TFS Financial Corporation reported a record net income of $91 million for the fiscal year ended September 30, 2025, a 14.3% increase from $79.6 million in FY 2024. Net interest income rose $14.2 million, or 5.1%, to $292.7 million, while the net interest margin improved to 1.76% from 1.69% a year earlier. Non‑interest income increased $4.1 million to $28.8 million, driven by higher fee and service earnings. Credit‑loss provisions were $2.5 million, up $1.0 million from the prior year, and the allowance for credit losses grew to $104.4 million. Loan delinquencies climbed $2.8 million to $34.7 million, but the delinquency rate remained low at 0.22% of total loans. Net loan recoveries were $4.0 million, slightly below the $4.7 million recorded in FY 2024.
In the fourth quarter of FY 2025, the company earned $26.0 million, up 20.9% from $21.5 million in Q3 FY 2025. The quarter’s net interest income increased to $73.2 million, reflecting a 15‑basis‑point rise in the yield on interest‑earning assets and an 8‑basis‑point increase in the cost of interest‑bearing liabilities. Non‑interest income for the quarter grew to $7.2 million, supported by a 12% increase in fee‑based services.
The net interest margin improvement was largely due to a higher weighted‑average yield on loans, particularly in the mortgage and home‑equity segments, while liability costs rose modestly. The company’s loan portfolio shifted toward home‑equity lines of credit, which carry higher yields, and away from core residential mortgages, reflecting a strategic adjustment to market demand and risk profiles.
Segment contributions show that mortgage lending remains the largest source of net interest income, while home‑equity loans and fee‑based services grew in relative share. The company’s fee‑and‑service earnings, which include advisory and transaction fees, increased by 9% year‑over‑year, underscoring a diversification of revenue streams.
Management highlighted the company’s strong capital position, with a Tier 1 capital ratio near 11%, and emphasized disciplined risk management, citing a low delinquency rate and stable allowance for credit losses. The CEO noted that the firm remains focused on organic growth, share buybacks, and dividend returns, while navigating a challenging interest‑rate environment. The company repurchased 247,865 shares at an average price of $13.05 per share and paid $59.7 million in dividends, maintaining a quarterly dividend of $0.2825 per share.
TFS Financial competes with other banks and credit unions in the residential mortgage market. The record net income and improved margins demonstrate the firm’s resilience and ability to sustain shareholder value amid fluctuating interest rates. The company’s strategic focus on organic growth, share buybacks, and dividend returns positions it well for continued performance in a competitive banking landscape.
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