TFS Financial Corp
) fiscal fourth-quarter 2013 earnings (ended Sep 30) came in at 5
cents per share, in line with the Zacks Consensus Estimate.
However, this compared favorably with the break-even earnings in
the year-ago quarter.
Results improved on a year-over-year basis owing to a decline in
provision for loan losses and decreased operating expense,
partially offset by reduced top line. Consistent improvement in
asset quality and strong capital ratios were the other tailwinds.
Washington Federal's net income in the said quarter grew
substantially to $15.8 million from $1.1 million in 4Q12.
Further, for fiscal 2013, net income was $56.0 million or 18
cents per share, up from $11.5 million or 4 cents per share in
fiscal 2012. Earnings were in line with the Zacks Consensus
Performance in Detail
Washington Federal's total revenue for the reported quarter came
in at $97.8 million, down 10.5% year over year. However, total
revenue outpaced the Zacks Consensus Estimate of $74.0 million.
For fiscal 2013, total revenue was $412.4 million, down 6.8% from
the prior-year figure. Nevertheless, it significantly surpassed
the Zacks Consensus Estimate of $293.0 million.
Net interest income dropped 0.3% from the prior-year quarter to
$66.1 million. The decrease was primarily due to a fall in
interest and dividend income, partially offset by lower interest
expense. However, net interest margin rose 6 basis points (bps)
to 2.43% year over year.
Non-interest income declined 12.3% year over year to $5.3
Operating expenses decreased 2.0% from the year-ago quarter to
$43.6 million. The decline was primarily due to decrease in
federal insurance premium and assessments costs, state franchise
tax, appraisal and other loan review expense as well as other
operating expenditure. These positives were offset by a rise in
salaries and employee benefits, marketing services charges,
office property, equipment and software expenditure as well as
real estate owned expense.
In the said quarter, credit quality continued to improve with TFS
Financial reporting provision for loan losses of $4.0 million, up
from $29.0 million in the year-ago quarter. Moreover, net loan
charge-offs came in at $44.9 million versus the year-earlier
quarter figure of $158.5 million.
As of Sep 30, 2013, total loan delinquencies were 1.31% of total
loans, down 35 bps from 1.66% as of Sep 30, 2012.
TFS Financial's capital ratios were well above the regulatory
requirement. As of Sep 30, 2013, Tier 1 risk-based capital ratio
was 26.69%. Total risk-based capital came in at 27.94%.
In the reported quarter, the company received authorization from
the Federal Reserve to recommence its stock repurchase program.
Consequently, the company expects to begin the same after Oct 1,
2013. The repurchase program has roughly 2.2 million shares of
its common stock remaining to be purchased.
Performance of Other Financial Firms
Washington Federal Inc.
) fiscal fourth-quarter 2013 earnings surpassed the Zacks
Consensus Estimate by a nickel. Results were driven by increase
in both net interest income and other income, partially offset by
higher operating expenses.
Hudson City Bancorp Inc.
) operating earnings came in line with the Zacks Consensus
Estimate. Results were aided by increased non-interest income and
lower provision for loan losses, partially offset by a decline in
net interest income.
New York Community Bancorp, Inc.
) earnings outpaced the Zacks Consensus Estimate.
Better-than-expected results came on the back of decline in
We expect the bank's renewed capital deployment initiatives to
boost investors' confidence in the stock. Moreover, continuous
improvement in credit quality and decent capital ratios bode well
for the company.
However, a still low interest rate scenario and protracted
economic recovery continue to drag the top line. Also, stringent
regulations remain a cause of concern.
At present, TFS Financial carries a Zacks Rank #3 (Hold).
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