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TF Financial Corporation Reports Second Quarter 2013 Results and 100% Increase in the Quarterly Dividend

NEWTOWN, Pa., July 25, 2013 (GLOBE NEWSWIRE) -- TF Financial Corporation (the "Company") (Nasdaq:THRD) today reported net income of $1,800,000 ($0.66 per diluted share) for the second quarter of 2013, a 44% increase over the $1,249,000 ($0.46 per diluted share) reported for the second quarter of 2012. In addition, net income advanced 47% over the first quarter of 2013.

Net income for the six month period ended June 30, 2013 was $3,023,000 ($1.10 per diluted share) compared with $2,404,000 ($0.88 per diluted share) for the first six months of 2012. The Company also announced that its Board of Directors declared a quarterly dividend of $0.10 per share, up from the previous rate of $0.05 per share, payable on August 15, 2013 to shareholders of record on August 8, 2013.

"Second quarter net income increased both year over year and as measured against the first quarter of 2013, reflecting solid momentum as we move through the year's halfway mark," said Kent C. Lufkin, president and chief executive officer. "As nonperforming assets and real estate owned are steadily returning to pre-recession levels, we have been expanding our commercial lending staff to pursue increasing opportunities to grow loan portfolios across our footprint. On an important related note, we closed on July 2 our acquisition of $156 million-asset Roebling Financial Corp, Inc. and its subsidiary Roebling Bank, which operated five branches in Burlington and Ocean Counties in New Jersey. Through Roebling, we are able to quickly enter a promising new contiguous market. We anticipate this will continue to accelerate our growth momentum for the balance of the year. Of additional note, the Board approved an increase in the dividend. Our dividend payout ratio is 15% for the current quarter, and produces an annual yield of 1.6% based on the closing price of our stock on June 30, 2013."

Results for the second quarter included:

  • Pre-tax income was $2,221,000 during the quarter, a $580,000 increase over the $1,641,000 reported for the second quarter of 2012. Key non-interest differences included: bank-owned life insurance claims of $934,000 recorded only during the second quarter of 2013, income from the adjustment of the value of loan servicing rights which increased by $271,000 during the second quarter of 2013 when compared with the second quarter of 2012, and merger-related expenses of $295,000 recorded only during the second quarter of 2013.
  • Net interest income was $5,806,000, a 1.2% decrease from the first quarter of 2013, and a 4.0% decrease from the second quarter of 2012. Similarly, the Company's net interest margin was 3.59% compared with 3.73% during the first quarter of 2013, and 3.96% during the second quarter of 2012. Yields on the Company's interest-earning assets fell by 18 basis points compared with the first quarter of 2013, and by 62 basis points compared with the second quarter of 2012. Partially offsetting these decreases, the cost of the Company's interest bearing liabilities fell by 4 basis points compared with the first quarter of 2013, and by 26 basis points compared to the second quarter of 2012. Margin compression has impacted the Company and was caused largely by the early repayment of higher rate residential mortgages, and repayments and rate reductions in the commercial mortgage portfolio, while competitive pressures continue to make it difficult for the Company to manage its cost of deposits towards lower levels. Also weighing on the Company's margin was a relatively large balance in other interest-earning assets, largely cash, averaging $39.1 million during the quarter ended June 30, 2013 which accumulated from loan repayments and deposit growth.
  • Asset quality showed steady and significant improvement, with total non-performing assets at 1.70% of total assets at June 30, 2013, down from 2.20% at year-end 2012 and 2.80% at June 30, 2012, respectively. Non-performing loans were $6.0 million at quarter-end compared with $8.4 million at December 31, 2012 and $12.6 million at June 30, 2012. Similarly, real estate acquired through foreclosure was reduced to $6.2 million at June 30, 2013 compared with $7.3 million at December 31, 2012 and $6.6 million at June 30, 2012.
  • The provision for loan losses was $400,000 and net charge-offs were $146,000 during the quarter, compared with a provision for loan losses of $500,000 and net charge-offs of $1,318,000 during the second quarter of 2012. The Company's allowance for loan losses was $6,916,000 or 115.8% of non-performing loans at quarter end, compared with $6,163,000 or 49.1% of non-performing loans at June 30, 2012.
  • Loans outstanding were $531.5 million, a $3.2 million or 0.6% increase during the quarter. Mortgage loans originated for sale were $9.9 million compared with $10.9 million during the second quarter of 2012. The corresponding gain on sale of loans was $226,000 during the quarter, compared with $214,000 during the second quarter of 2012.
  • At quarter end, total deposits were $571.4 million, compared with $560.3 million at December 31, 2012, and $547.0 million at June 30, 2012. The steady growth in deposits has been highlighted by a 22.7% increase in non-interest checking deposits since June 30, 2012. In addition, the deposit mix continues to improve: at June 30, 2013 core checking, savings, and money market accounts were 71.1% of total deposits compared with 69.4% at December 31, 2012, and 69.8% at June 30, 2012.
  • At June 30, 2013, the Company had a total risk-based capital ratio of 18.77%, a tier 1 risk-based capital ratio of 17.51% and a tier 1 leverage ratio of 10.74%.

