Another detailed look at TFSL

Investment Analysis Clubs Jim Royal
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…shows signs for optimism:

[TFS Financial: Robust Performance Means Higher Capital Returns (TFSL) | Seeking Alpha](TFS Financial: Robust Performance Means Higher Capital Returns (TFSL) | Seeking Alpha

Cheers!
Murph
BL Home Fool
(long TFSL and sold cash-secured puts)

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How long have you been following TFSL Murph? Do you know why they stopped the Dividend in 2010? Also their P/B seems a little high for what the banks are going through at 1.82, but maybe their Dividend is holding it up.

Andy

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Hi Andy!

I didn’t get start getting into TFSL until 2014 or so. However, the resident expert on TFSL is none other than Jim Royal; I’ll bet he knows.
You may want to review past TFSL posts from Jim to get some great perspective, although many super Jim Royal posts on TFSL were lost in the switch to the new board format.

Cheers!
Murph
BL Home Fool
(long TFSL, and who notes that it is a “special situation” that is often overlooked due to its organizational quirks…which Jim can speak to)

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Hi Murph,
I was surprised to read that MHC owned 80 percent of the stock and was waiving dividends. Not really sure how to think about this. Depending on if they hold or sell it seems like you have to have a lot of faith in them.

Andy

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Andy–

This piece explains some issues further.

Jim

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Thank you Jim. I appreciate the help.

Andy

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So Jim now I understand the MHC much better thank you. Why would they wave their dividends? Why not take them? Does it have something to do with them not being on the market?

Andy

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Basically, if the MHC didn’t waive the dividends, then the company wouldn’t declare one. The MHC can gain nothing by not waiving them.

Jim

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Wow Jim thanks, that is really interesting. I saw that others didn’t have a dividend and was wondering why this one did. Thank you again.

Andy

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Ok I am starting to understand this a little better. I calculate that they have about 41 million shares outstanding and that their BVPS is at $44.74 so their Price to book is at .25. It looks like they have bought back about 1/2 the shares outstanding. Very interesting.

Andy

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This is from 2014 so out of date but explains it well.

Andy

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Excellent find, Andy.

Thank you!

(Long TFSL)

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Your welcome Wysocki but I was given that by another investor on a seekingalpha thread. I agree it explains it very well and is now much easier to understand.

Andy

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Any update on TFSL, Jim. It has been a year.

Thanks

Anurag

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Anurag–

It’s pretty much the same thing here. The bank keeps paying its dividend but remains subject to the same issues as always – high-cost deposit base dominated by CDs and thin interest rate spreads. No appreciable buybacks in years, which is really the only way they’ll be able to credibly raise the dividend. With rates rising still more of late, the stock is feeling further pressure.

TFSL remains an interesting trade at this price. Collect the dividend – 2.4% per quarter! – and wait for some re-rating on the stock. You’re getting a market return on the dividend alone, and it was only 4 months ago that the stock kissed $15. If it takes a year to get back there again, you’re looking at a 38% total return (2 years and it’s a 47% total return, or better than 21% annualized). And the dividends are even qualified.

Jim

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Thanks Jim. Much appreciated.