SECURITIES AND EXCHANGE COMMISSION
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TGR FINANCIAL, INC.
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2012 TGR FINANCIAL, INC.
ANNUAL REPORT
The Golden Rule Bank
FIRST
NATIONAL
BANK
OF THE
GULF COAST
2 TGR FINANCIAL, INC. | 2012 ANNUAL REPORT
COMPANY’S REPORT
Three words summarize 2012: Growth, Progress, and Achievement.
GROWTH
The Company’s assets grew by $217 million to an ending balance of $613 million as of December 31, 2012. We take pride in that the vast majority of this growth was achieved organically (rather than through acquisitions). The Company did purchase, from the Federal Deposit Insurance Corporation, certain assets and assumed certain liabilities of the former Royal Palm Bank of Florida in July 2012. Through the acquisition, we purchased approximately $79 million in assets and assumed approximately $78 million in deposits and other liabilities. As a result of the acquisition, we added two additional offices to our footprint. We now serve the North Naples Community with our state of the art Creekside office, and the Marco Island Community is now represented with our Bald Eagle Drive office.
LOAN GROWTH
2009 – 2012
$39 $102 $181 $346
2009 2010 2011 2012
DEPOSIT GROWTH
2009 – 2012
$86 $272 $329 $526
2009 2010 2011 2012
Despite increasing competition, loan growth has been strong. In addition to the $39 million in loans purchased from Royal Palm Bank, net loans outstanding increased $126 million during 2012. Asset quality continues to be our mainstay as the Company reported only 1.44% of total assets as non-performing at year-end, a figure much lower than most of our peers. This figure also includes the nonperforming assets acquired from Royal Palm Bank.
Customer deposits and repurchase agreements grew from $329 million at year-end 2011 to $526 million by year-end 2012. Excluding the $78 million of acquired deposits, this represents a growth rate in excess of 36%. Market loyalty continues to reward the company, as existing customers remain our best source of referrals. We remain committed to our founding principle of providing superior customer service!
TGR FINANCIAL, INC. | 2012 ANNUAL REPORT 3
PROGRESS
Banking has fundamentally changed over the past decade; these fundamental changes are experienced most radically in methods of delivery. Customers no longer visit banks on a regular basis. They are demanding more online solutions and mobile access.
We have responded to these increasing demands through the implementation of our new Creekside Office. This office reflects the latest technological features. Here, we offer “cash assist machines” rather than traditional teller lines, similar in nature to automated teller machines. The café-style environment is equipped with touch screens, enabling our branch staff to serve as instructors to our customers. Because of our customers’ extensive use of technology, the Creekside office offers various types of educational opportunities to customers who are new to internet banking solutions, on-line bill pay or other web-based solutions.
As we continue to expand our presence throughout various markets, we view the Creekside Office as the office of the future. We are uniquely positioned to serve customers in a technologically progressive way, while maintaining our commitment to personal banking.
4 TGR FINANCIAL, INC. | 2012 ANNUAL REPORT
ACHIEVEMENT
The Bank reached core profitability in June 2012, and we have sustained earnings since that time. Our net interest margin increased from 2.90% at year-end 2011 to 3.14% at year-end 2012, contributing over $6 million in additional core revenue year over year.
2012 HIGHLIGHTS:
March 31, 2012 Total assets reach $460 million.
June 30, 2012 Total assets reach $504 million; the bank reaches core profitability.
July 20, 2012 First National Bank of the Gulf Coast acquires the former Royal Palm Bank of Florida from the FDIC.
September 13, 2012 The Office of the Comptroller of the Currency terminates its operating agreement with First National Bank of the Gulf Coast, allowing the Bank to expand outside of its initial footprint of Collier, Lee and Charlotte Counties.
September 30, 2012 Total assets reach $568 million.
October 10, 2012 First National Bank of the Gulf Coast reorganizes as a subsidiary of TGR Financial, Inc.
December 20, 2012 First National Bank of the Gulf Coast opens its Creekside Office, a technologically progressive branch of the Bank.
