Name: TFS Financial CORP Q1 2025 Earnings Call
Start: 2025-01-30T00:00:00.000Z

Executive Summary

Q1 FY2025 net income was $22.4M and EPS was $0.08, up versus Q4 FY2024 ($18.2M, $0.06) and above the prior year ($20.7M, $0.07), driven by a $1.5M release of credit loss provision and lower non-interest expense despite slightly lower net interest income .
Net interest income declined modestly to $68.3M and NIM slipped 1bp to 1.66% amid lower yields on interest-earning cash as short-term rates fell; interest rate spread was 1.34% (vs. 1.36% in Q4) .
Deposits grew, aided by a special CD offering that drew $350.0M in December while the weighted average cost of CDs fell 11bps; brokered CDs stood at $1.10B; borrowed funds fell by $136.5M to $4.66B .
Capital remains strong: Tier 1 leverage 10.89%, CET1/Tier 1 18.31%, Total capital 19.15%; the quarterly dividend was maintained at $0.2825 per share (declared Feb 20, 2025) .
The company did not host an earnings call; presentation slides were posted, limiting incremental catalysts from live commentary or Q&A .

What Went Well and What Went Wrong

Release of provision for credit losses ($1.5M) and lower non-interest expense (-$3.2M q/q to $47.9M) supported earnings; “our earnings of $22.4 million this quarter show our success in managing margin compression and expenses,” said CEO Marc A. Stefanski .
Deposit franchise momentum: creative promotional CDs drove $350.0M growth in December and helped retail deposit growth/retention while CD costs declined 11bps .
Capital strength: Tier 1 leverage 10.89%, CET1/Tier 1 18.31%, Total capital 19.15%, all well above “well-capitalized” thresholds .

Net interest income fell $0.4M q/q to $68.3M and NIM dipped to 1.66% (from 1.67%), as yields on interest-earning cash contracted with lower short-term rates .
Credit metrics softened: total delinquencies rose to $36.3M (0.24% of loans) and non-accruals increased to $36.5M (0.24% of loans) vs. Q4 levels .
First-mortgage originations slowed to $176.5M (vs. $255.5M in Q4; $273.0M prior year), reflecting persistent rate headwinds; home equity commitments also moderated to $559.0M from $655.4M in Q4 .

Metric	Q1 2024 (Dec 31, 2023)	Q3 2024 (Jun 30, 2024)	Q4 2024 (Sep 30, 2024)	Q1 2025 (Dec 31, 2024)
Total Interest & Dividend Income ($USD Millions)	$177.2	$184.9	$188.5	$186.8
Net Interest Income ($USD Millions)	$69.1	$69.3	$68.7	$68.3
Net Income ($USD Millions)	$20.7	$20.0	$18.2	$22.4
EPS (Basic & Diluted, $USD)	$0.07	$0.07	$0.06	$0.08
Interest Rate Spread (%)	1.39%	1.36%	1.36%	1.34%
Net Interest Margin (%)	1.68%	1.67%	1.67%	1.66%

KPIs and Credit/Originations

KPI	Q4 2024	Q1 2025	YoY / Notes
Deposits ($USD Billions)	$10.20	$10.21	+$0.01B q/q; $350.0M CD inflow in Dec
Brokered CDs ($USD Billions)	$1.22	$1.10	Decreased $0.12B q/q
Borrowed Funds ($USD Billions)	$4.79	$4.66	-$0.14B q/q
Allowance for Credit Losses ($USD Millions)	$97.8 (0.64% of loans)	$97.8 (0.64% of loans)	Flat q/q; YoY $94.6 (0.62%)
Delinquencies ($USD Millions; % of loans)	$31.9 (0.21%)	$36.3 (0.24%)	Higher q/q
Non-Accrual Loans ($USD Millions; % of loans)	$33.6 (0.22%)	$36.5 (0.24%)	Higher q/q
Net Loan Recoveries ($USD Millions)	$1.1	$1.4	Improved q/q
Provision for Credit Losses ($USD Millions)	+$1.0	-$1.5	Favorable swing q/q
First-Mortgage Originations ($USD Millions)	$255.5	$176.5	Down q/q; $273.0 prior year
Home Equity Commitments ($USD Millions)	$655.4	$559.0	Down q/q; $436.1 prior year
Loans Delivered to Fannie Mae ($USD Millions)	N/A	$82.4; net gain $1.4	Contracts settled
Capital Ratios (Tier 1 Leverage / CET1=Tier1 / Total)	10.89% / 18.50% / 19.24% (FY2024-end)	10.89% / 18.31% / 19.15%	Strong, well-capitalized

