Exhibit 99.1
FOR IMMEDIATE RELEASE
Monday, January 30, 2006
For further information contact:
Anthony J. Fabiano
Senior Vice President,
Chief Financial Officer
and Corporate Secretary
(914) 761-3636
SOUND FEDERAL BANCORP, INC. ANNOUNCES THIRD
FISCAL QUARTER EARNINGS
White Plains, New York (PR Newswire), Monday, January 30, 2006 -- Sound Federal
Bancorp, Inc. (Nasdaq National Market: "SFFS") (the "Company"), the holding
company for Sound Federal Savings (the "Bank"), announced net income of $1.05
million or diluted earnings per share of $0.09 for the quarter ended December
31, 2005 as compared to $1.43 million or diluted earnings per share of $0.12 for
the quarter ended December 31, 2004. Net income decreased $380,000 for the
quarter ended December 31, 2005, compared to the same quarter a year ago,
primarily due to a $645,000 increase in non-interest expense, partially offset
by a $48,000 increase in net interest income and a $253,000 decrease in income
tax expense. For the nine months ended December 31, 2005, net income amounted to
$3.53 million or diluted earnings per share of $0.30, as compared to $4.35
million or diluted earnings per share of $0.36 for the same period in 2004, a
decrease of $825,000 or 18.9% in net income. The decrease in net income for the
nine months ended December 31, 2005 is primarily attributable to a $1.7 million
increase in non-interest expense, partially offset by a $449,000 increase in
non-interest income and a $530,000 decrease in income tax expense.
Bruno J. Gioffre, Chairman of the Board, commented, "The results for the quarter
reflect the effect of the flat yield curve and increased operating expenses. The
increase in operating expenses is due primarily to the growth of the franchise.
Our growth is evidenced by increases, since March 31, 2005, of 14.1% in total
assets, 26.8% in net loans and 16.6% in deposits. This growth has occurred at a
time when the yield curve has remained flat for several consecutive quarters.
While the growth of the Company in this interest rate environment has restrained
earnings, we believe that the value of the franchise has been enhanced and will
be a positive factor in the future earnings stream. While we do not know what
the yield curve will look like in the future, we do know that the yield curve
will not remain flat indefinitely. We will continue to pursue a prudent growth
strategy and remain committed to enhancing stockholder value. As always, we
value and thank you for your continued support of our Company."
The Company's total assets amounted to $1.1 billion at December 31, 2005, as
compared to $1.0 billion at March 31, 2005. The $142.4 million increase in
assets primarily consisted of a $150.0 million increase in net
-more-
loans to $710.8 million, partially offset by a decrease in total securities of
$20.2 million. Our asset growth was funded principally by a $137.9 million
increase in deposits to $969.7 million.
Total stockholders' equity increased $1.5 million to $128.7 million at December
31, 2005 as compared to $127.2 million at March 31, 2005. The increase reflects
net income of $3.5 million and increases of $2.3 million related to stock
options, stock awards and ESOP shares, partially offset by common stock
repurchases at a cost of $1.3 million, dividends paid of $2.5 million and an
increase of $512,000 in the accumulated other comprehensive loss.
The accumulated other comprehensive loss of $3.2 million at December 31, 2005
represents the after-tax net unrealized loss on securities available for sale
($5.4 million pre-tax). The Company invests primarily in mortgage-backed
securities guaranteed by Ginnie Mae, Fannie Mae and Freddie Mac, as well as U.S.
Government and Agency securities. The unrealized losses at December 31, 2005
were caused by increases in market yields subsequent to purchase. There were no
debt securities past due or securities for which the Company currently believes
it is not probable that it will collect all amounts due according to the
contractual terms of the security. Because the Company has the ability to hold
securities with unrealized losses until a market price recovery (which, for debt
securities may be until maturity), the Company did not consider these securities
to be other-than-temporarily impaired at December 31, 2005.
Net interest income for the quarter ended December 31, 2005 increased $48,000 to
$6.72 million as compared to $6.68 million for the quarter ended December 31,
2004. Our net interest rate spread was 2.20% and 2.63% for the quarters ended
December 31, 2005 and 2004, respectively. Our net interest margin for those
respective periods was 2.50% and 2.85%. For the nine months ended December 31,
2005, net interest income amounted to $19.79 million as compared to $19.84
million for the prior year. Our interest rate spread was 2.28% and 2.71% and our
net interest margin was 2.57% and 2.93% for the respective nine month periods.
The decreases in interest rate spread and net interest margin are primarily the
result of a decrease in the spread between short and long-term market interest
rates. At December 31, 2005, the spread between the 1-month and 10-year Treasury
yield rates was 38 basis points as compared to 205 basis points at December 31,
2004. As a result, the Company's average cost of interest-bearing liabilities
has increased faster than the yield on interest-earning assets which are
principally affected by longer-term interest rates.
The provision for loan losses was $75,000 for the quarters ended December 31,
2005 and 2004 and $225,000 for the nine months ended December 31, 2005 and 2004.
