Sound Federal Bancorp, Inc. Announces Third
Fiscal Quarter Earnings
WHITE PLAINS, N.Y., Jan. 28 /PRNewswire-FirstCall/- Sound Federal Bancorp,
Inc. (Nasdaq: SFFS) (the "Company"), the holding company for Sound Federal
Savings (the "Bank"), announced net income of $1.8 million or diluted earnings
per share of $0.14 for the quarter ended December 31, 2003, as compared to
$2.0 million or diluted earnings per share of $0.15 for the quarter ended
December 31, 2002, a decrease of 11.4% in net income. The decrease in net
income for the quarter ended December 31, 2003 as compared to the same quarter
in the prior year is primarily attributable to a $583,000 increase in
non-interest expense partially offset by a $266,000 increase in net interest
income. For the nine months ended December 31, 2003, net income amounted to
$5.2 million or diluted earnings per share of $0.41 as compared to $6.2
million or diluted earnings per share of $0.47 for the same period in the
prior year. The decrease in net income for the nine months ended December 31,
2003 reflects an increase of $2.2 million in non-interest expense partially
offset by an increase of $448,000 in net interest income and a decrease of
$542,000 in income tax expense.
In connection with the second-step mutual-to-stock conversion of Sound
Federal, MHC that was completed on January 6, 2003, a total of 7,780,737
shares of common stock were sold at a price of $10.00 per share. In addition,
5,444,263 shares were issued to existing stockholders of our mid-tier holding
company resulting in an exchange ratio of 2.7667. At the completion of the
second-step conversion, the Company had 13,225,000 shares issued and
outstanding. At December 31, 2003, the Company had 12,803,133 shares shares
outstanding (exclusive of 444,000 treasury shares).
Bruno J. Gioffre, Chairman of the Board, commented, "We continue to
execute our business plan and invest our net conversion proceeds. Despite
decreases in our interest rate spread and net interest margin, we have been
able to increase net interest income over prior year amounts. Net interest
income amounted to $6.7 million for the quarter ended December 31, 2003 as
compared to $6.4 million for the same period in 2002. For the nine months
ended December 31, 2003, net interest income increased $448,000 or 2.4% to
$19.4 million as compared to the same period in the prior year. The extended
low interest rate environment will continue to provide a challenge for Sound
Federal and much of the thrift industry."
Mr. Gioffre continued, "We continue to evaluate opportunities to invest
the capital raised in our second-step conversion. Our commitments to
stockholder value and franchise value are the guiding principles in evaluating
these opportunities. We announced a share repurchase program in July 2003 for
a total of 530,482 shares, of which 474,000 shares were repurchased by
December 31, 2003. We have increased our quarterly cash dividend by 20% since
the beginning of 2003. We believe our de-novo branch strategy has been
successful in adding to the Bank's franchise value and we are continuing to
evaluate new branch opportunities as they become available. We look forward
to 2004 and the challenges and opportunities that lie ahead for Sound Federal.
As always, we appreciate your investment in Sound Federal."
The Company's total assets amounted to $881.6 million at December 31, 2003
as compared to $796.1 million at March 31, 2003. The $85.5 million increase
in total assets is primarily due to a $59.9 million increase in securities
available for sale to $355.0 million, a $33.8 million increase in net loans to
$461.5 million, and the purchase of bank-owned life insurance with a cash
surrender value of $10.0 million. These increases were partially offset by a
decrease in federal funds sold of $24.3 million. Our asset growth was funded
principally by a $94.2 million increase in deposits to $698.4 million.
Total stockholders' equity decreased $6.2 million to $132.1 million at
December 31, 2003 as compared to $138.3 million at March 31, 2003. The
decrease reflects the purchase of 474,000 shares of the Company's common stock
at a cost of $7.4 million, dividends paid of $1.9 million and a decrease of
$3.1 million attributable to accumulated other comprehensive (loss) income,
partially offset by net income of $5.2 million and proceeds of $246,000 on the
issuance of 30,000 treasury shares for stock options exercised. The change in
accumulated other comprehensive (loss) income reflects a net unrealized
holding loss of $5.0 million on securities available for sale, less a
$1.9 million income tax effect for the nine months ended December 31, 2003.
Net interest income for the quarter ended December 31, 2003 amounted to
$6.7 million, a $266,000 increase from the same period in the prior year. The
interest rate spread was 2.92% and 3.66% for the quarters ended December 31,
2003 and 2002, respectively. Our net interest margin for those respective
periods was 3.17% and 3.81%. For the nine months ended December 31, 2003, net
interest income amounted to $19.4 million as compared to $19.0 million for the
same period in the prior year. Our interest rate spread was 2.93% and 3.82%
and our net interest margin was 3.22% and 3.98% for the respective 2003 and
2002 nine-month periods. The decreases in interest rate spread and net
interest margin are primarily the result of mortgage refinancings, lower rates
on new loans originated and lower returns on our investment portfolio, as
interest rates remain at 40-year lows. If interest rates remain at these low
levels or decrease further, the yields earned on our interest-earning assets
may continue to decrease and adversely affect the Company's interest rate
spread and net interest margin.
