News Release
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July 24, 2003 Contact: Dennis R. Stewart, EVP/CFO
FOR IMMEDIATE RELEASE (215) 579-4000
TF Financial Corporation Announces Second Quarter Results
And Quarterly Dividend
Newtown, Pennsylvania: TF Financial Corporation (Nasdaq National Market - THRD)
today reported net income of $436,000 ($0.16 per diluted share) for the second
quarter of 2003, compared with $995,000 ($0.37 per diluted share) during the
second quarter of 2002. Year-to-date earnings for 2003 are $1,215,000 ($0.45 per
diluted share) compared with $2,280,000 ($0.86 per diluted share) during the
first six months of 2002. The Corporation also announced that its Board of
Directors declared a quarterly dividend of $0.15 per share, payable August 15,
2003 to shareholders of record on August 4.
The Corporation's net interest income continued to be adversely affected by
record low levels of market interest rates and decreased by $1,044,000 or 22.3%
during the 2003 quarter compared to the year earlier period. High prepayments of
mortgages and mortgage-backed securities have caused the Corporation to reinvest
these funds into loans and investments bearing significantly lower yields.
Although the Corporation is able to control its funding costs by reducing the
rates paid on deposits, the already low level of deposit rates has made these
reductions more difficult in light of the intense competition for core deposits.
In addition, high prepayment of mortgage-backed securities causes an
acceleration of the amortization of the premiums paid to purchase these
securities. While the Corporation has reduced its cash and cash equivalents to
$27.6 million at quarter end, the interest rate earned on these funds decreased
further when the Federal Reserve lowered the fed funds rate by 25 basis points
on June 25.
The Corporation did take advantage of higher security prices and recognized
$79,000 in gains on sales of securities during the quarter ended June 30, 2003.
In addition, retail banking fees were $103,000 higher due in large part to a
$70,000 increase in commercial loan prepayment fees, and a $33,000 increase in
overdraft fees. Operating expenses were $293,000 higher during the second
quarter of 2003 compared with 2002 in part because of the compensation costs
associated with the opening of a new branch location in Philadelphia early in
2003. Benefits expenses also were higher by $78,000 due to the cost of the
Corporation's employee stock ownership plan where the cost of shares released is
impacted by the higher share price during 2003 compared with 2002. In addition,
the Corporation's loan origination expenses were $33,000 higher during the
second quarter of 2003, corresponding to an increase in loans originated to
$31.3 million compared with $7.8 million during the second quarter of 2002.
TF Financial Corporation is a holding company whose principal subsidiary is
Third Federal Savings Bank, which operates 14 full service retail and commercial
banking offices in Philadelphia and Bucks County, Pennsylvania and in Mercer
County, New Jersey. In addition, the Bank's website can be found at
www.thirdfedbank.com.
Statements contained in this news release, which 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
Corporation 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
Corporation.
TF FINANCIAL CORPORATION
FINANCIAL INFORMATION
(dollars in thousands except per share data)
THREE MONTHS SIX MONTHS
------------ INC ---------- INC
6/30/03 6/30/02 (DEC) 6/30/03 6/30/02 (DEC)
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EARNINGS SUMMARY
Interest Income $ 8,156 $ 10,453 -22.0% $ 16,813 $ 21,040 -20.1%
Interest expense 4,525 5,778 -21.7% 9,348 11,645 -19.7%
Net interest income 3,631 4,675 -22.3% 7,465 9,395 -20.5%
Loan loss provision 90 538 -83.3% 180 688 -73.8%
Non-interest income 648 466 39.1% 1,732 1,006 72.2%
