8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) August 6, 2008

TFS FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

United States of America	001-33390	52-2054948
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

7007 Broadway Ave., Cleveland, Ohio	44105
(Address of principle executive offices)	(Zip Code)

Registrant’s telephone number, including area code (216) 441-6000

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On August 6, 2008, TFS Financial Corporation (the “Company”) issued a press release announcing its operating results for the three and nine month periods ended June 30, 2008. A copy of the press release is attached as Exhibit 99.1 to this Report.

The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof. The information in this report, including the exhibit hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.

99.1 Press Release dated August 6, 2008

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	TFS FINANCIAL CORPORATION
	(Registrant)
Date: August 6, 2008	By:	/s/ David S. Huffman
		David S. Huffman
		Chief Financial Officer

EX-99.1

Exhibit 99.1

Contact: Monica Martines (216) 441-7346

                Cherie Skoczen (216) 429-5194

For release Wednesday, August 6, 2008

TFS Financial Corporation Announces Third Fiscal Quarter Ended June 30, 2008 Financial Results

(Cleveland, OH – August 6, 2008) – TFS Financial Corporation (NASDAQ: TFSL) (the “Company”), the holding company for Third Federal Savings and Loan Association of Cleveland, today announced results for the three and nine month periods ended June 30, 2008.

The Company reported net income of $6.8 million for the three months ended June 30, 2008, compared to net loss of $17.3 million for the three months ended June 30, 2007. Net income of $40.4 million was reported for the nine months ended June 30, 2008, compared to net income of $10.6 million for the nine months ended June 30, 2007. The 2007 results were impacted by a non-recurring $55 million pre-tax charitable contribution expense to establish the Third Federal Foundation.

Interest income decreased $8.6 million, or 6%, to $131.6 million for the three months ended June 30, 2008 from $140.1 million for the three months ended June 30, 2007. The decrease in interest income resulted primarily from a decrease in the interest received on federal funds partially offset by increases in interest income from mortgage-backed securities and loans.

Interest expense decreased $12.1 million, or 14%, to $75.3 million for the three months ended June 30, 2008 from $87.3 million for the three months ended June 30, 2007. The change resulted primarily from a decrease in interest expense on NOW accounts and certificate of deposit accounts and was partially offset by an increase in interest expense on savings accounts.

Increasing unemployment levels and rising fuel and food prices are challenging our borrowers’ ability to repay their loans at a time when deteriorating housing prices, in part as a consequence of the sub-prime mortgage market, make it difficult to sell their homes. This limits the ability of many borrowers to self cure a delinquency. Based on our evaluation of the above factors, including an expanded loan level evaluation of our equity lines of credit which were delinquent 90 days or more, we recorded a provision for loan losses of $18.0 million for the three months ended June 30, 2008 and $2.1 million for the three months ended June 30, 2007. The provisions exceeded net chargeoffs of $3.9 million and $1.1 million for the three months ended June 30, 2008 and 2007, respectively. The Company’s provision for loan losses was $25.5 million for the nine months ended June 30, 2008 and $6.4 million for the nine months ended June 30, 2007. The provisions exceeded net chargeoffs of $8.4 million and $3.2 million for the nine months ended June 30, 2008 and 2007, respectively. The allowance for loan losses was $42.2 million, or 0.47% of total loans receivable at

June 30, 2008, compared to $25.1 million, or 0.31% of total loans receivable at September 30, 2007. We increased the allowance for loan losses to address the increased risk related to an increase in non-performing loans and in response to the results of our expanded evaluation of equity lines of credit, delinquent 90 days or more as of June 30, 2008. Nonperforming loans increased by $35.9 million to $149.4 million, or 1.66% of total loans, at June 30, 2008 from $113.5 million, or 1.39% of total loans, at September 30, 2007. Of the $35.9 million increase in nonperforming loans for the nine months ended June 30, 2008, $19.8 million occurred in the equity loans and lines of credit portfolio and $13.1 million occurred in the residential, non-Home Today portfolio. As of June 30, 2008, the equity loans and lines of credit portfolio was $2.27 billion, compared to $1.87 billion, at September 30, 2007.

Non-interest income decreased $2.2 million, to $11.9 million for the three months ended June 30, 2008 from $14.2 million for the three months ended June 30, 2007. This decrease can be attributed to a $3.2 million gain recognized in 2007 in connection with the sale of a commercial office building by a subsidiary.