TF Financial Corporation is a 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, the Bank's website can be found at www.3rdfedbank.com. 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, 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.

T F FINANCIAL CORPORATION
UNAUDITED FINANCIAL INFORMATION
(dollars in thousands except per share data) QUARTER ENDED SIX MONTHS ENDED
6/30/2013 3/31/2013 12/31/2012 9/30/2012 6/30/2012 6/30/2013 6/30/2012
EARNINGS SUMMARY
Interest income $ 6,744 $ 6,857 $ 7,234 $ 7,395 $ 7,328 $ 13,601 $ 14,591
Interest expense 938 979 1,048 1,141 1,277 1,917 2,748
Net interest income 5,806 5,878 6,186 6,254 6,051 11,684 11,843
Loan loss provision 400 439 650 750 500 839 1,000
Non-interest income 1,947 1,395 1,196 914 739 3,342 1,976
Non-interest expense 5,132 5,030 4,690 4,466 4,649 10,162 9,705
Income before taxes 2,221 1,804 2,042 1,952 1,641 4,025 3,114
Income taxes 421 581 536 479 392 1,002 710
Net income $ 1,800 $ 1,223 $ 1,506 $ 1,473 $ 1,249 $ 3,023 $ 2,404
PER SHARE INFORMATION
Earnings per share, basic $ 0.66 $ 0.45 $ 0.55 $ 0.54 $ 0.46 $ 1.10 $ 0.88
Earnings per share, diluted $ 0.66 $ 0.45 $ 0.55 $ 0.54 $ 0.46 $ 1.10 $ 0.88
Weighted average basic shares (000's) 2,743 2,738 2,733 2,729 2,724 2,741 2,721
Weighted average diluted shares (000's) 2,743 2,742 2,734 2,732 2,728 2,741 2,725
Dividends paid $ 0.05 $ 0.05 $ 0.05 $ 0.05 $ 0.05 $ 0.10 $ 0.10
FINANCIAL RATIOS
Annualized return on average assets 1.01% 0.70% 0.86% 0.84% 0.74% 0.84% 0.70%
Annualized return on average equity 8.55% 5.92% 7.21% 7.21% 6.31% 7.15% 6.10%
Efficiency ratio (1) 68.07% 64.56% 60.98% 60.24% 62.34% 66.30% 66.34%
REGULATORY CAPITAL RATIOS
Tier 1 leverage ratio 10.74% 10.50% 10.45% 10.47% 10.45%
Total risk-based capital ratio 18.77% 17.90% 17.89% 17.62% 17.37%
Tier 1 risk-based capital ratio 17.51% 16.65% 16.63% 16.37% 16.13%
T F FINANCIAL CORPORATION
UNAUDITED FINANCIAL INFORMATION
(dollars in thousands except per share data) QUARTER ENDED SIX MONTHS ENDED
6/30/2013 3/31/2013 12/31/2012 9/30/2012 6/30/2012 6/30/2013 6/30/2012
AVERAGE BALANCES
Loans $ 524,728 $ 525,275 $ 530,026 $ 527,195 $ 501,757 $ 525,000 $ 497,576
Mortgage-backed securities 37,523 41,988 49,383 55,820 61,580 39,744 61,776
Investment securities 68,211 65,131 63,773 64,304 68,181 66,680 67,608
Other interest-earning assets 39,111 28,877 6,482 393 3,074 34,022 8,347
Total earning assets 669,573 661,271 649,664 647,712 634,592 665,446 635,307
Non-earning assets 45,938 46,572 46,985 46,168 48,329 46,252 49,443
Total assets 715,511 707,843 696,649 693,880 682,921 711,698 684,750
Deposits 570,271 560,750 539,653 538,637 550,040 565,536 552,282
