TFS Financial (TFSL) investor relations material

Executive summary

• Net income rose 7.5% to $21.5M for the quarter and 5.9% to $65.0M for nine months, driven by higher net interest and non-interest income, and strong equity line originations.

• Total assets increased 1.7% to $17.38B since September 30, 2024, mainly due to growth in loans held for investment, especially home equity products.

• Capital ratios remain strong, with CET1 at 17.75% and leverage ratio at 10.86%, well above regulatory requirements.

• Equity lines of credit originations grew 17% year-over-year, with total originations and acquired mortgage loans nearing $700M year-to-date.

Financial highlights

• Net interest income for the quarter was $75.0M, up 4.2% sequentially and year-over-year; for nine months, $215.4M, up 2.7% year-over-year.

• Interest and dividend income increased 3.5% to $191.4M for the quarter and 3.4% to $564.1M for nine months, mainly from higher loan yields and balances.

• Provision for credit losses was $1.5M for the quarter and nine months, with allowance for credit losses rising to $102.4M (0.66% of loans receivable).

• Non-interest income rose 12.8% to $7.0M for the quarter and 12.6% to $20.6M for nine months, driven by higher loan fees and gains on loan sales.

• Non-interest expense increased 4.7% to $53.2M for the quarter but decreased 0.7% to $152.2M for nine months.

Outlook and guidance

• Management expects continued focus on interest rate risk, credit quality, liquidity, and expense control amid economic uncertainty and potential further Fed easing.

• Management remains optimistic for the year, citing strong purchase mortgage activity and improved net interest margin despite a weaker home buying season.

• Capital deployment will prioritize dividends and share repurchases, supported by strong capital and liquidity positions.