NEWS RELEASE
July 27, 2006 Contact: Dennis R. Stewart, EVP/CFO
FOR IMMEDIATE RELEASE (215) 579-4000
TF FINANCIAL CORPORATION REPORTS SECOND QUARTER 2006 RESULTS
AND QUARTERLY DIVIDEND
Newtown, Pennsylvania: TF Financial Corporation (NASDAQ - THRD) today reported
net income of $1,392,000 ($0.51 per diluted share) for the second quarter of
2006, compared with $1,605,000 ($0.57 per diluted share) during the second
quarter of 2005. Net income for the six month period ended June 30, 2006 was
$2,647,000 ($0.98 per diluted share) compared with $3,081,000 ($1.09 per diluted
share) during the first six months of 2005. The Company also announced that its
Board of Directors declared a quarterly dividend of $0.19 per share, payable
August 15, 2006 to shareholders of record on August 8.
Highlights for the current quarter included:
o Interest income increased by 15% compared to the second quarter of 2005,
and is up 5.8% compared with the first quarter of 2006, reflecting
continued strong loan growth since the year-ago and linked-quarter periods.
o Total retail deposits increased from $464.3 million at March 31, 2006 to
$468.0 million at June 30, 2006. Also, during the second quarter of 2006
the Company established a broker deposit program, raising $11.7 million in
deposits from this source. In addition, continuing its heightened efforts
initiated during the first quarter of 2006, the Company increased the
interest rates paid on its deposits and offered attractively priced new
deposit products as part of its efforts to manage deposit attrition and
attract new deposit relationships.
o The Company's net interest margin was 3.63% during the quarter ended June
30, 2006 compared with 3.60% during the first quarter of 2006. In addition,
net interest income increased by $172,000 and $105,000 during the second
quarter of 2006 compared with the first quarter of 2006 and second quarter
of 2005, respectively.
o Affecting year to year comparability, operating results for the second
quarter of 2006 contained $185,000 of stock compensation expense due in
part to the adoption during the first quarter of 2006 of a new accounting
principle requiring the expensing of the value of stock options.
o Also affecting year to year comparability, operating results during the
second quarter of 2006 contained approximately $93,000 of direct expense
related to a new branch office opened during the third quarter of 2005.
o Dividends paid in the quarter were $0.19 per share, up 5.6% from the $0.18
per share paid during the second quarter of 2005.
Commenting on the performance of the company, President Kent C. Lufkin stated
that, "I believe that the company continues to perform well in spite of the
ongoing challenge created by fierce competition for deposits and the high cost
of alternative funding options. Helping to offset the negative effect of these
rising funding costs, we have continued to experience strong loan activity while
exercising prudent expense control and bringing on line new sources of
non-interest income. Simultaneously, we are improving our operating
infrastructure and our product and service offerings."
TF Financial Corporation is a holding company whose principal subsidiary is
Third Federal Bank, which operates 15 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.
Interested parties can find a wealth of financial information on the website by
selecting "About Us" on the home page, then selecting the "Investor Relations"
option.
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
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
FINANCIAL INFORMATION
(dollars in thousands except per share data)
THREE MONTHS INC
6/30/2006 6/30/2005 (DEC)
EARNINGS SUMMARY
Interest Income $ 9,627 $ 8,371 15.0%
Interest expense 3,948 2,797 41.2%
Net interest income 5,679 5,574 1.9%
Loan loss provision 60 150 -60.0%
Non-interest income 625 677 -7.7%
Non-interest expense 4,301 3,943 9.1%
Income taxes 551 553 -0.4%
Net income $ 1,392 $ 1,605 -13.3%
PER SHARE INFORMATION
Earnings per share, basic $ 0.52 $ 0.59 -11.9%
Earnings per share, diluted $ 0.51 $ 0.57 -10.5%
Dividends paid $ 0.19 $ 0.18 5.6%
FINANCIAL RATIOS
Annualized return on average assets 0.83% 1.00% -17.0%
Annualized return on average equity 8.95% 10.71% -16.4%
Efficiency ratio 68.88% 64.63% 6.6%
AVERAGE BALANCES
Loans $ 512,542 $ 457,289 12.1%
Mortgage-backed securities 82,311 112,939 -27.1%
Investment securities 41,703 35,635 17.0%
Other interest-earning assets 999 2,368 -57.8%
