Exhibit 99.1
Contact: | Monica Martines (216) 441-7346 | |
Cherie Skoczen (216) 429-5194 |
For release Monday, December 17, 2007 – close of business.
TFS Financial Corporation Announces Fourth Quarter and Year Ended September 30, 2007 Financial Results
(Cleveland, OH – December 17, 2007) – TFS Financial Corporation (NASDAQ: TFSL) (the “Company”), the holding company for Third Federal Savings and Loan Association of Cleveland, today announced quarterly and fiscal year results for the period ended September 30, 2007.
The Company reported net income of $15.1 million for the three months ended September 30, 2007, compared to a net loss of $4.7 million for the three months ended September 30, 2006. The Company also reported net income of $25.6 million for the year ended September 30, 2007 compared to net income of $43.5 million for the year ended September 30, 2006. At September 30, 2007, the Company had assets of $10.3 billion; deposits of $8.1 billion and shareholders’ equity of $1.99 billion.
Net interest income increased by $4.4 million, or 9.1%, to $52.0 million for the three months ended September 30, 2007 from $47.6 million for the three months ended September 30, 2006. The increase resulted primarily from interest income earned on the proceeds from our initial public offering. Net interest income decreased by $3.5 million, or 1.76%, to $193.2 million for the year ended September 30, 2007 from $196.7 million for the year ended September 30, 2006. The decrease resulted from the compression of our interest rate spread and our net interest margin, as our interest rate spread decreased 50 basis points to 1.51% for the year ended September 30, 2007 from 2.01% for the year ended September 30, 2006, and our net interest margin decreased 24 basis points to 2.13% for the year ended September 30, 2007 from 2.37% for the year ended September 30, 2006.
Our provision for loan losses was $9.6 million for the year ended September 30, 2007 and $6.1 million for the year ended September 30, 2006. The provisions exceeded net chargeoffs of $5.2 million and $3.9 million for the years ended September 30, 2007 and 2006, respectively. The allowance for loan losses was $25.1 million, or 0.31% of total loans receivable at September 30, 2007, compared to $20.7 million, or 0.27% of total loans receivable, at September 30, 2006. We increased the allowance for loan losses to reflect an increase in non-performing loans from September 30, 2006 to September 30, 2007. Nonperforming loans increased by $33.8 million to $113.5 million, or 1.39% of total loans, at September 30, 2007 from $79.7 million, or 1.05% of total loans, at September 30, 2006. Of the $33.8 million increase in nonperforming loans, $15.5 million occurred in our Home Today portfolio and $15.6 million occurred in our home equity loans and lines of credit portfolio. Through our Home Today program, we originate loans with our standard terms to borrowers who might not otherwise qualify for such loans. To qualify for our Home Today program, a borrower must complete financial management education and counseling and must be referred to us by a sponsoring organization with whom we have partnered as part of the program. As of September 30, 2007, we had $304.0 million of loans outstanding that were originated through our Home Today program.
Non-interest income increased $31.5 million to $13.7 million for the three months ended September 30, 2007 from a $17.8 million loss for the three months ended September 30, 2006. Non-interest income increased $57.8 million to $51.4 million for the year ended September 30, 2007 from a $6.4 million loss for the year ended September 30, 2006. The increases were primarily caused by our recognizing gains of $1.0 million and $15 thousand on loan sales for the three months and year ended September 30, 2007, respectively, compared to losses of $28.4 million and $47.1 million on loan sales for the three months and year ended September 30, 2006, respectively.
Non-interest expense increased $68.6 million, or 56%, to $191.1 million for the year ended September 30, 2007 from $122.5 million for the year ended September 30, 2006. The increase resulted primarily from the $55 million charitable contribution to the Third Federal Foundation made in conjunction with our public stock offering in April 2007.
Total assets increased $1.68 billion, or 19.6%, to $10.3 billion at September 30, 2007 from $8.60 billion at September 30, 2006. The growth in our assets is based principally on the net proceeds of our initial stock offering, $886 million, which was completed on April 20, 2007, and a $740 million increase in deposits.
Forward Looking Statements
This press release contains forward-looking statements, which can be identified by the use of such words as estimate, project, believe, intend, anticipate, plan, seek, expect and similar expressions. These forward-looking statements include:
• | statements of our goals, intentions and expectations; |
• | statements regarding our business plans and prospects and growth and operating strategies; |
• | statements regarding the asset quality of our loan and investment portfolios; and |
• | estimates of our risks and future costs and benefits. |
These forward-looking statements are subject to significant risks, assumptions and uncertainties, including, among other things, the following important factors that could affect the actual outcome of future events:
• | significantly increased competition among depository and other financial institutions; |
• | inflation and changes in the interest rate environment that reduce our interest margins or reduce the fair value of financial instruments; |
• | general economic conditions, either nationally or in our market areas, that are worse than expected; |
• | adverse changes in the securities markets; |
• | legislative or regulatory changes that adversely affect our business; |
• | our ability to enter new markets successfully and take advantage of growth opportunities, and the possible short-term dilutive effect of potential acquisitions or de novo branches, if any; |
• | changes in consumer spending, borrowing and savings habits; |
• | changes in accounting policies and practices, as may be adopted by the bank regulatory agencies and the Financial Accounting Standards Board; |
• | inability of third-party providers to perform their obligations to us; and |
• | changes in our organization, compensation and benefit plans. |
Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.
