-----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, SvIoW6ECK7nCJIKDtk2nGpJIWg+BZtTJigF5KU2BtuGOJFMsflWPGpx6RhwfDUPM ACcAclcha0CuegqzU1DV3w== 0000946275-01-500039.txt : 20010507 0000946275-01-500039.hdr.sgml : 20010507 ACCESSION NUMBER: 0000946275-01-500039 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010504 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: 1622047 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 f10q_033101-0084.txt FORM 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, 2001 ------------------------------------------------- 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 27, 2001 -------------- Class Outstanding ------------------------------- ---------------- $.10 par value common stock 2,714,812 shares TF FINANCIAL CORPORATION AND SUBSIDIARIES FORM 1O-Q FOR THE QUARTER ENDED MARCH 31, 2001 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 TF FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (in thousands)
Unaudited Audited Unaudited March 31, December 31, March 31, 2001 2000 2000 ---- ---- ---- Assets Cash and cash equivalents $51,013 $10,618 $16,661 Certificates of deposit in other financial institutions 191 191 547 Investment securities available for sale - at fair value 15,092 18,865 22,534 Investment securities held to maturity (fair value of $21,753, $61,919 and $59,514, respectively) 21,459 63,461 61,798 Mortgage-backed securities available for sale - at fair value 91,897 97,914 139,557 Mortgage-backed securities held to maturity (fair value of $128,843, $133,458, and $148,796, respectively) 128,079 135,142 154,345 Loans receivable, net 357,906 361,806 294,715 Federal Home Loan Bank stock - at cost 13,042 13,042 13,042 Accrued interest receivable 4,280 5,523 4,789 Goodwill and other intangible assets 5,628 5,809 6,376 Premises and equipment, net 9,224 9,410 9,260 Other assets 1,253 1,516 2,810 -------- -------- -------- Total assets $699,064 $723,297 $726,434 ======== ======== ======== Liabilities and stockholders' equity Liabilities Deposits $402,969 $400,851 $408,597 Advances from the Federal Home Loan Bank 232,359 244,859 223,359 Other borrowings --- 14,962 36,530 Advances from borrowers for taxes and insurance 1,158 1,158 1,124 Accrued interest payable 5,271 4,670 5,081 Other liabilities 3,193 3,688 3,292 -------- -------- -------- Total liabilities 644,950 670,188 677,983 -------- -------- -------- 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; 2,453,393, 2,491,454, and 2,553,599 shares outstanding at March 31, 2001, December 31, 2000 and March 31, 2000, net of treasury shares of 2,575,188, 2,534,088, and 2,462,826, respectively. 529 529 529 Retained earnings 52,469 51,604 49,154 Additional paid-in capital 52,185 52,161 52,098 Unearned ESOP shares (2,614) (2,644) (2,736) Shares acquired by MSBP --- (4) (55) Treasury stock - at cost (48,874) (48,173) (47,143) Accumulated other comprehensive income (loss) 419 (364) (3,396) -------- -------- -------- Total stockholders' equity 54,114 53,109 48,451 -------- -------- -------- Total liabilities and stockholders' equity $699,064 $723,297 $726,434 ======== ======== ========
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, ----------------- 2001 2000 ---- ---- Interest income Loans $7,166 $5,556 Mortgage-backed securities 3,780 4,870 Investment securities 1,239 1,531 Interest bearing deposits and other 145 72 ------ ------ Total interest income 12,330 12,029 ------ ------ Interest expense Deposits 3,591 3,576 Advances from the Federal Home Loan Bank and other borrowings 3,500 3,603 ------ ------ Total interest expense 7,091 7,179 ------ ------ Net interest income 5,239 4,850 Provision for loan losses 125 44 ------ ------ Net interest income after provision for loan losses 5,114 4,806 ------ ------ Non-interest income Service fees, charges and other operating income 450 374 Loss on sale of loans and mortgage-backed securities available for (15) --- ------ ------ sale Total non-interest income 435 374 ------ ------ Non-interest expense Compensation and benefits 1,936 1,827 Occupancy and equipment 680 626 Federal deposit insurance premium 21 22 Professional fees 193 187 Amortization of goodwill and other intangible assets 180 194 Advertising 126 170 Other operating 710 598 ------ ------ Total non-interest expense 3,846 3,624 ------ ------ Income before income taxes 1,703 1,556 Income taxes 445 527 ------ ------ Net income $1,258 $1,029 ====== ====== Basic earnings per share $0.51 $0.40 Diluted earnings per share $0.48 $0.39 Weighted average number of shares outstanding - basic 2,482 2,569 Weighted average number of shares outstanding - diluted 2,664 2,654
