2018 ANNUAL REPORT
A MESSAGE FROM Our Chairman DEAR SHAREHOLDERS, Over the years, many people have asked me what sets our bank apart. They ve asked me how our bank competes with much larger money center and regional banks. My answer is simple: WE LOVE OUR CUSTOMERS. Our customers are our friends, our neighbors, and the communities we serve. Our goal first and foremost is to help our customers succeed. This goal drives our desire to provide outstanding customer service. I truly enjoy interacting with customers at our branches. They LOVE our employees and are overwhelmingly positive about the consistently superior levels of service they receive. In 2018, we once again surpassed expectations and achieved a record level of earnings. And, we accomplished these results without sacrificing our commitment to outstanding customer service and community support. Additionally this year, we transitioned to a balanced growth company focused on strong earnings. NET INCOME: The significant earnings momentum, which I spoke about last year, accelerated in 2018, resulting in another record year for TGR Financial, Inc. (the Company ). We increased net income by 85% to $15.0 million from $8.1 million in 2017. Obviously, our earnings in 2017 were impacted by a one-time mandatory income tax expense adjustment of $1.2 million related to the enactment of the Tax Cuts and Job Act (the Tax Act ). As a result of this one-time adjustment, it is more appropriate to consider the increase in income before taxes, which increased by a very enviable 39%. RETURN ON AVERAGE ASSETS: We achieved a return on average assets of 1.10% in 2018, a significant increase over the 2017 Tax Act adjusted return of 0.73%. Currently, we are well into our second year of our ROAdrunner strategic initiative, which has driven our improvement in return on average assets. Because of the ROAdrunner initiative, we focus on attracting and retaining top talent, generating core banking relationships within Florida s fast growing markets, streamlining internal processes, and managing expense levels while delivering a unique customercentric experience.
SHAREHOLDER VALUE: In 2018, total return on shareholders equity was 12.40%, compared to a Tax Act adjusted return on shareholders equity of 8.28% in 2017. Additionally, tangible book value per share increased from $6.03 to $6.76. As always, we remain focused on prudent capital stewardship, delivering sustainable shareholder value, and operating within a strong capital position. CURRENT AND FUTURE FOCUS: During the years leading up to 2018, we built a foundation for a substantial earnings increase by emphasizing growth in our highest-yielding product lines and discontinuing lower-yielding product lines. We also focused on superior asset quality and the continued generation of low-cost core deposit relationships. We plan to continue building on these initiatives in the year ahead. We remain the largest community bank headquartered in Collier County, maintaining the highest deposit share among all community banks. Our legacy of delivering a highly differentiated customer experience has provided the Company with a competitive advantage within the markets we serve. The Company s value proposition, combined with its outstanding, dedicated employees, has allowed us to efficiently and effectively generate additional market share. OUR COMMITMENT TO YOU: As we look to the remainder of 2019, we are completely confident that TGR Financial, Inc. is strategically and financially positioned for continued growth. Although economic conditions may change, our priorities remain: to provide