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TF Financial Corporation Reports Third Quarter 2012 Results and Quarterly Dividend

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NEWTOWN, Pa., Oct. 25, 2012 (GLOBE NEWSWIRE) -- TF Financial Corporation (Nasdaq: THRD) today reported net income of $1,473,000 ($0.54 per diluted share) for the third quarter of 2012, a 36% increase over the $1,080,000 ($0.40 per diluted share) reported for the third quarter of 2011. On a sequential linked-quarter basis, net income advanced 18% over the $1,249,000 or $0.46 per share reported for the second quarter of 2012.

Net income for the nine-month period ended September 30, 2012 was $3,877,000 ($1.42 per diluted share) compared with $2,397,000 ($0.89 per diluted share) for the first nine months of 2011. The Company also announced that its Board of Directors declared a quarterly dividend of $0.05 per share, payable November 15, 2012 to shareholders of record on November 8, 2012.

"We produced a good strong quarter with solid improvement in all measures of financial performance," said Kent C. Lufkin, president and chief executive officer. "With the exception of the fourth quarter of 2011, in which we booked some opportunistic securities gains, this was the best quarter since late 2005. Our net interest margin remained quite healthy at 3.96%, up from 3.83% a year earlier. On an encouraging note, non-performing assets declined to 2.59% of total assets at quarter-end, compared to 3.74% a year ago, as we diligently continued to work out troubled loans and move them off the balance sheet. We will continue to work tirelessly to achieve consistent future profitability as we move through this latter stage of a very tough banking cycle."

  Results for the current quarter included:

  • Pre-tax income was $1,952,000 during the quarter, compared with $1,394,000 during the third quarter of 2011. The Company's operating performance has improved in nearly every area since the third quarter of 2011: net interest income increased by $249,000 or 4.1%; non-interest income increased by $331,000 or 56.8%; and non-interest expenses decreased by $200,000 or 4.3%. This trend was also evident on a linked-quarter basis compared with the second quarter of 2012: net interest income increased by $203,000 or 3.4%; non-interest income increased by $175,000 or 23.7%; and non-interest expenses decreased by $183,000 or 3.9%.
  • Net interest income was $6,254,000 compared with $6,051,000 for the linked second quarter of 2012, and $6,005,000 during the third quarter of 2011. The Company's net interest margin was unchanged at 3.96% compared with second quarter of 2012, and improved by 13 basis points when compared with 3.83% during the third quarter of 2011. Yields on the Company's interest-earning assets fell by 35 basis points during the third quarter of 2012 compared with the year-ago third quarter of 2011. However, the cost of the Company's interest bearing liabilities decreased by 49 basis points compared to the third quarter of 2011, mainly the result of a 43 basis point reduction in the cost of deposits, due in large part to the maturity of time deposits, which had been originated during periods of higher market interest rates, and which were converted into accounts bearing much lower current market interest rates.
  • Overall, asset quality continued to show improving trends with total non-performing assets at 2.59% of total assets at September 30, 2012, which is down from 3.56% at year end 2011 and 3.74% at September 30, 2011. Non-performing loans were $10.4 million at quarter-end compared with $12.5 million at December 31, 2011. In addition, foreclosed property showed a substantial reduction during the year due to sales of properties, totaling $7.6 million at September 30, 2012 compared with $11.7 million at December 31, 2011.
  • The provision for loan losses was $750,000 and net charge-offs were $141,000 during the third quarter of 2012, compared with a provision for loan losses of $528,000 and net charge-offs of $49,000 during the third quarter of 2011. The Company's allowance for loan losses was $6,772,000 or 65.1% of non-performing loans at quarter end, compared with $9,586,000 or 56.1% of non-performing loans at September 30, 2011.
  • Total loans were $541.6 million at September 30, 2012, a $21.7 million or 4.2% increase during the quarter. Mortgage loans originated for sale were $12.7 million compared with $8.8 million during the third quarter of 2011. The corresponding gain on sale of loans was $382,000 during the quarter, compared with $125,000 during the third quarter of 2011.
  • At quarter end, total deposits were $533.3 million, compared with $551.3 million at December 31, 2011, and $551.7 million at September 30, 2011. Deposit decreases can be traced to the maturity of a large amount of maturing CDs which had been issued 3 to 4 years ago when market interest rates were substantially higher. These funds either were withdrawn from the Bank, or were transferred into other deposit products. Core checking, savings, and money market accounts increased by $11.0 million during 2012, and were 71.5% of total deposits at September 30, 2012 compared with 67.2% at December 31, 2011, and 66.4% at September 30, 2011.
  • Capital ratios continue to be strong, with Tier 1 Leverage and Total Risk-Based ratios of 10.47% and 17.62% at September 30, 2012. Capital levels are well above the regulatory minimums to be considered well-capitalized.