Total earning assets 637,555 608,231 4.8%
Non-earning assets 35,757 36,599 -2.3%
Total assets 673,312 644,830 4.4%
Deposits 467,570 466,679 0.2%
FHLB advances 135,399 111,734 21.2%
Total interest bearing liabilities 602,969 578,413 4.2%
Non-interest bearing liabilities 7,963 6,331 25.8%
Stockholders' equity 62,380 60,086 3.8%
Total liabilities & stockholders' $ 673,312 $ 644,830 4.4%
equity
SPREAD AND MARGIN ANALYSIS
Average yield on:
Loans 6.39% 5.88%
Mortgage-backed securities 4.66% 4.59%
Investment securities 5.61% 4.96%
Other interest-earning assets 5.62% 2.03%
Average cost of:
Deposits 2.20% 1.57%
FHLB advances 4.11% 3.47%
Interest rate spread 3.49% 3.63%
Net interest margin 3.63% 3.73%
T F FINANCIAL CORPORATION
FINANCIAL INFORMATION
(dollars in thousands except per share data)
SIX MONTHS INC
6/30/2006 6/30/2005 (DEC)
EARNINGS SUMMARY
Interest Income $ 18,730 $ 16,468 13.7%
Interest expense 7,544 5,264 43.3%
Net interest income 11,186 11,204 -0.2%
Loan loss provision 150 300 -50.0%
Non-interest income 1,306 1,339 -2.5%
Non-interest expense 8,671 8,074 7.4%
Income taxes 1,024 1,088 -5.9%
Net income $ 2,647 $ 3,081 -14.1%
PER SHARE INFORMATION
Earnings per share, basic $ 0.98 $ 1.12 -12.5%
Earnings per share, diluted $ 0.98 $ 1.09 -10.1%
Dividends paid $ 0.38 $ 0.36 5.6%
FINANCIAL RATIOS
Annualized return on average assets 0.80% 0.97% -17.5%
Annualized return on average equity 8.55% 10.32% -17.2%
Efficiency ratio 70.26% 65.95% 6.5%
AVERAGE BALANCES
Loans $ 505,475 $ 451,983 11.8%
Mortgage-backed securities 86,868 115,861 -25.0%
Investment securities 41,670 34,256 21.6%
Other interest-earning assets 697 1,755 -60.3%
Total earning assets 634,710 603,855 5.1%
Non-earning assets 34,790 34,870 -0.2%
Total assets 669,500 638,725 4.8%
Deposits 464,156 461,028 0.7%
FHLB advances 135,656 111,810 21.3%
Total interest bearing liabilities 599,812 572,838 4.7%
Non-interest bearing liabilities 7,256 5,703 27.2%
Stockholders' equity 62,432 60,184 3.7%
Total liabilities & stockholders' $ 669,500 $ 638,725 4.8%
equity
SPREAD AND MARGIN ANALYSIS
Average yield on:
Loans 6.32% 5.88%
Mortgage-backed securities 4.57% 4.52%
Investment securities 5.27% 4.83%
Other interest-earning assets 6.37% 2.53%
Average cost of:
Deposits 2.09% 1.47%
FHLB advances 4.07% 3.42%
Interest rate spread 3.47% 3.69%
Net interest margin 3.61% 3.80%
T F FINANCIAL CORPORATION
FINANCIAL INFORMATION
(dollars in thousands except per share data)
THREE MONTHS INC SIX MONTHS INC
6/30/2006 6/30/2005 (DEC) 6/30/2006 6/30/2005 (DEC)
NON-INTEREST INCOME
Retail banking fees $ 647 $ 669 -3.3% $ 1,319 $ 1,309 0.8%
Gain on sale of loans $ 29 $ 8 262.5% $ 38 $ 30 26.7%
Gain (loss) on sales of securities (51) - 0.0% (51) - 0.0%
NON-INTEREST EXPENSE
Salaries and benefits 2,498 2,303 8.5% 4,952 4,694 5.5%
Stock-based compensation 185 - 0.0% 370 - 0.0%
Occupancy 694 640 8.4% 1,398 1,301 7.5%
Deposit insurance 15 16 -6.3% 30 33 -9.1%
Professional fees 135 211 -36.0% 347 437 -20.6%
Deposit intangible amortization 28 34 -17.6% 56 68 -17.6%
Advertising 175 186 -5.9% 352 362 -2.8%
Other 571 553 3.3% 1,166 1,179 -1.1%
INC
6/30/2006 12/31/2005 (DEC)
DEPOSIT INFORMATION
Non-interest checking $ 37,122 $ 37,138 0.0%
Interest checking 49,490 52,319 -5.4%
Money market 59,139 79,666 -25.8%
Savings 143,330 151,725 -5.5%
CD's, retail 178,959 149,673 19.6%
CD's, broker 11,689 - 0.0%
OTHER PERIOD ENDING INFORMATION
Per Share
Book value (a) $ 23.33 $ 23.08
Tangible book value (a) $ 21.72 $ 21.46
Closing market price $ 28.85 $ 28.45
Balance sheet
Loans,net $ 517,866 $ 490,959 5.5%
Cash and cash equivalents 6,013 3,821 57.4%
Mortgage-backed securities 77,610 93,688 -17.2%
Investment securities 42,112 42,563 -1.1%
Total assets 674,134 660,839 2.0%
FHLB advances and other 123,013 121,260 1.4%
Stockholders' equity 62,873 62,648 0.4%
ASSET QUALITY
Non-performing loans 1,314 1,588 -17.3%
Loan loss reserves 2,788 2,641 5.6%
Reserves to gross loans 0.54% 0.54% 0.0%
Non-performing loans to gross loans 0.25% 0.32% -21.9%
Non-performing loans to total assets 0.19% 0.24% -20.8%
Foreclosed property - 700 -100.0%
Foreclosed property to total assets 0.00% 0.11% -100.0%
Non-performing assets to total assets 0.19% 0.35% -45.7%
OTHER STATISTICAL INFORMATION
Shares outstanding (000's) (a) 2,695 2,714
Number of branch offices 15 15
Full time equivalent employees 184 172
(a) Excludes 175,000 and 185,000 employee stock ownership plan shares at June
30, 2006 and December 31, 2005, respectively.