TFS Financial Corporation
) share price moved north by 5.8% following the Sep 26
announcement that the company has received authorization from the
Federal Reserve to recommence its stock repurchase program. The
green signal from the Fed spells good news for the company, and
comes as a respite after the arduous financial restrictions owing
to two Memorandums of Understanding (MOU).
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The company now appears to have an understandably less-troubled
path toward reinstating its dividend, which it last paid in
mid-2010. Going forward, these reinstated capital deployment
initiatives by the bank are expected to boost investors'
confidence in the stock.
The Ohio-based bank holding company expects to reinstate its
share repurchase program after Oct 1, 2013. The share repurchase
program has roughly 2.2 million shares of its common stock
remaining to be purchased.
In Mar 2009, the aforementioned share repurchase program was
approved by TFS Financial's board of directors. However, the
program was suspended in Aug 2010 when a MOU was entered into
with the bank's earlier regulator, the Office of Thrift
The MOU was signed to lessen its credit risk associated with TFS
Financial's home-equity credit lines and loans. Nearly one-third
of the bank's loan portfolio was concentrated in home equity
lines and loans in the states of Ohio and Florida, where the
real-estate values were tanking.
Further, the OTS ceased to exist on Oct 19, 2011 after being
merged with the Office of the Comptroller of the Currency (OCC),
the Federal Deposit Insurance Corporation (FDIC), the Federal
Reserve Board of Governors, and the Consumer Financial Protection
Bureau (CFPB). This came under the provisions of the Dodd-Frank
Wall Street Reform and Consumer Protection Act. The MOU is
presently under the supervision of the Federal Reserve.
TFS Financial currently carries a Zacks Rank #2 (Buy). Other
well-performing stocks in the same sector include
Meta Financial Group, Inc.
Provident Financial Holdings, Inc.
West Bancorp., Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).