UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the period ended March 31, 2014
- or -
o	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:  1-35163

TF FINANCIAL CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Pennsylvania	74-2705050
(State or Other Jurisdiction of Incorporation	(I.R.S. Employer Identification No.)
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

Indicate by check mark 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 xNOo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YESxNOo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 Exchange Act). YES   NO x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: May 14, 2014

Class	Outstanding
$.10 par value common stock	3,151,562 shares

CONTENTS

PART I-CONSOLIDATED FINANCIAL INFORMATION
Item 1.		Consolidated Financial Statements (Unaudited)	3
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations (Unaudited)	33
Item 3.		Quantitative and Qualitative Disclosures about Market Risk	39
Item 4.		Controls and Procedures	39
PART II-OTHER INFORMATION
Item 1.		Legal Proceedings	40
Item 1A.		Risk Factors	40
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.		Defaults Upon Senior Securities	40
Item 4.		Mine Safety Disclosures	40
Item 5.		Other Information	40
Item 6.		Exhibits	40
Signatures			41
Exhibits
31.1	Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of CFO pursuant of Section 302 of the Sarbanes-Oxley Act of 2002
32.	Certification pursuant of Section 906 of the Sarbanes-Oxley Act of 2002

The following Exhibits are being furnished as part of this report:

101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Definition Linkbase Document

2

TF FINANCIAL CORPORATION AND SUBSIDIARIES

PART I-CONSOLIDATED FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	At
	March 31, 2014			December 31, 2013
	(in thousands, except share and per share data)
ASSETS
Cash and cash equivalents	$	60,175		$	45,310
Investment securities
Available for sale		128,891			124,012
Held to maturity (fair value of $1,577 and $1,680 as of      March 31, 2014 and December 31, 2013, respectively)		1,401			1,490
Loans receivable, net		603,656			614,168
Loans receivable, held for sale		1,319			349
Federal Home Loan Bank ("FHLB") stock — at cost		3,314			3,370
Accrued interest receivable		2,571			2,520
Premises and equipment, net		8,510			8,616
Goodwill		4,324			4,324
Core deposit intangible		478			503
Bank owned life insurance		18,717			18,586
Other assets		12,660			12,441
TOTAL ASSETS	$	846,016		$	835,689
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Deposits	$	692,210		$	683,902
Advances from the FHLB		48,311			49,605
Advances from borrowers for taxes and insurance		2,609			3,228
Accrued interest payable		713			671
Other liabilities		5,215			3,408
Total liabilities		749,058			740,814
Stockholders’ equity
Preferred stock, no par value; 2,000,000 shares authorized at      March 31, 2014 and December 31, 2013, none issued		—			—
Common stock, $0.10 par value; 10,000,000 shares authorized,      5,290,000 shares issued, 3,150,244 and 3,149,239 shares      outstanding at March 31, 2014 and December 31, 2013,      respectively, net of shares in treasury of 2,139,756 and      2,140,761, respectively.		529			529
Additional paid-in capital		56,361			56,197
Unearned ESOP shares		(815	)		(846	)
Treasury stock — at cost		(44,481	)		(44,502	)
Retained earnings		85,689			84,675
Accumulated other comprehensive loss		(325	)		(1,178	)
Total stockholders’ equity		96,958			94,875
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	846,016		$	835,689

The accompanying notes are an integral part of these statements

3

TF FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	For the three months ended March 31,
	2014		2013
	(dollars in thousands, except per share data)
Interest income
Loans, including fees	$	6,677	$	6,066
Investment securities
Fully taxable		502		369
Exempt from federal taxes		417		418
Interest-bearing deposits and other		3		4
TOTAL INTEREST INCOME		7,599		6,857
Interest expense
Deposits		766		731
Borrowings		193		248
TOTAL INTEREST EXPENSE		959		979
NET INTEREST INCOME		6,640		5,878
Provision for loan losses		—		439
NET INTEREST INCOME AFTER PROVISION      FOR LOAN LOSSES		6,640		5,439
Noninterest income
Service fees, charges and other operating income		516		527
Bank owned life insurance		131		143
Gain on sale of loans		74		305
Gain on sale of investment securities		1		—
Gain on disposition of premises and equipment		—		420
TOTAL NONINTEREST INCOME		722		1,395
Noninterest expense
Compensation and benefits		3,383		2,817
Occupancy and equipment		907		697
Federal deposit insurance premiums		134		110
Professional fees		305		288
Merger-related costs		—		320
Marketing and advertising		144		39
Foreclosed real estate expense		13		224
Core deposit intangible amortization		25		—
Other operating		579		535
TOTAL NONINTEREST EXPENSE		5,490		5,030
INCOME BEFORE INCOME TAXES		1,872		1,804
Income tax expense		491		581
NET INCOME	$	1,381	$	1,223
Earnings per share—basic	$	0.45	$	0.45
Earnings per share—diluted	$	0.45	$	0.45
Dividends paid per share	$	0.12	$	0.05
Weighted average shares outstanding:
Basic		3,061,790		2,738,375
Diluted		3,080,659		2,741,889

The accompanying notes are an integral part of these statements

4

TF FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	For the three months ended March 31,
	2014			2013
	(in thousands)
Net income	$	1,381		$	1,223
Other comprehensive income (loss):
Investment securities available for sale:
Unrealized holding gains (losses)		1,231			(1,273	)
Tax effect		(419	)		433
Reclassification adjustment for gains realized in net income		(1	)		—
Tax effect		—			—
Net of tax amount		811			(840	)
Pension plan benefit adjustment:
Related to actuarial losses		62			66
Tax effect		(20	)		(23	)
Net of tax amount		42			43
Total other comprehensive income (loss)		853			(797	)
Comprehensive income	$	2,234		$	426

The accompanying notes are an integral part of these statements

5

TF FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the three months ended March 31,
	2014			2013
	(in thousands)
OPERATING ACTIVITIES
Net income	$	1,381		$	1,223
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and impairment adjustment of mortgage loan servicing rights		64			23
Premiums and discounts on investment securities, net		72			69
Premiums and discounts on mortgage-backed securities, net		101			114
Accretion of premiums on certificates of deposits		(65	)		—
Deferred loan origination costs, net		44			67
Provision for loan losses		—			439
Amortization of core deposit intangible		25			—
Depreciation of premises and equipment		166			167
Increase in value of bank owned life insurance		(131	)		(143	)
Stock-based compensation		215			174
Proceeds from sale of loans originated for sale		3,519			11,860
Origination of loans held for sale		(4,454	)		(11,680	)
Loss on foreclosed real estate		—			178
Gain on:
Sale of loans		(74	)		(305	)
Sale of investment securities		(1	)		—
Disposition of premises and equipment		—			(420	)
(Increase) decrease in:
Accrued interest receivable		(51	)		5
Other assets		325			267
Increase (decrease) in:
Accrued interest payable		42			67
Other liabilities		1,368			(236	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		2,546			1,869
INVESTING ACTIVITIES
Loan originations		(9,531	)		(29,085	)
Loan principal payments		19,437			34,343
Proceeds from sale of foreclosed real estate		55			34
Proceeds from disposition of premises and equipment		—			417
Proceeds from maturities of investment securities available for sale		2,115			1,945
Proceeds from sale of investment securities available for sale		1,921			—
Principal repayments on mortgage-backed securities held to maturity		89			87
Principal repayments on mortgage-backed securities available for sale		2,375			5,879
Purchase of investment securities available for sale		(1,135	)		(2,792	)
Purchase of mortgage-backed securities available for sale		(9,096	)		—
Purchase of premises and equipment		(60	)		(85	)
Redemption of FHLB stock		56			798
NET CASH PROVIDED BY INVESTING ACTIVITIES		6,226			11,541

6

TF FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the three months ended March 31,
	2014			2013
	(in thousands)
FINANCING ACTIVITIES
Net increase in customer deposits		8,373			11,015
Repayment of long-term FHLB borrowings		(1,294	)		(6,505	)
Net decrease in advances from borrowers for taxes and insurance		(619	)		(230	)
Common stock dividends paid		(367	)		(137	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		6,093			4,143
NET INCREASE IN CASH AND CASH EQUIVALENTS		14,865			17,553
Cash and cash equivalents at beginning of period		45,310			31,137
Cash and cash equivalents at end of period	$	60,175		$	48,690
Supplemental disclosure of cash flow information
Cash paid for:
Interest on deposits and borrowings	$	982		$	912
Income taxes	$	750		$	250
Noncash transactions:
Capitalization of mortgage servicing rights	$	39		$	120
Transfers from loans to foreclosed real estate	$	562		$	100

The accompanying notes are an integral part of these statements

7

TF FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — PRINCIPLES OF CONSOLIDATION

The consolidated financial statements as of March 31, 2014 (unaudited) and December 31, 2013 and for the three month periods ended March 31, 2014 and 2013 (unaudited) include the accounts of TF Financial Corporation (the “Company”) and its wholly owned subsidiaries: 3rd Fed Bank (the “Bank”) and Penns Trail Development Corporation. The accompanying consolidated balance sheet at December 31, 2013, has been derived from the audited consolidated balance sheet but does not include all of the information and notes required by accounting principles generally accepted in the United States of America (“US GAAP”) for complete financial statements. The Company’s business is conducted principally through the 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 the instructions for Form 10-Q and, therefore, do not include all of the disclosures or footnotes required by US GAAP. 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, 2014 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 the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

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 position or results of operations.