TFS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION (Unaudited)
(In thousands, except share data)
September 30, 2007 | September 30, 2006 | |||||||
Cash and due from banks | $ | 45,666 | $ | 42,021 | ||||
Interest bearing deposits at other financial institutions | 185,649 | 122,006 | ||||||
Federal funds sold | 598,400 | 88,900 | ||||||
Cash and cash equivalents | 829,715 | 252,927 | ||||||
Investment securities: | ||||||||
Available for sale (amortized cost $57,025 and $64,753, respectively) | 56,681 | 63,655 | ||||||
Held to maturity (fair value $825,342 and $67,386, respectively) | 823,815 | 67,319 | ||||||
Mortgage loans held for sale, at lower of cost or market | 107,962 | 314,956 | ||||||
Loans held for investment, net: | ||||||||
Mortgage loans | 8,103,300 | 7,487,975 | ||||||
Other loans | 14,692 | 28,469 | ||||||
Deferred loan fees, net | (19,174 | ) | (18,698 | ) | ||||
Allowance for loan losses | (25,111 | ) | (20,705 | ) | ||||
Loans, net | 8,073,707 | 7,477,041 | ||||||
Mortgage loan servicing assets, net | 41,064 | 40,366 | ||||||
Federal Home Loan Bank stock, at cost | 34,231 | 73,125 | ||||||
Real estate owned | 9,903 | 6,895 | ||||||
Premises, equipment, and software, net | 69,669 | 82,067 | ||||||
Accrued interest receivable | 48,364 | 41,994 | ||||||
Bank owned life insurance contracts | 144,498 | 139,260 | ||||||
Other assets | 38,420 | 35,962 | ||||||
TOTAL ASSETS | $ | 10,278,029 | $ | 8,595,567 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Deposits | $ | 8,141,215 | $ | 7,401,077 | ||||
Federal Home Loan Bank advances | — | 25,103 | ||||||
Borrowers’ advances for insurance and taxes | 40,481 | 38,279 | ||||||
Principal, interest, and related escrow owed on loans serviced | 77,908 | 74,910 | ||||||
Accrued expenses and other liabilities | 32,224 | 43,604 | ||||||
Total liabilities | 8,291,828 | 7,582,973 | ||||||
Commitments and contingent liabilities | ||||||||
Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued and outstanding | — | — | ||||||
Common stock, $0.01 par value, 700,000,000 shares authorized as of September 30, 2007, 300,000,000 shares authorized as of September 30, 2006; 332,318,750 shares issued and outstanding as of September 30, 2007, 1,000 shares issued and outstanding of September 30, 2006 | 3,323 | — | ||||||
Paid-in capital | 1,668,215 | 627,979 | ||||||
Unallocated ESOP shares | (100,597 | ) | — | |||||
Retained earnings—substantially restricted | 421,503 | 395,892 | ||||||
Accumulated other comprehensive loss | (6,243 | ) | (11,277 | ) | ||||
Total shareholders’ equity | 1,986,201 | 1,012,594 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 10,278,029 | $ | 8,595,567 | ||||
TFS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except share data)
For the Three Months Ended September 30, | For the Year Ended September 30, | |||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||
INTEREST AND DIVIDEND INCOME: | ||||||||||||||
Loans, including fees | $ | 122,102 | $ | 124,631 | $ | 469,755 | $ | 474,100 | ||||||
Investment securities available for sale | 591 | 692 | 2,575 | 3,046 | ||||||||||
Investment securities held to maturity | 10,154 | 880 | 22,777 | 3,776 | ||||||||||
Federal funds sold | 11,454 | 559 | 38,352 | 579 | ||||||||||
Other interest earning assets | 1,057 | 1,127 | 4,266 | 4,303 | ||||||||||
Total interest income | 145,358 | 127,889 | 537,725 | 485,804 | ||||||||||
INTEREST EXPENSE: | ||||||||||||||
Deposits | 93,296 | 75,715 | 343,511 | 275,191 | ||||||||||
Federal Home Loan Bank advances | 79 | 4,545 | 1,012 | 13,946 | ||||||||||
Total interest expense | 93,375 | 80,260 | 344,523 | 289,137 | ||||||||||
NET INTEREST INCOME | 51,983 | 47,629 | 193,202 | 196,667 | ||||||||||
PROVISION FOR LOAN LOSSES | 3,250 | 3,100 | 9,600 | 6,050 | ||||||||||
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 48,733 | 44,529 | 183,602 | 190,617 | ||||||||||
NON-INTEREST INCOME: | ||||||||||||||
Fees and service charges | 6,474 | 5,739 | 25,314 | 22,612 | ||||||||||
