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TF

TFS Financial CORP (TFSL)·Q2 2025 Earnings Summary

Executive Summary

  • EPS was $0.07, in line with consensus, while revenue beat: $77.62M* vs $75.95M* consensus as NIM expanded 9 bps q/q to 1.75% and spread improved 11 bps to 1.45% .
  • Net interest income rose 5.4% q/q to $72.0M as the weighted average cost of interest-bearing liabilities fell 14 bps; partially offset by higher non-interest expense (+$3.2M q/q) and a $1.5M provision vs a $1.5M release in Q1 .
  • Balance sheet mix continued to pivot toward home equity (HE) with HE balances up $193.7M q/q to $4.32B and deposits up $190.4M (CD-led), allowing $69M reduction in FHLB borrowings; Tier 1 leverage rose to 10.92% .
  • No formal guidance and no earnings call; dividend maintained at $0.2825 per share with MHC waiver in place, supporting income investors .

Note: Values marked with * retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Margin stabilization: NIM increased to 1.75% (+9 bps q/q) and interest rate spread to 1.45% (+11 bps q/q), driven by a 14 bps decline in the cost of interest-bearing liabilities. “Our net interest margin increased nearly 10 basis points to 1.75%...” — CEO Marc A. Stefanski .
  • Funding progress: Retail CD growth lifted deposits +$190.4M q/q to $10.40B, enabling $69.0M reduction in FHLB advances; brokered deposits fell to $1.03B vs $1.22B at FY-end .
  • Loan demand pockets: Commitments to originate/acquire first mortgages and equity loans/lines rose ~40% q/q; HE balances +$193.7M q/q to $4.32B; credit quality remained solid with delinquencies at 0.20% and non-accruals at 0.24% of loans .

What Went Wrong

  • Expense pressure: Non-interest expense increased $3.2M q/q (+6.7%) on higher salaries/benefits (+$1.1M), marketing (+$1.0M) and data processing (+$0.8M) .
  • Provision normalization: Shifted to a $1.5M provision vs a $1.5M release in Q1, reflecting higher allowance for unfunded commitments tied to stronger loan commitments; total ACL up to $99.9M (0.65% of loans) .
  • Residential mortgage runoff: Core residential portfolio declined $175.9M q/q to $10.99B as repayments/sales outpaced originations amid a still-high rate environment .

Financial Results

Core P&L and Margin vs Prior Periods and Estimates

MetricQ2 2024 (Mar-24)Q1 2025 (Dec-24)Q2 2025 Actual (Mar-25)Q2 2025 Consensus
EPS ($)$0.07 $0.08 $0.07 $0.07*
Revenue ($MM)$78.10 (NII after provision + non-int.) $76.33 (NII after provision + non-int.) $77.62*$75.95*
Net Interest Margin %1.71% 1.66% 1.75% N/A
Interest Rate Spread %1.43% 1.34% 1.45% N/A

Notes: Revenue (company-derived) for Q2 2024 and Q1 2025 equals Net interest income after provision + Total non-interest income from the company’s 8-K tables. Values with * retrieved from S&P Global.

Selected KPIs and Balance Sheet (period-end unless stated)

KPISep 30, 2024Dec 31, 2024Mar 31, 2025
Deposits ($B)$10.195 $10.207 $10.398
Borrowed Funds ($B)$4.793 $4.656 $4.587
Loans HFI, net ($B)$15.322 $15.343 $15.360
Home Equity Loans + Lines ($B)$3.89 —$4.32
Residential Core Mortgages ($B)$11.39 —$10.99
Net Interest Income ($MM) (quarter)$71.38 $68.33 $72.05
Non-Interest Expense ($MM) (quarter)$52.20 $47.94 $51.09
Provision for Credit Losses ($MM) (quarter)$(1.00) $(1.50) $1.50
Total Allowance for Credit Losses ($MM, % loans)$97.8 (0.64%) $97.8 (0.64%) $99.9 (0.65%)
Delinquencies ($MM, % loans)$31.9 (0.21%) $36.3 (0.24%) $31.6 (0.20%)
Non-Accrual Loans ($MM, % loans)$33.6 (0.22%) $36.5 (0.24%) $37.0 (0.24%)
Tier 1 Leverage Ratio (%)10.89% 10.89% 10.92%

— indicates not disclosed for that period.

Segment breakdown: Not applicable; TFSL reports as a single segment.

Guidance Changes

No formal quantitative guidance was provided; the company did not host an earnings call this quarter .