NOTE 4 — ACQUISITION OF ROEBLING FINANCIAL CORP, INC.

On July 2, 2013, the Company closed on a merger transaction pursuant to which the Company acquired Roebling Financial Corp, Inc. (“Roebling”), the parent company of Roebling Bank, in a stock and cash transaction. 

Under the terms of the merger agreement, the Company acquired all of the outstanding shares of Roebling for a total purchase price of approximately $14.9 million.  As a result of the acquisition, the Company issued 306,873 common shares to former shareholders of Roebling.  Roebling was merged with and into the Company, and Roebling Bank was merged with and into the Bank.

8

The acquired assets and assumed liabilities were measured at estimated fair values. Management made certain estimates and exercised judgment in accounting for the acquisition. The following condensed statement reflects the values assigned to Roebling’s net assets as of the acquisition date:

	At July 2, 2013
	(in thousands)
Total purchase price				$	14,926
Net assets acquired:
Cash	$	4,081
Investment securities		37,339
Loans receivable		102,026
Premises and equipment		2,154
Core deposit intangible		553
Other assets		2,531
Time deposits		(49,061	)
Deposits other than time deposits		(78,689	)
Other liabilities		(4,888	)
					16,046
Purchase gain on acquisition				$	1,120

NOTE 5 — EARNINGS PER SHARE

The following tables illustrate the reconciliation of the numerators and denominators of the basic and diluted earnings per share computations (dollars in thousands, except share and per share data):

	For the three months ended March 31, 2014
			Weighted
			average
	Income		shares		Per share
	(numerator)		(denominator)		Amount
Basic earnings per share
Income available to common stockholders	$	1,381		3,061,790	$	0.45
Effect of dilutive securities
Stock options and grants		—		18,869		—
Diluted earnings per share
Income available to common stockholders plus effect of      dilutive securities	$	1,381		3,080,659	$	0.45

There were 71,500 options to purchase shares of common stock with an exercise price of $30.03 per share which were outstanding during the three months ended March 31, 2014 that were not included in the computation of diluted earnings per share because the options’ exercise price was greater than the average market price of the common shares.

9

	For the three months ended March 31, 2013
			Weighted
			average
	Income		shares		Per share
	(numerator)		(denominator)		Amount
Basic earnings per share
Income available to common stockholders	$	1,223		2,738,375	$	0.45
Effect of dilutive securities
Stock options and grants		—		3,514		—
Diluted earnings per share
Income available to common stockholders plus effect of      dilutive securities	$	1,223		2,741,889	$	0.45

There were 31,963 options to purchase shares of common stock with exercise prices ranging from $25.71 to $32.51 per share which were outstanding during the three months ended March 31, 2013 that were not included in the computation of diluted earnings per share because the options’ exercise prices were greater than the average market price of the common shares.

10

NOTE 6 — ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

The activity in accumulated other comprehensive (loss) income for the three months ended March 31, 2014 and 2013 is as follows:

	Accumulated Other Comprehensive (Loss) Income (1), (2)
	Unrealized gains (losses) on securities available for sale			Defined benefit pension  plan			Total
	(in thousands)
Balance at December 31, 2013	$	176		$	(1,354	)	$	(1,178	)
Other comprehensive income before      reclassifications		812			—			812
Amounts reclassified from accumulated other      comprehensive income		(1	)		42			41
Period change		811			42			853
Balance at March 31, 2014	$	987		$	(1,312	)	$	(325	)
Balance at December 31, 2012	$	3,805		$	(2,835	)	$	970
Other comprehensive loss before      reclassifications		(840	)		—			(840	)
Amounts reclassified from accumulated other      comprehensive income		—			43			43
Period change		(840	)		43			(797	)
Balance at March 31, 2013	$	2,965		$	(2,792	)	$	173

(1	)	All amounts are net of tax. Related income tax expense or benefit is calculated using a Federal income tax rate approximating 34%.
(2	)	Amounts in parenthesis indicate debits.

11

	Amount reclassified from accumulated other comprehensive income (loss) For the three months ended March 31, (1)						Affected line item in the consolidated statements of net income
	2014			2013
	(in thousands)
Investment securities available for sale
Net securities gains reclassified into earnings	$	(1	)	$	—		Gain on sale of investment securities
Related income tax expense		—			—		Income tax expense
Net effect on accumulated other income (loss) for the period		(1	)		—		Net of tax
Defined benefit pension plan (2)
Amortization of net actuarial loss and prior service cost		62			66		Compensation and benefits
Related income tax expense		(20	)		(23	)	Income tax expense
Net effect on accumulated other comprehensive income (loss) for      the period		42			43
Total reclassification for the period	$	41		$	43		Net income

(1	)	Amounts in parenthesis indicate debits.
(2	)	Included in the computation of net periodic pension cost. See Note 11 – Employee Benefit Plans for additional detail.

12

NOTE 7 — INVESTMENT SECURITIES

The amortized cost, gross unrealized gains and losses, and fair value of the Company’s investment securities are summarized as follows:

	At March 31, 2014
			Gross		Gross
	Amortized		unrealized		unrealized			Fair
	cost		gains		losses			value
	(in thousands)
Available for sale
U.S. Government and federal agencies	$	16,666	$	15	$	(294	)	$	16,387
State and political subdivisions		59,093		1,840		(522	)		60,411
Residential mortgage-backed securities      issued by quasi-governmental agencies		51,636		614		(157	)		52,093
Total investment securities available for sale		127,395		2,469		(973	)		128,891
Held to maturity
Residential mortgage-backed securities      issued by quasi-governmental agencies		1,401		176		—			1,577
Total investment securities	$	128,796	$	2,645	$	(973	)	$	130,468

	At December 31, 2013
			Gross		Gross
	Amortized		unrealized		unrealized			Fair
	cost		gains		losses			value
	(in thousands)
Available for sale
U.S. Government and federal agencies	$	18,572	$	4	$	(513	)	$	18,063
State and political subdivisions		60,159		1,526		(1,016	)		60,669
Residential mortgage-backed securities      issued by quasi-governmental agencies		45,015		540		(275	)		45,280
Total investment securities available for sale		123,746		2,070		(1,804	)		124,012
Held to maturity
Residential mortgage-backed securities      issued by quasi-governmental agencies		1,490		191		(1	)		1,680
Total investment securities	$	125,236	$	2,261	$	(1,805	)	$	125,692

Gross realized gains were $5,000 from the sale proceeds of investment securities available for sale of $1.0 million for the quarter ended March 31, 2014. Gross realized losses were $4,000 from the sale proceeds of investment securities available for sale of $1.0 million for the quarter ended March 31, 2014. There were no sales of investment securities during the three months ended March 31, 2013.

13

The amortized cost and fair value of investment and mortgage-backed securities, by contractual maturity, are shown below. 