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, 2001 2000 ---- ---- Cash flows from operating activities Net Income $ 1,258 $ 1,029 Adjustments to reconcile net income to net cash provided by operating activities: Mortgage loan servicing rights 3 3 Deferred loan origination fees (52) (1) Premiums and discounts on investment securities, net (8) 5 Premiums and discounts on mortgage-backed securities and loans, net (113) 27 Amortization of goodwill and other intangible assets 181 111 Provision for loan losses 125 44 Depreciation of premises and equipment 206 248 Recognition of ESOP and MSBP expenses 58 68 Loss on sale of loans and mortgage-backed securities available for sale 15 --- Gain on sale of real estate acquired through foreclosure --- 3 (Increase) decrease in: Accrued interest receivable 1,243 169 Other assets 260 (1,469) Increase (decrease) in: Accrued interest payable 601 1,332 Other liabilities (955) 808 ------ ------- Net cash provided by operating activities 2,822 2,377 ------ ------- Cash flows from investing activities Loan origination and principal payments on loans, net 6,493 (953) Purchases of loans (3,792) (5,855) Proceeds from loan sales 1,227 --- Maturities of certificates of deposit in other financial institutions, net --- 300 Purchases of investment securities available for sale --- (429) Proceeds from sale of mortgage-backed securities available for sale 4,309 --- Purchases of mortgage-backed securities available for sale --- (9,843) Purchase of mortgage-backed securities held to maturity --- (353) Proceeds from maturities of investment securities held to maturity 45,014 4,895 Proceeds from maturities of investment securities available for sale 1,000 --- Principal repayments from mortgage-backed securities held to maturity 7,071 5,865 Principal repayments from mortgage-backed securities available for sale 2,709 2,493 Proceeds from sales of real estate acquired through foreclosure --- 146 Purchase of premises and equipment (20) (331) ------ ------- Net cash used in investing activities 64,011 (4,065) ------ -------
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, --------- 2001 2000 ---- ---- Cash flows from financing activities Net increase in deposits 2,118 6,899 Net decrease in advances from Federal Home Loan Bank (12,500) (25,174) Net increase (decrease) in other borrowings (14,962) 20,764 Net decrease in advances from borrowers for taxes and insurance --- (74) Exercise of stock options 21 437 Purchase of treasury stock, net (730) (879) Common stock cash dividend (385) (339) ------- ------- Net cash provided by financing activities (26,438) 1,634 ------- ------- Net increase (decrease) in cash and cash equivalents 40,395 (54) Cash and cash equivalents at beginning of period 10,618 16,715 ------- ------- Cash and cash equivalents at end of period $51,013 $16,661 ======= ======= Supplemental disclosure of cash flow information Cash paid for Interest on deposits and advances $ 6,490 $ 5,947 Income taxes $ 610 $ 2,538 Non-cash transactions Transfers from loans to real estate acquired through foreclosure $ --- $ ---
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, 2001 (unaudited), December 31, 2000, March 31, 2000 (unaudited) and for the three-month periods ended March 31, 2001 and 2000 (unaudited) 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 accounting principles generally accepted in the United States of America. 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, 2001 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, 2000. 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, 2001 and 2000 was $2,041,000 and $718,000, net of applicable income tax of $849,000 and $367,000, 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, 2001 and December 31, 2000 totaled $699.1 million and $723.2 million, respectively, a decrease of $24.1 million, or 3.4%, during the three-month period. The decrease is mainly the result of a $45.8 million decrease in investment securities due to the maturity or exercise of the call feature associated with these securities. In addition, there was a $13.1 million decrease in mortgage-backed securities, partly due to the sale of $4.3 million of such securities, and a $3.9 million net decrease in loans receivable. Offsetting these decreases is a $40.4 million increase in cash and cash equivalents. Total liabilities decreased by $25.2 million during the first three months of 2001 primarily as a result of the use of excess cash to repay maturing advances from the Federal Home Loan Bank and other borrowings. 