TF Financial Corporation is a holding company whose principal subsidiary is 3rd Fed Bank, which operates 14 full service retail and commercial banking offices in Philadelphia and Bucks County, Pennsylvania and in Mercer County, 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.thirdfedbank.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 NINE MONTHS ENDED
  9/30/2012 6/30/2012 3/31/2012 12/31/2011 9/30/2011 9/30/2012 9/30/2011
               
               
EARNINGS SUMMARY              
               
Interest income  $ 7,395  $ 7,328  $ 7,263  $ 7,613  $ 7,908  $ 21,986  $ 23,675
Interest expense 1,141 1,277 1,471 1,550 1,903 3,889 5,865
Net interest income 6,254 6,051 5,792 6,063 6,005 18,097 17,810
Loan loss provision 750 500 500 850 528 1,750 2,878
Non-interest income 914 739 1,237 1,395 583 2,890 2,225
Non-interest expense 4,466 4,649 5,056 4,565 4,666 14,171 14,252
Income before taxes  1,952 1,641 1,473 2,043 1,394 5,066 2,905
Income taxes 479 392 318 511 314 1,189 508
Net income  $ 1,473  $ 1,249  $ 1,155  $ 1,532  $ 1,080  $ 3,877  $ 2,397
               
               
PER SHARE INFORMATION              
               
Earnings per share, basic   $ 0.54  $ 0.46  $ 0.42  $ 0.57  $ 0.40  $ 1.42  $ 0.89
Earnings per share, diluted   $ 0.54  $ 0.46  $ 0.42  $ 0.57  $ 0.40  $ 1.42  $ 0.89
               
Weighted average basic shares (000's)  2,729  2,724  2,719  2,711  2,703  2,724  2,701
Weighted average diluted shares (000's)   2,732  2,728  2,722  2,711  2,704  2,727  2,702
               
Dividends paid   $ 0.05  $ 0.05  $ 0.05  $ 0.05  $ 0.05  $ 0.15  $ 0.15
               
               
FINANCIAL RATIOS              
               
Annualized return on average assets 0.84% 0.74% 0.68% 0.89% 0.62% 1.68% 1.03%
Annualized return on average equity 7.21% 6.31% 5.94% 7.75% 5.63% 14.49% 9.47%
Efficiency ratio (1) 60.24% 62.34% 70.55% 60.06% 63.65% 64.23% 68.49%
               
               
REGULATORY CAPITAL RATIOS              
Tier 1 leverage ratio 10.47% 10.45% 10.21% 10.21% 9.87%    
Total risk-based capital ratio 17.62% 17.37% 17.41% 18.56% 17.76%    
Tier 1 risk-based capital ratio 16.37% 16.13% 16.16% 17.31% 16.51%    
               
               
               
               
T F FINANCIAL CORPORATION              
UNAUDITED FINANCIAL INFORMATION              
(dollars in thousands except per share data) QUARTER ENDED NINE MONTHS ENDED
  9/30/2012 6/30/2012 3/31/2012 12/31/2011 9/30/2011 9/30/2012 9/30/2011
AVERAGE BALANCES              
               
Loans  $ 527,195  $ 501,757  $ 493,396  $ 497,258  $ 502,574  $ 507,521  $ 501,052
Mortgage-backed securities 55,820 61,580 61,971 61,079 66,283 59,776 65,541
Investment securities 64,304 68,181 67,035 67,843 67,662 66,498 67,714
Other interest-earning assets 393 3,074 13,619 6,699 3,237 5,676 4,970
Total earning assets 647,712 634,592 636,021 632,879 639,756 639,471 639,277
Non-earning assets 46,168 48,329 50,557 52,263 53,907 48,345 49,759
Total assets 693,880 682,921 686,578 685,142 693,663 687,816 689,036
               