	At March 31, 2014
	Available for sale				Held to maturity
	Amortized		Fair		Amortized		Fair
	cost		value		cost		value
	(in thousands)
Investment securities
Due in one year or less	$	2,042	$	2,051	$	—	$	—
Due after one year through five years		16,235		16,528		—		—
Due after five years through ten years		37,674		37,784		—		—
Due after ten years		19,808		20,435		—		—
		75,759		76,798		—		—
Mortgage-backed securities		51,636		52,093		1,401		1,577
Total investment and mortgage-backed securities	$	127,395	$	128,891	$	1,401	$	1,577

The table below indicates the length of time individual securities have been in a continuous unrealized loss position at March 31, 2014:

			Less than					12 months
	Number		12 months					or longer					Total
	of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Securities		Value		Loss			Value		Loss			Value		Loss
	(dollars in thousands)
U.S. Government and federal      agencies		8	$	12,445	$	(294	)	$	—	$	—		$	12,445	$	(294	)
State and political        subdivisions		9		6,970		(241	)		4,325		(281	)		11,295		(522	)
Residential mortgage-backed      securities issued by          quasi-governmental      agencies		53		25,759		(157	)		—		—			25,759		(157	)
Total temporarily impaired      securities		70	$	45,174	$	(692	)	$	4,325	$	(281	)	$	49,499	$	(973	)

14

The table below indicates the length of time individual securities have been in a continuous unrealized loss position at December 31, 2013:

			Less than					12 months
	Number		12 months					or longer				Total
	of		Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
Description of Securities	Securities		Value		Loss			Value		Loss		Value		Loss
	(dollars in thousands)
U.S. Government and federal      agencies		13	$	17,028	$	(513	)	$	—	$	—	$	17,028	$	(513	)
State and political      subdivisions		24		19,646		(1,016	)		—		—		19,646		(1,016	)
Residential mortgage-backed      securities issued by      quasi-governmental      agencies		65		24,508		(276	)		—		—		24,508		(276	)
Total temporarily impaired      securities		102	$	61,182	$	(1,805	)	$	—	$	—	$	61,182	$	(1,805	)

On a quarterly basis, temporarily impaired securities are evaluated to determine whether such impairment is an other-than-temporary impairment (“OTTI”). The Company has performed this evaluation and has determined that the unrealized losses at March 31, 2014 and December 31, 2013, respectively, are not considered other-than-temporary but are the result of changes in interest rates, and are therefore reflected in other comprehensive loss.

15

NOTE 8 — LOANS RECEIVABLE

Loans receivable are summarized as follows:

	At
	March 31, 2014			December 31, 2013
	(in thousands)
Held for investment:
Residential
Residential mortgages	$	360,992		$	371,961
Commercial
Real estate-commercial		122,294			129,345
Real estate-residential		24,123			20,005
Real estate-multi-family		18,197			16,623
Construction loans		6,915			8,773
Commercial and industrial loans		7,630			6,849
Total commercial loans		179,159			181,595
Consumer
Home equity and second mortgage		64,654			64,202
Other consumer		1,595			1,697
Total consumer loans		66,249			65,899
Total loans		606,400			619,455
Net deferred loan origination costs and unamortized premiums		1,318			1,288
Less allowance for loan losses		(4,062	)		(6,575	)
Total loans receivable	$	603,656		$	614,168
Held for sale:
Residential
Residential mortgages	$	1,319		$	349

16

The following table presents the composition of the commercial loan portfolio by credit quality indicators:

	At March 31, 2014
			Special
	Pass		mention		Substandard		Doubtful		Total
	(in thousands)
Real estate-commercial	$	110,425	$	2,955	$	8,914	$	—	$	122,294
Real estate-residential		22,033		483		1,607		—		24,123
Real estate-multi-family		14,702		—		3,495		—		18,197
Construction loans		6,682		—		233		—		6,915
Commercial and industrial loans		7,600		30		—		—		7,630
Total	$	161,442	$	3,468	$	14,249	$	—	$	179,159

	At December 31, 2013
			Special
	Pass		mention		Substandard		Doubtful		Total
	(in thousands)
Real estate-commercial	$	113,260	$	7,142	$	8,943	$	—	$	129,345
Real estate-residential		17,182		487		2,336		—		20,005
Real estate-multi-family		13,114		—		3,509		—		16,623
Construction loans		5,596		—		3,177		—		8,773
Commercial and industrial loans		6,817		32		—		—		6,849
Total	$	155,969	$	7,661	$	17,965	$	—	$	181,595

In order to assess and monitor the credit risk associated with commercial loans, the Company employs a risk rating methodology whereby each commercial loan is initially assigned a risk grade. At least annually, all risk ratings are reviewed in light of information received such as tax returns, rent rolls, cash flow statements, appraisals, and any other information which may affect the then-current risk rating, which is adjusted upward or downward as needed. At the end of each quarter the risk ratings are summarized and become a component of the evaluation of the allowance for loan losses. The Company’s risk rating definitions mirror those promulgated by banking regulators and are as follows:

Pass: A good quality loan that is characterized by satisfactory liquidity; reasonable debt capacity and coverage; acceptable management in all critical positions and normal operating results for its peer group. The Company has grades 1 through 6 within the Pass category which reflect the increasing amount of attention paid to the individual loan because of, among other things, trends in debt service coverage, management weaknesses, or collateral values.

Special mention: A loan that has potential weaknesses that deserves management’s close attention. Although the loan is currently protected, if left uncorrected, potential weaknesses may result in the deterioration of the loan’s repayment prospects or in the borrower’s future credit position. Potential weaknesses include: weakening financial condition; an unrealistic repayment program; inadequate sources of funds; lack of adequate collateral; credit information; or documentation. There is currently the capacity to meet interest and principal payments, but further adverse business, financial, or economic conditions may impair the borrower’s capacity or willingness to pay interest and repay principal.

Substandard: A loan that is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged. Although no loss of principal or interest is presently apparent, there is the distinct possibility that a partial loss of interest and/or principal will be sustained if the deficiencies are not corrected. There is a current identifiable vulnerability to default and the dependence upon favorable business, financial, or economic conditions to meet timely payment of interest and repayment of principal.

17

Doubtful: A loan which has all the weaknesses inherent in a substandard asset with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonable specific pending factors which may work to strengthen the asset, classification as an estimated loss is deferred until a more exact status is determined. Pending factors include: proposed merger, acquisition, liquidation, capital injection, perfecting liens on additional collateral, and refinancing plans.

Loss: Loans which are considered uncollectible and have been charged off. The Company has charged-off all loans classified as loss.

Loans classified as special mention, substandard or doubtful are monitored individually on a monthly basis. Loans which require impairment evaluation are placed on nonaccrual status and are classified as substandard or doubtful.

The following table presents the composition of the residential mortgage and consumer loan portfolios by credit quality indicators:

	At March 31, 2014
	Performing		Nonperforming		Total
	(in thousands)
Residential mortgages	$	359,977	$	1,015	$	360,992
Home equity and second mortgage		64,455		199		64,654
Other consumer		1,595		—		1,595
Total	$	426,027	$	1,214	$	427,241

	At December 31, 2013
	Performing		Nonperforming		Total
	(in thousands)
Residential mortgages	$	368,967	$	2,994	$	371,961
Home equity and second mortgage		63,902		300		64,202
Other consumer		1,697		—		1,697
Total	$	434,566	$	3,294	$	437,860

In order to assess and monitor the credit risk associated with residential mortgage loans and consumer loans which include second mortgage loans and home equity secured lines of credit, the Company relies upon the payment status of the loan. Residential mortgage and other consumer loans 90 days or more past due are placed on nonaccrual status, classified as nonperforming, and evaluated for impairment.