superior customer service, to invest in high growth areas, and to generate strong, sustained organic growth and shareholder returns. We continue to invest in progressive technology that reflects how our customers desire to bank. As we do so, we also maintain our focus on our corporate culture, which remains our most valuable asset. We are very pleased with last year s successes and the opportunities for continued high quality growth. These successes are due to the hard work and commitment of the Company s talented employee base. They have worked tirelessly to provide outstanding customer service and to promote the interests of the Company. I am grateful for the way in which they consistently deliver outstanding results for our shareholders, our customers, and our communities. In short, our employees invest themselves fully in the outcome of the Company. On behalf of our employees and directors, we thank you for your continuous support of TGR Financial, Inc. and First Florida Integrity Bank. We sincerely appreciate your continued investment and interest in our Company. If you are currently not yet a customer, please visit one of our offices to meet with a personal banker to experience the LOVE we have for our customers. And why not enjoy a delicious cookie while you re at it. Best regards, Chairman and CEO
TGR FINANCIAL, INC. AND SUBSIDIARIES Consolidated Statements of Financial Condition As of December 31, (dollars in thousands, except book value) 2018 2017 2016 ASSETS: Cash and due from banks $ 31,430 $ 41,454 $ 14,482 Interest earning balances due from banks and others 61,351 96,088 20,778 TOTAL CASH AND CASH EQUIVALENTS 92,781 137,542 35,260 Securities available-for-sale 166,092 169,920 188,401 Securities held-to-maturity 53,036 30,045 4,000 Federal Reserve Bank and Federal Home Loan Bank stock 4,445 4,281 6,876 Other equity securities 456 465 336 Loans, net of allowance for loan losses 1,080,492 958,955 900,951 Premises and equipment, net 21,558 21,769 19,229 Goodwill and other intangibles 5,465 5,542 5,633 Bank owned life insurance 28,069 27,418 26,739 Deferred tax asset, net 2,673 3,032 7,382 Other assets 5,838 5,292 4,278 TOTAL ASSETS $ 1,460,905 $ 1,364,261 $1,199,085 LIABILITIES: Non-interest bearing demand deposits $ 227,437 $ 206,142 $ 183,245 Interest bearing liabilities: Money market 160,801 178,807 178,854 NOW 597,274 476,821 348,836 Savings 38,211 52,889 51,125 Time deposits 172,949 215,107 158,764 TOTAL DEPOSITS 1,196,672 1,129,766 920,824 Customer repurchase agreements 131,650 114,666 105,986 Borrowings - - 63,000 TOTAL BORROWINGS 131,650 114,666 168,986 Other liabilities 3,209 3,865 2,876 TOTAL LIABILITIES 1,331,531 1,248,297 1,092,686 STOCKHOLDERS EQUITY: Common stock, $1 par value 17,299 17,263 17,228 Preferred stock, $1 par value 1,038 1,038 1,038 Additional paid-in capital 92,553 92,254 91,315 Accumulated earnings/(deficit) 21,952 6,923 (1,201) Accumulated other comprehensive loss (3,468) (1,514) (1,981) TOTAL STOCKHOLDERS EQUITY 129,374 115,964 106,399 TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 1,460,905 $ 1,364,261 $ 1,199,085 TANGIBLE BOOK VALUE (includes preferred shares) $ 6.76 $ 6.03 $ 5.52
