TFS Financial Reports Results for Second Quarter Fiscal 2026

Published: 2026-04-30 16:18:05 ET TFSL

Published on 04/30/2026 at 04:18 pm EDT

TFS Financial Corporation (NASDAQ: TFSL) (the "Company," "we," "our"), the holding company for Third Federal Savings and Loan Association of Cleveland (the "Association"), today announced results for the quarter and six months ended March 31, 2026.

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Chairman and CEO Marc A. Stefanski

"During the quarter, we had a 4% increase in net income and a record $77.8 million in net interest income,” said Chairman and CEO Marc A. Stefanski. “Our results were driven primarily by increasing yields from Smart Rate ARMs resetting and our prudent management of deposit costs,” he said. “The upcoming purchase season, and the opportunity for mortgage growth, gives us even more optimism for the fiscal year. Our Tier I capital ratio of 10.75% exceeds the amount considered to be well-capitalized, allowing us more opportunities for growth, dividends, and strategic buybacks.”

Operating Results for the Quarter Ended March 31, 2026 compared to the Quarter Ended December 31, 2025

Net income rose $0.9 million, or 4.0%, to $23.2 million for the quarter ended March 31, 2026, from $22.3 million in the prior quarter. This increase reflected higher net interest income and a reduction in non-interest expenses, partially offset by an increase in the provision for credit losses and a decrease in non-interest income.

Net interest income increased $2.1 million, or 2.8%, to $77.8 million for the quarter ended March 31, 2026 from $75.7 million for the quarter ended December 31, 2025. This increase was primarily attributable to a 12 basis point decrease in the cost of interest-bearing liabilities. The average balance and cost of certificates of deposit ("CDs") decreased $609.7 million and 19 basis points, respectively, while savings accounts experienced increases in both average balances ($461.4 million) and cost (56 basis points). The Company offers certain CD products that transition into liquid savings accounts at maturity. This feature has facilitated the movement of funds from CDs to savings accounts. Loan yields decreased by three basis points, reflecting the full quarterly impact of two 25 basis point reductions, during our first fiscal quarter of 2026, in the Wall Street Journal Prime Rate which serves as the index for our home equity lines of credit. The interest rate spread improved by seven basis points to 1.54%, while the net interest margin increased five basis points to 1.84%.

For the quarter ended March 31, 2026, the Company did not record a provision for credit losses whereas a $1.0 million release of provision was recorded for the quarter ended December 31, 2025. The total allowance for credit losses increased $0.8 million during the quarter to $104.9 million, or 0.67% of total loans receivable, from $104.1 million, or 0.66% of total loans receivable, at December 31, 2025. The allowance for unfunded commitments, included in other liabilities, increased $0.9 million due to a $104.8 million increase in commitments to originate loans and had a balance of $30.0 million at March 31, 2026 compared to $29.1 million at December 31, 2025. Net recoveries were $0.8 million for the quarter ended March 31, 2026 compared to $0.7 million for the previous quarter. Total loan delinquencies increased $1.5 million to $38.4 million, or 0.24% of total loans receivable, at March 31, 2026 from $36.9 million, or 0.23% of total loans receivable, at December 31, 2025.

Total non-interest income decreased $0.6 million, or 7.5%, to $7.4 million for the quarter ended March 31, 2026 from $8.0 million for the quarter ended December 31, 2025, primarily due to a $0.6 million decrease in net gain on the sale of loans.

Total non-interest expense decreased $0.8 million, or 1.4%, to $55.4 million for the quarter ended March 31, 2026 from $56.2 million for the quarter ended December 31, 2025. Marketing expenses decreased $2.2 million due to reduced media costs, while federal insurance premium and assessments increased $0.4 million and other operating expenses increased $1.2 million. An increase in third-party costs related to residential loan applications not yet converted to funded loans drove the increase in other operating expenses.

Financial Condition at March 31, 2026 compared to December 31, 2025

Total assets decreased $19.0 million to $17.48 billion at March 31, 2026 from $17.50 billion at December 31, 2025, mainly due to a decrease in cash and cash equivalents.

Cash and cash equivalents decreased $19.4 million, or 4.3%, to $437.3 million at March 31, 2026 from $456.7 million at December 31, 2025, due to normal fluctuations and liquidity management.

Loans held for investment, net of allowance and deferred loan expenses, increased $0.7 million, or less than 1%, remaining at $15.74 billion at March 31, 2026. During the quarter ended March 31, 2026, the combined balances of home equity loans and lines of credit increased $188.4 million to $5.24 billion and residential core mortgage loans decreased $185.9 million to $10.46 billion. Loans held for sale decreased $9.3 million to $5.1 million at March 31, 2026, from $14.4 million at December 31, 2025.

