-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SG5MvQXypdNd5HGgBX8Kv7vdAe/QlexeiLa2sLF30+AZFQLIcbEguqmsVXNNUr3Q 276Yrq+x0Fov7a+IXhFPXQ== 0000946275-00-000214.txt : 20000509 0000946275-00-000214.hdr.sgml : 20000509 ACCESSION NUMBER: 0000946275-00-000214 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000508 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TF FINANCIAL CORP CENTRAL INDEX KEY: 0000921051 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 742705050 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-24168 FILM NUMBER: 621538 BUSINESS ADDRESS: STREET 1: 3 PENNS TRAIL CITY: NEWTOWN STATE: PA ZIP: 18940 BUSINESS PHONE: 2155794000 MAIL ADDRESS: STREET 1: 3 PENNS TRAIL CITY: NEWTOWN STATE: PA ZIP: 18940 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM l0-Q (Mark One) |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 ------------------------------------------------- OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to --------------------- --------------------- Commission file number 0-24168 ------- TF FINANCIAL CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 74-2705050 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. employer identification no.) incorporation or organization) 3 Penns Trail, Newtown, Pennsylvania 18940 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 215-579-4000 ------------------ N/A - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. Indicate by check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: April 28, 2000 -------------- Class Outstanding --------------------------- ---------------- $.10 par value common stock 2,823,574 shares TF FINANCIAL CORPORATION AND SUBSIDIARIES FORM 1O-Q FOR THE QUARTER ENDED MARCH 31, 2000 INDEX Page Number ------ PART I - CONSOLIDATED FINANCIAL INFORMATION Item 1. Consolidated Financial Statements 3 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Item 3. Quantitative and Qualitative Disclosures about Market Risk 13 PART II- OTHER INFORMATION Item 1. Legal Proceedings 14 Item 2. Changes in Securities and Use of Proceeds 14 Item 3. Defaults Upon Senior Securities 14 Item 4. Submission of Matters to a Vote of Security Holders 14 Item 5. Other Information 14 Item 6. Exhibits and Reports on Form 8-K 14 SIGNATURES 15 2 TF FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (in thousands)
Unaudited Audited Unaudited March 31, December 31, March 31, 2000 1999 1999 ---- ---- ---- Assets Cash and cash equivalents $16,661 $16,715 $35,795 Certificates of deposit in other financial institutions 547 847 2,038 Investment securities available for sale - at fair value 22,534 21,930 5,016 Investment securities held to maturity (fair value of $59,514, $64,538 and 61,798 66,760 96,651 $96,478, respectively) Mortgage-backed securities available for sale - at fair value 139,557 132,515 69,682 Mortgage-backed securities held to maturity (fair value of $148,796, 154,345 159,888 191,321 $154,188, and $191,819, respectively) Loans receivable, net 294,715 287,979 302,083 Federal Home Loan Bank stock - at cost 13,042 13,042 12,668 Accrued interest receivable 4,789 4,958 4,420 Real estate held for investment -- -- 2,348 Goodwill and other intangible assets 6,376 6,570 7,181 Premises and equipment, net 9,260 9,177 8,924 Other assets 2,810 1,493 1,290 -------- --------- -------- Total assets $726,434 $721,874 $739,417 ======== ========= ======== Liabilities and stockholders' equity Liabilities Deposits $408,597 $401,698 $424,869 Advances from the Federal Home Loan Bank 223,359 248,533 253,359 Other borrowings 36,530 15,766 -- Advances from borrowers for taxes and insurance 1,124 1,198 1,111 Accrued interest payable 5,081 3,749 5,557 Other liabilities 3,292 2,483 3,256 -------- -------- ----- Total liabilities 677,983 673,427 688,152 -------- -------- ------- Commitments and contingencies Stockholders' equity Preferred stock, no par value; 2,000,000 shares authorized and none issued Common stock, $0.10 par value; 10,000,000 shares authorized, 5,290,000 issued; 2,553,599, 2,576,160, and 2,755,279 shares outstanding at March 31, 2000, December 31, 1999 and March 31, 1999, net of treasury shares of 2,462,826, 2,437,226, and 2,248,990, respectively. 529 529 529 Retained earnings 49,154 48,760 46,392 Additional paid-in capital 52,098 52,076 51,988 Unearned ESOP shares (2,736) (2,766) (2,857) Shares acquired by MSBP (55) (71) (362) Treasury stock - at cost (47,143) (46,996) (44,311) Accumulated other comprehensive income (loss) (3,396) (3,085) (114) -------- -------- -------- Total stockholders' equity 48,451 48,447 51,265 -------- -------- -------- Total liabilities and stockholders' equity $726,434 $721,874 $739,417 ======== ========= ========
See notes to consolidated financial statements 3 TF FINANCIAL CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS (in thousands, except per share data)