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per Share (Declared)FY25 quarterly dividend cadence$0.2825 (Q1 FY25 declared/paid) $0.2825 (Q2 FY25 declared/paid) Maintained

Earnings Call Themes & Trends

Note: The company did not host a Q2 FY25 earnings call; themes below reflect disclosures across Q4 FY24, Q1 FY25, and Q2 FY25 press materials .

TopicPrevious Mentions (Q4 FY24 and Q1 FY25)Current Period (Q2 FY25)Trend
Net Interest Margin / SpreadNIM 1.67% and spread 1.36% in Q4; NIM 1.66% and spread 1.34% in Q1 as funding costs weighed .NIM 1.75%, spread 1.45% on 14 bps lower liability costs .Improving
Deposit Strategy & MixRetail CD-led growth; brokered CDs ~$1.10B; special CD drove inflows in December .Deposits +$190.4M q/q; retail CDs drove growth; brokered deposits down to $1.03B .Improving (lower wholesale reliance)
Loan Mix: Home Equity vs MortgagesFY24: HE +$854.8M; residential mortgages −$693.0M . Q1: HE +$236.2M; mortgages −$214.4M .HE +$193.7M q/q to $4.32B; mortgages −$175.9M to $10.99B; commitments +40% q/q .Continued shift to HE; demand building
Credit QualityACL 0.64%; delinquencies 0.21%; non-accrual 0.22% at FY-end . Q1: delinquencies 0.24%, non-accrual 0.24% .ACL 0.65%; delinquencies 0.20%; non-accrual 0.24% .Stable to modestly improving delinquencies
Capital & DividendsTier 1 leverage ~10.89%; MHC waiver approved through July 9, 2025 .Tier 1 leverage 10.92%; dividend $0.2825 maintained; MHC waiver remains in force .Stable
Operating ExpensesFY24 cost control improved expense-to-asset; Q1 opex down q/q -.Non-interest expense +$3.2M q/q on wages, marketing, data processing .Worsening near-term (seasonal/investment)

Management Commentary

  • “Our second quarter earnings reflect our ability to successfully operate in any economic climate… Our net interest margin increased nearly 10 basis points to 1.75% and commitments… have increased 40% over last quarter.” — Marc A. Stefanski, Chairman & CEO .
  • “We continue to exceed the threshold to be considered well-capitalized, our Tier 1 leverage ratio at 10.92% improved by three basis points compared to last quarter.” — Marc A. Stefanski .

Additional context: The company highlighted improved funding mix, deposit growth via competitive retail CDs, and steady credit metrics while acknowledging expense increases tied to staffing and technology .

Q&A Highlights

  • No earnings call or Q&A session was held for Q2 FY25; the company stated it would not host a call to discuss operating results .

Estimates Context

  • Q2 FY25 EPS: $0.07 actual vs $0.07 consensus (2 estimates) — in line . Consensus EPS Mean and estimate count from S&P Global*.
  • Q2 FY25 Revenue: $77.62M* actual vs $75.95M* consensus (2 estimates) — beat by ~$1.67M (~2.2%)*.
  • With NIM expansion and lower funding costs, revenue modestly exceeded expectations despite higher opex and a provision; estimate models may nudge up revenue/NII run-rate assumptions while holding EPS largely unchanged given expense normalization .

Q2 FY25 vs Consensus (S&P Global)

MetricActualConsensusDelta# of Estimates
EPS ($)0.07 0.07*0.002*
Revenue ($MM)77.62*75.95*+1.672*

Note: Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Margin inflection: NIM up to 1.75% and spread to 1.45% as deposit pricing relief and mix shift aided NII; sustaining these trends is key to further EPS leverage .
  • Funding mix improving: Retail CD growth (+$190M q/q) and lower brokered balances reduce reliance on FHLB borrowings (−$69M q/q), supporting margin resilience .
  • Loan growth via HE: Continued expansion in home equity balances (+$194M q/q) with 40% q/q increase in commitments positions TFSL to capture consumer lending demand as rates normalize .
  • Credit quality stable: Low delinquencies (0.20%) and manageable non-accruals (0.24%) underpin modest ACL build; watch unfunded commitments as a swing factor for provision .
  • Expense watch: Q2 opex uptick tied to staffing/tech and marketing; monitor for reversion toward prior run-rate to support operating leverage in 2H FY25 .
  • Capital and dividend steady: Tier 1 leverage at 10.92% and dividend maintained at $0.2825 with MHC waiver — supportive for income-oriented holders .
  • No call, limited guidance: Absent formal guidance, focus on quarterly NIM trajectory, deposit competition, and HE momentum as the primary stock catalysts into Q3 .