Monday, TFS Financial, Corp. (TFSL), the holding company for Third Federal Savings and Loan Association of Cleveland, reported a decline in first-quarter profit from a year-ago, due mainly to an increase in provision for loan losses, offset by an increase in net interest income.
The company's profit declined to $8.92 million or $0.03 per share from $11.48 million or $0.04 per share in the year-ago period.
Net interest income increased 3% to $57.3 million from $55.6 million in the year-earlier quarter. The company attributed the increase to a decrease in the interest received on interest-earning assets, offset by a larger decrease in interest paid on interest-bearing liabilities.
The interest rate spread increased 22 basis points to 1.77% from 1.55% last year, while net interest margin increased six basis points to 2.20% from 2.14% in the prior-year period.
TFS Financial increased its provision for loan losses to $16.0 million from $10.0 million in the prior-year quarter. The provisions exceeded net charge-offs of $14.0 million and $5.0 million for the second quarters ended December 31, 2009 and 2008, respectively. Of the $14.0 million of net charge-offs, $10.0 million occurred in the equity loans and lines of credit portfolio.
The allowance for loan losses was $97.3 million, or 1.03% of total loans receivable, at December 31, 2009, compared to $48.8 million or 0.51% of total loans receivable at December 31, 2008.
Non-performing loans increased to $265.3 million or 2.82% of total loans at December 31, 2009 from $203.1 million or 2.13% of total loans at December 31, 2008. Of the $9.6 million increase in non-performing loans, $3.5 million occurred in the residential, non-Home Today portfolio, $3.8 million occurred in the residential, Home Today portfolio and $2.4 million occurred in the equity loans and lines of credit portfolio. The Home Today portfolio is an affordable housing program targeted toward low and moderate income home buyers.
Sequentially, total assets increased 1%, to $10.73 billion at December 31, 2009 from $10.60 billion at September 30, 2009 due to increases in loan portfolio, other assets and investment securities. Deposits increased 1%, to $8.61 billion at December 31, 2009 from $8.57 billion at September 30, 2009 due to a $123.8 million increase in high-yield savings and checking accounts.
TFSL closed Monday's regular trading at $12.63, down $0.23 or 1.79%, on a volume of 1.02 million shares on the Nasdaq.
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