TFB Bancorp, Inc. Announces Earnings Increase of 23% for the First Nine Months of 2016 Compared to the Same Period in 2015

YUMA, Ariz.--(BUSINESS WIRE)--TFB Bancorp, Inc. (OTC Symbol “TBBN”) today reported financial results for the period ended September 30, 2016.

About TFB Bancorp, Inc.

TFB Bancorp, Inc. (the “Holding Company”) is a bank holding company, whose consolidated financial statements include TFB Bancorp, Inc. and its wholly owned subsidiary, The Foothills Bank (the “Bank”). The Bank is an Arizona state-chartered commercial bank that provides comprehensive community banking services from four branch office locations serving the Arizona counties of Yuma, Pinal and Yavapai. Please visit www.foothillsbank.com to learn more about the Bank.

Year to date 2016 highlights:

• Annualized return on average assets and return on average equity of 1.07% and 8.26%, respectively
• Year-to-date loan growth of 14.1%
• Year-to-date deposit growth of 1.4%
• Net interest margin of 4.49%
• Noninterest income increase of 264%
• Noninterest expense decrease of 6.3%
• Cost of interest-bearing liabilities of .07%
• Core deposits exceed 90% of total deposit balances

“We are enthusiastic about our loan growth and credit quality. With new additions to our lending team, we have widened the Arizona geography we serve. It has become apparent that Arizona businesses are clamoring for the personal attention and service delivery that Foothills Bank strives to deliver every day,” said Mary Lynn Lenz, President of the Holding Company, and President and CEO of the Bank.

Loans grew $31.9 million, or 14.1%, to $257.4 million at September 30, 2016 compared to $225.6 million at December 31, 2015. Investment securities declined $14.7 million compared to December 31, 2015 as lower yielding investment securities were redeployed into higher yielding loans. A year-to-date gain of $403,000 was recognized on the call of $2.0 million and the sale of approximately $9.8 million of available-for-sale securities. Normal principal reductions and amortization, along with calls of two agency securities, also contributed to the decline in investment securities.

Total deposits increased to $265.3 million at September 30, 2016, an increase of $3.7 million, or 1.4% compared to December 31, 2015. The cost of interest bearing liabilities remains low at .07% at September 30, 2016 compared to .06% at December 31, 2015. Demand deposits comprise 49% and 52%, respectively, of the deposit portfolio at September 30, 2016 and December 31, 2015. Core deposits, defined as total deposits excluding brokered deposits, comprise more than 90% of total deposit balances at September 30, 2016 and December 31, 2015.

Due to strong loan portfolio performance and success in pursuing recoveries from previous problem loans, the year-to-date provision for loan and lease losses was a benefit of $177,000 through September 30, 2016 compared to a benefit of $993,000 for the same period in 2015. Nonperforming assets totaled $2.4 million, or 0.77% of total assets at September 30, 2016 compared to $3.8 million, or 1.25% of total assets at December 31, 2015, a decrease of 36%. The allowance for loan losses as a percentage of gross loans decreased to 1.21% at September 30, 2016 compared to 1.30% at December 31, 2015.

Ongoing expense controls accompanied by significant year over year increases in noninterest income contributed to an improved efficiency ratio of 63.69% at September 30, 2016 compared to 72.01% at December 31, 2015. Noninterest income totaled $1.5 million through September 30, 2016, an increase of $1.1 million compared to the same period in 2015, due to increases in deposit and other fees of $255,000, a $548,000 increase in gains on sales of investment securities and a $172,000 increase in gains on sales of other real estate owned. Noninterest expenses are $459,000, or 6.3%, lower than prior year.

Capital ratios for the Bank continue to be augmented by profitability and remain well above the levels required for a “well capitalized” institution as designated by bank regulatory agencies. The Holding Company’s book value and tangible book value increased to $18.11 and $16.00 per share, respectively, at September 30, 2016 representing an increase of 6% and 7%, respectively, compared to those ratios at December 31, 2015.

Strong profitability resulted in an annualized return on average assets and return on average equity of 1.07% and 8.26%, respectively.