Non-interest expense decreased $49.3 million, to $39.3 million for the three months ended June 30, 2008 from $88.6 million for the three months ended June 30, 2007. The 2007 results were impacted by a non-recurring $55.0 million pre-tax charitable contribution expense to establish the Third Federal Foundation.

Total assets increased by $82.9 million to $10.36 billion at June 30, 2008 from $10.28 billion at September 30, 2007.

Cash and cash equivalents decreased $730.0 million, or 88%, to $99.7 million at June 30, 2008 from $829.7 million at September 30, 2007, as we continued to redeploy our liquid assets into investments and loan products that provide higher yields along with longer maturities.

Our net loans held for investment increased $831.9 million, or 10%, to $8.91 billion at June 30, 2008 from $8.07 billion at September 30, 2007.

Deposits decreased $40.9 million, or less than 1%, to $8.10 billion at June 30, 2008 from $8.14 billion at September 30, 2007. The decrease in deposits was the result of a $226.7 million decrease in our high-yield checking accounts along with a $173.2 million decrease in certificates of deposit, which were offset by a $369.0 million increase in high-yield savings accounts (a subcategory of our savings accounts), combined with modest declines in other deposit products for the nine-month period ended June 30, 2008.

Accrued expenses and other liabilities increased $97.9 million to $130.1 million at June 30, 2008 from $32.2 million at September 30, 2007. This reflects the in-transit status of $90.6 million of real estate tax payments that have been collected from borrowers and are being remitted to various taxing agencies.

Shareholders’ equity decreased $31.2 million, to $1.95 billion at June 30, 2008 from $1.99 billion at September 30, 2007. This reflects $40.4 million of net income during the nine-month period reduced by $69.3 million of repurchases of outstanding common stock and $9.5 million in dividends paid on our shares of common stock (other than Third Federal Savings, MHC and unallocated ESOP shares) in the current fiscal year. Approximately 5.7 million shares were repurchased during the three months ended June 30, 2008 as part of a 15.8 million share repurchase program that began April 21, 2008.

Forward Looking Statements

This press release contains forward-looking statements, which can be identified by the use of such words as estimate, project, believe, intend, anticipate, plan, seek, expect and similar expressions. These forward-looking statements include:

• statements of our goals, intentions and expectations;

• statements regarding our business plans and prospects and growth and operating strategies;

• statements regarding the asset quality of our loan and investment portfolios; and

• estimates of our risks and future costs and benefits.

These forward-looking statements are subject to significant risks, assumptions and uncertainties, including, among other things, the following important factors that could affect the actual outcome of future events:

• significantly increased competition among depository and other financial institutions;

• inflation and changes in the interest rate environment that reduce our interest margins or reduce the fair value of financial instruments;

• general economic conditions, either nationally or in our market areas, that are worse than expected;

• adverse changes in the securities markets;

• adverse changes and volatility in credit markets;

• legislative or regulatory changes that adversely affect our business;

• our ability to enter new markets successfully and take advantage of growth opportunities, and the possible short-term dilutive effect of potential acquisitions or de novo branches, if any;

• changes in consumer spending, borrowing and savings habits;

• changes in accounting policies and practices, as may be adopted by the bank regulatory agencies and the Financial Accounting Standards Board;

• inability of third-party providers to perform their obligations to us; and

• changes in our organization, compensation and benefit plans.

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.

TFS FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CONDITION (unaudited)

(In thousands, except share data)