18

The following table presents by class nonperforming loans including impaired loans and loan balances 90 days or more past due for which the accrual of interest has been discontinued:

	At
	March 31, 2014		December 31, 2013
	(in thousands)
Residential
Residential mortgages	$	1,015	$	2,994
Commercial
Real estate-commercial		897		774
Real estate-residential		682		896
Real estate-multi-family		191		191
Construction loans		233		3,177
Commercial and industrial loans		—		—
Consumer
Home equity and second mortgage		199		300
Other consumer		—		—
Total nonperforming loans	$	3,217	$	8,332

19

The following tables present loans individually evaluated for impairment by class:

	At March 31, 2014
	Recorded investment		Unpaid principal balance		Related allowance		Average recorded investment		Interest income recognized
	(in thousands)
With an allowance recorded:
Residential
Residential mortgages	$	1,127	$	1,127	$	127	$	1,131	$	—
Commercial
Real estate-residential		498		498		46		791		—
Construction loans		233		233		21		1,705		—
		1,858		1,858		194		3,627		—
With no allowance recorded:
Residential
Residential mortgages		22		33		—		603		—
Commercial
Real estate-commercial		897		897		—		835		—
Real estate-residential		184		322		—		184		—
Real estate-multifamily		191		372		—		191		—
Consumer
Home equity and second mortgage		16		16		—		39		—
		1,310		1,640		—		1,852		—
Total	$	3,168	$	3,498	$	194	$	5,479	$	—

	At December 31, 2013
	Recorded investment		Unpaid principal balance		Related allowance		Average recorded investment		Interest income recognized
	(in thousands)
With an allowance recorded:
Residential
Residential mortgages	$	1,135	$	1,135	$	128	$	1,620	$	—
Commercial
Real estate-commercial		—		—		—		109		—
Real estate-residential		712		712		77		211		—
Construction loans		3,177		3,375		2,021		3,701		—
		5,024		5,222		2,226		5,641		—
With no allowance recorded:
Residential
Residential mortgages		1,184		1,184		—		241		—
Commercial
Real estate-commercial		774		774		—		607		—
Real estate-residential		184		321		—		108		—
Real estate-multi-family		191		372		—		77		—
Consumer
Home equity and second mortgage		47		81		—		7		—
		2,380		2,732		—		1,040		—
Total	$	7,404	$	7,954	$	2,226	$	6,681	$	—

20

The following tables present the contractual aging of delinquent loans by class:

	At March 31, 2014
	Current		30-59  Days  past due		60-89 Days past due		Loans past due 90 days or more		Total past due		Total loans		Recorded investment over 90 days and accruing  interest
	(in thousands)
Residential
Residential mortgages	$	359,724	$	173	$	80	$	1,015	$	1,268	$	360,992	$	—
Commercial
Real estate-commercial		121,397		—		131		766		897		122,294		—
Real estate-residential		23,441		—		—		682		682		24,123		—
Real estate-multi-family		18,006		—		—		191		191		18,197		—
Construction loans		6,682		—		—		233		233		6,915		—
Commercial and industrial       loans		7,630		—		—		—		—		7,630		—
Consumer
Home equity and second        mortgage		64,314		105		36		199		340		64,654		—
Other consumer		1,595		—		—		—		—		1,595		—
Total	$	602,789	$	278	$	247	$	3,086	$	3,611	$	606,400	$	—

	At December 31, 2013
	Current		30-59 Days past due		60-89 Days past due		Loans past due 90 days or more		Total past  due		Total loans		Recorded investment over 90 days and accruing interest
	(in thousands)
Residential
Residential mortgages	$	369,271	$	111	$	—	$	2,579	$	2,690	$	371,961	$	—
Commercial
Real estate-commercial		127,786		785		—		774		1,559		129,345		—
Real estate-residential		18,589		180		340		896		1,416		20,005		—
Real estate-multi-family		16,432		—		—		191		191		16,623		—
Construction loans		5,596		—		—		3,177		3,177		8,773		—
Commercial and industrial        loans		6,849		—		—		—		—		6,849		—
Consumer
Home equity and second      mortgage		63,543		355		4		300		659		64,202		—
Other consumer		1,686		7		4		—		11		1,697		—
Total	$	609,752	$	1,438	$	348	$	7,917	$	9,703	$	619,455	$	—

21

Activity in the allowance for loan losses for the three months ended March 31, 2014 and 2013 is summarized as follows:

	Balance January 1, 2014		Provision			Charge-offs			Recoveries		Balance March 31, 2014
	(in thousands)
Residential
Residential mortgages	$	1,722	$	60		$	(169	)	$	1	$	1,614
Commercial
Real estate-commercial		1,220		(270	)		—			—		950
Real estate-residential		437		82			(107	)		—		412
Real estate-multi-family		136		1			—			—		137
Construction loans		2,208		326			(2,179	)		—		355
Commercial and industrial loans		97		3			—			1		101
Consumer
Home equity and second  mortgage		214		60			(47	)		—		227
Other consumer		50		(3	)		(14	)		1		34
Unallocated		491		(259	)		—			—		232
Total	$	6,575	$	—		$	(2,516	)	$	3	$	4,062

	Balance January 1, 2013		Provision			Charge-offs			Recoveries		Balance March 31, 2013
	(in thousands)
Residential
Residential mortgages	$	1,849	$	49		$	(98	)	$	—	$	1,800
Commercial
Real estate-commercial		1,754		(8	)		(435	)		—		1,311
Real estate-residential		608		52			(59	)		—		601
Real estate-multi-family		245		(8	)		—			—		237
Construction loans		1,697		297			(111	)		11		1,894
Commercial and industrial loans		119		3			—			3		125
Consumer
Home equity and second mortgage		251		(33	)		(15	)		8		211
Other consumer		11		3			(3	)		—		11
Unallocated		388		84			—			—		472
Total	$	6,922	$	439		$	(721	)	$	22	$	6,662

Despite the above allocation, the allowance for credit losses is general in nature and is available to absorb losses from any portfolio segment.

Loans receivable include certain loans that have been modified as troubled debt restructurings (“TDRs”), where economic concessions have been granted to borrowers experiencing financial difficulties. The objective for granting the concessions is to maximize the recovery of the investment in the loan and may include reductions in the interest rate, payment extensions, forgiveness of interest or principal, forbearance or other actions. TDRs are classified as nonperforming at the time of restructuring and typically return to performing status after considering the borrower’s positive repayment performance for a reasonable period of time, usually six months.

22

Loans modified in a TDR are evaluated individually for impairment based on the present value of expected cash flows or the fair value of the underlying collateral less selling costs for collateral dependent loans. If the value of the modified loan is less than the recorded investment in the loan, impairment is recognized through an increase by an additional provision to the allowance for loan losses. In periods subsequent to modification, TDRs are evaluated for possible additional impairment.

There were no new loan modifications deemed TDRs during the three months ended March 31, 2014 and 2013. Additionally, there were no loans previously identified as TDRs which defaulted on the modified terms during the three months ended March 31, 2014 and 2013.

In 2013, the Company acquired loans for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable that all contractually required payments would not be collected. The following table presents information regarding the outstanding principal balance and related carrying amount:

	At March 31, 2014		At December 31, 2013
	(in thousands)
Outstanding principal balance	$                               743	$	808
Carrying amount	413		444

The table below presents changes in the amortizable yield for purchased credit-impaired loans as follows for the three months ended March 31, 2014:

	At March 31, 2014
	(in thousands)
Balance at beginning of period	$	154
Acquisition of impaired loans		—
Accretion		(12	)
Balance at end of period	$	142

There has been no allowance for loan losses recorded for acquired loans with or without specific evidence of deterioration in credit quality as of March 31, 2014 and December 31, 2013.

23

The following tables present the ending balance of the allowance for loan losses and ending loan balance by portfolio and by class based on impairment method as of March 31, 2014. Acquired loans were recorded at fair value on their purchase date without a carryover of the related allowance for loan losses.

	Evaluated for impairment
Allowance for loan losses	Loans acquired without credit deterioration		Loans acquired with credit deterioration		Individually		Collectively		Total
	(in thousands)
Residential
Residential mortgages	$	—	$	—	$	127	$	1,487	$	1,614
Commercial
Real estate-commercial		—		—		—		950		950
Real estate-residential		—		—		46		366		412
Real estate-multi-family		—		—		—		137		137
Construction loans		—		—		21		334		355
Commercial and industrial loans		—		—		—		101		101
Consumer
Home equity and second mortgage		—		—		—		227		227
Other consumer		—		—		—		34		34
Unallocated		—		—		—		232		232
Total	$	—	$	—	$	194	$	3,868	$	4,062

	Evaluated for impairment
Loans receivable	Loans acquired without credit deterioration		Loans acquired with credit deterioration		Individually		Collectively		Total
	(in thousands)
Residential
Residential mortgages	$	49,198	$	22	$	1,127	$	310,645	$	360,992
Commercial
Real estate-commercial		12,229		—		897		109,168		122,294
Real estate-residential		4,913		184		498		18,528		24,123
Real estate-multi-family		1,092		191		—		16,914		18,197
Construction loans		—		—		233		6,682		6,915
Commercial and industrial loans		258		—		—		7,372		7,630
Consumer
Home equity and second mortgage		23,706		16		—		40,932		64,654
Other consumer		114		—		—		1,481		1,595
Total	$	91,510	$	413	$	2,755	$	511,722	$	606,400

24

The following tables present the ending balance of the allowance for loan losses and ending loan balance by portfolio and by class based on impairment method as of December 31, 2013. Acquired loans were recorded at fair value on their purchase date without a carryover of the related allowance for loan losses.