Non-interest income totaled $252,000 and $229,000 for the quarters ended
December 31, 2003 and 2002, respectively. For the nine months ended December
31, 2003, non-interest income amounted to $765,000 as compared to $623,000 for
the same period in 2002. The increase in non-interest income was primarily
due to higher levels of income from service charges on deposit accounts, late
charges on loans and various other service fees.
Non-interest expense totaled $3.9 million for the quarter ended December
31, 2003 as compared to $3.4 million for the quarter ended December 31, 2002.
This increase is due primarily to increases of $457,000 in compensation and
benefits, $58,000 in occupancy and equipment expense, $83,000 in data
processing service fees and $82,000 in other non-interest expense, partially
offset by a decrease of $97,000 in advertising and promotion expense. For the
nine months ended December 31, 2003, non-interest expense increased
$2.2 million to $11.6 million as compared to $9.4 million for the same period
in the prior year. This increase is due primarily to increases of
$1.4 million in compensation and benefits, $375,000 in occupancy and equipment
expense, and $329,000 in other non-interest expense.
The increase in compensation and benefits expense is due primarily to
normal salary increases, additional staff to support the growth in the
Company's lending operations and the Stamford branch, which opened in
September 2003, and additional ESOP expense. The increase in ESOP expense
reflects the increase in shares committed to be released for allocation as a
result of the second-step conversion and the increase in the market value of
those shares. Compensation expense is recognized for the ESOP equal to the
fair value of shares committed to be released for allocation to participant
accounts. The difference between the fair value at that time and the ESOP's
original acquisition cost is charged or credited to stockholders' equity. For
the quarter and nine months ended December 31, 2003, the difference credited
to equity amounted to $123,000 and $300,000, respectively, as compared to
$92,000 and $204,000 for the same periods in 2002.
The increase in occupancy and equipment expense is primarily due to two
new branch locations (Somers, New York and Stamford, Connecticut) and the
Company's new corporate office which opened in April 2003.
The Bank is a federally-chartered savings bank offering traditional
financial services and products through its New York branches in Mamaroneck,
Harrison, Rye Brook, New Rochelle, Peekskill, Yorktown, Somers and Cortlandt
in Westchester County and New City in Rockland County, and in Connecticut in
Greenwich and Stamford.
This press release contains certain forward-looking statements consisting
of estimates with respect to the financial condition, results of operations
and business of the Company and the Bank. These estimates are subject to
various factors that could cause actual results to differ materially from
these estimates. Such factors include (i) the effect that an adverse movement
in interest rates could have on net interest income, (ii) customer
preferences, (iii) national and local economic and market conditions, (iv)
higher than anticipated operating expenses and (v) a lower level of or higher
cost for deposits than anticipated. The Company disclaims any obligation to
publicly announce future events or developments that may affect the
forward-looking statements herein.
Sound Federal Bancorp, Inc. and Subsidiary
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except per
share data) December 31, March 31,
2003 2003
Assets
Cash and due from banks $11,068 $8,776
Federal funds sold and other
overnight deposits 11,784 36,121
Securities available for sale, at
fair value 354,955 295,048
Loans, net:
Mortgage loans 462,673 428,575
Consumer loans 1,417 1,551
Allowance for loan losses (2,637) (2,442)
Total loans, net 461,453 427,684
Accrued interest receivable 3,557 3,678
Federal Home Loan Bank stock 5,303 4,141
Premises and equipment, net 5,625 5,467
Deferred income taxes 2,310 392
Goodwill 13,970 13,970
Bank-owned life insurance 10,000 --
Other assets 1,612 811
Total assets $881,637 $796,088
Liabilities and Stockholders' Equity
Liabilities:
Deposits $698,416 $604,260
Borrowings 35,000 35,000
Mortgagors' escrow funds 5,176 4,603
Due to brokers for securities purchased 8,163 10,495
Accrued expenses and other liabilities 2,791 3,409
Total liabilities 749,546 657,767
Stockholders' equity:
Preferred stock ($0.01 par value;
1,000,000 shares authorized;
none issued and outstanding) -- --
Common stock ($0.01 par value;
24,000,000 shares authorized;
13,247,133 shares issued) 132 132