For Three Months Ended March 31, --------------- 2000 1999 ---- ---- Interest income Loans $ 5,556 $ 5,089 Mortgage-backed securities 4,870 4,097 Investment securities 1,531 1,581 Interest bearing deposits and other 72 326 ------- ------- Total interest income 12,029 11,093 ------- ------- Interest expense Deposits 3,576 3,857 Advances from the Federal Home Loan Bank and other borrowings 3,603 2,775 ------- ------- Total interest expense 7,179 6,632 ------- ------- Net interest income 4,850 4,461 Provision for loan losses 44 30 ------- ------- Net interest income after provision for loan losses 4,806 4,431 ------- ------- Non-interest income Service fees, charges and other operating income 374 324 ------- ------- Total non-interest income 374 324 ------- ------- Non-interest expense Compensation and benefits 1,827 1,640 Occupancy and equipment 626 494 Federal deposit insurance premium 22 68 Professional fees 187 165 Amortization of goodwill and other intangible assets 194 209 Advertising 170 90 Other operating 598 554 ------- ------- Total non-interest expense 3,624 3,220 ------- ------- Income before income taxes 1,556 1,535 Income taxes 527 551 ------- ------- Net income $ 1,029 $ 984 ======= ======= Basic earnings per share $0.40 $0.35 Diluted earnings per share $0.39 $0.33 Weighted average number of shares outstanding - basic 2,569 2,822 Weighted average number of shares outstanding - diluted 2,654 2,996
See notes to consolidated financial statements 4 TF FINANCIAL CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
For the three months ended March 31, --------- 2000 1999 ---- ---- Cash flows from operating activities Net Income $ 1,029 $ 984 Adjustments to reconcile net income to net cash provided by operating activities: Mortgage loan servicing rights 3 3 Deferred loan origination fees (1) (25) Premiums and discounts on investment securities, net 5 23 Premiums and discounts on mortgage-backed securities and loans, net 27 230 Amortization of goodwill and other intangible assets 111 209 Provision for loan losses 44 30 Depreciation of premises and equipment 248 231 Recognition of ESOP and MSBP expenses 68 167 Gain on sale of real estate acquired through foreclosure 3 (12) (Increase) decrease in: Accrued interest receivable 169 138 Other assets (1,469) (167) Increase (decrease) in: Accrued interest payable 1,332 1,391 Other liabilities 808 (2,222) --------- --------- Net cash provided by operating activities 2,377 980 --------- --------- Cash flows from investing activities Loan origination and principal payments on loans, net (953) 15,253 Purchases of loans (5,855) (76,553) Proceeds from loan sales -- -- Maturities of certificates of deposit in other financial institutions, net 300 200 Purchases of investment securities available for sale (429) -- Purchases of investment securities held to maturity -- (102,576) Purchases of mortgage-backed securities available for sale (9,843) (2,346) Purchase of mortgage-backed securities held to maturity (353) (41,632) Proceeds from maturities of investment securities held to maturity 4,895 89,140 Proceeds from maturities of investment securities available for sale -- 2,000 Principal repayments from mortgage-backed securities held to maturity 5,865 31,162 Principal repayments from mortgage-backed securities available for sale 2,493 7,458 Purchases and redemption of Federal Home Loan Bank Stock, net -- (3,500) Proceeds from sales of real estate acquired through foreclosure 146 60 Purchase of premises and equipment (331) (138) --------- --------- Net cash used in investing activities (4,065) (81,472) --------- ---------
See notes to consolidated financial statements 5 TF FINANCIAL CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (in thousands)
For the three months ended March 31, --------- 2000 1999 ---- ---- Cash flows from financing activities Net increase (decrease ) in deposits 6,899 (14,044) Net increase (decrease) in advances from Federal Home Loan Bank (25,174) 90,000 Net increase in other borrowings 20,764 -- Net decrease in advances from borrowers for taxes and insurance (74) (93) Exercise of stock options 437 34 Purchase of treasury stock, net (879) (1,970) Common stock cash dividend (339) (343) -------- -------- Net cash provided by financing activities 1,634 73,584 -------- -------- Net decrease in cash and cash equivalents (54) (6,908) Cash and cash equivalents at beginning of period 16,715 42,703 -------- -------- Cash and cash equivalents at end of period $ 16,661 $ 35,795 ======== ======== Supplemental disclosure of cash flow information Cash paid for Interest on deposits and advances $ 5,947 $ 5,241 Income taxes $ 2,538 $ 512 Non-cash transactions Transfers from loans to real estate acquired through foreclosure $ -- $ 13