	Evaluated for impairment
Allowance for loan losses	Loans acquired  without credit deterioration		Loans acquired with credit deterioration		Individually		Collectively		Total
	(in thousands)
Residential
Residential mortgages	$	—	$	—	$	128	$	1,594	$	1,722
Commercial
Real estate-commercial		—		—		—		1,220		1,220
Real estate-residential		—		—		77		360		437
Real estate-multi-family		—		—		—		136		136
Construction loans		—		—		2,021		187		2,208
Commercial and industrial loans		—		—		—		97		97
Consumer
Home equity and second mortgage		—		—		—		214		214
Other consumer		—		—		—		50		50
Unallocated		—		—		—		491		491
Total	$	—	$	—	$	2,226	$	4,349	$	6,575

	Evaluated for impairment
Loans receivable	Loans acquired without credit deterioration		Loans acquired with credit deterioration		Individually		Collectively		Total
	(in thousands)
Residential
Residential mortgages	$	50,985	$	22	$	2,297	$	318,657	$	371,961
Commercial
Real estate-commercial		12,787		—		774		115,784		129,345
Real estate-residential		4,913		184		712		14,196		20,005
Real estate-multi-family		1,116		191		—		15,316		16,623
Construction loans		—		—		3,177		5,596		8,773
Commercial and industrial loans		279		—		—		6,570		6,849
Consumer
Home equity and second mortgage		24,806		47		—		39,349		64,202
Other consumer		126		—		—		1,571		1,697
Total	$	95,012	$	444	$	6,960	$	517,039	$	619,455

25

NOTE 9 — FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS

The following tables present information about the Company’s financial instruments measured at fair value as of March 31, 2014 and December 31, 2013. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement hierarchy has been established for inputs in valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Determination of the appropriate level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement for the instrument or security.

The fair value hierarchy levels are summarized below:

· Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

· Level 2 inputs are inputs that are observable for the asset or liability, either directly or indirectly.

· Level 3 inputs are unobservable and contain assumptions of the party assessing the fair value of the asset or liability.

Assets measured at fair value on a recurring basis, segregated by fair value hierarchy level are summarized below:

							Balance as of
	Fair value hierarchy levels						March 31,
	Level 1		Level 2		Level 3		2014
	(in thousands)
Assets
Investment securities available for sale
U.S. Government and federal agencies	$	—	$	16,387	$	—	$	16,387
State and political subdivisions		—		60,411		—		60,411
Residential mortgage-backed securities issued by quasi-      governmental agencies		—		52,093		—		52,093
Total investment securities available for sale	$	—	$	128,891	$	—	$	128,891
Loans receivable, held for sale	$	—	$	1,319	$	—	$	1,319

							Balance as of
	Fair value hierarchy levels						December 31,
	Level 1		Level 2		Level 3		2013
	(in thousands)
Assets
Investment securities available for sale
U.S. Government and federal agencies	$	—	$	18,063	$	—	$	18,063
State and political subdivisions		—		60,669		—		60,669
Residential mortgage-backed securities issued by quasi-      governmental agencies		—		45,280		—		45,280
Total investment securities available for sale	$	—	$	124,012	$	—	$	124,012
Loans receivable, held for sale	$	—	$	349	$	—	$	349

26

Investment securities available for sale and mortgage-backed securities available for sale are valued primarily by a third party pricing agent. U.S. Government and federal agency securities are primarily priced through a multidimensional relational model, a Level 2 hierarchy, which incorporates dealer quotes and other market information including, defined sector breakdown, benchmark yields, base spread, yield to maturity, and corporate actions. State and political subdivision securities are valued within the Level 2 hierarchy using inputs with a series of matrices that reflect benchmark yields, ratings updates, and spread adjustments. Mortgage-backed securities include Government National Mortgage Association (“GNMA”), Federal Home Loan Mortgage Corporation (“FHLMC”) and Federal National Mortgage Association (“FNMA”) certificates which are valued under a Level 2 hierarchy using a matrix correlation to benchmark yields, spread analysis, and prepayment speeds.

 Values for loans held for sale utilize active pricing quotes which exist in the secondary market and are therefore deemed a Level 2 hierarchy.

Assets measured at fair value on a nonrecurring basis segregated by fair value hierarchy level at March 31, 2014 are summarized below:

							Balance as of
	Fair value hierarchy levels						March 31,
	Level 1		Level 2		Level 3		2014
	(in thousands)
Impaired loans	$	—	$	—	$	2,974	$	2,974
Real estate acquired through foreclosure		—		—		6,108		6,108
Mortgage servicing rights		—		1,452		—		1,452

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Bank has utilized Level 3 inputs to determine fair value at March 31, 2014:

						Range of
		Fair value		Valuation	Unobservable	inputs
Description		estimate		technique	Input	(weighted average)
	(in thousands)
Impaired loans		$	2,974	Appraisal of collateral (1)	Discount rate to reflect current market		5%-15%
					conditions and ultimate recoverability		(7.39%)
Real estate acquired through foreclosure			6,108	Appraisal of collateral (1)	Discount rate to reflect current market		5%-20%
					conditions and liquidation expenses		(16.67%)

(1 ) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.

27

Assets measured at fair value on a nonrecurring basis segregated by fair value hierarchy level at December 31, 2013 are summarized below:

							Balance as of
	Fair value hierarchy levels						December 31,
	Level 1		Level 2		Level 3		2013
	(in thousands)
Impaired loans	$	—	$	—	$	5,178	$	5,178
Real estate acquired through foreclosure		—		—		5,601		5,601
Mortgage servicing rights		—		1,472		—		1,472

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Bank has utilized Level 3 inputs to determine fair value at December 31, 2013:

						Range of
		Fair value		Valuation	Unobservable	inputs
Description		estimate		technique	Input	(weighted average)
	(in thousands)
Impaired loans		$	5,178	Appraisal of collateral (1)	Discount rate to reflect current market		5%-15%
					conditions and ultimate recoverability		(6.59%)
Real estate acquired through foreclosure			5,601	Appraisal of collateral (1)	Discount rate to reflect current market		5%-20%
					conditions and liquidation expenses		(17.47%)

(1 ) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.

The fair value of impaired loans is generally determined through independent appraisals of the underlying collateral, which generally include Level 3 inputs that are not identifiable. Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. Impaired loans are evaluated and valued while the loan is identified as impaired, at the lower of the recorded investment in the loan or fair value. The range and weighted average of liquidation expenses are presented as a percent of the appraised value.

Real estate acquired through foreclosure is initially valued at the lower of the recorded investment in the loan or fair value at foreclosure and subsequently adjusted for further decreases in market value, less costs to sell, if necessary. Fair value is determined by using the value of the real estate acquired through foreclosure based on appraisals prepared by qualified independent licensed appraisers contracted by the Company to perform the assessment and is therefore classified as a Level 3 hierarchy. 

The Company retains a qualified valuation service to calculate the amortized cost and to determine the fair value of the mortgage servicing rights. The valuation service utilizes discounted cash flow analyses adjusted for prepayment speeds, market discount rates and conditions existing in the secondary servicing market. Hence, the fair value of mortgage servicing rights is deemed a Level 2 hierarchy. The amortized cost basis of the Company’s mortgage servicing rights was $1.5 million at March 31, 2014 and December 31, 2013, respectively. The fair value of the mortgage servicing rights was $1.5 million at March 31, 2014 and December 31, 2013, respectively, and was included in other assets in the consolidated balance sheets.