TGR FINANCIAL, INC. AND SUBSIDIARIES Consolidated Statements of Income For the Years Ended December 31, (dollars in thousands, except per share data) 2018 2017 Interest income: Loans $ 47,208 $ 40,719 $ 35,003 Investment securities 5,917 4,206 3,752 Interest bearing balances due from banks 772 684 494 TOTAL INTEREST INCOME 53,897 45,609 39,249 2016 Interest expense: Deposits 8,654 5,866 4,535 Customer repurchase agreements 1,253 636 320 Other borrowed funds 5 281 306 TOTAL INTEREST EXPENSE 9,912 6,783 5,161 NET INTEREST INCOME 43,985 38,826 34,088 Provision for loan losses 125-971 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 43,860 38,826 33,117 Non-interest income: Service charges and fees on deposit accounts 1,605 1,362 1,237 Title and closing services revenue 593 510 446 Gain on sale of other real estate owned - 1,021 - Gain/(loss) on sale of securities, net - (393) 7 Bank owned life insurance 651 679 697 Other non-interest income 931 551 497 3,780 3,730 2,884 Non-interest expense: Salaries and employee benefits 17,381 16,927 15,913 Occupancy and equipment 4,023 4,027 3,814 Professional fees 841 916 803 Data processing 1,700 1,529 1,292 Advertising, marketing, and business development 871 924 977 Regulatory assessments 788 997 955 Other non-interest expense 3,282 3,772 3,328 28,886 29,092 27,082 INCOME BEFORE INCOME TAXES 18,754 13,464 8,919 Provision for income taxes 3,725 5,340 3,216 NET INCOME $ 15,029 $ 8,124 $ 5,703 Basic earnings per share $ 0.87 $ 0.47 $ 0.33 Diluted earnings per share $ 0.78 $ 0.43 $ 0.30
SELECT FINANCIAL HIGHLIGHTS *Dollars in Millions NET INCOME* $15.0 $8.1 $5.7 ASSETS PER FULL TIME EQUIVALENT EMPLOYEE* $9.4 $9.3 $8.3 TOTAL LOANS & LEASES* $1,090.1 $968.3 $910.1 TOTAL DEPOSITS & CUSTOMER REPOS* $1,328.3 $1,244.4 $1,026.8 0.06% $1.6 NET CHARGE OFFS/ (RECOVERIES) (0.02%) (0.01%) NON-ACCRUAL LOANS & OREO* $1.0 $0.4
OUR LEADERSHIP TEAM BOARD OF DIRECTORS EXECUTIVE MANAGEMENT Adam D. Compton Dulce V. Dudley, M.D., FFAP Robert M. Feerick J. Michael Gibbons John J. Guinee Michael J. Kerschner Bradford B. Kopp James S. Lindsay Edward J. Mace Donald W. Major Garrett S. Richter Gary L. Tice Robert T. Zellers Gary L. Tice Chairman Garrett S. Richter Chief Executive Officer & President Robert T. Reichert Chief Administrative Officer Peter Setaro Chief Information Officer Brian P. Keenan Chief Lending Officer Jody Hudgins Chief Credit Officer Terry Read Walston Chief Financial Officer Nancye Hire Director, Loan Operations Ed Borges Chief Risk Officer Tracy Coghill Chief Legal Counsel Jeff Turner Director, People Department Nancy Ortega President, Private Banking Director, Treasury Operations C.C. Coghill Senior Credit Advisor Ron Rucker Senior Loan Executive BOARD OF DIRECTORS Adam D. Compton Michael J. Kerschner Bradford B. Kopp Colleen M. Kvetko Edward J. Mace John B. McWilliams Thomas F. O Reilly Calvin J. Pratt Garrett S. Richter Joseph C. Smallwood, Jr. J. Nathan Stout Gary L. Tice Timothy S. Weidle PLEASE JOIN US For our Annual Shareholders Meeting THE HILTON - NAPLES 5111 Tamiami Trl. North, Naples, FL 34103 MONDAY, MAY 13, 2019-6:00 PM RSVP by Monday, May 6 (239) 325-3868 or alyssahaney@ffibank.com
GET IN TOUCH CORPORATE HEADQUARTERS 3560 Kraft Rd Naples, FL 34105 Phone: 1-877-763-0244 Website: ffibank.com OTCQX Website: otcmarkets.com Ticker Symbol: TGRF Shareholder Relations: Ann E. Crowley Phone: 239-325-5901 Email: shareholder@ffibank.com SOCIAL MEDIA facebook.com/ffibank google.com/+firstfloridaintegritybanknaples linkedin.com/company/first-florida-integrity-bank pinterest.com/firstfloridaint @firstfloridaintegritybank @firstfloridaintegritybank @FFIBANK BRANCH LOCATIONS 3580 Pine Ridge Rd. Naples, FL 34105 (239) 348-8000 811 Anchor Rode Dr. Naples, FL 34103 (239) 649-6000 1055 Crosspointe Dr. Naples, FL 34110 (239) 593-5522 895 5th Ave. S. Naples, FL 34102 (239) 919-5199 5078 Pope John Paul II Blvd., 100 Ave Maria, FL 34142 (239) 354-5250 690 Bald Eagle Dr. Marco, Island, FL 34145 (239) 642-1166 4404 W. Kennedy Blvd. Tampa, FL 33609 (813) 517-1760