Non-interest expense 3,599 3,306 8.9% 7,338 6,726 9.1%
Income taxes 154 302 -49.0% 464 707 -34.4%
Net income $ 436 $ 995 -56.2% $ 1,215 $ 2,280 -46.7%
PER SHARE INFORMATION
Earnings per share, basic $ 0.17 $ 0.40 -57.5% $ 0.49 $ 0.92 -46.7%
Earnings per share, diluted $ 0.16 $ 0.37 -56.8% $ 0.45 $ 0.86 -47.7%
Dividends paid $ 0.15 $ 0.15 0.0% $ 0.30 $ 0.30 0.0%
FINANCIAL RATIOS
Annualized return on average assets 0.25% 0.55% -54.5% 0.34% 0.64% -46.9%
Annualized return on average equity 2.77% 6.82% -59.4% 3.88% 7.88% -50.8%
Efficiency ratio 85.92% 71.82% 19.6% 81.38% 69.25% 17.5%
AVERAGE BALANCES
Loans $363,906 $360,448 1.0% $ 365,226 $366,435 -0.3%
Mortgage-backed securities 172,259 212,146 -18.8% 167,985 206,999 -18.8%
Investment securities 76,608 49,845 53.7% 66,670 48,921 36.3%
Other interest-earning assets 64,376 64,617 -0.4% 79,297 59,225 33.9%
Total earning assets 677,149 687,056 -1.4% 679,178 681,580 -0.4%
Non-earning assets 35,748 34,628 3.2% 35,356 35,084 0.8%
Total assets 712,897 721,684 -1.2% 714,534 716,664 -0.3%
Deposits 446,212 432,918 3.1% 444,459 428,105 3.8%
FHLB advances 197,249 222,359 -11.3% 200,619 222,359 -9.8%
Total interest bearing liabilities 643,461 655,277 -1.8% 645,078 650,464 -0.8%
Non-interest bearing liabilities 6,266 7,879 -20.5% 6,344 7,844 -19.1%
Stockholders' equity 63,170 58,528 7.9% 63,112 58,356 8.1%
Total liabilities & stockholders' $712,897 $721,684 -1.2% $ 714,534 $716,664 -0.3%
equity
SPREAD AND MARGIN ANALYSIS
Average yield on:
Loans 6.20% 7.15% 6.45% 7.24%
Mortgage-backed securities 4.30% 6.03% 4.44% 6.09%
Investment securities 2.71% 4.55% 3.10% 4.75%
Other interest-earning assets 1.05% 1.68% 1.05% 1.63%
Average cost of:
Deposits 1.64% 2.51% 1.75% 2.61%
FHLB advances 5.49% 5.54% 5.51% 5.54%
Interest rate spread 2.01% 2.57% 2.07% 2.61%
Net interest margin 2.15% 2.73% 2.22% 2.78%
TF FINANCIAL CORPORATION
FINANCIAL INFORMATION
(dollars in thousands except per share data)
THREE MONTHS SIX MONTHS
------------ INC ---------- INC
6/30/03 6/30/02 (DEC) 6/30/03 6/30/02 (DEC)
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NON-INTEREST INCOME
Retail banking fees $ 569 $ 466 22.1% $ 1,147 $ 1,006 14.0%
Gain on sale securities 79 - 0.0% 585 - 0.0%
NON-INTEREST EXPENSE
Salaries and benefits 2,036 1,916 6.3% 4,060 3,845 5.6%
Occupancy 602 576 4.5% 1,230 1,154 6.6%
Deposit insurance 18 19 -5.3% 37 38 -2.6%
Professional fees 158 105 50.5% 318 185 71.9%
Deposit intangible amortization 48 58 -17.2% 96 116 -17.2%
Advertising 138 110 25.5% 275 220 25.0%
Other 599 522 14.8% 1,322 1,168 13.2%
INC
6/30/03 12/31/02 (DEC)
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DEPOSIT INFORMATION
Non-interest checking $ 23,125 $ 20,810 11.1%
Interest checking 50,852 48,496 4.9%
Money market 44,239 43,677 1.3%
Savings 187,491 182,813 2.6%
CD's 142,432 146,762 -3.0%
OTHER PERIOD ENDING INFORMATION
Per Share
Book value (1) $ 24.90 $ 25.31
Tangible book value (1) $ 23.03 $ 23.34
Closing market price $ 23.12 $ 24.71
Balance sheet
Loans,net $359,208 $ 370,092 -2.9%
Interest bearing cash and cash equivalents 27,588 93,923 -70.6%
Mortgage-backed securities 172,968 169,835 1.8%
Investment securities 112,620 53,450 110.7%
Total assets 712,636 721,032 -1.2%
FHLB advances and other 192,359 207,359 -7.2%
Stockholders' equity 63,881 62,840 1.7%
ASSET QUALITY
Non-performing loans 2,231 3,822 -41.6%
Loan loss reserves 1,923 2,047 -6.1%
Reserves to gross loans 0.53% 0.55% -3.6%
Non-performing loans to gross loans 0.62% 1.03% -39.8%
Non-performing loans to total assets 0.31% 0.53% -41.5%
Foreclosed property 1,857 84 2110.7%
Foreclosed property to total assets 0.26% 0.01% 2500.0%
Non-performing assets to total assets 0.57% 0.54% 5.6%
OTHER STATISTICAL INFORMATION
Shares outstanding (000's) 2,566 2,483
Number of branch offices 14 13
Full time equivalent employees 171 169
(1) Employee stock ownership plan shares 230 240
not included in shares outstanding (000's)