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TFS Financial Corporation Announces First Fiscal Quarter Ended December 31, 2010 Financial Results

CLEVELAND, Feb. 9, 2011 (GLOBE NEWSWIRE) -- 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 quarter ended December 31, 2010.

The Company reported a net loss of $7.3 million for the three months ended December 31, 2010, compared to net income of $8.9 million for the three months ended December 31, 2009. The change in net income is largely the result of an increase in the provision for loan losses and non-interest expense, plus a reduction in non-interest income, partially offset by an increase in net interest income.

Marc A. Stefanski, chairman and CEO of Third Federal commented, "While the strong refinance market has allowed us to grow and attract new customers, we still face the challenges of a weak economy, an unemployment rate of 9 percent and increasing costs due to a changing regulatory environment."

Net interest income increased $2.4 million, or 4.2%, to $59.7 million for the three months ended December 31, 2010 from $57.3 million for the three months ended December 31, 2009. The increase in net interest income resulted from a decrease in interest paid on interest-bearing liabilities, partially offset by a decrease in the interest received on interest-bearing assets. The interest rate spread increased 5 basis points to 1.82% for the three months ended December 31, 2010 from 1.77% for the three months ended December 31, 2009. The net interest margin increased one basis point to 2.21% compared to 2.20% for the same quarter last year. 

The Company recorded a provision for loan losses of $34.5 million for the three months ended December 31, 2010 and $16.0 million for the three months ended December 31, 2009. The provisions exceeded net charge-offs of $19.5 million and $14.0 million for the quarters ended December 31, 2010 and 2009, respectively Of the $19.5 million of net charge-offs, $13.4 million occurred in the equity loans and lines of credit portfolio. The allowance for loan losses was $148.2 million, or 1.50% of total loans receivable, at December 31, 2010, compared to $133.2 million, or 1.42% of total loans receivable, at September 30, 2010, and further compared to $97.3 million or 1.03% of total loans receivable at December 31, 2009. Included in the allowance for loan losses is a specific reserve for losses on impaired loans which was $53.1 million, $46.0 million and $31.8 million at December 31, 2010, September 30, 2010 and December 31, 2009, respectively.

Non-performing loans decreased $11.1 million to $275.5 million, or 2.80% of total loans, at December 31, 2010 from $286.6 million, or 3.08% of total loans, at September 30, 2010.  Of the $11.1 million decrease, $3.5 million occurred in the residential, non-Home Today portfolio, $4.3 million occurred in the residential, Home Today portfolio, $1.9 million occurred in the equity loans and lines of credit portfolio and $1.4 million occurred in the construction portfolio.  Non-performing loans increased $10.8 million compared to $264.7 million, or 2.83% of total loans, at December 31, 2009.  The Home Today portfolio is an affordable housing program targeted toward low and moderate income home buyers, which totaled $276.2 million at December 31, 2010 and $280.5 million at September 30, 2010.

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