Deposits decreased $184.7 million, or less than 1%, to $10.19 billion at March 31, 2026, compared to $10.37 billion at December 31, 2025, consisting of decreases of $471.0 million in CDs, $9.5 million in money market deposit accounts and $18.9 million in checking accounts, partially offset by an increase of $311.5 million in savings accounts.

Borrowed funds increased $202.6 million, or 4%, to $5.14 billion at March 31, 2026, compared to $4.94 billion at December 31, 2025. The increase in borrowed funds was entirely due to an increase in utilization of advances from the Federal Home Loan Bank ("FHLB") of Cincinnati.

Operating Results for the Six Months Ended March 31, 2026 compared to the Six Months Ended March 31, 2025

The Company reported net income of $45.5 million for the six months ended March 31, 2026, an increase of $2.1 million, or 4.8%, compared to net income of $43.4 million for the six months ended March 31, 2025. The increase was primarily driven by increases in net interest income and non-interest income along with a lower provision for credit losses, partially offset by an increase in non-interest expenses.

Net interest income increased $13.1 million, or 9.3%, to $153.5 million for the six months ended March 31, 2026 compared to $140.4 million for the six months ended March 31, 2025. The yield on interest-earning assets for the six months ended March 31, 2026 rose by 14 basis points compared to the prior year period, as lower-rate residential mortgages were replaced with higher-yielding mortgage loans and home equity products. The cost of interest-bearing liabilities increased by two basis points. The interest rate spread was 1.51% for the six months ended March 31, 2026 compared to 1.39% for the six months ended March 31, 2025. The net interest margin was 1.82% for the six months ended March 31, 2026 and 1.70% for the six months ended March 31, 2025.

During the six months ended March 31, 2026, there was a $1.0 million release of provision for credit losses compared to no provision for the six months ended March 31, 2025. Net loan recoveries totaled $1.5 million for the six months ended March 31, 2026 and $2.1 million for the same period of the prior year.

The total allowance for credit losses increased $0.5 million to $104.9 million, or 0.67% of total loans receivable, from $104.4 million, or 0.67% of total loans receivable, at September 30, 2025 and increased $4.9 million from $99.9 million, or 0.65% of total loans receivable at March 31, 2025. The increases were primarily related to increases in the home equity loan and lines of credit portfolios. The allowance for credit losses included $30.0 million, $30.1 million and $29.4 million in liabilities for unfunded commitments at March 31, 2026, September 30, 2025 and March 31, 2025, respectively. Total loan delinquencies increased $3.7 million to $38.4 million, or 0.24% of total loans receivable, at March 31, 2026 from $34.7 million, or 0.22% of total loans receivable, at September 30, 2025 and increased $6.8 million from $31.6 million, or 0.20% of total loans receivable, at March 31, 2025. Non-accrual loans totaled $37.1 million, or 0.23% of total loans receivable, at March 31, 2026, compared to $38.7 million, or 0.25% of total loans receivable, at September 30, 2025 and $37.0 million, or 0.24% of total loans receivable at March 31, 2025.

Total non-interest income increased $1.9 million, or 14.0%, to $15.5 million for the six months ended March 31, 2026, from $13.6 million for the six months ended March 31, 2025, primarily due to a $1.8 million increase in net gain on the sale of loans. During the six months ended March 31, 2026 and 2025, there were $204.1 million and $147.2 million of loans sold with net gains on the sale of loans totaling $4.1 million and $2.3 million, respectively.

Total non-interest expense for the six months ended March 31, 2026 increased $12.6 million, or 12.7%, to $111.6 million from $99.0 million for the six months ended March 31, 2025. There were increases of $6.4 million in salaries and employee benefits, $2.0 million in marketing services, $1.2 million in office property, equipment and software expenses and $3.5 million in other expenses, partially offset by a decrease of $0.5 million in federal insurance premium and assessments. The increase in salaries and benefits was mainly the result of a one-time after-tax bonus of $1,500 provided to all associates in December 2025, totaling $2.2 million, as well as higher staffing levels and stock-based compensation expenses, partially offset by an increase in capitalized payroll costs related to the implementation of a new core banking system. Other expenses rose due to an increase in third party expenses related to a higher volume of loan applications not yet converted to funded loans, increased down payment assistance and additional postage expenses. Additionally, pension benefits arising from actuarial adjustments were lower during the most recent period.

