TFSL "misses" on both lines

Investment Analysis Clubs Jim Royal
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TFS Financial [press release](TFS Financial Corporation Announces Second Fiscal Quarter 2023 Results | Seeking Alpha

  • Q2 GAAP EPS of $0.06 misses by $0.01.

  • Revenue of $74.6M (+9.2% Y/Y) misses by $0.86M

  • Generated over $80 million of residential mortgage loan growth

  • Remained well capitalized, with a Tier 1 leverage ratio of 11.27%

Any thoughts Jim?

Thanks!
Murph

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Hey, Murph,

That income really came down in the quarter, to $15.9 million. That just covers the quarterly dividend of about $15.2 million. The interest rate spread declined 19 bps sequentially, to just 1.56%, and that’s the key mover (higher funding costs) for the decline in earnings, but rising labor costs also contributed.

They repurchased ~362,000 shares in the quarter, on top of the 315,000 in the December quarter, a sizable uptick in repurchases for them, though not what it has been in years past. In the latest quarter, repurchases totaled about 0.7% of publicly traded stock. That’s almost enough shares retired for them to fund what I expect to be the forward dividend without having to pay any more in abosolute terms.

We’ll get a vote in early July on the go-forward dividend, and it will be interesting to see what they do. They’ll want to increase it, of course, and likely will end up doing what they did before and edge it up a cent per year. So I’m calling $1.14 here. :slight_smile:

Jim

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Thanks much, Jim!

I am holding what I have, plus I have sold a few cash-secured puts to generate net new buys, if exercised, in the 11’s.

Cheers!
Murph
BL Home Fool
(regional bank kamikaze!) :wink:

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Well, it looks like I will have no problem getting TFSL in the $11’s. :crazy_face:

Cheers!
Murph

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@TMFMurph–“(regional bank kamikaze)”

You crack me up with that one, Murph.

That said, me, too, with my recent buys into NYCB, TFC, TFSL and USB.

David

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“Great” minds work alike; I also sold some TFC puts!

Cheers!
Kamikaze Murph

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Yeah, it was a pretty rough day for banks all around. It may not be over.

Jim

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Trade’s not lookin’ so bad now, is it, Murph? :slight_smile:
Jim

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Let’s just say that even a blind hog finds a few acorns now and then! :wink:

Cheers!
Murph
BL Home Fool
(long TFSL; sold TFSL puts)

10

ANyone been sniffing around CMA (Comerica)?

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I have some puts on USB, PNC and 5% long position on KRE (regional bank index etf), the index is heavily shorted something like 90%, so any sign of stabilization will push the index up. Of course I own the big banks like C, WFC, BAC.

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Kingran,

Will the ETF be very responsive to shorting, or the reversal of the shorting?

Here’s my thinking, and why I wonder:

  • A Short-seller has to borrow shares from someone who is long the ETF.
  • The act of selling short doesn’t force the index ETF to sell anything at all. (Because they are holding stock shares for the long-holder.)
  • The short selling on the index ETF doesn’t directly place any downward pressure on the stock shares.
  • removal of the short-selling doesn’t create any upward pressure on the indexed companies’ shares.

So, won’t the ETF only rise to the degree that the indexed companies share prices rise? The short positions getting covered won’t “squeeze” the ETF to rise above “NAV” of the indexed companies.

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Not sure why you think the shorting of the ETF won’t squeeze the price.

If someone is buying the ETF, the ETF has to buy the underlying stocks. Why wouldn’t that cause the stocks to go up just the same as if they were bought directly?

Randy

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It looks like they’re keeping the dividend at $1.13

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Yep, I ended up voting on it (“Yes”) as a depositor/mortgagee. Gotta keep that income flowing.

Jim

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Any idea why TFSL is dropping like a brick?

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All banks are down… relatively TFSL is doing okay.

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Hey, WealthRatio,

It may also have to do with that hefty dividend, and they already have a substantial payout ratio. Regardless, this kind of sentiment can tend to feed on itself, as investors get scared of a cut on a high dividend stock.

Jim

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Looks like a “beat” from TFSL: +.07 vs +.044, at least according to TD Ameritrade.

Cheers!
Murph
(long TFSL)

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