28

In addition to financial instruments recorded at fair value in the Company’s financial statements, disclosure of the estimated fair value of all of an entity’s assets and liabilities considered to be financial instruments is also required. For the Bank, as for most financial institutions, the majority of its assets and liabilities are considered financial instruments. However, many such instruments lack an available trading market as characterized by a willing buyer and willing seller engaging in an exchange transaction. Also, it is the Company’s general practice and intent to hold its financial instruments to maturity or available for sale and to not engage in trading or significant sales activities. For fair value disclosure purposes, the Company substantially utilized the established fair value measurement hierarchy.

Changes in the assumptions or methodologies used to estimate fair values may materially affect the estimated amounts. In addition, there may not be reasonable comparability between entities due to the wide range of permitted assumptions and methodologies in the absence of active markets. This lack of uniformity gives rise to a high degree of subjectivity in estimating financial instrument fair values.

29

Fair values have been estimated using data which management considered the best available, as generally provided by estimation methodologies deemed suitable for the pertinent category of financial instrument. The recorded carrying amounts and fair values segregated by fair value hierarchy level at March 31, 2014 and December 31, 2013 are summarized below:

	At March 31, 2014
	Carrying		Fair		Fair value hierarchy levels
	value		value		Level 1		Level 2		Level 3
Assets	(in thousands)
Cash and cash equivalents	$	60,175	$	60,175	$	60,175	$	—	$	—
Investment securities		76,798		76,798		—		76,798		—
Mortgage-backed securities		53,494		53,670		—		53,670		—
Loans receivable, net		604,975		613,668		—		1,319		612,349
Liabilities
Deposits with stated maturities	$	187,143	$	188,734	$	—	$	—	$	188,734
Deposits with no stated maturities		505,067		505,067		505,067		—		—
Borrowings with stated maturities		48,311		47,450		—		—		47,450

	At December 31, 2013
	Carrying		Fair		Fair value hierarchy levels
	value		value		Level 1		Level 2		Level 3
Assets	(in thousands)
Cash and cash equivalents	$	45,310	$	45,310	$	45,310	$	—	$	—
Investment securities		78,732		78,732		—		78,732		—
Mortgage-backed securities		46,770		46,960		—		46,960		—
Loans receivable, net		614,517		614,246		—		349		613,897
Liabilities
Deposits with stated maturities	$	190,492	$	193,258	$	—	$	—	$	193,258
Deposits with no stated maturities		493,410		493,410		493,410		—		—
Borrowings with stated maturities		49,605		48,426		—		—		48,426

The fair value of cash and cash equivalents equals the historical book value. The fair value of investment and mortgage-backed securities is described and presented under fair value measurement guidelines as discussed earlier.

The fair value of loans receivable has been estimated using the present value of cash flows, discounted at the approximate current market rates, and giving consideration to estimated prepayment risk but not adjusted for credit risk. Loans receivable also includes loans receivable held for sale.

The fair value of deposits and borrowings with stated maturities has been estimated using the present value of cash flows, discounted at rates approximating current market rates for similar liabilities. Fair value of deposits and borrowings with floating interest rates is generally presumed to approximate the recorded carrying amounts.

The fair value of deposits with no stated maturities is generally presumed to approximate the carrying amount (the amount payable on demand). The fair value of deposits with floating interest rates is generally presumed to approximate the recorded carrying amounts.

The Bank’s remaining assets and liabilities are not considered financial instruments. No disclosure of the relationship value of the Bank’s depositors or customers is required.

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NOTE 10 — STOCK-BASED COMPENSATION

The Company has stock benefit plans that allow the Company to grant options and restricted stock to employees and directors. The awards, which have a term of up to seven years when issued, vest over a two to five year period. The exercise price of each award equals the market price of the Company’s stock on the date of the grant. The fair value of each option grant during the three months ended March 31, 2014 and 2013 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	For the three months ended March 31,
Weighted average assumptions	2014			2013
Dividend yield		1.61	%		0.83	%
Expected volatility		15.85	%		17.24	%
Risk-free interest rate		0.56	%		0.67	%
Fair value of options granted during the period	$	3.90		$	3.13
Expected lives in years		5			5

At March 31, 2014, there was $541,000 of total unrecognized compensation cost, net of estimated forfeitures, related to non-vested awards under the Company’s stock option plan. That cost is expected to be recognized over a weighted average period of 20 months. Option activity under the Company’s stock option plan for the quarter ended March 31, 2014 was as follows:

	At March 31, 2014
	Number of shares		Weighted average exercise price per share		Weighted average remaining contractual term (in years)		Aggregate intrinsic value ($000)
Outstanding at January 1, 2014		254,144	$	23.71		2.81	$	1,132
Options granted		71,500		30.03		5.00		—
Options exercised		—		—		—		—
Options forfeited		—		—		—		—
Options expired		—		—		—		—
Outstanding At March 31, 2014		325,644	$	25.10		3.06		1,562
Options exercisable At March 31, 2014		149,894	$	23.26		2.37		988

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the first quarter and the exercise price, multiplied by the number of in-the-money options).

There were no exercises of stock options for the three months ended March 31, 2014 or 2013.

31

The Company issues stock of the Company as payment for director fees as permitted by the 2011 Director Stock Compensation Plan. The cost associated with these grants is included as a component of stock-based compensation. The following tables provide information regarding the Company’s stock-based compensation expense:

	For the three months ended March 31,
	2014		2013
	(in thousands)
Stock-based compensation expense
Director fees	$	28	$	34
Stock option expense		89		59
Employee Stock Ownership Plan ("ESOP") expense		81		73
Total stock-based compensation expense	$	198	$	166

The Bank reports ESOP expense in an amount equal to the fair value of shares released from the ESOP to employees less dividends received on the allocated shares in the plan used for debt service. Dividends on allocated shares used to reduce ESOP expense totaled $17,000 and $8,000 for the three months ended March 31, 2014 and 2013, respectively. Stock-based compensation expense related to stock options resulted in a tax benefit of $24,000 and $18,000 for the three months ended March 31, 2014 and 2013, respectively.

NOTE 11 — EMPLOYEE BENEFIT PLANS

Net periodic defined benefit pension cost included the following:

	For the three months ended March 31,
	2014			2013
	(in thousands)
Components of net periodic benefit cost
Service cost	$	205		$	206
Interest cost		128			89
Expected return on plan assets		(209	)		(182	)
Recognized net actuarial loss		62			66
Net periodic benefit cost	$	186		$	179

There were no employer contributions for the three months ended March 31, 2014 and 2013.

32

TF FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The Company 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 hereto), 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, 2014 and December 31, 2013 were $846.0 million and $835.7 million, respectively, representing an increase of $10.3 million during the three-month period. Largely as a result of the repayment of loans receivable and an increase in customer deposits, cash and cash equivalents increased by $14.9 million during the first three months of 2014. Investment securities increased by $4.8 million due to security purchases of $10.2 million and an increase in the fair value of available for sale securities of $1.2 million, which were offset by principal repayments, maturities and sales totaling $6.5 million and net premium amortization of $173,000. Loans receivable, net decreased by $10.5 million during the first quarter of 2014. Principal repayments of $19.4 million on loans were partially offset by originations of consumer and single-family residential mortgage loans totaling $6.0 million and originations of commercial loans totaling $3.5 million. The Company also transferred $562,000 from loans to real estate acquired through foreclosure. Loans receivable held for sale increased to $1.3 million at March 31, 2014 as originations of loans for sale in the secondary market totaled $4.5 million during the quarter and proceeds from loan sales totaled $3.5 million.

Total liabilities increased by $8.2 million during the first three months of 2014. Deposit balances increased $8.3 million during the period with checking, money market and savings accounts increasing by $11.6 million. Retail certificates of deposit (“CDs”) decreased $3.3 million during the first three months of 2014.  Advances from the FHLB decreased by $1.3 million, the result of scheduled amortization and maturities.

Total consolidated stockholders’ equity of the Company was $97.0 million or 11.5% of total assets at March 31, 2014. At March 31, 2014, there were approximately 99,000 shares available for repurchase under the previously announced share repurchase plan.