	June 30,			September 30,
	2008			2007
ASSETS
Cash and due from banks	$	43,536		$	45,666
Federal funds sold		2,500			598,400
Other interest-bearing cash equivalents		53,699			185,649
Cash and cash equivalents		99,735			829,715
Investment securities:
Available for sale (amortized cost $32,075 and $57,025, respectively)		32,180			56,681
Held to maturity (fair value $864,180 and $825,342, respectively)		865,165			823,815
Investment securities		897,345			880,496
Mortgage loans held for sale, at lower of cost or market		63,260			107,962
Loans held for investment, net:
Mortgage loans		8,954,654			8,103,300
Other loans		8,997			14,692
Deferred loan fees, net		(15,817	)		(19,174	)
Allowance for loan losses		(42,239	)		(25,111	)
Loans held for investment, net		8,905,595			8,073,707
Mortgage loan servicing rights, net		42,032			41,064
Federal Home Loan Bank stock, at cost		35,146			34,231
Real estate owned		13,091			9,903
Premises, equipment, and software, net		68,471			69,669
Accrued interest receivable		44,515			48,364
Bank owned life insurance contracts		149,413			144,498
Other assets		42,332			38,420
TOTAL ASSETS	$	10,360,935		$	10,278,029
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits	$	8,100,362		$	8,141,215
Borrowed funds		93,007			—
Borrowers’ advances for insurance and taxes		20,535			40,481
Principal, interest, and related escrow owed on loans serviced		61,943			77,908
Accrued expenses and other liabilities		130,093			32,224
Total liabilities		8,405,940			8,291,828
Commitments and contingent liabilities
Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued and outstanding		—			—
Common stock, $0.01 par value, 700,000,000 shares authorized; 332,318,750 shares issued; 326,635,750 and 332,318,750 outstanding at June 30, 2008 and
September 30, 2007, respectively		3,323			3,323
Paid-in capital		1,669,423			1,668,215
Treasury stock, at cost; 5,683,000 shares at June 30, 2008		(69,316	)		—
Unallocated ESOP shares		(95,132	)		(100,597	)
Retained earnings—substantially restricted		452,466			421,503
Accumulated other comprehensive loss		(5,769	)		(6,243	)
Total shareholders’ equity		1,954,995			1,986,201
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	10,360,935		$	10,278,029

TFS FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS) (unaudited)

(In thousands, except share and per share data)

	For the Three Months Ended June 30,					For the Nine Months Ended June 30,
	2008		2007			2008		2007
INTEREST AND DIVIDEND INCOME:
Loans, including fees	$	118,645	$	116,088		$	363,713	$	347,653
Investment securities available for sale		388		624			1,448		1,984
Investment securities held to maturity		10,471		7,235			33,436		12,623
Federal funds sold		1,254		15,370			14,480		26,898
Other interest earning assets		806		797			3,047		3,209
Total interest income		131,564		140,114			416,124		392,367
INTEREST EXPENSE:
Deposits		75,244		87,029			253,772		250,215
Federal Home Loan Bank advances		19		310			19		933
Total interest expense		75,263		87,339			253,791		251,148
NET INTEREST INCOME		56,301		52,775			162,333		141,219
PROVISION FOR LOAN LOSSES		18,000		2,100			25,500		6,350
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		38,301		50,675			136,833		134,869
NON-INTEREST INCOME
Fees and service charges		6,521		6,481			18,903		18,840
Net gain (loss) on the sale of loans		828		(630	)		3,282		(995	)
Increase in and death benefits from bank owned life insurance contracts		1,659		1,595			4,921		4,720
Net income on private equity investments		1,158		1,293			3,173		4,470
Other		1,780		5,442			5,420		10,665
Total non-interest income		11,946		14,181			35,699		37,700
NON-INTEREST EXPENSE:
Salaries and employee benefits		17,931		17,956			54,422		54,275
Marketing services		3,525		3,353			10,578		10,055
Office property, equipment, and software		4,932		5,018			13,891		14,393
Federal insurance premium		1,964		591			3,258		1,749
State franchise tax		1,657		841			4,027		2,655
Contribution to charitable foundation		—		55,000			—		55,000
Other operating expenses		9,322		5,833			23,274		16,763
Total non-interest expense		39,331		88,592			109,450		154,890
INCOME (LOSS) BEFORE INCOME TAXES		10,916		(23,736	)		63,082		17,679
INCOME TAX EXPENSE (BENEFIT)		4,126		(6,479	)		22,653		7,118
NET INCOME (LOSS)	$	6,790	$	(17,257	)	$	40,429	$	10,561
Earnings (loss) per share—basic and fully diluted	$	0.02	$	(0.06	)	$	0.13	$	0.04
Weighted average shares outstanding—basic and fully diluted		320,510,396		301,108,648			321,795,514		251,782,304

TFS FINANCIAL CORPORATION AND SUBSIDIARIES

AVERAGE BALANCES AND YIELDS (unaudited)