Additional paid-in capital 95,840 95,395
Treasury stock, at cost (444,000
shares at December 31, 2003) (6,929) --
Common stock held by the Employee
Stock Ownership Plan (6,682) (7,059)
Common stock awards under the
Recognition and Retention Plan -- (100)
Retained earnings 52,789 49,937
Accumulated other comprehensive
(loss) income, net of taxes (3,059) 16
Total stockholders' equity 132,091 138,321
Total liabilities and
stockholders' equity $881,637 $796,088
Sound Federal Bancorp and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
For the Quarter For the Nine
Ended Months Ended
December 31, December 31,
2003 2002 2003 2002
Interest and Dividend Income
Loans $6,641 $7,527 $19,900 $22,767
Mortgage-backed and other securities 3,186 2,130 8,693 6,177
Federal funds sold and other
overnight deposits 46 158 220 390
Other earning assets -- 55 123 139
Total interest and dividend income 9,873 9,870 28,936 29,473
Interest Expense
Deposits 2,798 3,025 8,342 9,211
Borrowings 381 409 1,130 1,236
Other interest-bearing liabilities 7 38 42 52
Total interest expense 3,186 3,472 9,514 10,499
Net interest income 6,687 6,398 19,422 18,974
Provision for loan losses 75 50 200 175
Net interest income after provision
for loan losses 6,612 6,348 19,222 18,799
Non-Interest Income
Service charges and fees 252 229 765 610
Gain on sale of real estate owned -- -- -- 13
Total non-interest income 252 229 765 623
Non-Interest Expense
Compensation and benefits 2,107 1,650 6,105 4,701
Occupancy and equipment 553 495 1,699 1,324
Data processing service fees 320 237 751 724
Advertising and promotion 231 328 782 754
Other 725 620 2,231 1,902
Total non-interest expense 3,936 3,330 11,568 9,405
Income before income tax expense 2,928 3,247 8,419 10,017
Income tax expense 1,133 1,220 3,257 3,799
Net income $1,795 $2,027 $5,162 $6,218
Basic earnings per share (1) $0.15 $0.16 $0.42 $0.48
Diluted earnings per share (1) $0.14 $0.15 $0.41 $0.47
(1) Earnings per share data for the 2002 periods have been adjusted to
reflect the shares issued in the second-step conversion completed on
January 6, 2003.
Sound Federal Bancorp, Inc. and Subsidiary
Other Financial Data
(Unaudited)
(Dollars in thousands, except per share data)
At or for the Quarter Ended
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2003 2003 2003 2003 2002
Net interest income $6,687 $6,205 $6,530 $6,888 $6,398
Provision for loan losses 75 75 50 100 50
Non-interest income 252 228 285 267 229
Non-interest expense:
Compensation and
benefits 2,107 2,006 1,992 1,839 1,650
Occupancy and equipment 553 584 562 422 495
Other non-interest
expense 1,276 1,058 1,430 1,066 1,185
Total non-interest
expense 3,936 3,648 3,984 3,327 3,330
Income before income tax
expense 2,928 2,710 2,781 3,728 3,247
Income tax expense 1,133 1,060 1,064 1,420 1,220
Net income $1,795 $1,650 $1,717 $2,308 $2,027
Total assets $881,637 $850,988 $835,635 $796,088 $779,465
Loans, net 461,453 437,205 422,461 427,684 434,166
Securities available for
sale:
Mortgage-backed
securities 268,299 264,359 250,529 211,484 148,754
Other securities 86,656 93,532 88,752 83,564 73,061
Deposits 698,416 653,395 633,265 604,260 592,417
Borrowings 35,000 55,000 35,000 35,000 34,973
Stockholders' equity 132,091 137,780 139,822 138,321 68,246
Performance Data:
Return on average
assets (1) 0.82% 0.80% 0.85% 1.17% 1.14%
Return on average
equity (1) 5.26% 4.76% 4.97% 7.75% 12.07%
Average interest rate
spread (1) 2.92% 2.85% 3.07% 3.41% 3.66%
Net interest margin (1) 3.17% 3.14% 3.39% 3.79% 3.81%
Efficiency ratio 56.72% 56.71% 58.46% 46.80% 50.25%
Per Common Share Data:
Basic earnings per
common share (2) $0.15 $0.13 $0.14 $0.19 $0.16
Diluted earnings per
common share (2) $0.14 $0.13 $0.14 $0.18 $0.15
Book value per share (3) $10.32 $10.46 $10.55 $10.44 $14.27
Tangible book value per
share (3) $9.23 $9.40 $9.50 $9.39 $11.35
Dividends per share (2) $0.06 $0.05 $0.05 $0.05 $0.03
Capital Ratios:
Equity to total assets
(consolidated) 14.98% 16.19% 16.73% 17.38% 8.76%
Tier 1 leverage capital
(Bank) 10.74% 10.82% 11.14% 11.29% 6.14%
Asset Quality Data:
Total non-performing
loans $1,290 $1,751 $889 $477 $795
Total non-performing
assets $1,290 $1,751 $889 $477 $966
(1) Ratios are annualized.
(2) Per share data for the quarter ended December 31, 2002 has been
adjusted to reflect the shares issued in the second-step conversion
completed on January 6, 2003.
(3) Computed based on total common shares issued, less treasury shares.
SOURCE Sound Federal Bancorp, Inc.
-0- 01/28/2004
/CONTACT: Anthony J. Fabiano, Senior Vice President, Chief Financial
Officer and Corporate Secretary of Sound Federal Bancorp, Inc.,
+1-914-761-3636/
/Web site: http://www.soundfed.com /
(SFFS)