Tfs Financial's Business Segments

TFS Financial Corporation was organized in 1997 as the mid-tier stock holding company for the Association. We completed our initial public stock offering on April 20, 2007 and issued 100,199,618 shares of common stock, or 30.16% of our post-offering outstanding common stock, to subscribers in the offering. Additionally, at the time of the public offering, 5,000,000 shares of our common stock, or 1.50% of our outstanding shares, were issued to the newly formed charitable foundation, Third Federal Foundation. Third Federal Savings, MHC, our mutual holding company parent, holds the remainder of our outstanding common stock (227,119,132 shares). Net proceeds from our initial public stock offering were approximately $886 million and reflected the costs we incurred in completing the offering as well as a $106.5 million loan to the ESOP related to its acquisition of shares in the initial public stock offering. As the holding company of the Association, we are authorized to pursue other business activities permitted by applicable laws and regulations for savings and loan holding companies, which include making equity investments and the acquisition of banking and financial services companies.
Our cash flow depends primarily on earnings from the investment of the portion of the net offering proceeds we retained, and any dividends we receive from the Association and Third Capital, Inc. All of our officers are also officers of the Association. In addition, we use the services of the support staff of the Association from time to time. We may hire additional employees, as needed, to the extent we expand our business in the future.

TFS Financial Corporation Overview

Segments, Products, and Services

TFS Financial Corporation operates primarily within the financial sector, specifically focusing on residential mortgage lending. The company offers a diverse set of financial products and services designed to cater to the needs of individual consumers, particularly homeowners. Here is a comprehensive breakdown of the segments, products, and services offered by TFS Financial Corporation:

1. Residential Real Estate Mortgage Loans

The cornerstone of TFS Financial Corporations lending activities is the origination and servicing of residential real estate mortgage loans.

- Loan Types: The company typically issues both fixed-rate and adjustable-rate mortgage loans.
- Loan Amounts: Loans are available up to conforming loan limits set by the Office of Federal Housing Enterprise Oversight, which generally range from $417,000 to $625,500 for single-family homes, depending on the market conditions.
- Jumbo Loans: In addition to regular conforming loans, TFS Financial also caters to borrowers seeking larger amounts through jumbo loans. These loans surpass the federal conforming loan limits and are underwritten with principles similar to conforming loans, thus allowing flexibility for borrowers in high-value markets.

Home Equity Loans and Home Equity Lines of Credit

TFS Financial Corporation has a robust assortment of home equity products designed to help homeowners leverage the equity in their properties.

- Home Equity Loans: Home equity loans typically provide a lump sum amount that borrowers repay over a specified term, with a fixed interest rate.
- Home Equity Lines of Credit (HELOC): HELOCs allow homeowners access to credit based on their home equity and operate similarly to credit cards. Borrowers can draw on the line of credit as needed and pay interest only on the amount drawn.
- Historical Products: The company has seen changes in its home equity offerings over the years. Initially, it provided both first and second home equity loans but scaled back offerings after June 28, 2010, due to market conditions and regulatory advisories. They did, however, open the door to bridge loans for certain qualifying customers during this restrictive period.
- Expansion: After actively reducing the outstanding home equity loan balances, TFS Financial reintroduced its home equity lines of credit starting March 20, 2012, and has since expanded access to a broader range of consumers, covering multiple states and maintaining strict eligibility criteria based on property and credit performance.

Construction Loans

TFS Financial Corporation also specializes in construction loans, which finance the building of new homes.

- Construction/Permanent Loans: These loans are structured to provide financing during the construction phase and transition into permanent mortgages upon completion of the home. This allows homeowners to manage their finances more effectively, as they only pay interest on the drawn amounts during construction.
- Disbursement Process: Funds are disbursed progressively to builders or subcontractors as construction milestones are met, reducing the financial burden on the borrower.
- Terms and Ratios: The construction loans come with flexible options for both fixed and adjustable rates. The Association offers a maximum loan-to-completed-appraised value ratio of 80%, enhancing the accessibility of funding for homeowners looking to construct new single-family residences.

Risk Considerations in Construction Financing

While construction loans offer unique opportunities, they also come with heightened risk levels compared to traditional long-term financing.

- Credit Risk: Greater credit risk is associated, primarily due to market uncertainties and potential inaccuracies in initially estimating construction costs versus final property values.
- Market Fluctuations: Borrowers must understand that fluctuations in home prices can significantly impact the value of the finished property and, consequently, the likelihood of repaying the construction loan. A decline in property values can pose risks for both the borrower and the lender.



By providing tailored financial solutions ranging from traditional mortgages to specialized construction financing, TFS Financial Corporation addresses diverse consumer needs while navigating the complexities of the residential real estate market. Their comprehensive offerings ensure that homeowners have access to flexible financing options suited to a variety of circumstances and goals.