TFS Financial (US:TFSL)2026-02-05 22:14Capital Ratios and Requirements - The company's Common Equity Tier 1 Capital ratio is 17.35%, exceeding the regulatory requirement for being considered "Well Capitalized" [141] - The company is committed to maintaining regulatory capital in excess of levels required to be considered well capitalized [153] - The Association's Tier 1 (leverage) capital ratio was 9.81% as of December 31, 2025, indicating a well-capitalized status despite a $65 million cash dividend payment [168] - The Company aims to maintain minimum capital ratios exceeding total capital to risk-weighted assets of 13.0%, tier 1 capital to net average assets of 9.0%, and tier 1 capital to risk-weighted assets of 11.0% [258] - As of December 31, 2025, the Company reported total capital to risk-weighted assets of $1,978,291, representing a ratio of 18.31% [260] Loan and Mortgage Activity - First mortgage loan originations for the three months ended December 31, 2025, totaled $315.39 million, a 78.6% increase from $176.49 million in the same period of 2024 [154] - The balance of first mortgage loans held for investment as of December 31, 2025, was $10.68 billion, down from $10.84 billion as of September 30, 2025 [154] - The average credit score for first mortgage loans originated during the current quarter was 772, with an average loan-to-value (LTV) ratio of 71% [166] - As of December 31, 2025, loans originated or acquired had a balance of $15.83 billion, with only $36.8 million, or 0.23%, classified as delinquent [166] - The total residential core loans reached $10.68 billion, with a significant portion being in the <80% loan-to-value (LTV) category, totaling $5.45 billion [194] Interest Rate Management - The company maintains a multi-disciplined risk management program that includes stress testing and scenario analysis for interest rate risk, credit risk, market risk, and liquidity risk [144] - The company utilizes interest rate swaps to convert short-term FHLB advances and brokered certificates of deposit into long-term, fixed-rate borrowings [153] - The company employs interest rate swaps to extend the duration of its funding sources, aiming to manage interest rate risk effectively [160] - The interest rate spread improved to 1.47% for the quarter ended December 31, 2025, compared to 1.34% for the same quarter in 2024 [225] - In the event of a 200 basis point increase in interest rates, the Company would experience a 19.98% decrease in estimated economic value of equity (EVE) to $1,279,286 [272] Credit Losses and Delinquencies - The allowance for credit losses on loans increased to $74.98 million by the end of the period, with total charge-offs amounting to $448,000 [180] - The total allowance for credit losses decreased to $104.1 million from $104.4 million at the end of the previous quarter, with a net release of $1.0 million for the period [183] - The allowance for credit losses on loans to non-accrual loans was 192.39% at the end of the period, indicating strong coverage [180] - The total amount of loans delinquent for 90 days or more was $17.32 million, representing 0.11% of total net loans [206] - Delinquencies in the home equity lines of credit portfolio have shown an upward trend due to elevated interest rates tied to the prime rate [207] Financial Performance - Net income decreased by $0.1 million, or 0.4%, to $22.3 million for the quarter ended December 31, 2025, from $22.4 million for the same quarter in 2024 [227] - Total shareholders' equity increased by $7.0 million, or less than 1%, to $1.90 billion at December 31, 2025, from $1.89 billion at September 30, 2025 [223] - Interest and dividend income increased by $11.0 million, or 5.9%, to $197.8 million compared to $186.8 million in the same quarter last year [229] - Non-interest income rose by $1.5 million, or 23.1%, to $8.0 million, primarily due to increases in loan fees and net gains on loan sales [239] - Non-interest expense increased by $8.3 million, or 17.3%, to $56.2 million, mainly due to higher marketing expenses and salaries [240] Asset Management - Total assets increased by $42.4 million, or less than 1%, to $17.50 billion at December 31, 2025, from $17.46 billion at September 30, 2025 [212] - Cash and cash equivalents rose by $27.3 million, or 6.4%, to $456.7 million at December 31, 2025, compared to $429.4 million at September 30, 2025 [213] - Loans held for investment increased by $78.4 million, or 0.5%, to $15.74 billion at December 31, 2025, from $15.66 billion at September 30, 2025 [216] - The total home equity lines of credit increased to $4.239 billion as of December 31, 2025, from $4.063 billion at September 30, 2025 [189] - The total home equity loans increased to $809.4 million as of December 31, 2025, compared to $749.5 million at September 30, 2025 [189]