News Release
------------
January 29, 2004 Contact: Dennis R. Stewart, EVP/CFO
FOR IMMEDIATE RELEASE (215) 579-4000
TF Financial Corporation Announces 2003 Results
and Quarterly Dividend
Newtown, Pennsylvania: TF Financial Corporation (Nasdaq National Market - THRD)
today reported a net loss of $5,834,000 ($2.30 per diluted share) for 2003,
compared with net income of $5,092,000 ($1.91 per diluted share) during 2002.
Year to date earnings for 2003 include the $9,334,000 ($3.35 per diluted share)
after-tax net cost of the Corporation's debt refinancing transaction completed
during the third quarter of 2003. Excluding this transaction, the Corporation's
net income was $3,500,000 ($1.27 per diluted share) for 2003. During the fourth
quarter of 2003 net income was $1,516,000 ($0.54 per diluted share) compared
with $1,438,000 ($0.54 per diluted share) during the fourth quarter of 2002.
The Corporation also announced that its Board of Directors had declared a
quarterly cash dividend of $0.15 per share, payable February 17, 2004 to
shareholders of record on February 9, 2004.
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%, that produced a loss of $377,000. The combined effect of these
transactions was a cost of $14,142,000 or $9,334,000 after tax. The intent of
the transaction was to positively affect the Corporation's future net interest
income. During the fourth quarter of 2003 the Corporation reported $5,541,000 of
net interest income, an increase of $1,422,000 or 35% when compared with the
$4,119,000 reported for the third quarter of 2003.
Record low levels of market interest rates again played a significant role in
the Corporation's operating results for 2003. Throughout the year mortgage loan
rates decreased steadily, reaching record low levels during the third quarter.
As a result the Corporation's mortgage loans and mortgage related securities
repaid at very high levels, reducing the yield on these portfolios. However, the
Corporation reacted by increasing its loan origination activities and benefited
from its community banking presence as borrowers sought local lenders with
attractive loan products and personal service. At year end, loans totaled $406.8
million, up $34.6 million or 9.3% over year end 2002. The Corporation also
experienced good deposit growth during the year as deposits increased in all
categories and in total by $16.8 million or 3.8%.
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 TWELVE MONTHS
------------ INC ------------- INC
12/31/03 12/31/02 (DEC) 12/31/03 12/31/02 (DEC)
-------- -------- ----- -------- -------- -----
EARNINGS SUMMARY
Interest Income $ 7,729 $ 9,377 -17.6% $ 32,377 $ 40,455 -20.0%
Interest expense 2,188 5,390 -59.4% 15,252 22,660 -32.7%
Net interest income 5,541 3,987 39.0% 17,125 17,795 -3.8%
Loan loss provision 60 150 -60.0% 330 988 -66.6%
Non-interest income 636 1,316 -51.7% 2,690 3,304 -18.6%
Non-interest expense 3,887 3,255 19.4% 28,703 13,414 114.0%
Income taxes 714 460 55.2% (3,384) 1,605 -310.8%
Net income (loss) $ 1,516 $ 1,438 5.4% $ (5,834) $ 5,092 -214.6%
Pro forma net income (b) $ 1,516 $ 1,438 5.4% $ 3,500 $ 5,092 -31.3%
PER SHARE INFORMATION
Earnings per share, basic (a) $ 0.59 $ 0.58 1.7% $ (2.30) $ 2.06 -211.7%
Earnings per share, diluted (a) $ 0.54 $ 0.54 0.0% $ (2.30) $ 1.91 -220.4%
Pro forma earnings per share, basic (b) $ 0.59 $ 0.58 1.7% $ 1.38 $ 2.06 -33.0%
Pro forma earnings per share, diluted (b) $ 0.54 $ 0.54 0.0% $ 1.27 $ 1.91 -33.5%
Dividends paid $ 0.15 $ 0.15 0.0% $ 0.60 $ 0.60 0.0%
FINANCIAL RATIOS
Annualized return on average assets (b) 1.00% 0.79% 26.6% 0.52% 0.71% -26.8%
