News Release
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October 24, 2003 Contact: Dennis R. Stewart, EVP/CFO
FOR IMMEDIATE RELEASE (215) 579-4000
TF Financial Corporation Announces Third Quarter Results
And Quarterly Dividend
Newtown, Pennsylvania: TF Financial Corporation (Nasdaq National Market - THRD)
today reported a net loss of $8,565,000 ($3.07 per diluted share) for the third
quarter of 2003 and a year to date net loss of $7,350,000 ($2.69 per diluted
share.) These amounts include the $9,334,000 ($3.35 per diluted share) net cost
of the Corporation's debt refinancing transaction completed during September
2003. Excluding this transaction, the Corporation's earnings were $769,000
($0.28 per diluted share) for the third quarter of 2003 compared with $1,375,000
($0.51 per diluted share) during the third quarter of 2002. Excluding the debt
refinancing transaction, year-to-date earnings for 2003 were $1,984,000 ($0.72
per diluted share) compared with $3,655,000 ($1.34 per diluted share) during the
first nine months of 2002. The Corporation also announced that its Board of
Directors declared a quarterly dividend of $0.15 per share, payable November 14,
2003 to shareholders of record on November 5.
On September 12, 2003 the Corporation announced that it had completed a series
of transactions that resulted in the refinancing or repayment of $187.4 million
of Federal Home Loan Bank borrowings whose interest cost to the Corporation had
been 5.46%. $80 million of these borrowings were refinanced at 3.23%; the
remaining $107.4 million were repaid. The refinancing and early repayment costs
charged by the Federal Home Loan Bank were $13,765,000. In addition, a portion
of the funds used to repay these borrowings came from the sale of $79.7 million
of investment securities and mortgage-backed securities, which had been yielding
1.93%, at a loss of $377,000. The combined effect of these transactions was a
cost of $14,142,000 or $9,334,000 after tax. Although stockholders' equity
decreased to $54,174,000 at September 30, 2003, the Corporation's equity to
assets ratio increased to 8.96% compared to 8.72% at December 31, 2002 because
of a reduction in the Corporation's total assets to $604.7 million from $721.0
million at December 31, 2002.
Excluding the effect of the debt refinancing transaction, the Corporation's
pre-tax income during the third quarter of 2003 was $1,015,000 compared with
$1,813,000 during the third quarter of 2002. The decrease is largely
attributable to a $295,000 decrease in net interest income and the absence of
any gains on the sale of securities in the third quarter of 2003 compared with
the $419,000 of gains on the sale of securities that occurred in 2002. Other
significant, non-recurring expense items during the third quarter of 2003
include $71,000 of compensation and benefits paid to the former president of the
Corporation, who retired on July 1, 2003, and $62,000 of additional expense due
to revisions in the useful lives of certain depreciable and amortizable assets.
Non-recurring income during the third quarter of 2003 was composed of a $110,000
gain on the sale of real estate.
While decreasing compared to the third quarter of 2002, net interest income
increased by $488,000 compared to the second quarter of 2003 as a result of the
Corporation's increased loan originations and substantial reduction in
interest-bearing cash balances during both the second and third quarters of
2003. The Corporation's loans receivable were $400,766,000 at September 30, 2003
compared to $359,208,000 at June 30, 2003 and $370,092,000 at December 31, 2002.
Similarly, the Corporation's cash and cash equivalents were $6,106,000 at
September 30, 2003 compared to $37,589,000 at June 30, 2003 and $100,580,000 at
December 31, 2002. Taking the debt refinancing transaction into account, there
is expected to be a further increase in the Corporation's net interest income in
the fourth quarter of 2003.
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.
T F FINANCIAL CORPORATION
FINANCIAL INFORMATION
(dollars in thousands except per share data)
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THREE MONTHS NINE MONTHS
------------ INC ----------- INC
9/30/03 9/30/02 (DEC) 9/30/03 9/30/02 (DEC)
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EARNINGS SUMMARY
Interest Income $ 7,835 $ 10,038 -21.9% $ 24,648 $ 31,078 -20.7%
Interest expense 3,716 5,624 -33.9% $ 13,064 $ 17,269 -24.3%
Net interest income 4,119 4,414 -6.7% 11,584 13,809 -16.1%
Loan loss provision 90 150 -40.0% 270 838 -67.8%