Financial Condition at March 31, 2026 compared to September 30, 2025

Total assets increased $23.4 million, or less than 1%, to $17.48 billion at March 31, 2026 from $17.46 billion at September 30, 2025. The increase was mainly the result of increases in loans held for investment and other assets, partially offset by decreases in loans held for sale and investment securities available for sale.

Investment securities available for sale decreased $66.1 million, or 12.69%, to $454.6 million at March 31, 2026 from $520.7 million at September 30, 2025. This decrease was mainly due to the combined effect of cash flows from security repayments and maturities. During the six months ended March 31, 2026, a $50.0 million treasury security matured and was not replaced.

Loans held for investment, net of allowance and deferred loan expenses, increased $79.0 million, or 0.5%, to $15.74 billion at March 31, 2026 from $15.66 billion at September 30, 2025. The increase was offset by a $52.6 million decrease in loans held for sale, which totaled $5.1 million at March 31, 2026. Home equity loans and lines of credit increased $424.4 million to $5.24 billion and the residential core mortgage loan portfolio decreased $339.8 million to $10.46 billion.

The changes in loans held for sale and loans held for investment were affected by the volume of loans originated, acquired and sold. During the six months ended March 31, 2026, residential mortgage loan origination and acquisitions were $567.1 million compared to $376.0 million for the six months ended March 31, 2025. Of total residential mortgage loans originated and acquired during the most recent period, 80% were purchase transactions. Commitments originated for home equity loans and lines of credit were $1.10 billion for the six months ended March 31, 2026 compared to $1.19 billion for the six months ended March 31, 2025.

Other assets increased $41.2 million, or 36.9%, to $152.9 million at March 31, 2026 from $111.7 million at September 30, 2025. The increase largely stemmed from a $47.9 million increase in the margin requirement on swap contracts following the maturity of an investment security previously posted as collateral. This was partially offset by a $3.5 million decrease in deferred income tax assets and a $4.0 million decrease in interest receivables on swap contracts.

Deposits decreased $259.6 million, or 2.5%, to $10.19 billion at March 31, 2026 from $10.45 billion at September 30, 2025. The decrease was the result of a $965.2 million decrease in CDs and a $19.4 million decrease in money market deposit accounts, partially offset by increases of $711.2 million in savings accounts and $8.7 million in checking accounts. The decrease in total CDs included a $926.7 million decrease in retail CDs, the majority of which moved into savings accounts, and a $38.5 million decrease in brokered CD accounts. There were $862.4 million in brokered certificates of deposit at March 31, 2026 compared to $900.9 million at September 30, 2025.

Borrowed funds increased $272.2 million, or 5.6%, to $5.14 billion at March 31, 2026 from $4.87 billion at September 30, 2025. The balance of borrowed funds at March 31, 2026, all from the FHLB of Cincinnati, included $624.0 million of overnight advances, $1.53 billion of term advances with a weighted average maturity of approximately 1.5 years and $2.98 billion of term advances, aligned with interest rate swap contracts, with a remaining weighted average effective maturity of approximately 2.8 years.

Total shareholders' equity increased $28.5 million, or 1.5%, to $1.92 billion at March 31, 2026 from $1.89 billion at September 30, 2025. Activity reflects $45.5 million of net income, dividends paid of $30.1 million, $4.0 million in repurchases of the Company's common stock, a $12.4 million net decrease in accumulated other comprehensive loss and net positive adjustments of $4.7 million related to our stock compensation and employee stock ownership plans. The change in accumulated other comprehensive income was primarily due to a net decrease in unrealized losses on swap contracts. During the six months ended March 31, 2026, a total of 288,196 shares of the Company's common stock were repurchased at an average cost of $13.86 per share. The Company's eighth stock repurchase program, authorized by the Board of Directors in October 2016, allows for a total of 10,000,000 shares to be repurchased, with 4,655,890 remaining shares authorized for repurchase at March 31, 2026.

The Company declared and paid a quarterly dividend of $0.2825 per share during each of the first two fiscal quarters of 2026. As a result of a mutual member vote, Third Federal Savings and Loan Association of Cleveland, MHC (the "MHC"), the mutual holding company that owns approximately 81% of the outstanding stock of the Company, was able to waive its receipt of its share of the dividends paid. Under Federal Reserve regulations, the MHC is required to obtain the approval of its members every 12 months for the MHC to waive its right to receive dividends. As a result of a July 8, 2025 member vote and subsequent non-objection of the Federal Reserve, the MHC has the approval to waive receipt of up to $1.13 per share of possible dividends to be declared on the Company’s common stock during the twelve months subsequent to the members’ approval (i.e., through July 8, 2026), including a total of up to $0.2825 remaining. The MHC has conducted the member vote to approve the dividend waiver each of the past twelve years under Federal Reserve regulations and for each of those twelve years, approximately 97% of the votes cast were in favor of the waiver.

