TFS Financial earns record $100.7 million profit for fiscal 2026

TFS Financial Corporation (TFSL) said in a regulatory filing on Oct. 29 that it earned $100.7 million for the fiscal year ended Sept. 30, 2026, up 10.7% from $91.0 million a year earlier.

Fourth-quarter net income was $24.7 million, or 9 cents per share, in line with the 9 cents consensus estimate compiled by Finnhub. That was down 19.0% from $30.5 million in the quarter ended June 30.

The company is the holding company for Third Federal Savings and Loan Association of Cleveland. The association has 21 full-service branches in Northeast Ohio, two lending offices in Central and Southern Ohio, and 14 full-service branches in Florida. Total assets were $18.19 billion at Sept. 30, 2026.

Here's how the company did:

• Fiscal-year net income: $100.7 million vs. $91.0 million a year earlier
• Fiscal-year diluted EPS: 35 cents vs. 32 cents a year earlier
• Fourth-quarter EPS, basic and diluted: 9 cents vs. 9 cents a year earlier
• Net interest income: $321.8 million vs. $292.7 million a year earlier
• Non-interest expense: $225.4 million vs. $204.3 million a year earlier

Chairman and CEO Marc A. Stefanski said, "This year was another milestone for Third Federal, passing $100 million in net income, driven by continued net margin improvement to 1.88%, and a 39% increase in mortgage loan originations from 2025."

Net interest income and margin

Net interest income rose $29.1 million, or 9.9%, to $321.8 million for the year. Total interest income increased $46.0 million to $809.2 million, while total interest expense rose $17.0 million to $487.5 million.

The net interest margin was 1.88% for the year, up from 1.76% a year earlier. The average balance of loans increased $529.5 million, and the loan yield improved by 18 basis points.

In the fourth quarter, net interest income rose $5.5 million, or 6.8%, to $86.9 million from $81.4 million in the June quarter. The net interest margin increased nine basis points to 1.99%.

Credit quality and expenses

The company recorded a $2.5 million release of provision for credit losses for the year, compared with $2.5 million of expense a year earlier. In the fourth quarter it recorded a $2.0 million provision, compared with a $3.5 million release in the prior quarter.

Total loan delinquencies rose $26.0 million to $60.7 million, or 0.37% of total loans receivable, at Sept. 30, 2026, from $34.7 million, or 0.22%, a year earlier. Non-accrual loans totaled $49.8 million.

Non-interest expense rose $21.1 million, or 10.3%, to $225.4 million. Salaries and employee benefits rose $11.3 million, partly due to a $2.2 million one-time bonus paid to associates in December 2025.

Other expenses rose $7.6 million, including a $4.6 million unfavorable change in pension expense. The pension plan was terminated in December 2025, and the company said the remaining obligation is expected to settle during the quarter ending Dec. 31, 2026. The fourth quarter included $2.5 million of settlement expense.

Fourth-quarter salaries rose $3.2 million, primarily because payroll costs for the new core banking system were no longer capitalized after the system began operating in July 2026.

Balance sheet and capital

Deposits fell $267.8 million, or 2.6%, to $10.18 billion, as certificates of deposit decreased $868.8 million. Borrowed funds rose $867.0 million, or 17.8%, to $5.74 billion.

The company repurchased 384,241 shares at an average cost of $14.31 per share during the year. It had 4,559,845 shares remaining under its eighth stock repurchase program at Sept. 30, 2026.

The company declared a quarterly dividend of 31.75 cents per share in the fourth quarter, up from 28.25 cents in each of the first three fiscal quarters. The mutual holding company, which owns about 81% of the stock, was approved to waive up to $1.27 per share of possible dividends through July 7, 2027.

Shareholders' equity increased 5.9% to $2.01 billion. The Tier 1 leverage ratio was 10.53% at Sept. 30, 2026.

The company will not host a conference call. It said presentation slides will be available on its website from Oct. 30, 2026.