News Column

TF Financial Corporation Reports Record 2013 Results and Increased Quarterly Dividend

January 24, 2014

NEWTOWN, Pa. , Jan. 24, 2014 (GLOBE NEWSWIRE) -- TF Financial Corporation (Nasdaq:THRD) today reported net income of $6,575,000 ( $2.27 per diluted share) for 2013, a 22.1% increase over the $5,383,000 ( $1.97 per diluted share) reported for 2012. Net income for the three-month period ended December 31, 2013 was $1,586,000 ( $0.52 per diluted share) compared with $1,506,000 ( $0.55 per diluted share) reported for the comparable period of 2012. The Company also announced that its Board of Directors declared a quarterly dividend of $0.12 per share, payable February 14, 2014 to shareholders of record on February 7, 2014 . "We are very pleased to report the highest year of net income since the Company was founded in 1921," said Kent C. Lufkin , President and Chief Executive Officer. "We see our 2013 outcome as clear evidence that we have successfully managed our way through the most challenging recession and banking environment in the history of this organization, and have restored our performance to be comparable to or better than pre-recession levels." "While we closed the Roebling Financial Corp, Inc. ("Roebling") merger in early July, there was considerable further work to be done in order to complete the full systems conversion to enable the combined Company to operate on unified back and front office platforms. This complex process continued through to the end of 2013 and we are very encouraged by the quickly accretive impact of the Roebling transaction." "Concurrently, we never diminished our intense focus throughout the year on improving asset quality. Total non-performing assets ("NPAs") at year end were 1.67% of total assets, down from 2.20% the prior year; foreclosed property was $5.6 million at year end 2013, down from $7.3 million the prior year. NPAs and troubled assets have reached a 5-year low. Also, as noted below, credit costs declined substantially, year-over-year, and loan loss coverage is solid." "Having focused extensive resources and time assimilating Roebling during the fourth quarter, the Company recently kicked off aggressive, multi-faceted, franchise-wide loan promotions that should continue through 2014. We've strengthened our commercial lending, consumer banking, mortgage origination and marketing teams. Thus, we are making every effort to generate increasing, yet balanced loan growth in the coming year across our expanded footprint as a result of this strategy and ramp-up of high-quality talent," said Lufkin. Highlights for 2013 included: On July 2, 2013 the Company completed the acquisition of Roebling and its wholly-owned subsidiary, Roebling Bank . The Company issued 306,873 shares of its common stock and paid $7.3 million in cash for Roebling, and acquired approximately $144.7 million in total assets, $102.0 million in loans receivable, and $127.8 million in total deposits contained in Roebling's five branches. The significant non-recurring impacts on the Company's 2013 operating results were a purchase accounting gain and merger-related costs, both before and after tax, of $1.1 million and $0.6 million , respectively, and conversion costs, before tax, of $1.4 million . Much of the remaining comparisons of operating results described below are driven by the inclusion of Roebling beginning on July 3, 2013 . Net interest income was $25.4 million compared with $24.3 million during 2012. The Company's net interest margin was 3.59% compared with 3.90% during 2012. Asset quality showed improvement, with total non-performing assets at 1.67% of total assets at December 31, 2013 , which is down from 2.20% at December 31, 2012 . Foreclosed property was $5.6 million at December 31, 2013 , down from $7.3 million at December 31, 2012 . The