8 Total consolidated stockholders' equity of the Company was $54.1 million or 7.74% of assets at March 31, 2001, compared to $53.1 million or 7.34% of assets at December 31, 2000, and $48.5 million or 6.67% of assets at March 31, 2000. During the first quarter of 2001, the net increase in retained earnings, which is net income less dividends paid, plus the increase in accumulated other comprehensive income, was partially offset by the net cost of treasury shares purchased. During January of 2000 management announced that the Company's board of directors had authorized the purchase of up to 142,368 shares of the Company's stock in the open market. As of March 31, 2001, there were approximately 45,000 shares available for repurchase under this plan, and the Company will continue to repurchase shares as share availability and market conditions permit. 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, 2001. The following table sets forth information regarding the Company's asset quality (dollars in thousands):
March 31, December 31, March 31, --------- ------------ --------- 2001 2000 2000 ---- ---- ---- Non-performing loans $1,302 $1,478 $2,183 Ratio of non-performing loans to gross loans 0.36% 0.41% 0.74% Ratio of non-performing loans to total assets 0.19% 0.20% 0.30% Foreclosed property $176 $176 $321 Foreclosed property to total assets 0.03% 0.02% 0.04% Ratio of total non-performing assets to total assets 0.21% 0.23% 0.34%
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): 2001 2000 ---- ---- Beginning balance, January 1, $ 1,714 $ 1,970 Provision 125 44 Less: charge-off's (recoveries), net 62 127 ------- ------- Ending balance, March 31, $ 1,777 $ 1,887 ======= ======= 9 RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000 Net Income. The Company recorded net income of $1,258,000, or $0.48 per diluted share, for the three months ended March 31, 2001 as compared to $1,029,000, or $0.39 per diluted share, for the three months ended March 31, 2000. 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, ------------------------- 2001 2000 -------------------------------- ------------------------------- Average Average Average Average Balance Interest Yld/Cost Balance Interest Yld/Cost ------- -------- -------- ------- -------- -------- (dollars in thousands) Assets: Interest-earning assets: Loans receivable (4)....................... $362,020 $ 7,166 8.03% $289,660 $ 5,556 7.71% Mortgage-backed securities................. 232,319 3,780 6.60% 292,754 4,870 6.69% Investment securities...................... 83,824 1,239 5.99% 101,928 1,531 6.04% Other interest-earning assets(1)........... 10,687 145 5.50% 7,454 72 3.88% -------- ------- -------- ------- Total interest-earning assets............ 688,850 12,330 7.26% 691,796 12,029 6.99% ------- ------- Non interest-earning assets.................... 28,503 27,622 -------- -------- Total assets............................. 717,353 719,418 ======== ======== Liabilities and stockholders' equity: Interest-bearing liabilities Deposits................................... 404,512 3,591 3.60% 404,091 3,576 3.56% Advances from the FHLB and other borrowings...................... 251,405 3,500 5.65% 259,676 3,603 5.58% -------- ------ -------- ------ Total interest-bearing liabilities....... 655,917 7,091 4.39% 663,767 7,179 4.35% ------ ------ Non interest-bearing liabilities............... 7,859 7,840 -------- -------- Total liabilities........................ 663,776 671,607 Stockholders' equity........................... 53,517 47,811 -------- -------- Total liabilities and stockholders' equity.. $717,353 $719,418 ======== ======== Net interest income............................ $5,239 $4,850 ====== ====== Interest rate spread (2)....................... 2.87% 2.64% Net yield on interest-earning assets (3)....... 3.08% 2.82% Ratio of average interest-earning assets to average interest bearing liabilities........... 105% 104%
(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, 2001 vs. 2000 ----------------------------- Increase (decrease) due to ----------------------------- Volume Rate Net ----------------------------- Interest income: Loans receivable, net $ 1,381 229 $ 1,610 Mortgage-backed securities (1,023) (67) (1,090) Investment securities (279) (13) (292) Other interest-earning assets 37 36 73 ----------------------------- Total interest-earning assets 116 185 301 ============================= Interest expense: Deposits 1 14 15 Advances from the FHLB and other borrowings (334) 231 (103) ----------------------------- Total interest-bearing liabilities (333) 245 (88) ============================= Net change in net interest