Non-performing loans amounted to $2.7 million or 0.38% of total loans at
December 31, 2005, as compared to $734,000 or 0.14% of total loans at December
31, 2004. At March 31, 2005, non-performing loans amounted to $580,000 or 0.10%
of total loans. The allowance for loan losses amounted to $3.2 million and $3.0
million at December 31, 2005 and March 31, 2005, respectively. There were no
charge-offs or recoveries during the quarters ended December 31, 2005 and 2004.
The increase in the allowance for loan losses primarily reflects an increase in
the origination of adjustable rate mortgage loans, commercial mortgage loans and
commercial loans (not secured by real estate), as well as overall portfolio
growth.
Non-interest income totaled $346,000 and $382,000 for the quarters ended
December 31, 2005 and 2004, respectively. For the nine months ended December 31,
2005, non-interest income amounted to $1.5 million as compared to $1.0 million
for the nine months ended December 31, 2004. The increase in non-interest income
for the nine month period was primarily due to a $325,000 gain on the sale of
real estate which was completed in September 2005. The property was contiguous
to an existing branch site. Management determined that this property was not
going to be used in connection with the operation of the branch.
Non-interest expense totaled $5.2 million for the quarter ended December 31,
2005 as compared to $4.6 million for the quarter ended December 31, 2004. This
increase is due to increases of $431,000 in compensation and benefits expense,
$75,000 in occupancy and equipment expense, $114,000 in advertising and
promotion expense and $75,000 in other non-interest expense, partially offset by
a decrease of $50,000 in data processing service fees. For the nine months ended
December 31, 2005, non-interest expense increased $1.7 million to $15.2 million
as compared to $13.5 million for the nine months ended December 31, 2004.
-more-
This increase is due primarily to increases of $1.2 million in compensation and
benefits, $269,000 in occupancy and equipment expense, and $149,000 in
advertising and promotion expense. The increases include costs attributable to
two new branches opened during the fourth quarter of fiscal 2005.
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, Cortlandt and Carmel in
Westchester County and New City in Rockland County, and in Connecticut in
Greenwich, Stamford, Brookfield and Bethel.
* * * * * *
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.
Balance sheets, statements of income and other financial data are attached.
-more-
Sound Federal Bancorp, Inc. and Subsidiary
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except per share data)
December 31, March 31,
2005 2005
------------ -------------
Assets
Cash and due from banks $ 12,591 $ 11,512
Federal funds sold and other overnight deposits 44,116 31,095
Securities:
Available for sale, at fair value 227,537 276,154
Held to maturity, at amortized cost 107,931 79,489
------------ ------------
Total securities 335,468 355,643
------------ ------------
Loans, net:
Mortgage loans 707,288 558,662
Other loans 6,698 5,100
Allowance for loan losses (3,236) (3,011)
------------ ------------
Total loans, net 710,750 560,751
------------ ------------
Accrued interest receivable 4,764 4,277
Federal Home Loan Bank stock 3,157 5,738
Premises and equipment, net 5,687 6,214
Goodwill 13,970 13,970
Bank-owned life insurance 10,747 10,464
Prepaid pension costs 4,299 3,057
Deferred income taxes 1,977 2,236
Other assets 1,800 1,993
------------ ------------
Total assets $ 1,149,326 $ 1,006,950
============ ============
Liabilities and Stockholders' Equity
Liabilities:
Deposits $ 969,702 $ 831,768
Borrowings 35,000 38,000
Mortgagors' escrow funds 7,302 5,264
Due to brokers for securities purchased 5,867 2,513
Accrued expenses and other liabilities 2,804 2,245
------------ ------------
Total liabilities 1,020,675 879,790
------------ ------------
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; 13,636,170 shares issued; 12,322,206 and
12,377,206 shares outstanding at December 31, 2005
and March 31, 2005, respectively) 136 136
Additional paid-in capital 104,630 103,728
Treasury stock, at cost (1,313,964 and 1,258,964 shares
at December 31, 2005 and March 31, 2005, respectively) (19,013) (18,131)
Common stock held by Employee Stock Ownership Plan (5,675) (6,053)
Unearned stock awards (3,548) (4,435)
Retained earnings 55,356 54,638
Accumulated other comprehensive loss, net of taxes (3,235) (2,723)
------------ ------------
Total stockholders' equity 128,651 127,160
------------ ------------
Total liabilities and stockholders' equity $ 1,149,326 $ 1,006,950
============ ============
Sound Federal Bancorp, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
For the Three For the Nine
Months Ended Months Ended
December 31, December 31,
--------------------- ---------------------
2005 2004 2005 2004