See notes to consolidated financial statements 6 TF FINANCIAL CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - PRINCIPLES OF CONSOLIDATION The consolidated financial statements as of March 31, 2000, December 31, 1999, March 31, 1999 and for the three-month periods ended March 31, 2000 and 1999 include the accounts of TF Financial Corporation (the "Company") and its wholly owned subsidiaries Third Federal Savings Bank (the "Savings Bank"), TF Investments Corporation, Penns Trail Development Corporation and Teragon Financial Corporation. The Company's business is conducted principally through the Savings Bank. All significant intercompany accounts and transactions have been eliminated in consolidation. NOTE 2 - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and, therefore, do not include all of the disclosures or footnotes required by generally accepted accounting principles. In the opinion of management, all adjustments, consisting of normal recurring accruals, necessary for fair presentation of the consolidated financial statements have been included. The results of operations for the period ended March 31, 2000 are not necessarily indicative of the results which may be expected for the entire fiscal year or any other period. For further information, refer to consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. NOTE 3 - CONTINGENCIES The Company, from time to time, is a party to routine litigation that arises in the normal course of business. In the opinion of management, the resolution of this litigation, if any, would not have a material adverse effect on the Company's consolidated financial condition or results of operations. NOTE 4 - OTHER COMPREHENSIVE INCOME (LOSS) The Company's other comprehensive income consists of net unrealized gains (losses) on investment securities and mortgage-backed securities available for sale. Total comprehensive income for the three-month periods ended March 31, 2000 and 1999 was $718,000 and $716,000, net of applicable income tax of $367,000 and $172,000, respectively. NOTE 5- RECLASSIFICATIONS Certain prior year amounts have been reclassified to conform to the current period presentation. 7 TF FINANCIAL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL TF Financial Corporation may from time to time make written or oral "forward-looking statements", including statements contained in the Company's filings with the Securities and Exchange Commission (including this Quarterly Report on Form 10-Q and the exhibits thereto), in its reports to stockholders and in other communications by the Company, which are made in good faith by the Company pursuant to the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties, such as statements of the Company's plans, objectives, expectations, estimates and intentions, that are subject to change based on various important factors (some of which are beyond the Company's control). The following factors, among others, could cause the Company's financial performance to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements: the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System, inflation, interest rate, market and monetary fluctuations; the timely development of and acceptance of new products and services of the Company and the perceived overall value of these products and services by users, including the features, pricing and quality compared to competitors' products and services; the willingness of users to substitute competitors' products and services for the Company's products and services; the success of the Company in gaining regulatory approval of its products and services, when required; the impact of changes in financial services' laws and regulations (including laws concerning taxes, banking, securities and insurance); technological changes, acquisitions; changes in consumer spending and saving habits; and the success of the Company at managing the risks involved in the foregoing. The Company cautions that the foregoing list of important factors is not exclusive. 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. Financial Condition The Company's total assets at March 31, 2000 and December 31, 1999 totaled $726.4 million and $721.9 million, respectively, an increase of $4.5 million, or 0.6%, during the three-month period. This increase was primarily the result of a $6.7 million increase in loans receivable. The increase in loans receivable was primarily funded by a $6.9 million increase in deposits. Total liabilities increased by $4.6 million during the first three months of 2000 primarily as a result of a $6.9 million increase in deposits. 8 Total consolidated stockholders' equity of the Company was $48.5 million at March 31, 2000, relatively unchanged from December 31, 1999. During the first quarter of 2000, the net increase in retained earnings, which is net income less dividends paid, was partially offset by the net cost of treasury shares purchased plus the decrease in accumulated other comprehensive income. During January of 2000 management announced that the Company's board of directors had authorized the purchase of up to 142,368 additional shares of the Company's stock in the open market during the subsequent twelve months. As of March 31, 2000, there were approximately 116,500 shares available for repurchase under this plan. Asset Quality Management of the Company believes that there has been no material adverse change in the Company's asset quality during the three-month period ended March 31, 2000. The increase in non-performing loans is largely attributable to one loan with a balance of $547,000, secured by four residential condominium units. The Savings Bank is presently working with the borrower to resolve the situation, and one of the units representing approximately 40% of the non-performing balance is under contract of sale. Non-performing loans also include $338,000 in student loans that are guaranteed by the United States Department of Education, through the Pennsylvania Higher Education Assistance Association, unless the Savings Bank is notified that it has failed to perform all the necessary procedures to preserve the guarantee. In such a situation, the Savings Bank would attempt to have the guarantee reinstated; if unsuccessful, these loans become unsecured loans that the Savings Bank will attempt to collect or charge-off. The following table sets forth information regarding the Company's asset quality (dollars in thousands):