loan loss provision was $0.8 million during 2013, compared with $2.4 million during 2012, and net charge-offs were $1.2 million during 2013 compared with $3.6 million during 2012. The Company's allowance for loan losses was $6.6 million or 78.9% of non-performing loans at year end 2013. Total loans were $621.1 million at December 31, 2013 compared with $534.3 million at year end 2012. Loan demand was good during 2013 and was aided by demand in the market area in which the former Roebling branches operated. Total portfolio loans originated were $97.2 million , and loans originated for sale were $31.7 million . Total deposits were $683.9 million , compared with $560.3 million at December 31, 2012 . Checking, savings, and money market accounts totaled $493.4 million or 72.1% of total deposits at December 31, 2013 , compared with $388.9 million or 69.4% of total deposits at year end 2012. Capital ratios were minimally impacted by the Roebling acquisition and continue to be strong. Book value per share and tangible book value per share were $29.71 and $28.18 , respectively, at December 31, 2013 , compared with $29.23 and $27.70 , respectively, at December 31, 2012 . Regulatory capital comprised Tier 1 Leverage and Total Risk-Based ratios of 10.36% and 17.56%, respectively, at December 31, 2013 , compared with 10.45% and 17.89%, respectively, at December 31, 2012 . Capital levels are well above the regulatory minimums required to be considered well-capitalized. About TF Financial Corporation TF Financial Corporation is a bank holding company whose principal subsidiary is 3rd Fed Bank , which operates 13 full service retail and commercial banking offices in Philadelphia and Bucks County, Pennsylvania and in Mercer County, New Jersey , and with the acquisition of Roebling Bank on July 2, 2013 , also operates five additional full service branches in Burlington and Ocean Counties in New Jersey . Deposits at 3rd Fed Bank are insured up to the maximum amount by the Federal Deposit Insurance Corporation (FDIC). In addition, 3rd Fed Bank's website can be found at www.3rdfedbank.com . Forward Looking Statements Statements contained in this news release that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, the possibility that any remaining integration of Roebling's business and operations with those of 3rd Fed Bank may be more difficult and/or take longer than anticipated, may be more costly than anticipated and may have unanticipated adverse results relating to the existing business of the Company, the challenges of integrating and retaining key employees, our ability to generate increasing, yet balanced, loan growth in 2014 or to reduce total nonperforming loans and real estate owned, as well as factors discussed in documents filed by TF Financial Corporation with the Securities and Exchange Commission from time to time. The Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company. TF FINANCIAL CORPORATION UNAUDITED FINANCIAL INFORMATION (dollars in thousands except per share data) QUARTER ENDED TWELVE MONTHS ENDED 12/31/2013 9/30/2013 6/30/2013 3/31/2013 12/31/2012 12/31/2013 12/31/2012 EARNINGS SUMMARY Interest income $ 7,809 $ 7,903 $ 6,744 $ 6,857 $ 7,234 $ 29,313 $ 29,220 Interest expense 988 1,018 938 979 1,048 3,923 4,937 Net interest income 6,821 6,885 5,806 5,878 6,186 25,390 24,283 Loan loss provision -- -- 400 439 650 839 2,400 Non-interest income 694 2,046 1,947 1,395 1,196 6,082 4,086 Non-interest expense 5,157 6,782 5,132 5,030 4,690 22,101 18,861 Income before taxes 2,358 2,149 2,221 1,804 2,042 8,532 7,108 Income taxes 772 183 421 581 536 1,957 1,725 Net income $ 1,586 $ 1,966 $ 1,800 $ 1,223 $ 1,506 $ 6,575 $ 5,383 PER SHARE INFORMATION Earnings per share, basic $ 0.52 $ 0.64 $ 0.66 $ 0.45 $ 0.55 $ 2.27 $ 1.97 Earnings per share, diluted $ 0.52 $ 0.64 $ 0.66 $ 