The Company operates under the capital requirements for the standardized approach of the Basel III capital framework for U.S. banking organizations (“Basel III Rules”). At March 31, 2026 all of the Company's capital ratios exceed the amounts required for the Company to be considered "well capitalized" for regulatory capital purposes. The Company's Tier 1 leverage ratio was 10.77%, its Common Equity Tier 1 and Tier 1 ratios were each 17.22% and its total capital ratio was 18.18%.

Presentation slides as of March 31, 2026 will be available on the Company's website, thirdfederal.com, under the Investor Relations link under the "Presentations" menu, beginning May 1, 2026. The Company will not be hosting a conference call to discuss its operating results.

Third Federal Savings and Loan Association is a leading provider of savings and mortgage products, and operates under the values of love, trust, respect, a commitment to excellence and fun. Founded in Cleveland in 1938 as a mutual association by Ben and Gerome Stefanski, Third Federal’s mission is to help people achieve the dream of home ownership and financial security while creating value for our customers, communities, associates and shareholders. It became part of a public company in 2007 and celebrated its 85th anniversary in May 2023. Third Federal, which lends in 28 states and the District of Columbia, is dedicated to serving consumers with competitive rates and outstanding service. Third Federal, an equal housing lender, has 21 full service branches in Northeast Ohio, two lending offices in Central and Southern Ohio, and 15 full service branches throughout Florida. As of March 31, 2026, the Company’s assets totaled $17.48 billion.

Forward Looking Statements

This report 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, among other things:

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:

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by any forward-looking statements. Any forward-looking statement made by us in this report speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by law.

TFS FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CONDITION (unaudited) (In thousands, except share data)

March 31,

2026

September 30,

2025

ASSETS

Cash and due from banks

25,122

24,176

Other interest-earning cash equivalents

412,159

405,263

Cash and cash equivalents

437,281

429,439

Investment securities available for sale

454,625

520,659

Mortgage loans held for sale

5,051

57,662

Loans held for investment, net:

Mortgage loans

15,738,734

15,659,460

Other loans

8,254

8,153

Deferred loan expenses, net

70,253

69,943

Allowance for credit losses on loans

(74,900

)

(74,244

)

Loans, net

15,742,341

15,663,312

Mortgage loan servicing rights, net

8,975

8,549

Federal Home Loan Bank stock, at cost

244,361

235,363

Real estate owned, net

1,383

1,921

Premises, equipment, and software, net

43,429

40,022

Accrued interest receivable

59,927

62,553

Bank owned life insurance contracts

329,360

325,149

Other assets

152,937

111,687

TOTAL ASSETS

17,479,670

17,456,316

LIABILITIES AND SHAREHOLDERS’ EQUITY

Deposits

10,187,391

10,446,968

Borrowed funds

5,142,391

4,870,219

Borrowers’ advances for insurance and taxes

96,518

113,168

Principal, interest, and related escrow owed on loans serviced

29,197

30,328

Accrued expenses and other liabilities

101,703

101,709

Total liabilities

15,557,200

15,562,392

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; 332,318,750 shares issued

3,323

Paid-in capital

1,758,387

1,757,813

Treasury stock, at cost

(776,404

)

(774,340

)

Unallocated ESOP shares

(16,250

)

(18,417

)

Retained earnings—substantially restricted

962,213

946,776

Accumulated other comprehensive income (loss)

(8,799

)

(21,231

)

Total shareholders’ equity

1,922,470

1,893,924

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

17,479,670

17,456,316

TFS FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited) (In thousands, except share and per share data)

For the Three Months Ended

March 31,

2026

December 31,

2025

September 30,

2025

June 30,

2025

March 31,

2025

INTEREST AND DIVIDEND INCOME:

Loans, including fees

183,515

184,946

185,332

177,493

171,506

Investment securities available for sale

3,985

4,241

4,708

4,816

4,755

Other interest and dividend earning assets

7,969

8,585

9,013

9,098

9,691

Total interest and dividend income

195,469

197,772

199,053

191,407

185,952

INTEREST EXPENSE:

