TFS Financial (TFSL) - 2024 Q4 - Annual Report

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]