TFS Financial (US:TFSL)2025-02-06 21:59Capital Ratios and Financial Health - The company's Common Equity Tier 1 Capital ratio is 18.32%, exceeding regulatory requirements for being classified as "Well Capitalized" [135] - The company’s Tier 1 (leverage) capital totaled $1.85 billion, representing 10.89% of net average assets as of December 31, 2024 [144] - The Tier 1 (leverage) capital ratio was 9.96% as of December 31, 2024, indicating a well-capitalized status [163] - As of December 31, 2024, the Company reported total capital to risk-weighted assets of $1,940,628, representing a ratio of 19.15% [259] - The Company maintained tier 1 (leverage) capital to net average assets at $1,854,832, with a ratio of 10.89% [259] - The Company’s tier 1 capital to risk-weighted assets was reported at $1,854,832, with a ratio of 18.32% [259] - The Company’s common equity tier 1 capital to risk-weighted assets was also reported at $1,854,832, with a ratio of 18.31% [259] Loan Originations and Portfolio Composition - The total first mortgage loan originations for the three months ended December 31, 2024, amounted to $176.49 million, a decrease from $272.95 million in the same period of 2023 [147] - The balance of first mortgage loans held for investment as of December 31, 2024, was $11.21 billion, compared to $11.43 billion as of September 30, 2024 [148] - Total loans receivable amounted to $15.36 billion, with a weighted average yield of 4.52% as of December 31, 2024 [150] - As of December 31, 2024, 90% of the company's assets consisted of residential real estate loans and home equity loans and lines of credit [160] - The total residential core loans reached $11,170,777,000, accounting for 72.8% of the loan portfolio, down from 74.2% in the prior quarter [187] - Home equity lines of credit totaled $3.51 billion, with an average yield of 6.60% [152] - Home equity loans totaled $608,454,000, which is 4.0% of total loans, up from 3.6% in the previous quarter [187] - The company has extended its lending activities to 25 other states and the District of Columbia to reduce concentration risk in Ohio and Florida [162] Interest Rate Management and Risk Exposure - The company’s marketing strategy includes promoting adjustable-rate loans and shorter-term fixed-rate loans to manage interest rate risk [145] - The yield on ARM loans scheduled for interest rate reset in 2025 is 3.94% with a total current balance of $730.49 million [148] - The Company’s interest rate risk management strategy includes monitoring and managing its net interest income sensitivity to changes in market interest rates [261] - In the event of a 200 basis point increase in interest rates, the Company would experience a 26.35% decrease in estimated economic value of equity (EVE) [271] - A 100 basis point decrease in interest rates would lead to an 8.89% increase in the Company's EVE [274] - The overall interest rate risk exposure is indicated by the EVE measurements, which are not precise forecasts of actual results [276] Credit Quality and Allowance for Losses - The allowance for credit losses on loans at the end of the period was $70.6 million, with a total allowance for credit losses of $97.8 million [180] - The allowance for credit losses on loans was $70,559,000, representing 100% of total loans, consistent with the previous quarter [187] - The percentage of loans seriously delinquent (90 days or more) was 0.10% of total net loans as of December 31, 2024, reflecting a slight increase from 0.09% at September 30, 2024 [204] - Serious delinquencies in the home equity lines of credit portfolio remained stable at 0.03% for both periods [206] - The total charge-offs for the three months ended December 31, 2024, were $317, down from $510 in the same period of 2023 [176] - The company recorded a $1.5 million net release of allowance for credit losses for the period, consisting of a $0.9 million release of provision on loans [180] Income and Expense Trends - Net income increased by $1.7 million, or 8%, to $22.4 million for the quarter ended December 31, 2024 [227] - Interest and dividend income increased by $9.6 million, or 5%, to $186.8 million during the current quarter [230] - Interest expense increased by $10.3 million, or 10%, to $118.4 million during the current quarter, compared to $108.1 million for the quarter ended December 31, 2023 [232] - Non-interest income increased by $0.2 million, or 3%, to $6.5 million during the current quarter, primarily due to an increase in net gain on the sale of loans [239] - Non-interest expense decreased by $2.4 million, or 5%, to $47.9 million during the current quarter, compared to $50.3 million for the quarter ended December 31, 2023 [240] Asset and Deposit Management - Total assets decreased by $33.2 million, or less than 1%, to $17.06 billion at December 31, 2024, from $17.09 billion at September 30, 2024 [213] - Total deposits increased by $12.2 million, or less than 1%, to $10.21 billion at December 31, 2024 [220] - Average deposits per full-time employee were $11.0 million, with average deposits held at branch offices amounting to $246.2 million as of December 31, 2024 [168] - The company retains additional borrowing capacity totaling $3.12 billion under arrangements with the FHLB of Cincinnati and the FRB Cleveland [137] - The company had $158.8 million in cash and a demand loan from the Association available for its operations as of December 31, 2024 [259]