0.45 $ 0.55 $ 2.27 $ 1.97 Weighted average basic shares (000's) 3,056 3,053 2,743 2,738 2,733 2,899 2,726 Weighted average diluted shares (000's) 3,068 3,053 2,743 2,742 2,734 2,903 2,730 Dividends paid $ 0.10 $ 0.10 $ 0.05 $ 0.05 $ 0.05 $ 0.30 $ 0.20 FINANCIAL RATIOS Annualized return on average assets 0.75% 0.92% 1.01% 0.70% 0.86% 0.85% 0.78% Annualized return on average equity 6.71% 8.55% 8.55% 5.92% 7.21% 7.40% 6.68% Efficiency ratio (1) 66.08% 67.42% 68.07% 64.56% 60.98% 66.53% 63.78% REGULATORY CAPITAL RATIOS Tier 1 leverage ratio 10.36% 10.21% 10.74% 10.50% 10.45% Total risk-based capital ratio 17.56% 17.64% 18.77% 17.90% 17.89% Tier 1 risk-based capital ratio 16.32% 16.39% 17.51% 16.65% 16.63% TF FINANCIAL CORPORATION UNAUDITED FINANCIAL INFORMATION (dollars in thousands except per share data) QUARTER ENDED TWELVE MONTHS ENDED 12/31/2013 9/30/2013 6/30/2013 3/31/2013 12/31/2012 12/31/2013 12/31/2012 AVERAGE BALANCES Loans $ 619,498 $ 622,416 $ 524,728 $ 525,275 $ 530,026 $ 573,373 $ 513,178 Mortgage-backed securities 47,568 50,737 37,523 41,988 49,383 44,487 57,164 Investment securities 82,213 86,942 68,211 65,131 63,773 75,702 65,813 Other interest-earning assets 36,694 35,294 39,111 28,877 6,482 35,016 6,155 Total earning assets 785,973 795,389 669,573 661,271 649,664 728,578 642,310 Non-earning assets 49,164 48,404 45,938 46,572 46,985 47,531 47,726 Total assets 835,137 843,793 715,511 707,843 696,649 776,109 690,036 Deposits 684,085 691,646 570,271 560,750 539,653 626,716 545,677 FHLB advances and other borrowed money 50,259 55,358 53,303 56,114 66,223 53,747 56,837 Total interest bearing liabilities 734,344 747,004 623,574 616,864 605,876 680,463 602,514 Non-interest bearing liabilities 6,951 5,528 7,508 7,216 7,629 6,788 6,957 Stockholders' equity 93,842 91,261 84,429 83,763 83,144 88,858 80,565 Total liabilities & stockholders' equity $ 835,137 $ 843,793 $ 715,511 $ 707,843 $ 696,649 $ 776,109 $ 690,036 SPREAD AND MARGIN ANALYSIS (TAX EQUIVALENT) Average yield on: Loans 4.41% 4.43% 4.56% 4.68% 4.76% 4.51% 4.91% Mortgage-backed securities 2.38% 2.52% 2.63% 2.64% 3.04% 2.53% 3.38% Investment securities 4.04% 3.71% 4.19% 4.43% 4.37% 4.06% 4.33% Other interest-earning assets 0.04% 0.06% 0.14% 0.06% 0.37% 0.08% 0.13% Total interest-earning assets 4.04% 4.03% 4.15% 4.33% 4.55% 4.13% 4.67% Average cost of: Deposits 0.45% 0.46% 0.50% 0.53% 0.54% 0.48% 0.65% FHLB advances and other borrowed money 1.62% 1.57% 1.70% 1.79% 1.87% 1.67% 2.47% Total interest-bearing liabilities 0.53% 0.54% 0.60% 0.64% 0.69% 0.58% 0.82% Interest rate spread 3.51% 3.49% 3.55% 3.68% 3.86% 3.55% 3.85% Net interest margin 3.54% 3.53% 3.59% 3.73% 3.90% 3.59% 3.90% TF FINANCIAL CORPORATION UNAUDITED FINANCIAL INFORMATION (dollars in thousands except per share data) QUARTER ENDED TWELVE MONTHS ENDED 12/31/2013 9/30/2013 6/30/2013 3/31/2013 12/31/2012 12/31/2013 12/31/2012 INTEREST INCOME AND EXPENSE DETAIL Interest income on: Loans $ 6,882 $ 6,947 $ 5,963 $ 6,066 $ 6,341 $ 25,858 $ 25,205 Mortgage-backed securities 285 322 246 273 377 1,126 1,933 Investment securities 837 814 713 711 701 3,075 2,849 Other interest-earning assets 4 5 14 4 6 27 8 Total interest-earning assets $ 8,008 $ 8,088 $ 6,936 $ 7,054 $ 7,425 $ 30,086 $ 29,995 Interest expense on: Deposits $ 783 $ 799 $ 712 $ 731 $ 737 $ 3,025 $ 3,532 FHLB advances and other borrowed money 205 219 226 248 311 898 1,405 Total interest-bearing liabilities $ 988 $ 1,018 $ 938 $ 979 $ 1,048 $ 3,923 $ 4,937 Net interest income: tax equivalent basis $ 7,020 $ 7,070 $ 5,998 $ 6,075 $ 6,377 $ 26,163 $ 25,058 Tax equivalent adjustment on investment securities 199 185 192 197 191 773 775 Net interest income $ 6,821 $ 6,885 $ 5,806 $ 5,878 $ 6,186 $ 25,390 $ 24,283 NON-INTEREST INCOME DETAIL Service fees, charges and other $ 560 $ 560 $ 454 $ 497 $ 484 $ 