Deposits 538,637 550,040 554,523 551,964 555,713 547,700 549,364
FHLB advances and other borrowed money 66,740 46,785 47,387 48,109 54,709 53,685 57,688
Total interest bearing liabilities 605,377 596,825 601,910 600,073 610,422 601,385 607,052
Non-interest bearing liabilities 7,179 6,486 6,523 6,600 7,075 6,732 6,867
Stockholders' equity 81,324 79,610 78,145 78,469 76,166 79,699 75,117
Total liabilities & stockholders'  $ 693,880  $ 682,921  $ 686,578  $ 685,142  $ 693,663  $ 687,816  $ 689,036
 equity              
               
               
SPREAD AND MARGIN ANALYSIS (TAX EQUIVALENT)            
               
Average yield on:              
Loans 4.86% 4.99% 5.05% 5.13% 5.26% 4.96% 5.32%
Mortgage-backed securities 3.23% 3.68% 3.50% 4.22% 4.20% 3.48% 4.22%
Investment securities 4.32% 4.31% 4.27% 4.15% 4.13% 4.33% 4.25%
Other interest-earning assets 0.00% 0.00% 0.06% 0.11% 0.00% 0.05% 0.03%
Total interest-earning assets 4.66% 4.77% 4.71% 4.88% 5.01% 4.72% 5.05%
               
Average cost of:              
Deposits 0.59% 0.68% 0.77% 0.82% 1.02% 0.68% 1.05%
FHLB advances and other borrowed money 2.01% 3.02% 3.44% 3.39% 3.43% 2.72% 3.56%
Total interest-bearing liabilities 0.75% 0.86% 0.98% 1.02% 1.24% 0.86% 1.29%
               
Interest rate spread 3.91% 3.91% 3.73% 3.86% 3.77% 3.85% 3.76%
Net interest margin 3.96% 3.96% 3.78% 3.91% 3.83% 3.90% 3.83%
               
               
               
               
T F FINANCIAL CORPORATION              
UNAUDITED FINANCIAL INFORMATION              
(dollars in thousands except per share data) QUARTER ENDED NINE MONTHS ENDED
  9/30/2012 6/30/2012 3/31/2012 12/31/2011 9/30/2011 9/30/2012 9/30/2011
INTEREST INCOME AND EXPENSE DETAIL              
               
Interest income on:              
Loans  $ 6,436  $ 6,231  $ 6,197  $ 6,427  $ 6,667  $ 18,864  $ 19,946
Mortgage-backed securities  453  564  539  650  702  1,556  2,068
Investment securities  699  731  712  730  705  2,154  2,155
Other interest-earning assets  --   --   2  2  --   2  1
Total interest-earning assets  $ 7,588  $ 7,526  $ 7,450  $ 7,809  $ 8,074  $ 22,576  $ 24,170
               
               
Interest expense on:              
Deposits  $ 803  $ 926  $ 1,066  $ 1,139  $ 1,430  $ 2,795  $ 4,328
FHLB advances and other borrowed money  338  351  405  411  473  1,094  1,537
Total interest-bearing liabilities  $ 1,141  $ 1,277  $ 1,471  $ 1,550  $ 1,903  $ 3,889  $ 5,865
               
Net interest income: tax equivalent basis  $ 6,447  $ 6,249  $ 5,979  $ 6,259  $ 6,171  $ 18,687  $ 18,305
Tax equivalent adjustment on investment securities  193  198  187  196  166  590  495
Net interest income  $ 6,254  $ 6,051  $ 5,792  $ 6,063  $ 6,005  $ 18,097  $ 17,810
               
