Tfs Financial Corp (TFSL) SEC Filing 10-Q Quarterly report for the period ending Saturday, March 31, 2018

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Tfs Financial Corp
Ticker: TFSL CIK: 1381668

Contact: David Reavis (216) 429-5036 Exhibit 99.1

For release Monday, April 30, 2018

TFS FINANCIAL QUARTERLY EARNINGS REFLECT SURGING HOUSING MARKET

(Cleveland, OH - April 30, 2018) - TFS Financial Corporation (NASDAQ: TFSL) (the "Company"), the holding company for Third Federal Savings and Loan Association of Cleveland (the "Association"), today announced results for the three months and six months ended March 31, 2018.

The Company reported net income of $23.3 million for the three months ended March 31, 2018, compared to net income of $23.5 million for the three months ended March 31, 2017, and net income of $42.9 million for the six months ended March 31, 2018, compared to net income of $43.1 million for the six months ended March 31, 2017. While the results were similar, higher net interest income and a lower effective tax rate helped offset an increase in non-interest expenses for the current six month period when compared to the same period last year.

"As we celebrate our 80^th anniversary year, the housing market is healthier than it has been in a decade.” said Marc A. Stefanski, Chairman and CEO. "Consumer confidence is higher than ever and home buyers are buying homes before they sell their current homes. This has helped Third Federal home purchase mortgage applications increase 31% year over year which makes us optimistic about the home purchase season. The surging housing market has also increased home values across many of our lending markets. Borrowers are taking advantage of this increase in home equity and, as a result, our home equity line of credit applications have increased 16% year over year."

Net interest income was $141.7 million for the six months ended March 31, 2018 and $138.5 million for the six months ended March 31, 2017, as $18.1 million of additional interest income in the current period more than offset $14.9 million of additional interest expense. Interest income was higher, due to a combination of a $672.3 million increase in the average balance of interest-earning assets, mainly loans, and a higher weighted average yield earned on those assets. Recent market interest rate increases have impacted both loan yields, particularly home equity lending products that feature interest rates that reset based on the prime rate, as well as funding costs. The average cost of interest-bearing liabilities was also higher in the current year as a result of the use of longer duration funding sources that carried higher costs. Similar trends were observed in the three month periods as well, as net interest income was $71.7 million for the three months ended March 31, 2018 and $70.3 million for the three months ended March 31, 2017. The interest rate spread for the six months ended March 31, 2018 was 1.97%, compared to 2.05% for the prior year period. The interest rate spread was 1.98% for the three months ended March 31, 2018 and 2.06% for the three months ended March 31, 2017. The net interest margin for the six months ended March 31, 2018 was 2.11%, as compared to 2.17% for the six months ended March 31, 2017. The net interest margin for the three months ended March 31, 2018 was 2.13%, compared to 2.18% for the three months ended March 31, 2017.

The provision for loan losses was a credit of $4.0 million for the three months ended March 31, 2018 compared to a credit of $6.0 million for the three months ended March 31, 2017. The provision for loan losses was a credit of $7.0 million for the six months ended March 31, 2018 compared to a credit of $6.0 million for the six months ended March 31, 2017. Continued strong recoveries of loan amounts previously charged off, low levels of current loan charge-offs and reduced exposure from home equity lines of credit coming to the end of the draw period resulted in the loan provision credit. Gross loan charge-offs were $4.7 million for the six months ended March 31, 2018 and $6.3 million for the six months ended March 31, 2017, while loan recoveries were $5.9 million in the current year period and $7.3 million in the prior year period. As a result of loan recoveries exceeding charge-offs, the Company reported net loan recoveries of $1.2 million for the six months ended March 31, 2018, and $1.0 million for the six months ended March 31, 2017. In recent years, a large portion of the overall allowance has been allocated to the home equity loans and lines of credit category to address exposure from customers whose lines of credit were originated without amortizing payments during the draw period and who could face potential increased payment shock at the end of the draw period. In general, home equity lines of credit originated prior to June 2010 were characterized by a ten-year draw period, with interest only payments, followed by a ten-year repayment period. However, a large number of those lines of credit approaching the end of draw period have been paid off or refinanced without significant loss. The principal balance of home equity lines of credit originated prior to 2010 without amortizing payments during the draw period that are coming to the end of the draw period through fiscal 2020 was $306.5 million at March 31, 2018, compared to $396.1 million at December 31, 2017, $484.8 at September 30, 2017 and $687.0 million at March 31, 2017. As this exposure decreases without incurring significant loss, the portion of the overall allowance allocated to the home equity loans and lines of credit category has correspondingly decreased. Generally, equity lines of credit originated after June 2010 require an amortizing payment during the draw period and do not face the same end-of-draw increased payment shock risk. The allowance for loan losses was $43.1

The following information was filed by Tfs Financial Corp (TFSL) on Monday, April 30, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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