March 31, December 31, March 31, --------- ------------ --------- 2000 1999 1999 ---- ---- ---- Non-performing loans $2,183 $1,356 $1,561 Ratio of non-performing loans to gross loans 0.74% 0.47% 0.51% Ratio of non-performing loans to total assets 0.30% 0.19% 0.21% Foreclosed property $321 $546 $274 Foreclosed property to total assets 0.04% 0.08% 0.04% Ratio of total non-performing assets to total assets 0.34% 0.26% 0.25%
Management maintains an allowance for loan losses at levels that are believed to be adequate; however, there can be no assurances that further additions will not be necessary or that losses inherent in the existing loan portfolios will not exceed the allowance. The following table sets forth the activity in the allowance for loan losses during the periods indicated (in thousands): 2000 1999 ---- ---- Beginning balance, January 1, $1,970 $1,909 Provision 44 30 Less: charge-off's (recoveries), net 127 -- ------ ------ Ending balance, March 31, $1,887 $1,939 ====== ====== 9 RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 Net Income. The Company recorded net income of $1,029,000, or $0.39 per diluted share, for the three months ended March 31, 2000 as compared to $984,000, or $0.33 per diluted share, for the three months ended March 31, 1999. Average Balance Sheet The following table sets forth information relating to the Company's average balance sheet and reflects the average yield on assets and average cost of liabilities for the periods indicated. The yields and costs are computed by dividing income or expense by the average balance of interest-earning assets or interest-bearing liabilities, respectively for the periods indicated.
Three months ended March 31, ---------------------------- 2000 1999 ---------------------------------- ---------------------------------- Average Average Average Average Balance Interest Yld/Cost Balance Interest Yld/Cost ------- -------- -------- ------- -------- -------- (dollars in thousands) Assets: Interest-earning assets: Loans receivable (4)....................... $289,660 $5,556 7.71% $282,072 $5,089 7.22% Mortgage-backed securities................. 292,754 4,870 6.69% 261,124 4,097 6.28% Investment securities...................... 101,928 1,531 6.04% 113,605 1,581 5.57% Other interest-earning assets(1)........... 7,454 72 3.88% 34,181 326 3.81% ------- ------ -------- ------- Total interest-earning assets............ 691,796 12,029 6.99% 690,982 11,093 6.42% ------ ------- Non interest-earning assets.................... 27,622 24,562 ------- ------- Total assets............................. 719,418 715,544 ======= ======= Liabilities and stockholders' equity: Interest-bearing liabilities Deposits................................... 404,091 3,576 3.56% 430,115 3,857 3.59% Advances from the FHLB and other borrowings...................... 259,676 3,603 5.58% 223,359 2,775 4.97% ------- ------ ------- ------ Total interest-bearing liabilities....... 663,767 7,179 4.35% 653,474 6,632 4.06% ------ ------ Non interest-bearing liabilities............... 7,840 9,964 ------- ------- Total liabilities.......................... 671,607 663,438 Stockholders' equity........................... 47,811 52,106 ------- ------- Total liabilities and stockholders' equity.... $719,418 $715,544 ======== ======== Net interest income............................ $4,850 $4,461 ====== ====== Interest rate spread (2)....................... 2.64% 2.36% Net yield on interest-earning assets (3)....... 2.82% 2.58% Ratio of average interest-earning assets to average interest bearing liabilities........... 104% 106%
(1) Includes interest-bearing deposits in other banks. (2) Interest-rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. (3) Net yield on interest-earning assets represents net interest income as a percentage of average interest-earning assets. (4) Nonaccrual loans have been included in the appropriate average loan balance category, but interest on nonaccrual loans has not been included for purposes of determining interest income. 10 Rate/Volume Analysis The following table presents, for the periods indicated, the change in interest income and interest expense (in thousands) attributed to (i) changes in volume (changes in the weighted average balance of the total interest earning asset and interest bearing liability portfolios multiplied by the prior year rate), and (ii) changes in rate (changes in rate multiplied by prior year volume). Changes attributable to the combined impact of volume and rate have been allocated proportionately based on the absolute value of changes due to volume and changes due to rate.