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per share ($)	Q2 FY2025	$0.2825 in FY2024 quarters	$0.2825 declared (payable Mar 20, 2025)	Maintained
Revenue/Margins/OpEx/Tax/Segments	FY2025	Not provided	Not provided	N/A (company did not issue guidance)

Topic	Previous Mentions (Q3 FY2024 and Q4 FY2024)	Current Period (Q1 FY2025)	Trend
Deposits/CDs	Retail CDs grew; deposit mix shifted to CDs; Q3 retail CD +$226M; Q4 retail CD +$277M	Special CD drew $350.0M in Dec; CD weighted average cost -11bps; brokered CDs down $120.8M	Improving retail CD traction; lower CD costs
Net Interest Margin/Spread	NIM 1.67% and spread 1.36% in Q3 and Q4	NIM 1.66%, spread 1.34%; slight compression from lower short-term rates	Slightly negative
Home Equity Growth	Strong growth: +$269M in Q3; +$296.5M in Q4 balances	Commitments $559.0M (down from $655.4M q/q)	Mixed (still high, but moderating)
Mortgage Originations	Soft due to rate environment; Q3 originations $162.97M interest income context, originations low	First-mortgage originations $176.5M vs $255.5M prior quarter	Negative q/q
Credit Quality	Allowance 0.63–0.64%; delinquencies rising into Q4; non-accrual ~0.22%	Delinquencies 0.24%; non-accrual 0.24%; allowance 0.64%	Mixed (metrics up but still low)
Capital/Regulatory	Strong capital ratios; MHC waiver in place	Tier 1 10.89%, CET1/Tier 1 18.31%, Total 19.15%; MHC continued waiver	Stable
Investor Communications	No live calls; slides posted	No call; slides posted	Stable (no call)

“Our earnings of $22.4 million this quarter show our success in managing margin compression and expenses.” — Marc A. Stefanski, Chairman & CEO .
“We’ve also developed creative deposit products, leading to more than $350 million growth in our promotional CDs in December alone.” — Marc A. Stefanski .
“Additionally, our Tier I capital ratio remains a source of strength at nearly 11%. As I look forward in 2025, I am encouraged by the economic forecast, interest rates, and their effect on the housing industry.” — Marc A. Stefanski .

The company did not host a conference call for Q1 FY2025; therefore, no analyst Q&A or live guidance clarifications were provided .

Wall Street consensus estimates via S&P Global for Q1 FY2025 EPS and revenue were unavailable at the time of analysis due to SPGI request limits; as a result, estimate comparisons cannot be provided here [GetEstimates error].
Actuals: EPS $0.08, net income $22.4M, net interest income $68.3M, total interest & dividend income $186.8M .
Where estimates are needed for future comparisons, we will default to S&P Global consensus; if unavailable, we will state explicitly that estimates are not available.

Earnings quality improved q/q on provision release (-$1.5M) and lower non-interest expense, offsetting modest NII pressure from lower short-term rates; NIM/spread compression is small but worth monitoring .
Deposit franchise remains a strength: $350.0M promotional CD inflow and lower CD costs (-11bps) suggest funding stabilization and reduced pricing pressure; brokered CDs declined, improving funding mix .
Credit metrics ticked up but remain low in absolute terms (delinquencies 0.24%, non-accrual 0.24%); allowance steady at 0.64% with net recoveries of $1.4M .
Mortgage originations remain subdued due to the rate environment; home equity continues to be a key growth product, though commitments moderated sequentially .
Balance sheet de-risking continued as borrowed funds fell by $136.5M; strong capital ratios (Tier 1 leverage 10.89%) support dividend sustainability ($0.2825 declared for Q2 FY2025) and flexibility .
No earnings call limits incremental information flow; watch for posted presentation materials and future quarterly releases for updates on funding costs, NIM trajectory, and credit trends .
Near-term focus: funding cost discipline and stable credit should underpin earnings while macro rate paths will drive NIM; medium-term thesis hinges on deposit franchise strength and capital adequacy supporting steady dividends .