, with ARM production accounting for 24.1% of total first mortgage loan originations in Q4 2023, down from 33.5% in Q4 2022 [157]. - The company offers a "Smart Rate" adjustable-rate mortgage that provides improved interest rate risk characteristics compared to traditional fixed-rate loans [154]. - The Company’s interest rate risk management strategy includes the establishment of risk parameter limits and oversight by the Board of Directors [276]. - The Economic Value of Equity (EVE) model uses 150 different interest rate paths to compute market value at the account level, while EaR uses the implied forward curve for interest income/expense calculations [292]. - Specific policy limits for interest rate risk have been established and approved by the Association's Board of Directors, serving as benchmarks for evaluation [294].