------- ------- ------- -------
Interest and Dividend Income
Loans $ 9,834 $ 7,482 $26,972 $21,733
Mortgage-backed and other securities 3,166 3,101 9,392 8,917
Federal funds sold and other overnight deposits 290 113 666 245
Other earning assets 88 32 240 87
------- ------- ------- -------
Total interest and dividend income 13,378 10,728 37,270 30,982
------- ------- ------- -------
Interest Expense
Deposits 6,286 3,677 16,377 10,002
Borrowings 362 371 1,084 1,126
Other interest-bearing liabilities 7 5 18 15
------- ------- ------- -------
Total interest expense 6,655 4,053 17,479 11,143
------- ------- ------- -------
Net interest income 6,723 6,675 19,791 19,839
Provision for loan losses 75 75 225 225
------- ------- ------- -------
Net interest income after provision for loan losses 6,648 6,600 19,566 19,614
------- ------- ------- -------
Non-Interest Income
Service charges and fees 251 244 885 740
Income on bank-owned life insurance 95 121 283 287
Gain on sale of assets -- 17 325 17
------- ------- ------- -------
Total non-interest income 346 382 1,493 1,044
------- ------- ------- -------
Non-Interest Expense
Compensation and benefits 2,969 2,538 8,637 7,412
Occupancy and equipment 748 673 2,236 1,967
Data processing service fees 264 314 910 878
Advertising and promotion 303 189 828 679
Other 961 886 2,638 2,557
------- ------- ------- -------
Total non-interest expense 5,245 4,600 15,249 13,493
------- ------- ------- -------
Income before income tax expense 1,749 2,382 5,810 7,165
Income tax expense 703 956 2,281 2,811
------- ------- ------- -------
Net income $ 1,046 $ 1,426 $ 3,529 $ 4,354
======= ======= ======= =======
Earnings per share:
Basic earnings per share $ 0.09 $ 0.12 $ 0.31 $ 0.37
======= ======= ======= =======
Diluted earnings per share $ 0.09 $ 0.12 $ 0.30 $ 0.36
======= ======= ======= =======
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, 2005 Sept. 30, 2005 June 30, 2005 March 31, 2005 Dec. 31, 2004
-------------------------------------------------------------------------------------
Net interest income $ 6,723 $ 6,548 $ 6,520 $ 6,584 $ 6,675
Provision for loan losses 75 75 75 75 75
Non-interest income 346 778 369 403 382
Non-interest expense:
Compensation and benefits 2,969 2,841 2,827 2,533 2,538
Occupancy and equipment 748 751 737 750 673
Other non-interest expense 1,528 1,442 1,406 1,792 1,389
---------- ---------- ---------- ---------- ----------
Total non-interest expense 5,245 5,034 4,970 5,075 4,600
---------- ---------- ---------- ---------- ----------
Income before income tax expense 1,749 2,217 1,844 1,837 2,382
Income tax expense 703 858 720 722 956
---------- ---------- ---------- ---------- ----------
Net income $ 1,046 $ 1,359 $ 1,124 $ 1,115 $ 1,426
========== ========== ========== ========== ==========
Total assets $1,149,326 $1,083,065 $1,060,811 $1,006,950 $ 984,372
Loans, net 710,750 668,019 613,481 560,751 541,955
Mortgage-backed securities
Available for sale 150,758 165,474 184,491 199,746 216,133
Held to maturity 64,988 60,530 60,314 59,777 54,717
Other securities
Available for sale 76,779 77,183 76,988 76,408 79,364
Held to maturity 42,943 34,211 23,713 19,712 14,713
Deposits 969,702 913,722 890,191 831,768 802,990
Borrowings 35,000 35,000 35,000 38,000 38,000
Stockholders' equity 128,651 128,179 128,084 127,160 131,134
- ---------------------------------------------------------------------------------------------------------------------------------
Performance Data:
Return on average assets (1) 0.37% 0.51% 0.44% 0.46% 0.58%
Return on average equity (1) 3.25% 4.14% 3.57% 3.51% 4.38%
Net interest rate spread (1) 2.20% 2.27% 2.41% 2.62% 2.63%
Net interest margin (1) 2.50% 2.55% 2.66% 2.85% 2.85%
Efficiency ratio (2) 74.20% 71.90% 72.14% 73.61% 65.18%
Per Common Share Data:
Basic earnings per common share $ 0.09 $ 0.12 $ 0.10 $ 0.10 $ 0.12
Diluted earnings per common share $ 0.09 $ 0.12 $ 0.10 $ 0.10 $ 0.12
Book value per share (3) $ 10.44 $ 10.41 $ 10.41 $ 10.27 $ 10.40
Tangible book value per share (3) $ 9.31 $ 9.28 $ 9.28 $ 9.15 $ 9.29
Dividends per share $ 0.075 $ 0.070 $ 0.065 $ 0.06 $ 0.06
- ---------------------------------------------------------------------------------------------------------------------------------
Capital Ratios:
Equity to total assets (consolidated) 11.19% 11.83% 12.07% 12.63% 13.32%
Tier 1 leverage capital (Bank) 9.43% 9.80% 9.85% 10.24% 10.37%
- ---------------------------------------------------------------------------------------------------------------------------------
Asset Quality Data:
Total non-performing loans $ 2,689 $ 1,285 $ 2,183 $ 580 $ 734
Total non-performing assets $ 2,689 $ 1,285 $ 2,183 $ 580 $ 734
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
(1) Ratios are annualized.
(2) Computed by dividing non-interest expense by the sum of net interest income
and non-interest income.
(3) Computed based on total common shares issued, less
treasury shares.