Non-interest income 322 982 -67.2% 2,054 1,988 3.3%
Non-interest expense 17,478 3,433 409.1% 24,816 10,159 144.3%
Income taxes (4,562) 438 -1141.6% (4,098) 1,145 -457.9%
Net income (loss) $(8,565) $ 1,375 -722.9% $ (7,350) $ 3,655 -301.1%
Pro forma net income (b) $ 769 $ 1,375 -44.1% $ 1,984 $ 3,655 -45.7%
PER SHARE INFORMATION
Earnings per share, basic $ (3.33) $ 0.55 -705.5% $ (2.91) $ 1.48 -296.6%
Earnings per share, diluted $ (3.07) $ 0.51 -702.0% $ (2.69) $ 1.34 -300.7%
Pro forma earnings per share, basic (b) $ 0.30 $ 0.55 -45.5% $ 0.79 $ 1.48 -46.6%
Pro forma earnings per share, diluted (b) $ 0.28 $ 0.51 -45.1% $ 0.72 $ 1.34 -46.3%
Dividends paid $ 0.15 $ 0.15 0.0% $ 0.45 $ 0.45 0.0%
FINANCIAL RATIOS
Annualized return on average assets (b) 0.45% 0.75% -40.0% 0.38% 0.68% -44.1%
Annualized return on average equity (b) 4.82% 8.90% -45.8% 4.20% 8.24% -49.0%
Efficiency ratio (b) 78.53% 65.44% 20.0% 80.40% 67.91% 18.4%
AVERAGE BALANCES
Loans $ 381,005 $ 348,675 9.3% $ 370,543 $ 360,215 2.9%
Mortgage-backed securities 155,260 205,729 -24.5% 163,697 206,506 -20.7%
Investment securities 85,847 54,051 58.8% 73,131 50,650 44.4%
Other interest-earning assets 21,685 80,811 -73.2% 59,882 66,499 -10.0%
Total earning assets 643,797 689,266 -6.6% 667,253 683,870 -2.4%
Non-earning assets 33,670 34,176 -1.5% 34,789 34,890 -0.3%
Total assets 677,467 723,442 -6.4% 702,042 718,760 -2.3%
Deposits 452,145 436,272 3.6% 447,049 430,857 3.8%
FHLB advances 158,357 218,989 -27.7% 186,377 221,223 -15.8%
Total interest bearing liabilities 610,502 655,261 -6.8% 633,426 652,080 -2.9%
Non-interest bearing liabilities 3,661 6,908 -47.0% 5,439 7,340 -25.9%
Stockholders' equity 63,304 61,273 3.3% 63,177 59,340 6.5%
Total liabilities & stockholders' $ 677,467 $ 723,442 -6.4% $ 702,042 $ 718,760 -2.3%
equity
SPREAD AND MARGIN ANALYSIS
Average yield on:
Loans 5.89% 7.10% 6.26% 7.20%
Mortgage-backed securities 4.14% 5.54% 4.34% 5.90%
Investment securities 2.33% 4.46% 2.80% 4.65%
Other interest-earning assets 0.90% 1.57% 1.03% 1.61%
Average cost of:
Deposits 1.44% 2.33% 1.65% 2.51%
FHLB advances 5.21% 5.54% 5.42% 5.54%
Interest rate spread 2.41% 2.37% 2.18% 2.54%
Net interest margin 2.54% 2.54% 2.32% 2.70%
T F FINANCIAL CORPORATION
FINANCIAL INFORMATION
(dollars in thousands except per share data)
THREE MONTHS NINE MONTHS
------------ INC ----------- INC
9/30/03 9/30/02 (DEC) 9/30/03 9/30/02 (DEC)
------- ------- ------- -------
NON-INTEREST INCOME
Retail banking fees $ 589 $ 563 4.6% $ 1,736 $ 1,569 10.6%
Gain (loss) on sales of securities (377) 419 -190.0% 208 419 -50.4%
Gain on sale of real estate 110 - 0.0% 110 - 0.0%
NON-INTEREST EXPENSE
Salaries and benefits 1,996 1,945 2.6% 6,056 5,790 4.6%
Occupancy 675 570 18.4% 1,905 1,724 10.5%
Deposit insurance 18 18 0.0% 55 56 -1.8%
Professional fees 110 119 -7.6% 428 304 40.8%
Deposit intangible amortization 49 58 -15.5% 145 174 -16.7%
Advertising 138 110 25.5% 413 330 25.2%
Other 727 613 18.6% 2,049 1,781 15.0%
Debt prepayment fee 13,765 - 0.0% 13,765 - 0.0%
INC
9/30/03 12/31/02 (DEC)
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DEPOSIT INFORMATION
Non-interest checking $ 26,918 $ 20,810 29.4%
Interest checking 49,630 48,496 2.3%
Money market 45,184 43,677 3.5%
Savings 189,474 182,813 3.6%
CD's 143,542 146,762 -2.2%
OTHER PERIOD ENDING INFORMATION
Per Share
Book value (a) $ 21.01 $ 25.31
Tangible book value (a) $ 19.17 $ 23.34
Closing market price $ 31.52 $ 24.71
Balance sheet
Loans,net $ 400,766 $ 370,092 8.3%
Cash and cash equivalents 6,106 100,580 -93.9%
Mortgage-backed securities 130,472 169,835 -23.2%
Investment securities 33,084 53,450 -38.1%
Total assets 604,682 721,032 -16.1%
FHLB advances and other 87,100 207,359 -58.0%
Stockholders' equity 54,174 62,840 -13.8%
ASSET QUALITY
Non-performing loans 2,905 3,822 -24.0%
Loan loss reserves 1,972 2,047 -3.7%
Reserves to gross loans 0.49% 0.55% -10.9%
Non-performing loans to gross loans 0.72% 1.03% -30.1%
Non-performing loans to total assets 0.48% 0.53% -9.4%
Foreclosed property 1,763 84 1998.8%
Foreclosed property to total assets 0.29% 0.01% 2800.0%
Non-performing assets to total assets 0.77% 0.54% 42.6%
OTHER STATISTICAL INFORMATION
Shares outstanding (000's) (a) 2,579 2,483
Number of branch offices 14 13
Full time equivalent employees 174 169
(a) excludes employee stock ownership 225 240
plan shares (000's) tax cost attributable to
the debt refinancing transaction.
(b) excludes $14,142,000 pre-tax and $9,334,000 after tax cost attributable
to the debt refinancing transaction.