Three months ended March 31, 2000 vs. 1999 ------------------------------------------- Increase (decrease) due to ------------------------------------------- Volume Rate Net ------------------------------------------- Interest income: Loans receivable, net $133 $334 $467 Mortgage-backed securities 502 271 773 Investment securities (614) 564 (50) Other interest-earning assets (295) 41 (254) ------------------------------------------- Total interest-earning assets (274) 1,210 936 =========================================== Interest expense: Deposits (247) (34) (281) Advances from the FHLB and other borrowings 472 356 828 ------------------------------------------- Total interest-bearing liabilities 225 322 547 =========================================== Net change in net interest income $(499) $888 $389 ===========================================
Total Interest Income. Total interest income increased by $936,000 or 8.4% to $12.0 million for the three months ended March 31, 2000 compared with the first quarter of 1999 primarily because of increases in the rates earned on average interest-earning assets. The increase in the rate earned on loans receivable occurred for two reasons: first, the Company purchased $76.6 million in loans receivable late in the first quarter of 1999 at yields that were higher than the current portfolio yields. Second, market interest rates rose steadily from the first quarter of 1999 through year-end 1999. The increase in interest earned on mortgage-backed securities also occurred as a result of purchases, throughout the last three quarters of 1999, with yields higher than the existing portfolio because of higher market interest rates. Total Interest Expense. Total interest expense increased to $7.2 million for the three-month period ended March 31, 2000 from $6.6 million for the same period in 1999 primarily due to increased advances from the Federal Home Loan Bank and other borrowings which were used to fund asset growth and deposit outflows. The average rate paid on Federal Home Loan Bank advances and other borrowings increased due to the effect of higher interest rates on new borrowings. Interest expense on deposits decreased during the first quarter of 2000 compared to the first quarter of 1999 because the average balance of deposits decreased $26.0 million or 6.1%, from $430.0 million to $404.1 million. The decrease in the average balance of deposits resulted from management's efforts to price deposits at lower interest rates. 11 Non-interest income. Total non-interest income was $374,000 for the three-month period ended March 31, 2000 compared with $323,000 for the same period in 1999. The increase is due in part to $33,000 of non-recurring loan prepayment fees received during the first quarter of 2000. Non-interest expense. Total non-interest expense increased by $404,000 to $3.6 million for the three months ended March 31, 2000 compared to the same period in 1999. Compensation and benefits expenses increased by $187,000 during the first quarter of 2000 compared to the year earlier period due in large part to the increase in full time equivalent employees from 144 at March 31, 1999 to 167 at March 31, 2000. These additional employees were related to the two additional branch offices open during the first quarter of 2000 compared to the first quarter of 1999, and additional staff in the lending areas of the Company. In addition, these additional branch offices are largely the cause of the increases in occupancy and equipment and other operating expenses. The increase in advertising expense is the result of a planned increase in the Company's advertising expenses in order to attract new retail banking customers. 12 LIQUIDITY AND CAPITAL RESOURCES Liquidity The Company's liquidity is a measure of its ability to fund loans, pay withdrawals of deposits, and other cash outflows in an efficient, cost-effective manner. The Company's short-term sources of liquidity include maturity, repayment and sales of assets, excess cash and cash equivalents, new deposits, broker deposits, other borrowings, and new advances from the Federal Home Loan Bank. There has been no material adverse change during three-month period ended March 31, 2000 in the ability of the Company and its subsidiaries to fund their operations. The Savings Bank is required under federal regulations to maintain certain specified levels of "liquid investments", which