NON-INTEREST INCOME DETAIL              
               
Service fees, charges and other  $ 433  $ 448  $ 458  $ 478  $ 476  $ 1,339  $ 1,359
Impairment adjustment to mortgage servicing rights  (53)  (75)  39  (22)  (178)  (89)  (117)
Bank-owned life insurance  152  152  152  157  160  456  481
Gain on sale of investment securities  --   --   --   550  --   --   210
Gain on sale of loans  382  214  324  232  125  920  292
Gain on disposition of real estate  --   --   264  --   --   264  -- 
               
NON-INTEREST EXPENSE DETAIL              
               
Compensation and benefits  $ 2,651  $ 2,697  $ 2,874  $ 2,573  $ 2,584  $ 8,222  $ 7,952
Occupancy and equipment  686  672  710  719  699  2,068  2,253
Professional fees  349  174  351  266  263  874  1,065
Marketing and advertising  76  106  85  55  88  267  257
FDIC insurance premiums  146  150  151  149  142  447  526
Loss on foreclosed real estate   --   246  179  285  254  425  254
Operating expenses on foreclosed real estate  78  94  108  23  63  280  243
Other operating  480  510  598  495  573  1,588  1,702
               
T F FINANCIAL CORPORATION              
UNAUDITED FINANCIAL INFORMATION              
(dollars in thousands except per share data) PERIOD ENDED    
  9/30/2012 6/30/2012 3/31/2012 12/31/2011 9/30/2011    
DEPOSIT INFORMATION              
               
               
Non-interest checking  $ 50,421  $ 47,826  $ 49,408  $ 43,910  $ 46,591    
Interest checking 70,797 74,925 69,195 65,677 65,614    
Money market 153,351 151,375 154,417 155,010 150,142    
Savings 106,693 107,924 108,219 105,617 103,871    
CDs 152,011 164,990 180,962 181,074 185,460    
               
OTHER INFORMATION              
               
Per Share              
               
Book value   $ 28.89  $ 28.25  $ 27.71  $ 27.33  $ 27.44    
Tangible book value   $ 27.37  $ 26.73  $ 26.18  $ 25.81  $ 25.91    
Closing market price  $ 23.79  $ 24.66  $ 24.20  $ 22.72  $ 19.25    
               
Balance Sheet              
               
Loans  $ 541,610  $ 519,946  $ 498,357  $ 502,713  $ 515,318    
Cash and cash equivalents 3,712 4,367 22,340 14,928 14,475    
Mortgage-backed securities 51,463 58,753 63,988 58,970 63,029    
Investment securities 63,822 66,012 69,556 65,778 65,514    
Total assets 697,056 685,387 693,421 681,929 695,168    
Total deposits 533,273 547,040 562,201 551,288 551,678    
FHLB advances and other borrowed money 75,156 51,084 46,685 46,908 59,500    
Stockholders' equity 81,965 80,102 78,528 77,408 77,499    
               
Asset Quality              
               
Non-performing loans  $ 10,400  $ 12,566  $ 13,889  $ 12,541  $ 17,103    
Allowance for loan losses   $ 6,772  $ 6,163  $ 6,981  $ 8,100  $ 9,586    
Net charge-offs   $ 141  $ 1,318  $ 1,619  $ 2,337  $ 49    
Allowance for loan losses to non-performing loans 65.12% 49.05% 50.26% 64.59% 56.05%    
Allowance for loan losses to gross loans 1.25% 1.19% 1.40% 1.61% 1.86%    
Non-performing loans to gross loans 1.92% 2.42% 2.79% 2.49% 3.32%    
Non-performing loans to total assets 1.49% 1.83% 2.00% 1.84% 2.46%    
Foreclosed property  $ 7,619  $ 6,625  $ 10,247  $ 11,730  $ 8,909    
Foreclosed property to total assets 1.09% 0.97% 1.48% 1.72% 1.28%    
Non-performing assets to total assets 2.59% 2.80% 3.48% 3.56% 3.74%    
               
               
Statistical              
               
Shares outstanding (000's)  2,837  2,835  2,834  2,832  2,824    
Number of branch offices  14  14  14  14  14    
Full time equivalent employees  167  171  176  168  172    
               
(1) The efficiency ratio is non-interest expense excluding loss on foreclosed real estate 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, and gain on disposition of real estate.    
CONTACT: Dennis R. Stewart, EVP/CFO (215) 579-4000
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