Annualized return on average equity (b) 11.14% 9.13% 22.0% 5.75% 8.47% -32.1%
Efficiency ratio (b) 63.54% 63.17% 0.6% 75.21% 66.70% 12.8%
AVERAGE BALANCES
Loans $401,769 $365,685 9.9% $ 378,414 $362,104 4.5%
Mortgage-backed securities 128,090 181,949 -29.6% 154,721 200,316 -22.8%
Investment securities 31,935 48,358 -34.0% 62,747 50,072 25.3%
Other interest-earning assets 3,181 96,490 -96.7% 45,590 74,058 -38.4%
Total earning assets 564,975 692,482 -18.4% 641,472 686,550 -6.6%
Non-earning assets 36,416 33,734 8.0% 33,839 34,494 -1.9%
Total assets 601,391 726,216 -17.2% 675,311 721,044 -6.3%
Deposits 458,458 441,428 3.9% 449,925 433,522 3.8%
FHLB advances 83,020 215,566 -61.5% 160,325 219,797 -27.1%
Total interest bearing liabilities 541,478 656,994 -17.6% 610,250 653,319 -6.6%
Non-interest bearing liabilities 5,903 6,736 -12.4% 4,195 7,603 -44.8%
Stockholders' equity 54,010 62,486 -13.6% 60,866 60,122 1.2%
Total liabilities & stockholders' $601,391 $726,216 -17.2% $ 675,311 $721,044 -6.3%
equity
SPREAD AND MARGIN ANALYSIS
Average yield on:
Loans 5.96% 6.80% 6.18% 7.09%
Mortgage-backed securities 4.36% 5.02% 4.35% 5.70%
Investment securities 3.42% 4.19% 2.88% 4.54%
Other interest-earning assets 1.37% 1.23% 1.04% 1.48%
Average cost of:
Deposits 1.33% 2.16% 1.57% 2.42%
FHLB advances 3.11% 5.50% 5.12% 5.53%
Interest rate spread 3.82% 2.12% 2.55% 2.42%
Net interest margin 3.89% 2.28% 2.67% 2.59%
TF FINANCIAL CORPORATION
FINANCIAL INFORMATION
(dollars in thousands except per share data)
THREE MONTHS TWELVE MONTHS
------------ INC ------------- INC
12/31/03 12/31/02 (DEC) 12/31/03 12/31/02 (DEC)
-------- -------- ----- -------- -------- -----
NON-INTEREST INCOME
Retail banking fees $ 636 $ 545 16.7% $ 2,372 $ 2,114 12.2%
Gain on sales of securities - 771 -100.0% 208 1,190 -82.5%
Gain on sale of real estate - - 0.0% 110 - 0.0%
NON-INTEREST EXPENSE
Salaries and benefits 2,130 1,839 15.8% 8,186 7,629 7.3%
Occupancy 583 580 0.5% 2,488 2,303 8.0%
Deposit insurance 17 19 -10.5% 72 75 -4.0%
Professional fees 181 104 74.0% 609 408 49.3%
Deposit intangible amortization 40 48 -16.7% 185 222 -16.7%
Advertising 138 111 24.3% 551 441 24.9%
Other 798 554 44.0% 2,847 2,336 21.9%
Debt prepayment fee - - 0.0% 13,765 - 0.0%
INC
12/31/03 12/31/02 (DEC)
-------- -------- -----
DEPOSIT INFORMATION
Non-interest checking $ 26,375 $ 20,810 26.7%
Interest checking 52,647 48,496 8.6%
Money market 44,688 43,677 2.3%
Savings 188,673 182,813 3.2%
CD's 146,960 146,762 0.1%
OTHER PERIOD ENDING INFORMATION
Per Share
Book value $ 21.16 $ 25.31
Tangible book value $ 19.35 $ 23.34
Closing market price $ 34.20 $ 24.71
Balance sheet
Loans,net $404,649 $370,092 9.3%
Cash and cash equivalents 8,241 100,580 -91.8%
Mortgage-backed securities 130,404 169,835 -23.2%
Investment securities 31,802 53,450 -40.5%
Total assets 606,200 721,032 -15.9%
FHLB advances and other 86,853 207,359 -58.1%
Stockholders' equity 54,928 62,840 -12.6%
ASSET QUALITY
Non-performing loans 2,282 3,822 -40.3%
Loan loss reserves 2,111 2,047 3.1%
Reserves to gross loans 0.52% 0.55% -5.5%
Non-performing loans to gross loans 0.56% 1.03% -45.6%
Non-performing loans to total assets 0.38% 0.53% -28.3%
Foreclosed property 868 84 933.3%
Foreclosed property to total assets 0.14% 0.01% 1300.0%
Non-performing assets to total assets 0.52% 0.54% -3.7%
OTHER STATISTICAL INFORMATION
Shares outstanding (000's) (a) 2,596 2,483
Number of branch offices 14 13
Full time equivalent employees 171 169
(a) excludes employee stock ownership plan shares.
(b) excludes $14,142,000 pre-tax and $9,334,000 ($3.35 per diluted
share) after tax cost attributable to the debt refinancing
transaction.