TFB Bancorp, Inc.
Consolidated Balance Sheets
(Dollars in $000s)
				As of			As of			As of
				September 30,			December 31,			September 30,
				(Unaudited)			(Audited)			(Unaudited)
				2016			2015			2015
Assets
	Cash and due from banks:
		Interest-bearing		$	7,380		$	13,073		$	10,675
		Noninterest-bearing			7,093			4,721			1,925
			Total cash and due from banks		14,473			17,794			12,600
	Investment securities available-for-sale at fair value				26,840			41,554			42,490
	Loans, net of unearned fees				257,439			225,589			220,521
		Allowance for loan losses			(3,113	)		(2,937	)		(2,799	)
			Net loans		254,326			222,652			217,722
	Other Assets
		Premises and equipment, net			4,059			4,130			4,197
		Real estate held for sale			-			392			396
		Other real estate owned			293			913			791
		Goodwill			4,723			4,723			4,723
		Core deposit intangible			148			211			232
		Bank owned life insurance			7,803			7,654			7,603
		FHLB and other bank stock at cost			1,455			1,455			1,455
		Other			1,469			1,460			1,265
	Total Assets			$	315,589		$	302,938		$	293,474
Liabilities
	Deposits:
		Noninterest-bearing demand		$	81,680		$	89,923		$	85,851
		Interest-bearing demand			47,478			46,465			41,467
		Savings and money market			120,264			105,029			99,837
		Certificates of deposit			15,835			20,184			22,029
			Total		265,257			261,601			249,184
		Borrowings			5,800			-			3,400
		Other liabilities			2,676			2,546			2,839
Equity
		Shareholders' Equity			41,856			38,791			38,051
Total Liabilities and Shareholders' Equity				$	315,589		$	302,938		$	293,474
Selected data:
Total loans to deposits					97	%		86	%		88	%
Tangible equity				$	36,985		$	33,857		$	33,096
Shares outstanding					2,311,349			2,266,062			2,266,062
Book value per share				$	18.11		$	17.12		$	16.79
Tangible book value per share				$	16.00		$	14.94		$	14.61

TFB Bancorp, Inc.
Consolidated Income Statements
(Dollars in $000s)
			Nine months ended September 30,						Three months ended September 30,
			(Unaudited)						(Unaudited)
			2016			2015			2016			2015
Interest income
	Cash equivalents		$	35		$	11		$	4		$	5
	Interest-bearing CDs			26			44			8			12
	Investment securities			780			960			239			293
	Loans			8,807			8,457			3,130			2,893
		Total		9,648			9,472			3,381			3,203
Interest expense
	Deposits			91			92			34			27
	Other borrowings			11			3			11			0
		Total		102			95			45			27
Net interest income				9,546			9,377			3,336			3,176
(Credit) Loan loss provision				(177	)		(993	)		(216	)		(269	)
Net interest income after provision for loan losses				9,723			10,370			3,552			3,445
Non-interest income
	Deposit fees			433			234			136			73
	Other fees			285			229			88			75
	BOLI income			205			206			68			69
	Stock dividends			98			127			31			32
	Gain (loss) on sale of investment securities			403			(145	)		393			(0	)
	Gain (loss) on sale of REO			55			(117	)		(4	)		(46	)
	Other non interest income (loss)			(29	)		(136	)		0			(148	)
		Total		1,450			398			712			55
Non-interest expense
	Salaries and employee benefits			3,829			3,416			1,293			1,171
	Occupancy			750			876			260			270
	Data processing			600			1,161			202			309
	Legal and professional			294			412			91			122
	Other			1,367			1,435			512			460
				6,840			7,300			2,358			2,332
Net operating income before provision for income taxes				4,333			3,468			1,906			1,168
Income tax expense				1,418			1,104			647			371
Net income after tax			$	2,915		$	2,364		$	1,259		$	797

Forward-Looking Statements

Statements in this press release that are not statements of historical or current fact constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other unknown factors that could cause the actual results of the Company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. You can identify these forward-looking statements by the use of words like “strategy,” “anticipates,” “expects,” “plans,” “believes,” “will,” “estimates,” “intends,” “projects,” “goals,” “targets” and other words of similar meaning. You can also identify them by the fact that they do not relate strictly to historical or current facts. Forward-looking statements include, but are not limited to, those made in connection with attractiveness of common stock to potential investors following a stock split and with respect to the future results of operations, financial condition and the business of TFB which are subject to change based on the impact of various factors that could cause actual results to differ materially from those projected or suggested due to certain risks and uncertainties. These risks and uncertainties include, but are not limited to, changes in general economic conditions, interest rates, deposit flows, loan demand, internal controls, legislation or regulation and accounting principles, policies or guidelines, as well as other economic, competitive, governmental, regulatory and accounting and technological factors affecting the Company’s operations. The Company assumes no obligation to update any forward-looking statements as a result of new information or future events or developments.