FHLB advances and other borrowed money 53,303 56,114 66,223 66,740 46,785 54,701 47,086
Total interest bearing liabilities 623,574 616,864 605,876 605,377 596,825 620,237 599,368
Non-interest bearing liabilities 7,508 7,216 7,629 7,179 6,486 7,363 6,504
Stockholders' equity 84,429 83,763 83,144 81,324 79,610 84,098 78,878
Total liabilities & stockholders' equity $ 715,511 $ 707,843 $ 696,649 $ 693,880 $ 682,921 $ 711,698 $ 684,750
SPREAD AND MARGIN ANALYSIS (TAX EQUIVALENT)
Average yield on:
Loans 4.56% 4.68% 4.76% 4.86% 4.99% 4.62% 5.02%
Mortgage-backed securities 2.63% 2.64% 3.04% 3.23% 3.68% 2.63% 3.59%
Investment securities 4.19% 4.43% 4.37% 4.32% 4.31% 4.30% 4.33%
Other interest-earning assets 0.14% 0.06% 0.37% 0.00% 0.00% 0.11% 0.05%
Total interest-earning assets 4.15% 4.33% 4.55% 4.66% 4.77% 4.24% 4.74%
Average cost of:
Deposits 0.50% 0.53% 0.54% 0.59% 0.68% 0.51% 0.73%
FHLB advances and other borrowed money 1.70% 1.79% 1.87% 2.01% 3.02% 1.75% 3.23%
Total interest-bearing liabilities 0.60% 0.64% 0.69% 0.75% 0.86% 0.62% 0.92%
Interest rate spread 3.55% 3.68% 3.86% 3.91% 3.91% 3.62% 3.82%
Net interest margin 3.59% 3.73% 3.90% 3.96% 3.96% 3.66% 3.87%
T F FINANCIAL CORPORATION
UNAUDITED FINANCIAL INFORMATION
(dollars in thousands except per share data) QUARTER ENDED SIX MONTHS ENDED
6/30/2013 3/31/2013 12/31/2012 9/30/2012 6/30/2012 6/30/2013 6/30/2012
INTEREST INCOME AND EXPENSE DETAIL
Interest income on:
Loans $ 5,963 $ 6,066 $ 6,341 $ 6,436 $ 6,231 $ 12,029 $ 12,428
Mortgage-backed securities 246 273 377 453 564 519 1,103
Investment securities 713 711 701 699 731 1,421 1,455
Other interest-earning assets 14 4 6 -- -- 18 2
Total interest-earning assets $ 6,936 $ 7,054 $ 7,425 $ 7,588 $ 7,526 $ 13,987 $ 14,988
Interest expense on:
Deposits $ 712 $ 731 $ 737 $ 803 $ 926 $ 1,443 $ 1,992
FHLB advances and other borrowed money 226 248 311 338 351 474 756
Total interest-bearing liabilities $ 938 $ 979 $ 1,048 $ 1,141 $ 1,277 $ 1,917 $ 2,748
Net interest income: tax equivalent basis $ 5,998 $ 6,075 $ 6,377 $ 6,447 $ 6,249 $ 12,070 $ 12,240
Tax equivalent adjustment on investment securities 192 197 191 193 198 386 397
Net interest income $ 5,806 $ 5,878 $ 6,186 $ 6,254 $ 6,051 $ 11,684 $ 11,843
NON-INTEREST INCOME DETAIL
Service fees, charges and other $ 454 $ 497 $ 484 $ 433 $ 448 $ 951 $ 906
Impairment adjustment to mortgage servicing rights 196 33 50 (53) (75) 229 (36)
Bank-owned life insurance 137 143 147 152 152 280 304
Proceeds from bank-owned life insurance 934 -- -- -- -- 934 --
Gain on sale of investment securities -- -- 85 -- -- -- --
Gain on sale of loans 226 305 430 382 214 531 538
Gain on disposition of real estate -- 417 -- -- -- 417 264
NON-INTEREST EXPENSE DETAIL