December 31, 2012 Total assets reach $613 million.
NET INCOME
IN THOUSANDS
Our net income improved greatly from 2011 to 2012. We consider attaining and recurring core profitability in 2012 our greatest achievement.
1000
0
-1000
-2000
-3000
-4000
-5000
-6000
2009 2010 2011 2012
TGR FINANCIAL, INC. | 2012 ANNUAL REPORT 5
TGR FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands)
FOR THE YEARS ENDED AS OF DECEMBER 31
2012 2011 2010 2009
INTEREST INCOME:
Loans $13,960 $7,417 $4,374 $415
Investment securities 4,340 4,097 3,945 192
Interest bearing balances due from banks 165 319 239 20
Total interest income 18,465 11,833 8,558 627
INTEREST EXPENSE:
Deposits 2,924 2,406 3,129 159
Repurchase agreements 177 131 33 -
Short term borrowings 6 - - -
Long term borrowings 45 - - -
Total interest expense 3,152 2,537 3,162 159
Net interest income 15,313 9,296 5,396 468
Provision for loan losses 2,302 2,726 1,764 211
Net interest income after provision for loan losses 13,011 6,570 3,632 257
NON-INTEREST INCOME:
Service charges and fees on deposit accounts 433 317 190 11
Title and closing services revenue 248 229 138 15
Gain on loans held for sale 9 47 85 14
Gain on sale of other real estate owned 10 - - -
Gains on sale of securities, net 2,009 607 1,448 -
Bargain purchase gain 724 - - -
Other non-interest income 115 78 27 1
3,548 1,278 1,888 41
NON-INTEREST EXPENSE;
Salaries and employee benefits 8,808 6,879 6,297 1,259
Occupancy and equipment 2,689 2,560 2,367 390
Professional fees 488 790 348 25
Data processing 495 399 189 28
Advertising, marketing, and business development 296 302 311 57
FDIC and OCC assessments 566 431 402 28
Merger and acquisition related expense 720 1,269 - -
Reorganization related expense 802 - - 2,643
Other non-interest expense 1,535 1,151 1,002 167
16,399 13,781 10,916 4,597
Income/(loss) before income taxes 160 (5,933) (5,396) (4,299)
Provision for income taxes - - - -
Net income/(loss) $160 $(5,933) $(5,396) $(4,299)
*A bargain purchase gain was recorded in connection with the Royal Palm Bank acquisition. One time charges for 2012 include costs associated with the Royal Palm Bank acquisition and holding company reorganization. One time charges for 2011 were related to a branch closing that included settlement on a long term office lease.
6 TGR FINANCIAL, INC. | 2012 ANNUAL REPORT
FINANCIAL HIGHLIGHTS
TGR FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands) FOR THE YEARS ENDED AS OF DECEMBER 31
2012 2011 2010 2009
ASSETS:
Cash and due from banks $12,735 $9,950 $5,136 $2,565
Interest earning balances due from banks 32,928 45,550 22,960 21,255
Total cash and cash equivalents 45,663 55,500 28,096 23,820
Securities available-for-sale 188,636 130,649 140,249 33,207
Federal Reserve Bank stock 1,991 1,922 994 1,135
Federal Home Loan Bank stock 1,448 449 183 76
Loans, net of allowance for loan losses 346,554 181,399 102,581 39,142
Premises and equipment, net 18,483 18,544 19,623 18,416
Other real estate owned, net 2,685 799 - -
Accrued interest receivable 1,777 1,085 1,097 408
Goodwill and other intangibles 5,283 5,196 5,203 5,210
Other assets 540 512 1,241 646