Deposits

73,792

79,203

78,636

76,803

75,379

Borrowed funds

43,871

42,889

43,094

39,610

38,524

Total interest expense

117,663

122,092

121,730

116,413

113,903

NET INTEREST INCOME

77,806

75,680

77,323

74,994

72,049

PROVISION (RELEASE) FOR CREDIT LOSSES

—

(1,000

)

1,000

1,500

NET INTEREST INCOME AFTER PROVISION (RELEASE) FOR CREDIT LOSSES

77,806

76,680

76,323

73,494

70,549

NON-INTEREST INCOME:

Fees and service charges, net of amortization

2,498

2,512

2,617

2,467

2,221

Net gain on the sale of loans

1,744

2,329

2,314

726

1,187

Increase in and death benefits from bank owned life insurance contracts

2,718

2,764

2,650

2,733

2,680

Other

477

443

580

1,122

980

Total non-interest income

7,437

8,048

8,161

7,048

7,068

NON-INTEREST EXPENSE:

Salaries and employee benefits

30,184

30,488

27,579

27,651

27,666

Marketing services

4,026

6,239

4,537

5,810

4,632

Office property, equipment and software

7,932

7,756

7,236

7,653

7,617

Federal insurance premium and assessments

3,552

3,247

3,388

3,519

3,673

State franchise tax

1,146

1,067

1,117

1,204

1,199

Other expenses

8,559

7,433

8,188

7,348

6,301

Total non-interest expense

55,399

56,230

52,045

53,185

51,088

INCOME BEFORE INCOME TAXES

29,844

28,498

32,439

27,357

26,529

INCOME TAX EXPENSE

6,597

6,224

6,440

5,844

5,508

NET INCOME

23,247

22,274

25,999

21,513

21,021

Earnings per share - basic and diluted

0.08

0.09

0.08

0.07

Weighted average shares outstanding

Basic

278,858,428

278,754,792

278,764,271

278,832,875

278,729,388

Diluted

279,934,262

279,908,875

279,887,491

279,873,274

279,719,382

TFS FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited) (In thousands, except share and per share data)

For the Six Months Ended

March 31,

2026

2025

INTEREST AND DIVIDEND INCOME:

Loans, including fees

368,461

343,658

Investment securities available for sale

8,226

9,210

Other interest and dividend earning assets

16,554

19,852

Total interest and dividend income

393,241

372,720

INTEREST EXPENSE:

Deposits

152,995

153,321

Borrowed funds

86,760

79,022

Total interest expense

239,755

232,343

NET INTEREST INCOME

153,486

140,377

PROVISION (RELEASE) FOR CREDIT LOSSES

(1,000

)

—

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

154,486

140,377

NON-INTEREST INCOME:

Fees and service charges, net of amortization

5,010

4,445

Net gain on the sale of loans

4,073

2,302

Increase in and death benefits from bank owned life insurance contracts

5,482

5,362

Other

920

1,462

Total non-interest income

15,485

13,571

NON-INTEREST EXPENSE:

Salaries and employee benefits

60,672

54,272

Marketing services

10,265

8,286

Office property, equipment and software

15,688

14,461

Federal insurance premium and assessments

6,799

7,258

State franchise tax

2,213

2,246

Other expenses

15,992

12,506

Total non-interest expense

111,629

99,029

INCOME BEFORE INCOME TAXES

58,342

54,919

INCOME TAX EXPENSE

12,821

11,472

NET INCOME

45,521

43,447

Earnings per share

Basic

0.16

0.15

Diluted

0.16

0.15

Weighted average shares outstanding

Basic

278,806,040

278,632,698

Diluted

279,906,185

279,644,307

TFS FINANCIAL CORPORATION AND SUBSIDIARIES AVERAGE BALANCES AND YIELDS (unaudited)

Three Months Ended

March 31, 2026

December 31, 2025

March 31, 2025

Average

Balance

Interest

Income/

Expense

Yield/

Cost (1)

Average

Balance

Interest

Income/

Expense

Yield/

Cost (1)

Average

Balance

Interest

Income/

Expense

Yield/

Cost (1)

(Dollars in thousands)

Interest-earning assets:

Interest-earning cash equivalents

390,194

3,561

3.65

386,878

3,827

3.96

416,911

4,578

4.39

Investment securities

3,948

1.11

20,064

194

3.87

54,105

552

4.08

Mortgage-backed securities

454,227

3,974

3.50

460,043

4,047

3.52

466,617

4,203

3.60

Loans (2)