income $ 449 (60) $ 389 ============================= Total Interest Income. Total interest income increased by $301,000 or 2.5% to $12.3 million for the three months ended March 31, 2001 compared with the first quarter of 2000 primarily because of the increase in average loans outstanding. Although average interest-earning assets were lower during the first quarter of 2001 compared to 2000, average loans receivable increased by 25.0% while average mortgage-backed securities and investment securities decreased a combined 19.9%, and the higher average yield earned on loans compared to securities produced the increase in net interest income. Total Interest Expense. Total interest expense decreased to $7.1 million for the three-month period ended March 31, 2001 from $7.2 million for the same period in 2000 primarily due to decreased advances from the Federal Home Loan Bank and other borrowings, which resulted in an overall decrease in average interest-bearing liabilities. Non-interest income. Total non-interest income was $435,000 for the three-month period ended March 31, 2001 compared with $374,000 for the same period in 2000. The increase is due to the repricing of certain of the Savings Bank's retail deposit products and fees, and the implementation of new transaction account fees during the first quarter of 2001. In addition, $33,000 of non-recurring loan prepayment fees were included in fee income for the first quarter of 2000. Non-interest expense. Total non-interest expense increased by $222,000 to $3.8 million for the three months ended March 31, 2001 compared to the same period in 2000. Compensation and benefits expenses increased by $109,000 during the first quarter of 2001 compared to the year earlier period due normal wage increases, a $42,000 increase in the use of temporary help, and a $14,000 increase in the cost of employee group insurance expenses. 11 Occupancy and equipment expenses increased by $54,000 due to additional utilities and maintenance expenses associated with more severe weather during the first quarter of 2001 compared to 2000. Advertising expense decreased by $44,000 due to the reduced usage of newspaper advertising during the first quarter of 2001, and the non-recurring costs of opening a new branch incurred during the first quarter of 2000. Other operating expenses increased by $112,000 mainly due to $60,000 of start-up costs associated with the implementation of in-house item processing and statement rendering capabilities for checking accounts. In addition, the timing of certain annual contributions and dues payments resulted in $17,000 additional expense during the first quarter of 2001 compared to 2000. 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, 2001 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 18.6% and 18.9% at March 31, 2001 and 2000, respectively. At March 31, 2001, the Company had commitments outstanding under letters of credit of $3.7 million, commitments to originate loans of $9.0 million, and commitments to fund undisbursed balances of closed loans and unused lines of credit of $33.0million. Capital Requirements The Savings Bank is in compliance with all of its capital requirements as of March 31, 2001. 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, 2001. 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 25, 2001. There were outstanding and entitled to vote at the Meeting 2,787,638 shares of Common Stock of the Company. There were present at the meeting or by proxy the holders of 2,486,357 shares of Common Stock representing 89.19% of the total eligible votes to be cast. Proposal 1 was to elect two directors of the Company. Proposal 2 was a non-binding stockholder recommendation to remove certain anti-takeover provisions from the Company's Certificate of Incorporation and By-laws. The results of the voting at the Meeting are as follows (percentages in terms of votes cast): Proposal 1 George A. Olsen FOR: 2,147,743 PERCENT FOR: 86.38% Thomas J. Gola FOR: 2,154,504 PERCENT FOR: 86.65% Proposal 2 FOR: 604,387 PERCENT FOR: 27.90% AGAINST: 1,528,961 PERCENT AGAINST: 70.59% ABSTAIN: 32,706 PERCENT ABSTAIN: 1.51% ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None (b) Reports on Form 8-K None 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 4, 2001 John R. Stranford ----------------------- President and CEO (Principal Executive Officer) /s/ Dennis R. Stewart --------------------- Date: May 4, 2001 Dennis R. Stewart ---------------------- Senior Vice President and Chief Financial Officer (Principal Financial & Accounting Officer) 15 -----END PRIVACY-ENHANCED MESSAGE-----