2,071 $ 1,823 Impairment adjustment to mortgage servicing rights 19 32 196 33 50 280 (39) Bank-owned life insurance 135 136 137 143 147 551 603 Proceeds from bank-owned life insurance -- -- 934 -- -- 934 -- Gain on sale of investment securities 4 -- -- -- 85 4 85 Gain on sale of loans 70 104 226 305 430 705 1,350 Gain on disposition of real estate -- -- -- 417 -- 417 264 Purchase gain associated with Roebling acquisition (94) 1,214 -- -- -- 1,120 -- NON-INTEREST EXPENSE DETAIL Compensation and benefits $ 3,269 $ 3,125 $ 2,842 $ 2,817 $ 2,760 $ 12,053 $ 10,982 Occupancy and equipment 833 867 709 697 727 3,106 2,795 Professional fees 195 311 230 288 302 1,024 1,284 Merger-related costs -- 2 295 320 108 617 -- Marketing and advertising 53 132 132 39 79 356 346 FDIC insurance premiums 91 188 132 110 149 521 596 Loss (gain) on REO, net (2) (1) 71 198 178 46 446 471 Operating expenses of REO (2) 37 43 37 46 60 163 340 Other operating 666 640 557 535 459 2,398 2,047 Conversion costs (3) 14 1,403 -- -- -- 1,417 -- TF FINANCIAL CORPORATION UNAUDITED FINANCIAL INFORMATION (dollars in thousands except per share data) PERIOD ENDED 12/31/2013 9/30/2013 6/30/2013 3/31/2013 12/31/2012 DEPOSIT INFORMATION Non-interest checking $ 68,133 $ 69,157 $ 58,697 $ 57,422 $ 52,433 Interest checking 114,184 108,341 78,923 78,263 76,370 Money market 180,215 179,612 159,015 156,736 153,827 Savings 130,878 131,432 109,446 108,554 106,268 CD's 190,492 193,283 165,331 170,355 171,417 OTHER INFORMATION Per Share Book value $ 29.71 $ 29.48 $ 29.36 $ 29.37 $ 29.23 Tangible book value $ 28.18 $ 27.94 $ 27.84 $ 27.85 $ 27.70 Closing market price $ 28.16 $ 27.88 $ 25.40 $ 25.15 $ 23.83 Balance Sheet Loans, net of acquired loans $ 527,207 $ 525,354 $ 531,464 $ 528,229 $ 534,348 Acquired loans 93,885 97,667 -- -- -- Cash and cash equivalents 45,310 31,004 44,958 48,690 31,137 Mortgage-backed securities 46,769 48,709 34,206 38,320 44,639 Investment securities 82,103 85,330 68,459 63,987 65,041 Total assets 833,707 833,334 714,781 716,002 711,836 Total deposits 683,902 681,825 571,412 571,330 560,315 FHLB advances and other borrowed money 49,605 50,990 52,534 54,151 60,656 Stockholders' equity 93,567 92,811 83,453 83,408 82,945 Asset Quality Non-performing loans $ 8,332 $ 6,881 $ 5,973 $ 7,647 $ 8,359 Allowance for loan losses $ 6,575 $ 6,691 $ 6,916 $ 6,662 $ 6,922 Net charge-offs $ 116 $ 225 $ 146 $ 699 $ 500 Allowance for loan losses to non-performing loans 78.91% 97.24% 115.79% 87.12% 82.81% Allowance for loan losses to gross loans excluding acquired loans 1.25% 1.27% 1.30% 1.26% 1.30% Non-performing loans to gross loans 1.34% 1.10% 1.12% 1.45% 1.56% Non-performing loans to total assets 1.00% 0.83% 0.84% 1.07% 1.17% REO (2) $ 5,601 $ 5,786 $ 6,177 $ 7,170 $ 7,282 REO to total assets (2) 0.67% 0.69% 0.86% 1.00% 1.02% Non-performing assets to total assets 1.67% 1.52% 1.70% 2.07% 2.20% Statistical Shares outstanding (000's) 3,149 3,148 2,842 2,840 2,838 Number of branch offices 18 18 13 13 13 Full time equivalent employees 203 206 166 165 167 (1) The efficiency ratio is non-interest expense excluding merger-related and conversion costs and loss on REO divided by net interest income on a tax equivalent basis plus non-interest income excluding impairment adjustment to mortgage servicing rights, gain on sale of investment securities, proceeds from bank owned life insurance and gain on disposition of real estate and purchase gain associated with Roebling Bank acquisition. (2) REO is real estate acquired through foreclosure. (3) Conversion costs are mainly retention and severance payments paid to transition employees, and amounts paid to terminate various data processing contracts. CONTACT: Dennis R. Stewart , EVP/CFO (215) 579-4000 Source: TF Financial Corporation


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