Total assets $613,060 $396,055 $299,267 $122,060
LIABILITIES AND STOCKHOLDERS’ EQUITY: LIABILITIES:
Noninterest-bearing demand deposits $49,263 $23,151 $17,158 $11,841
Interest-bearing liabilities:
Money market 146,805 90,649 39,449 38,272
NOW 65,858 74,356 140,289 4,895
Savings 63,785 33,218 14,476 6,400
Certificates of deposit $100,000 or more 110,263 55,086 20,969 12,231
Certificates of deposit under $100,000 33,263 14,093 14,449 12,690
Total deposits 469,237 290,553 246,790 86,329
Securities sold under agreements to repurchase 57,206 38,580 25,766 -
Long term borrowings 16,000 - - -
Total borrowings 73,206 38,580 25,766 -
Other liabilities 2,875 2,168 581 718
Total liabilities 545,318 331,301 273,137 87,047
STOCKHOLDERS’ EQUITY:
Common stock, $1 par value 14,333 14,060 5,310 5,310
Preferred stock, $1 par value 127 - - -
Additional paid -in capital 75,614 74,014 43,037 43,035
Accumulated deficit (24,274) (24,434) (18,501) (13,105)
Accumulated other comprehensive income (loss) 1,942 1,114 (3,716) (227)
Total stockholders’ equity 67,742 64,754 26,130 35,013
Total liabilities and stockholders’ equity $613,060 $396,055 $299,267 $122,060
TGR FINANCIAL, INC. | 2012 ANNUAL REPORT 7
LEADERSHIP
TGR FINANCIAL, INC. BOARD OF DIRECTORS
Thomas G. Brewer Michael J. Kerschner Garrett S. Richter
Christopher C. Casciato Dianne G. Krumsee Gary L. Tice
Adam D. Compton James S. Lindsay Robert I. Usdan
Robert M. Feerick Edward J. Mace
John J. Guinee Judy R. Miller
FIRST NATIONAL BANK OF THE GULF COAST BOARD OF DIRECTORS
Christopher C. Casciato Donald W. Major J. Nathan Stout
Adam D. Compton John B. McWilliams Gary L. Tice
Edgar E. Davis Thomas F. O’Reilly Timothy S. Weidle
Jeffrey D. Davis Calvin J. Pratt Robert T. Zellers
Michael J. Kerschner Garrett S. Richter
Edward J. Mace Joseph C. Smallwood, Jr.
FIRST NATIONAL BANK OF THE GULF COAST EXECUTIVE MANAGEMENT TEAM
Gary L. Tice Peter Setaro Ron Rucker
CHAIRMAN & CHIEF EXECUTIVE OFFICER CHIEF INFORMATION OFFICER SENIOR LOAN OFFICER
Garrett S. Richter Jody Hudgins Ron Orr
PRESIDENT DEPUTY CHIEF CREDIT OFFICER CHIEF RISK OFFICER
Robert Reichert Brian Keenan
CHIEF ADMINISTRATIVE OFFICER REGIONAL PRESIDENT,
C.C. Coghill WEST CENTRAL FLORIDA
CHIEF CREDIT OFFICER
SHAREHOLDERS’ MEETING
Please join us for our Annual Shareholders’ Meeting
on Monday, May 20, 2013 - 6:00 P.M.
at the Ritz-Carlton Golf Resort 2600 Tiburon Drive, Naples, Florida.
Cocktails and hors d’oeuvres will be served.
Please RSVP by Monday, May 13 Anna Snyder at annasnyder@fnbofgc.com or (239) 325-3846
The Golden Rule Company
TGR
FINANCIAL, INC.
CORPORATE HEADQUARTERS
3560 Kraft Road Naples, Florida 34105 877-763-0244
The Golden Rule Bank
FIRST
NATIONAL
BANK OF THE GULF COAST
PINE RIDGE OFFICE ANCHOR RODE OFFICE CREEKSIDE OFFICE MARCO ISLAND OFFICE
3580 Pine Ridge Road 811 Anchor Rode Drive 1280 Creekside Street #104 690 Bald Eagle Drive
Naples, Florida 34109 Naples, Florida 34103 Naples, Florida 34108 Marco Island, Florida 34145
239-348-8000 239-649-6000 239-593-5522 239-642-1166
Member
FDIC
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The Golden Rule Company
TGR
FINANCIAL, INC.