include certain United States government obligations and other approved investments. Current regulations require the Savings Bank to maintain liquid assets of not less than 4% of its net withdrawable accounts plus short term borrowings. Short-term liquid assets must consist of not less than 1% of such accounts and borrowings, which amount is also included within the 4% requirement. These levels may be changed from time to time by the regulators to reflect current economic conditions. The Savings Bank had regulatory liquidity ratios of 18.9% and 27.8% at March 31, 2000 and 1999, respectively. At March 31, 2000, the Company had commitments outstanding under letters of credit of $3.7 million, commitments to originate loans of $4.2 million, and commitments to fund undisbursed balances of closed loans and unused lines of credit of $43.1 million. Capital Requirements The Savings Bank is in compliance with all of its capital requirements as of March 31, 2000. YEAR 2000 Risk Assessment There has been no information that has come to the Company's attention during the three-months ended March 31, 2000 to indicate that there are any adverse consequences that might affect the Company in the future related to the year 2000 problem. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Asset and Liability Management The Company's market risk exposure is predominately caused by interest rate risk, which is defined as the sensitivity of the Company's current and future earnings, the values of its assets and liabilities, and the value of its capital to changes in the level of market interest rates. Management of the Company believes that there has not been a material adverse change in market risk during the three months ended March 31, 2000. 13 TF FINANCIAL CORPORATION AND SUBSIDIARIES PART II ITEM 1. LEGAL PROCEEDINGS Not applicable. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS Not applicable. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of Stockholders (the "Meeting") of the Company was held on April 26, 2000. There were outstanding and entitled to vote at the Meeting 2,843,874 shares of Common Stock of the Company. There were present at the meeting or by proxy the holders of 2,443,390 shares of Common Stock representing 85.92% of the total eligible votes to be cast. Proposal 1 was to elect two directors of the Company. Proposal 2 was a shareholder proposal to repeal or amend various provisions of the Company's Certificate of Incorporation and by-laws. Proposal 3 was a shareholder proposal recommending that the Board of Directors take certain action to initiate a possible sale of the Company. The results of the voting at the Meeting are as follows (percentages in terms of votes cast): Proposal 1 Carl F. Gregory FOR: 2,097,880 PERCENT FOR: 85.86% Robert N. Dusek FOR: 2,064,022 PERCENT FOR: 84.47% Proposal 2 FOR: 675,702 PERCENT FOR: 33.27% AGAINST: 1,331,816 PERCENT AGAINST: 65.57% ABSTAIN: 23,405 PERCENT ABSTAIN: 1.16% Proposal 3 FOR: 563,233 PERCENT FOR: 27.73% AGAINST: 1,445,420 PERCENT AGAINST: 71.17% ABSTAIN: 22,270 PERCENT ABSTAIN: 1.10% ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 27 - Financial data schedule (in electronic filing only) (b) Reports on Form 8-K During the quarter ended March 31, 2000, the Registrant filed a Current Report on Form 8-K dated January 19, 2000 (Items 5 and 7) to report that it intended to repurchase in the open market up to 5% or 142,368 shares of its outstanding common stock. The repurchases will be made from time to time over the subsequent twelve months, subject to the availability of stock. 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. TF FINANCIAL CORPORATION /s/ John R. Stranford --------------------- Date: May 5, 2000 John R. Stranford ------------------- President and CEO (Principal Executive Officer) /s/ Dennis R. Stewart --------------------- Date: May 5, 2000 Dennis R. Stewart ------------------ Senior Vice President and Chief Financial Officer (Principal Financial & Accounting Officer) 15 EX-27 2 FDS
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL INFORMATION. 1000 3-MOS DEC-31-1999 MAR-31-2000 16,661 547 0 0 162,091 378,234 370,401 296,602 1,887 726,434 408,597 51,882 9,497 208,007 0 0 529 47,922 726,434 5,556 6,401 72 12,029 3,576 7,179 4,850 44 0 3,624 1,556 1,556 0 0 1,029 .40 .39 2.82 0 2,183 0 0 1,970 132 (5) 1,887 1,887 0 1,887
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