15,800,101

183,515

4.65

15,793,474

184,946

4.68

15,351,040

171,506

4.47

Federal Home Loan Bank stock

239,292

4,408

7.37

233,298

4,758

8.16

219,813

5,113

9.30

Total interest-earning assets

16,887,762

195,469

4.63

16,893,757

197,772

4.68

16,508,486

185,952

4.51

Noninterest-earning assets

534,228

536,886

534,285

Total assets

17,421,990

17,430,643

17,042,771

Interest-bearing liabilities:

Checking accounts

791,919

0.02

790,898

0.04

822,059

0.04

Savings accounts

1,709,180

7,245

1.70

1,247,736

3,563

1.14

1,219,188

2,722

0.89

Certificates of deposit

7,750,278

66,508

3.43

8,359,946

75,570

3.62

8,292,210

72,568

3.50

Borrowed funds

5,001,235

43,871

3.51

4,827,275

42,889

3.55

4,542,318

38,524

3.39

Total interest-bearing liabilities

15,252,612

117,663

3.09

15,225,855

122,092

3.21

14,875,775

113,903

3.06

Noninterest-bearing liabilities

241,772

282,935

235,601

Total liabilities

15,494,384

15,508,790

15,111,376

Shareholders’ equity

1,927,606

1,921,853

1,931,395

Total liabilities and shareholders’ equity

17,421,990

17,430,643

17,042,771

Net interest income

77,806

75,680

72,049

Interest rate spread (1)(3)

1.54

1.47

1.45

Net interest-earning assets (4)

1,635,150

1,667,902

1,632,711

Net interest margin (1)(5)

1.84

1.79

1.75

Average interest-earning assets to average interest-bearing liabilities

110.72

110.95

110.98

Selected performance ratios:

Return on average assets (1)

0.53

0.51

0.49

Return on average equity (1)

4.82

4.64

4.35

Average equity to average assets

11.06

11.03

11.33

(1)

Annualized.

(2)

Loans include both mortgage loans held for sale and loans held for investment.

(3)

Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(4)

Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(5)

Net interest margin represents net interest income divided by total interest-earning assets.

TFS FINANCIAL CORPORATION AND SUBSIDIARIES AVERAGE BALANCES AND YIELDS (unaudited)

Six Months Ended

March 31, 2026

March 31, 2025

Average

Balance

Interest

Income/

Expense

Yield/

Cost (1)

Average

Balance

Interest

Income/

Expense

Yield/

Cost (1)

(Dollars in thousands)

Interest-earning assets:

Interest-earning cash equivalents

388,536

7,388

3.80

420,511

9,527

4.53

Investment securities

12,006

205

3.41

57,144

1,226

4.29

Mortgage-backed securities

457,135

8,021

3.51

460,475

7,984

3.47

Loans (2)

15,796,787

368,461

4.67

15,338,580

343,658

4.48

Federal Home Loan Bank stock

236,295

9,166

7.76

222,895

10,325

9.26

Total interest-earning assets

16,890,759

393,241

4.66

16,499,605

372,720

4.52

Noninterest-earning assets

535,558

529,459

Total assets

17,426,317

17,029,064

Interest-bearing liabilities:

Checking accounts

791,409

109

0.03

824,221

179

0.04

Savings accounts

1,478,458

10,808

1.46

1,254,488

6,075

0.97

Certificates of deposit

8,055,112

142,078

3.53

8,175,475

147,067

3.60

Borrowed funds

4,914,255

86,760

3.53

4,597,823

79,022

3.44

Total interest-bearing liabilities

15,239,234

239,755

3.15

14,852,007

232,343

3.13

Noninterest-bearing liabilities

262,354

253,621

Total liabilities

15,501,588

15,105,628

Shareholders’ equity

1,924,729

1,923,436

Total liabilities and shareholders’ equity

17,426,317

17,029,064

Net interest income

153,486

140,377

Interest rate spread (1)(3)

1.51

1.39

Net interest-earning assets (4)

1,651,525

1,647,598

Net interest margin (1)(5)

1.82

1.70

Average interest-earning assets to average interest-bearing liabilities

110.84

111.09

Selected performance ratios:

Return on average assets (1)

0.52

0.51

Return on average equity (1)

4.73

4.52

Average equity to average assets

11.04

11.30

(1)

Annualized.

(2)

Loans include both mortgage loans held for sale and loans held for investment.

(3)

Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(4)

Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(5)

Net interest margin represents net interest income divided by total interest-earning assets.

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