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Asset Quality

Nonperforming assets include real estate owned, which is carried at estimated fair value less costs to sell, and nonperforming loans. Nonperforming loans include loan balances 90 days or more past due and impaired loans for which the accrual of interest has been discontinued. The following table sets forth information regarding the Company’s nonperforming assets:

	At
Nonperforming Assets	March 31,  2014			December 31, 2013			March 31, 2013
	(Dollars in thousands)
Loans receivable, net:
Residential
Residential mortgages	$	1,015		$	2,994		$	2,242
Commercial
Real estate-commercial		897			774			552
Real estate-residential		682			896			50
Real estate-multi-family		191			191
Construction loans		233			3,177			4,649
Commercial and industrial loans		—			—			—
Consumer
Home equity and second mortgage		199			300			143
Other consumer		—			—			11
Total nonperforming loans		3,217			8,332			7,647
Real estate owned		6,108			5,601			7,170
Total nonperforming assets	$	9,325		$	13,933		$	14,817
Total loans 90 days or more past due as to interest or      principal and accruing interest	$	—		$	—		$	—
Ratio of nonperforming loans to gross loans		0.53	%		1.34	%		1.45	%
Ratio of nonperforming loans to total assets		0.38	%		1.00	%		1.07	%
Ratio of total nonperforming assets to total assets		1.10	%		1.67	%		2.07	%

Foreclosed property at March 31, 2014 consisted of ten parcels of real estate with a combined carrying value of $6.1 million. During the first quarter of 2014, the Bank foreclosed on four mortgage loans secured by seven residential properties valued at $562,000. Also, the Bank sold one property acquired through foreclosure with a carrying value of $55,000. All foreclosed properties are listed or are in the process of being listed with real estate agents for sale in a timely manner. Foreclosed real estate is included in other assets in the Consolidated Balance Sheets.

Allowance for Loan Losses

The Bank provides valuation allowances for estimated losses from uncollectible loans. The allowance is increased by provisions charged to expense and reduced by net charge-offs. On a quarterly basis, the Company prepares an allowance for loan losses (ALLL) analysis. In the analysis, the loan portfolio is segmented into groups of homogeneous loans that share similar risk characteristics: commercial loans secured by nonresidential or non-owner occupied residential real estate; construction; commercial and industrial loans; single-family residential; and consumer which is predominately real estate-secured by junior liens and home equity lines of credit. Each segment is assigned reserve factors based on quantitative and qualitative measurements. In addition, the Bank reviews its internally classified loans, its loans classified for regulatory purposes, delinquent loans, and other relevant information in order to isolate loans for further scrutiny as potentially impaired loans.

Quantitative factors include an actual expected loss factor based on historical loss experience over a relevant look-back period. Quantitative factors also include the Bank’s actual risk ratings for the commercial loan segments as determined in accordance with loan review and loan grading policies and procedures, and additional factors as determined by management to be representative of additional risk due to the loan’s geographic location, type, and other attributes. These quantitative factors are adjusted if necessary, up or down, based on actual experience and an evaluation of the qualitative factors.

34

Qualitative factors are based upon: (1) changes in lending policies and procedures, including but not limited to changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses; (2) changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments; (3) changes in the nature and volume of the portfolio and in the terms of loans; (4) changes in the experience, ability, and depth of lending management and other relevant staff; (5) changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified or graded loans; (6) changes in the quality of the loan review system; (7) changes in the value of underlying collateral for collateral dependent loans; (8) the existence and effect of any concentration of credit, and changes in the level of such concentrations; and (9) the effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the existing loan portfolio.

Potentially impaired loans selected for individual evaluation are reviewed in accordance with US GAAP which governs the accounting for impaired assets, as well as regulatory guidance regarding treatment of troubled, collateral-dependent loans. Each potentially impaired loan is evaluated using all available information such as recent appraisals, whether the loan is currently on accrual or nonaccrual status, discounted cash flow analyses, guarantor financial strength, the value of additional collateral, and the loan’s and borrower’s past performance to determine whether in management’s best judgment it is probable that the Bank will be unable to collect all contractual interest and principal in accordance with the loan’s terms. Loans deemed not to be impaired are assigned a reserve factor based upon the segment from which they were selected.

Loans deemed impaired are evaluated to determine the estimated fair value of the collateral, and a portion of the ALLL will be allocated to the deficiency. Troubled collateral-dependent real estate secured loans are valued using the appraised value of the collateral, and a portion of the ALLL will be allocated to these loans based on the difference between the loan amount and the appraised value. If such amounts are judged by management to be permanent, they will be charged-off. In addition, if foreclosure is

probable, a portion of the ALLL will be allocated to the estimated additional costs to acquire and the estimated costs to sell. Upon completion of the foreclosure process, these amounts will be charged-off.

The ALLL needed as a result of the foregoing evaluation is compared with the unadjusted amount, and an adjustment is made by means of a provision to the allowance for loan losses. Recognizing the inherently imprecise nature of the loss estimates and the large number of assumptions needed in order to perform the analysis, the required reserve may be less than the actual level of reserves at the end of any evaluation period, and thus there may be an unallocated portion of the ALLL. Management adjusts the unallocated portion to an amount which management considers reasonable under the circumstances.

35

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2014 AND 2013

Net Income. The Company recorded net income of $1,381,000 or $0.45 per diluted share, for the three months ended March 31, 2014 as compared to net income of $1,223,000, or $0.45 per diluted share, for the three months ended March 31, 2013.

Average Balance Sheet

The following table sets forth information (dollars in thousands) relating to the Company’s average balance sheet and reflects the average yield on assets and average cost of liabilities for the periods indicated. Yields and costs are computed by dividing income or expense by the average daily balance of interest-earning assets or interest-bearing liabilities, respectively, for the three-month periods indicated.

	Three Months Ended March 31,
	2014								2013
	Average balance		Interest			Average yld/cost			Average balance		Interest			Average yld/cost
ASSETS
Interest-earning assets:
Loans receivable (1)	$	610,590	$	6,677			4.43	%	$	525,275	$	6,066			4.68	%
Mortgage-backed securities		48,185		309			2.60	%		41,988		273			2.64	%
Investment securities (2)		80,063		801			4.06	%		65,131		711			4.43	%
Other interest-earning assets (3)		46,666		3			0.03	%		28,877		4			0.06	%
Total interest-earning assets		785,504		7,790			4.02	%		661,271		7,054			4.33	%
Noninterest-earning assets		50,462								46,572
Total assets	$	835,966							$	707,843
LIABILITIES AND  STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Deposits	$	684,900		766			0.45	%	$	560,750		731			0.53	%
Borrowings from the FHLB		48,872		193			1.60	%		56,114		248			1.79	%
Total interest-bearing liabilities		733,772		959			0.53	%		616,864		979			0.64	%
Noninterest-bearing liabilities		6,316								7,216
Total liabilities		740,088								624,080
Stockholders’ equity		95,878								83,763
Total liabilities and stockholders’ equity	$	835,966							$	707,843
Net interest income—tax equivalent basis				6,831								6,075
Interest rate spread (4)—tax equivalent basis							3.49	%							3.69	%
Net yield on interest-earning assets (5)—tax  equivalent basis							3.53	%							3.73	%
Ratio of average interest-earning assets to  average interest-bearing liabilities							107.05	%							107.20	%
Less: tax equivalent interest adjustments				(191	)							(197	)
Net interest income			$	6,640							$	5,878
Interest rate spread (4)							3.39	%							3.56	%
Net yield on interest-earning assets (5)							3.43	%							3.60	%

(1	)	Nonperforming loans have been included in the appropriate average loan balance category, but interest on nonperforming loans has not been included for purposes of determining interest income.
(2	)	Tax equivalent adjustments to interest on investment securities were $191,000 and $197,000 for the quarters ended March 31, 2014 and 2013, respectively. Tax equivalent interest income is based upon a marginal effective tax rate of 34%.
(3	)	Includes interest-bearing deposits in other banks.
(4	)	Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(5	)	Net yield on interest-earning assets represents net interest income as a percentage of average interest-earning assets.

36

Rate/Volume Analysis

The following table presents, for the periods indicated, the change in interest income and interest expense (dollars 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.

