CLEVELAND, OH – TFS Financial (NASDAQ:TFSL) Corporation (NASDAQ:TFSL), a federally chartered savings institution, announced today that its mutual holding company, Third Federal Savings and Loan Association of Cleveland, MHC (the "MHC"), received approval from its members to waive dividends aggregating up to $1.13 per share. This waiver is applicable to dividends declared on the company's common stock over the next twelve months, ending July 9, 2025.
In a special meeting held today, members of the MHC, which include depositors and certain loan customers of Third Federal Savings and Loan Association of Cleveland, cast their votes on the proposed dividend waiver. The approval saw a significant majority, with 58% of the total eligible votes being cast, of which 97% were in favor of the proposal.
The MHC, which holds an 81% majority stake in TFS Financial Corporation, will now proceed to file a notice and request for non-objection with the Federal Reserve Bank of Cleveland concerning the approved dividend waivers. The company noted that the timing and receipt of the non-objection from the Federal Reserve Bank are currently uncertain.
Today's announcement follows the MHC's special meeting and comes as a significant event for the company and its shareholders. TFS Financial has not disclosed any further details regarding the potential impact of the dividend waivers on its financial position or on its majority shareholder, the MHC.
In other recent news, TFS Financial has been under the analysts' lens, with Keefe Bruyette & Woods adjusting their financial outlook on the company. The firm reduced the price target from $15.00 to $14.00, maintaining its Market Perform rating.
This revision followed TFS Financial's latest earnings report, which revealed a per-share profit of $0.07, exceeding expectations due to a robust net interest income (NII) that saw an increase as the net interest margin (NIM) expanded by 3 basis points to 1.71%.
The company also reported a 2% annualized decrease in loans last quarter, with a decline in traditional mortgages being partly compensated by the growth in home equity lines of credit (HELOC). Keefe Bruyette & Woods acknowledged the improved NIM as a promising starting point for future NII projections, although they anticipate that interest rate cuts will be necessary for sustainable NIM improvement.
Furthermore, Keefe Bruyette & Woods revised their earnings estimates for TFS Financial. The firm increased its forecasted earnings for fiscal years 2024 and 2025 to $0.26 per share.
InvestingPro Insights
As TFS Financial Corporation (NASDAQ:TFSL) navigates through its dividend waiver approval process, investors may find value in examining the company's financial metrics and market performance. According to InvestingPro data, TFS Financial has a market capitalization of $3.44 billion and is trading at a P/E ratio of 44.58, indicating a high earnings multiple. Additionally, the company has a dividend yield of 9.14%, which is significant and reflects its history of maintaining dividend payments for 11 consecutive years.
Despite a slight decrease in revenue growth over the last twelve months as of Q2 2024, by -1.84%, TFS Financial remains profitable with an operating income margin of 36.91%. Investors may also consider the company's solid operating income of $112.25 million during the same period. With analysts predicting profitability for the current year and the company having been profitable over the last twelve months, these factors may be of interest to those evaluating TFSL's investment potential.
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