Gain (Loss) on the sale of loans | 1,010 | (28,388 | ) | 15 | (47,087 | ) | ||||||||
Increase in and death benefits from bank owned life insurance contracts | 3,370 | 2,229 | 8,090 | 6,983 | ||||||||||
Net income (loss) on private equity investments | 961 | (144 | ) | 5,431 | 856 | |||||||||
Other | 1,874 | 2,716 | 12,539 | 10,243 | ||||||||||
Total non-interest income | 13,689 | (17,848 | ) | 51,389 | (6,393 | ) | ||||||||
NON-INTEREST EXPENSE: | ||||||||||||||
Salaries and employee benefits | 18,721 | 22,354 | 72,996 | 68,372 | ||||||||||
Marketing services | 3,473 | 2,967 | 13,528 | 10,942 | ||||||||||
Office property, equipment and software | 5,316 | 4,760 | 19,709 | 18,394 | ||||||||||
Federal insurance premium | 652 | 575 | 2,401 | 2,297 | ||||||||||
State franchise tax | 455 | 982 | 3,110 | 3,876 | ||||||||||
Contribution to charitable foundation | — | — | 55,000 | — | ||||||||||
Other operating expenses | 7,601 | 4,848 | 24,365 | 18,634 | ||||||||||
Total non-interest expense | 36,218 | 36,486 | 191,109 | 122,515 | ||||||||||
INCOME(LOSS) BEFORE INCOME TAXES | 26,204 | (9,805 | ) | 43,882 | 61,709 | |||||||||
INCOME TAX EXPENSE(BENEFIT) | 11,154 | (5,064 | ) | 18,271 | 18,170 | |||||||||
NET INCOME(LOSS) | $ | 15,050 | $ | (4,741 | ) | $ | 25,611 | $ | 43,539 | |||||
Earnings(loss) per share - basic and fully diluted | $ | 0.05 | $ | (0.02 | ) | $ | 0.10 | $ | 0.19 | |||||
TFS FINANCIAL CORPORATION AND SUBSIDIARIES
AVERAGE BALANCES AND YIELDS (Unaudited)
Year Ended September 30, 2007 | Year Ended September 30, 2006 | |||||||||||||||||||||
Average Balance | Interest Income/ Expense | Yield/ Cost | Average Balance | Interest Income/ Expense | Yield/ Cost | |||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Cash on hand and in banks | $ | 20,795 | $ | 1,087 | 5.23 | % | $ | 21,149 | $ | 245 | 1.16 | % | ||||||||||
Federal funds sold | 736,711 | 38,352 | 5.21 | % | 11,064 | 579 | 5.23 | % | ||||||||||||||
Investment securities | 54,365 | 2,191 | 4.03 | % | 40,370 | 1,516 | 3.76 | % | ||||||||||||||
Mortgage-backed securities | 429,244 | 23,161 | 5.40 | % | 112,543 | 5,306 | 4.71 | % | ||||||||||||||
Loans | 7,775,810 | 469,755 | 6.04 | % | 8,056,105 | 474,100 | 5.88 | % | ||||||||||||||
Federal Home Loan Bank stock | 52,334 | 3,179 | 6.07 | % | 70,739 | 4,058 | 5.74 | % | ||||||||||||||
Total interest-earning assets | 9,069,259 | 537,725 | 5.93 | % | 8,311,970 | 485,804 | 5.84 | % | ||||||||||||||
Noninterest-earning assets | 332,323 | 388,936 | ||||||||||||||||||||
Total assets | $ | 9,401,582 | $ | 8,700,906 | ||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
NOW accounts | $ | 1,621,548 | 66,221 | 4.08 | % | $ | 1,465,382 | 52,051 | 3.55 | % | ||||||||||||
Passbook savings and subscription proceeds | 649,414 | 17,605 | 2.71 | % | 380,876 | 3,545 | 0.93 | % | ||||||||||||||
Certificates of deposit | 5,495,449 | 259,685 | 4.73 | % | 5,360,232 | 219,595 | 4.10 | % | ||||||||||||||
FHLB advances | 20,274 | 1,012 | 4.99 | % | 341,759 | 13,946 | 4.08 | % | ||||||||||||||
Total interest-bearing liabilities | 7,786,685 | 344,523 | 4.42 | % | 7,548,249 | 289,137 | 3.83 | % | ||||||||||||||
Noninterest-bearing liabilities | 156,930 | 150,480 | ||||||||||||||||||||
Total liabilities | 7,943,615 | 7,698,729 | ||||||||||||||||||||
Shareholders’ equity | 1,457,967 | 1,002,177 | ||||||||||||||||||||
Total liabilities and Shareholders’ equity | $ | 9,401,582 | $ | 8,700,906 | ||||||||||||||||||
Net interest income | $ | 193,202 | $ | 196,667 | ||||||||||||||||||
Interest rate spread (a) | 1.51 | % | 2.01 | % | ||||||||||||||||||
Net interest-earning assets (b) | $ | 1,282,574 | $ | 763,721 | ||||||||||||||||||
Net interest margin (c) | 2.13 | % | 2.37 | % | ||||||||||||||||||
Average interest-earning assets to average interest-bearing liabilities | 116.47 | % | 110.12 | % | ||||||||||||||||||
(a) | Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. |
(b) | Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. |
(c) | Net interest margin represents net interest income divided by total interest-earning assets. |