	For the three months ended March 31
	2014 vs 2013 Increase (decrease) due to
	Volume			Rate			Net
Interest income:
Loans receivable, net	$	2,429		$	(1,818	)	$	611
Mortgage-backed securities		61			(25	)		36
Investment securities (1)		419			(329	)		90
Other interest-earning assets		9			(10	)		(1	)
Total interest-earning assets		2,918			(2,182	)		736
Interest expense:
Deposits		534			(499	)		35
Borrowings from the FHLB		(30	)		(25	)		(55	)
Total interest-bearing liabilities		504			(524	)		(20	)
Net change in net interest income	$	2,414		$	(1,658	)	$	756

(1 ) Tax equivalent adjustments to interest on investment securities were $191,000 and $197,000 for the quarters ended March 31, 2014 and 2013, respectively. Tax equivalent interest income is based upon a marginal effective tax rate of 34%.

Total Interest Income. Total interest income, on a taxable equivalent basis, increased by $736,000, or 10.4%, to $7.8 million for the quarter ended March 31, 2014 compared with the first quarter of 2013. Interest income from loans receivable increased by $611,000, the result of an $85.3 million increase in the average balance of loans outstanding offset by the effect of a decrease in the average yield on loans of 25 basis points. The merger with Roebling resulted in the increase in the average balance of loans outstanding whereas the decrease in the yield was caused by the combined effects of a large number of higher rate loans being prepaid, and new loans added to the portfolio with lower yields than the existing portfolio loans that had been repaid. Interest income from investment and mortgage-backed securities was higher in the quarter ended March 31, 2014 in comparison to the same period of 2013 mainly because of the securities acquired from Roebling. Offsetting the increase in the average balance was the effect of lower yields on the agency securities acquired from Roebling.

Total Interest Expense. Total interest expense decreased by $20,000 to $959,000 during the three-month period ended March 31, 2014 as compared with the same period in 2013. Interest expense associated with borrowings from the FHLB decreased $55,000 in the first quarter of 2014 compared to the same quarter of 2013. The Bank decreased its average outstanding borrowings by $7.2 million which resulted in a decrease in the cost of borrowed funds of 19 basis points. The average outstanding balance of deposits increased $124.2 million during the first quarter of 2014 as compared to the same period in 2013 mainly as a result of the Roebling acquisition. The average interest rate paid on the Bank’s deposits was eight basis points lower in the first quarter of 2014 due to the maturity of certificates of deposit with higher interest rates than current market rates offered on the products into which the maturing CDs were renewed or reinvested, and a favorable change in the deposit mix and pricing.

Noninterest income. Total noninterest income was $722,000 for the first quarter of 2014 compared with $1.4 million for the same period in 2013. The decrease was mainly the result of a $417,000 gain related to an eminent domain matter affecting a parcel of Company property recorded in 2013 whereas there was no such disposition in the 2014 period. Additionally, gain on sale of loans in the secondary market decreased $231,000 between the quarters due to weak loan activity during the first quarter of 2014.

Noninterest expense. Total noninterest expense increased by $460,000 to $5.5 million for the three months ended March 31, 2014 compared to the same period in 2013. Employee compensation increased by $566,000 in the first quarter of 2014, which was mainly the result of employee costs associated with staffing the five additional branches acquired from Roebling. In addition, as a

37

result of slow loan origination activity, compensation expense deferred was lower in the first quarter of 2014 as compared to the same period in 2013. Occupancy costs increased $210,000 in 2014, largely the result of operating and maintaining the five additional branch offices acquired from Roebling. Additionally, there was an increase of $85,000 in costs incurred related to snow removal during the first quarter of 2014 over the same period in 2013. Marketing and advertising expenses increased in the first quarter of 2014 as compared to the same period in 2013 due to an aggressive and integrated print-TV-direct mail- telemarketing outreach campaign designed to raise the Bank’s visibility and position in specific sub-markets to capture share and grow loans. Offsetting these increases, was a decrease in merger-related costs of $320,000 attributable to the acquisition of Roebling Financial Corp, Inc. incurred during 2013, while there was no such costs in 2014. Foreclosed real estate expense decreased $211,000 in first quarter of 2014 mainly due to a decrease in the holding costs of real estate acquired through foreclosure, resulting from the disposition of such properties during the intervening period.

Income tax expense. The Company’s effective tax rate was 26.2% for the quarter ended March 31, 2014 compared to 32.2% for the quarter ended March 31, 2013. These effective tax rates differ from the Company’s marginal tax rate of 34% largely due to tax-exempt income associated with the Company’s investments in tax-exempt municipal bonds and bank owned life insurance, and the treatment of merger-related costs as nondeductible during 2013.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

The Bank’s liquidity is a measure of its ability to fund loans and pay withdrawals of deposits and other cash outflows in an efficient, cost-effective manner. The Bank’s short-term sources of liquidity include maturities, repayment and sales of assets, excess cash and cash equivalents, new deposits, brokered deposits, other borrowings, and new borrowings from the Federal Home Loan Bank and the Federal Reserve Bank. There has been no material adverse change during the three-month period ended March 31, 2014 in the ability of the Bank and its subsidiaries to fund their operations.

At March 31, 2014, the Bank had commitments outstanding under letters of credit of $1.1 million, commitments to originate loans of $53.6 million, and commitments to fund undisbursed balances of closed loans and unused lines of credit of $60.7 million. At March 31, 2014, the Bank had $4.5 million in outstanding commitments to sell loans. There has been no material change during the three months ended March 31, 2014 in any of the Bank’s other contractual obligations or commitments to make future payments.

The Company’s primary sources of liquidity are dividends from the Bank, principal and interest payments received from a loan made to the Bank’s ESOP, and tax benefits arising from the use of the Company’s tax deductions by other members of its consolidated group pursuant to a tax sharing agreement. The Company is dependent upon these sources and cash on hand which totaled approximately $2.2 million at March 31, 2014 in order to fund its operations and pay the dividend to its shareholders. There has been no material adverse change in the ability of the Company to fund its operations during the three-month period ended March 31, 2014.

Capital Requirements

The Bank was in compliance with all of its capital requirements as of March 31, 2014.

CRITICAL ACCOUNTING POLICIES

Certain critical accounting policies of the Company require the use of significant judgment and accounting estimates in the preparation of the consolidated financial statements and related data of the Company. These accounting estimates require management to make assumptions about matters that are highly uncertain at the time the accounting estimate is made. Management believes that the most critical accounting policy requiring the use of accounting estimates and judgment is the determination of the allowance for loan losses. If the financial position of a significant number of debtors or the value of the collateral securing the loans should deteriorate more than the Company has estimated, the present allowance for loan losses may be insufficient and additional provisions for loan losses may be required. The allowance for loan losses was approximately $4.1 million at March 31, 2014.

38

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Based on their evaluation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)), the Company’s principal executive officer and principal financial officer have concluded that as of the end of the period covered by this Quarterly Report on Form 10-Q such disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files and submits pursuant to the rules and forms of the SEC is accumulated and communicated to the Company’s management including the principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Controls over Financial Reporting

During the quarter under report, there was no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

39

TF FINANCIAL CORPORATION AND SUBSIDIARIES

PART II-OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS
	Neither the Company nor its subsidiaries are involved in any pending legal proceedings, other than routine legal matters occurring in the ordinary course of business that in the aggregate involve amounts which are believed by management to be immaterial to the consolidated financial condition or results of operations of the Company.
ITEM 1A.	RISK FACTORS
	As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this item.
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
	None.
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES
	Not applicable.
ITEM 4.	MINE SAFETY DISCLOSURES Not applicable
ITEM 5.	OTHER INFORMATION
	None.
ITEM 6.	EXHIBITS
	(a)	Exhibits
		31.1	Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
		31.2	Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
		32.	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
		101.INS	XBRL Instance Document
		101.SCH	XBRL Taxonomy Extension Schema Document
		101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
		101.LAB	XBRL Taxonomy Extension Label Linkbase Document
		101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
		101.DEF	XBRL Taxonomy Definition Linkbase Document

40

TF FINANCIAL CORPORATION

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.

Date:	May 14, 2014	/s/ Kent C. Lufkin
		Kent C. Lufkin
		President and CEO
		(Principal Executive Officer)
Date:	May 14, 2014	/s/ Dennis R. Stewart
		Dennis R. Stewart
		Executive Vice President and Chief Financial Officer
		(Principal Financial & Accounting Officer)

41