	Three Months Ended June 30, 2008								Three Months Ended June 30, 2007
	Average Balance			Interest Income/ Expense			Yield/ Cost(a)		Average Balance			Interest Income/ Expense			Yield/ Cost(a)
	(Dollars in thousands)
Interest-earning assets:
Federal funds sold	$	231,237		$	1,254		2.17	%	$	1,173,324		$	15,370		5.24	%
Other interest-bearing cash equivalents		53,258			331		2.49	%		17,754			242		5.45	%
Investment securities		28,987			222		3.06	%		61,055			643		4.21	%
Mortgage-backed securities		915,114			10,638		4.65	%		528,748			7,216		5.46	%
Loans		8,808,113			118,645		5.39	%		7,698,883			116,088		6.03	%
Federal Home Loan Bank stock		34,683			474		5.47	%		34,231			555		6.49	%
Total interest-earning assets		10,071,392			131,564		5.23	%		9,513,995			140,114		5.89	%
Non-interest-earning assets		341,596								341,012
Total assets	$	10,412,988							$	9,855,007
Interest-bearing liabilities:
NOW accounts	$	1,266,661			5,974		1.89	%	$	1,616,065			16,472		4.08	%
Savings & subscription proceeds		1,411,285			8,647		2.45	%		919,609			6,277		2.73	%
Certificates of deposit		5,481,524			60,623		4.42	%		5,402,340			64,280		4.76	%
Borrowed funds		3,570			19		2.13	%		25,104			310		4.94	%
Total interest-bearing liabilities		8,163,040			75,263		3.69	%		7,963,118			87,339		4.39	%
Non-interest-bearing liabilities		235,368								85,000
Total liabilities		8,398,408								8,048,118
Shareholders’ equity		2,014,580								1,806,889
Total liabilities and shareholders’ equity	$	10,412,988							$	9,855,007
Net interest income				$	56,301							$	52,775
Interest rate spread (b)							1.54	%							1.50	%
Net interest-earning assets (c)	$	1,908,352							$	1,550,877
Net interest margin (d)					2.24	% (a)							2.22	% (a)
Average interest-earning assets to average interest-bearing liabilities		123.38	%							119.48	%

(a) Annualized

(b) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(c) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(d) Net interest margin represents net interest income divided by total interest-earning assets.

TFS FINANCIAL CORPORATION AND SUBSIDIARIES

AVERAGE BALANCES AND YIELDS (unaudited)

	Nine Months Ended June 30, 2008								Nine Months Ended June 30, 2007
	Average Balance			Interest Income/ Expense			Yield/ Cost(a)		Average Balance			Interest Income/ Expense			Yield/ Cost(a)
	(Dollars in thousands)
Interest-earning assets:
Federal funds sold	$	515,548		$	14,480		3.74	%	$	684,692		$	26,898		5.24	%
Other interest-bearing cash equivalents		53,294			1,522		3.81	%		15,204			591		5.18	%
Investment securities		44,972			1,205		3.57	%		52,027			1,548		3.97	%
Mortgage-backed securities		892,649			33,679		5.03	%		327,618			13,059		5.31	%
Loans		8,526,432			363,713		5.69	%		7,680,778			347,653		6.04	%
Federal Home Loan Bank stock		34,383			1,525		5.91	%		58,368			2,618		5.98	%
Total interest-earning assets		10,067,278			416,124		5.51	%		8,818,687			392,367		5.93	%
Non-interest-earning assets		347,824								335,880
Total assets	$	10,415,102							$	9,154,567
Interest-bearing liabilities:
NOW accounts	$	1,323,877			25,847		2.60	%	$	1,661,553			50,948		4.09	%
Savings & subscription proceeds		1,258,262			29,856		3.16	%		560,322			8,306		1.98	%
Certificates of deposit		5,608,577			198,069		4.71	%		5,462,386			190,961		4.66	%
Borrowed funds		1,190			19		2.13	%		25,104			933		4.96	%
Total interest-bearing liabilities		8,191,906			253,791		4.13	%		7,709,365			251,148		4.34	%
Non-interest-bearing liabilities		207,338								157,987
Total liabilities		8,399,244								7,867,352
Shareholders’ equity		2,015,858								1,287,215
Total liabilities and shareholders’ equity	$	10,415,102							$	9,154,567
Net interest income				$	162,333							$	141,219
Interest rate spread (b)							1.38	%							1.59	%
Net interest-earning assets (c)	$	1,875,372							$	1,109,322
Net interest margin (d)					2.15	% (a)							2.14	% (a)
Average interest-earning assets to average interest-bearing liabilities		122.89	%							114.39	%

(a) Annualized

(b) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(c) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(d) Net interest margin represents net interest income divided by total interest-earning assets.