Wrapping up Q3 earnings, we look at the numbers and key takeaways for the thrifts & mortgage finance stocks, including TFS Financial (NASDAQ: TFSL) and its peers.

Thrifts & Mortgage Finance institutions operate by accepting deposits and extending loans primarily for residential mortgages, earning revenue through interest rate spreads (difference between lending rates and borrowing costs) and origination fees. The industry benefits from demographic tailwinds as millennials enter prime homebuying age, technological advancements streamlining the loan approval process, and potential interest rate stabilization improving affordability. However, significant headwinds include net interest margin compression during rate volatility, increased competition from fintech disruptors offering digital-first experiences, mounting regulatory compliance costs, and potential housing market corrections that could impact loan portfolios and default rates.

The 15 thrifts & mortgage finance stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 4.7% while next quarter’s revenue guidance was 2.4% below.

In light of this news, share prices of the companies have held steady as they are up 3.8% on average since the latest earnings results.

TFS Financial (NASDAQ: TFSL)

Tracing its roots back to 1938 during the Great Depression era when savings and loans were vital to homeownership, TFS Financial (NASDAQ: TFSL) is a savings and loan holding company that provides mortgage lending, deposit services, and other retail banking products primarily in Ohio and Florida.

TFS Financial reported revenues of $84.48 million, up 14% year on year. This print was in line with analysts’ expectations, and overall, it was a strong quarter for the company with EPS in line with analysts’ estimates and a narrow beat of analysts’ tangible book value per share estimates.

“Third Federal saw record earnings of $91 million in our fiscal year, driven by a continued focus on improving our net interest margin, and an increase in first mortgage and home equity originations,” said Chairman and CEO Marc A. Stefanski.

Interestingly, the stock is up 1.9% since reporting and currently trades at $14.27.

Is now the time to buy TFS Financial? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q3: Ellington Financial (NYSE: EFC)

Operating under the guidance of Ellington Management Group, a respected name in structured credit markets, Ellington Financial (NYSE: EFC) acquires and manages a diverse portfolio of mortgage-related, consumer-related, and other financial assets to generate returns for investors.

Ellington Financial reported revenues of $82.76 million, up 23.6% year on year, outperforming analysts’ expectations by 4.9%. The business had an exceptional quarter with a beat of analysts’ EPS estimates and a solid beat of analysts’ revenue estimates.

However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $13.78.

Is now the time to buy Ellington Financial? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: WaFd Bank (NASDAQ: WAFD)

Founded in 1917 and rebranded from Washington Federal in 2023, WaFd (NASDAQ: WAFD) is a bank holding company that provides lending, deposit services, and insurance through its Washington Federal Bank subsidiary across eight western states.

WaFd Bank reported revenues of $187.2 million, flat year on year, falling short of analysts’ expectations by 1.7%. It was a disappointing quarter as it posted a significant miss of analysts’ net interest income and EPS estimates.

Interestingly, the stock is up 20.7% since the results and currently trades at $33.59.

Read our full analysis of WaFd Bank’s results here.

PennyMac Financial Services (NYSE: PFSI)

Founded during the 2008 financial crisis to help address the mortgage market meltdown, PennyMac Financial Services (NYSE: PFSI) is a specialty financial services company that originates, services, and manages investments related to residential mortgage loans in the United States.

PennyMac Financial Services reported revenues of $637.1 million, up 11.3% year on year. This print topped analysts’ expectations by 9%. It was an exceptional quarter as it also produced an impressive beat of analysts’ net interest income estimates and a solid beat of analysts’ revenue estimates.

The stock is up 9.2% since reporting and currently trades at $132.07.

Read our full, actionable report on PennyMac Financial Services here, it’s free for active Edge members.

AGNC Investment (NASDAQ: AGNC)

Born during the 2008 financial crisis when mortgage markets were in turmoil, AGNC Investment (NASDAQ: AGNC) is a real estate investment trust that primarily invests in mortgage-backed securities guaranteed by U.S. government agencies or enterprises.

AGNC Investment reported revenues of $836 million, up 122% year on year. This result beat analysts’ expectations by 42.3%. Taking a step back, it was a slower quarter as it logged a significant miss of analysts’ net interest income estimates and a significant miss of analysts’ EPS estimates.

AGNC Investment scored the biggest analyst estimates beat among its peers. The stock is up 4.8% since reporting and currently trades at $10.59.

Read our full, actionable report on AGNC Investment here, it’s free for active Edge members.

Market Update

Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.

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