Wrapping up Q2 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 20 thrifts & mortgage finance stocks we track reported a slower Q2. As a group, revenues missed analysts’ consensus estimates by 26% while next quarter’s revenue guidance was 0.7% above.

Thankfully, share prices of the companies have been resilient as they are up 6.9% 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 $80.54 million, up 6% year on year. This print fell short of analysts’ expectations by 0.8%. Overall, it was a slower quarter for the company with EPS in line with analysts’ estimates.

Interestingly, the stock is up 6.5% since reporting and currently trades at $13.44.

Read our full report on TFS Financial here, it’s free.

Best Q2: 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 $92.54 million, up 1.5% year on year, outperforming analysts’ expectations by 11.5%. The business had a stunning quarter with a solid beat of analysts’ tangible book value per share and EPS estimates.

The market seems content with the results as the stock is up 3.2% since reporting. It currently trades at $13.08.

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

Weakest Q2: Ready Capital (NYSE: RC)

Operating as one of only 17 non-bank Small Business Lending Companies with preferred lender status from the SBA, Ready Capital (NYSE: RC) is a multi-strategy real estate finance company that originates, acquires, and services commercial real estate loans, small business loans, and other real estate investments.

Ready Capital reported revenues of -$26.37 million, up 29.4% year on year, falling short of analysts’ expectations by 155%. It was a disappointing quarter as it posted a significant miss of analysts’ tangible book value per share and net interest income estimates.

Ready Capital delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 4.8% since the results and currently trades at $4.04.

Read our full analysis of Ready Capital’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 $444.7 million, up 9.5% year on year. This number missed analysts’ expectations by 19.8%. Aside from that, it was a strong quarter as it logged a beat of analysts’ EPS and net interest income estimates.

The stock is up 19.5% since reporting and currently trades at $124.71.

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

Columbia Financial (NASDAQ: CLBK)

Founded during the Roaring Twenties in 1926 and headquartered in Fair Lawn, New Jersey, Columbia Financial (NASDAQ: CLBK) operates federally chartered savings banks in New Jersey that offer traditional banking services including loans, deposits, and insurance products.

Columbia Financial reported revenues of $61.41 million, up 20.3% year on year. This result beat analysts’ expectations by 15.4%. Overall, it was an exceptional quarter as it also recorded a beat of analysts’ EPS and tangible book value per share estimates.

The stock is up 8% since reporting and currently trades at $15.07.

Read our full, actionable report on Columbia Financial here, it’s free.

Market Update

Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.

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