TFS Financial (US:TFSL)2024-05-09 19:25Capital 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].