Compensation and benefits $ 2,842 $ 2,817 $ 2,760 $ 2,651 $ 2,697 $ 5,659 $ 5,571
Occupancy and equipment 709 697 727 686 672 1,406 1,382
Professional fees 230 288 302 349 174 518 525
Merger-related costs 295 320 108 -- -- 615 --
Marketing and advertising 132 39 79 76 106 171 191
FDIC insurance premiums 132 110 149 146 150 242 301
Loss on REO (2) 198 178 46 -- 246 376 425
Operating expenses of REO (2) 37 46 60 78 94 83 202
Other operating 557 535 459 480 510 1,092 1,108
T F FINANCIAL CORPORATION
UNAUDITED FINANCIAL INFORMATION
(dollars in thousands except per share data) PERIOD ENDED
6/30/2013 3/31/2013 12/31/2012 9/30/2012 6/30/2012
DEPOSIT INFORMATION
Non-interest checking $ 58,697 $ 57,422 $ 52,433 $ 50,421 $ 47,826
Interest checking 78,923 78,263 76,370 70,797 74,925
Money market 159,015 156,736 153,827 153,351 151,375
Savings 109,446 108,554 106,268 106,693 107,924
CD's 165,331 170,355 171,417 152,011 164,990
OTHER INFORMATION
Per Share
Book value $ 29.36 $ 29.37 $ 29.23 $ 28.89 $ 28.25
Tangible book value $ 27.84 $ 27.85 $ 27.70 $ 27.37 $ 26.73
Closing market price $ 25.40 $ 25.15 $ 23.83 $ 23.79 $ 24.66
Balance Sheet
Loans $ 531,464 $ 528,229 $ 534,348 $ 541,610 $ 519,946
Cash and cash equivalents 44,958 48,690 31,137 3,712 4,367
Mortgage-backed securities 34,206 38,320 44,639 51,463 58,753
Investment securities 68,459 63,987 65,041 63,822 66,012
Total assets 714,781 716,002 711,836 697,056 685,387
Total deposits 571,412 571,330 560,315 533,273 547,040
FHLB advances and other borrowed money 52,534 54,151 60,656 75,156 51,084
Stockholders' equity 83,453 83,408 82,945 81,965 80,102
Asset Quality
Non-performing loans $ 5,973 $ 7,647 $ 8,359 $ 10,400 $ 12,566
Allowance for loan losses $ 6,916 $ 6,662 $ 6,922 $ 6,772 $ 6,163
Net charge-offs $ 146 $ 699 $ 500 $ 141 $ 1,318
Allowance for loan losses to non-performing loans 115.79% 87.12% 82.81% 65.12% 49.05%
Allowance for loan losses to gross loans 1.30% 1.26% 1.30% 1.25% 1.19%
Non-performing loans to gross loans 1.12% 1.45% 1.56% 1.92% 2.42%
Non-performing loans to total assets 0.84% 1.07% 1.17% 1.49% 1.83%
REO (2) $ 6,177 $ 7,170 $ 7,282 $ 7,619 $ 6,625
REO to total assets (2) 0.86% 1.00% 1.02% 1.09% 0.97%
Non-performing assets to total assets 1.70% 2.07% 2.20% 2.59% 2.80%
Statistical
Shares outstanding (000's) 2,842 2,840 2,838 2,837 2,835
Number of branch offices 13 13 13 14 14
Full time equivalent employees 166 165 167 167 171
(1) The efficiency ratio is non-interest expense excluding merger-related 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.
(2) REO is real estate acquired through foreclosure.

CONTACT: Dennis R. Stewart, EVP/CFO (215) 579-4000Source:TF Financial Corporation