PROSPECTUS
SE FINANCIAL CORP.
(Proposed Holding Company for St. Edmond's Federal Savings Bank)

Up to 2,242,500 Shares of Common Stock

SE Financial Corp. is offering for sale up to 2,242,500 shares of
common stock at $10.00 per share in connection with the conversion of St.
Edmond's Federal Savings Bank from a federal mutual savings bank to a federal
stock savings bank. As part of the conversion, St. Edmond's Federal Savings Bank
will become a wholly- owned subsidiary of SE Financial Corp.

We are offering for sale up to 2,242,500 shares of common stock. We may
sell up to 2,578,875 shares because of changes in market or general financial
and economic conditions without notifying prospective purchasers. We must sell a
minimum of 1,657,500 shares in order to complete the offering. Purchases of
stock in the offering by our directors and executive officers will be counted
toward such minimum. The maximum purchase for any person, or persons through a
single account, is 10,000 shares. The minimum purchase is 25 shares. The
subscription offering is expected to terminate on April 19, 2004 at 12:00 noon,
eastern time. We may extend this termination date without notice to you until
June 3, 2004. To the extent that shares remain available and depending on market
conditions at or near the completion of the subscription offering, we may
conduct a community offering and possibly a syndicated community offering. The
community offering, if any, may commence concurrently with, during or subsequent
to the completion of the subscription offering, and a syndicated community
offering, if any, would commence just prior to, or as soon as practicable after,
the termination of the subscription offering. Once submitted, orders placed in
the subscription, community or syndicated community offerings are irrevocable
unless the offerings are terminated or extended beyond June 3, 2004. We may
request permission from the Office of Thrift Supervision to extend the offerings
beyond June 3, 2004, but in no event may the subscription, community or
syndicated community offerings be extended beyond May 4, 2006. Funds received
prior to completion of the offering will be held in an escrow account at St.
Edmond's Federal Savings Bank and will earn interest at the savings account
rate. In the event the offering is terminated or the minimum is not reached,
funds will be promptly returned with interest.

There is currently no public market for the stock. SE Financial Corp.
anticipates that the stock will be quoted on the OTC Electronic Bulletin Board.
See Market for the Stock on page 17 of this document.

Sandler O'Neill & Partners, L.P. will use its best efforts to assist us
in selling our common stock. Sandler O'Neill & Partners, L.P. is not obligated
to purchase any of the common stock that is being offered.

This investment involves risk, including the possible loss of principal. Please
read "Risk Factors" beginning on page 9.

Maximum, as
Minimum Maximum Adjusted
------- ------- --------

Number of shares......................................... 1,657,500 2,242,500 2,578,875
Estimated offering expenses, excluding underwriting
commissions and expenses............................... $250,000 $250,000 $250,000
Underwriting commissions and expenses(1)................. $215,750 $274,250 $307,887
Estimated net proceeds................................... $16,109,250 $21,900,750 $25,230,863
Estimated net proceeds per share......................... $9.72 $9.77 $9.78

- ---------------
(1) See The Offering - Plan of Distribution/Marketing Arrangements on page 94
for a discussion of Sandler O'Neill & Partners, L.P.'s compensation for
this offering.

These securities are not deposits or savings accounts and are not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency.

Neither the Securities and Exchange Commission, the Office of Thrift
Supervision, the Federal Deposit Insurance Corporation, nor any state securities
regulator has approved or disapproved these securities or determined if this
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.

For assistance, please contact the conversion center at (888) 234-6705

Sandler O'Neill & Partners, L.P.

The date of this prospectus is March 15, 2004

TABLE OF CONTENTS

Page
----

Summary........................................................................1
Risk Factors...................................................................9
Forward-Looking Statements....................................................15
Use of Proceeds...............................................................16
Dividend Policy...............................................................17
Market for the Stock..........................................................17
Capitalization................................................................18
Pro Forma Data................................................................19
Historical and Pro Forma Capital Compliance...................................22
Recent Developments...........................................................23
Selected Consolidated Financial and Other Data................................27
Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................................29
Business of SE Financial Corp.................................................43
Business of St. Edmond's Federal Savings Bank ................................43
Regulation....................................................................62
Taxation......................................................................69
Management....................................................................70
The Conversion................................................................77
The Offering..................................................................81
Restrictions on Acquisition of SE Financial Corp..............................96
Description of Capital Stock..................................................99
Legal and Tax Opinions.......................................................100
Experts......................................................................100
Registration Requirements....................................................100
Where You Can Find Additional Information....................................101
Index to Consolidated Financial Statements...................................102

- --------------------------------------------------------------------------------

SUMMARY

This summary highlights selected information from this document and may not
contain all the information that is important to you. To understand the stock
offering fully, you should read this entire document carefully, including the
consolidated financial statements and the notes to the consolidated financial
statements of St. Edmond's Federal Savings Bank beginning on page F-1.

SE Financial Corp.

1901-03 East Passyunk Avenue
Philadelphia, PA 19148
(215) 468-1700

SE Financial Corp. is a new company incorporated under Pennsylvania law
and has not engaged in any significant business to date. Its primary activity
will be owning all the stock of St. Edmond's Federal Savings Bank (sometimes
referred to herein as the "Bank"). It will invest its initial capitalization as
discussed under Use of Proceeds on page 16. In the future, it may pursue other
business activities, including the addition of branch offices and
diversification of operations. There are, however, no current arrangements,
understandings or agreements for these activities.

St. Edmond's Federal Savings Bank

St. Edmond's Federal Savings Bank is a federally-chartered mutual
savings bank. It is converting from the mutual to the stock form of ownership as
part of the conversion. At October 31, 2003, the Bank had total assets, deposits
and retained earnings of $87.4 million, $72.3 million and $7.7 million,
respectively. Approximately 58.1% of total assets were comprised of loans at
October 31, 2003.

St. Edmond's Federal Savings Bank was originally chartered in 1912 as
St. Edmond's Building and Loan Association. In 1995, it became a
federally-chartered savings bank. The Bank's deposits are federally insured by
the Savings Association Insurance Fund as administered by the Federal Deposit
Insurance Corporation. The Bank is regulated by the Office of Thrift Supervision
and the Federal Deposit Insurance Corporation.

The Bank is a community-oriented savings organization, providing
traditional retail banking services. The Bank's lending products include one- to
four-family residential mortgage loans (including investor loans and mixed-use
loans), multi-family mortgage loans, commercial real estate mortgage loans,
construction loans, home equity loans, savings account loans and other consumer
loans. The Bank's primary source of funds for its lending and investing
activities is deposits, with an emphasis on certificates of deposit. The Bank
conducts its operations through its main office located in Philadelphia,
Pennsylvania and a branch office located in Sewell, New Jersey. See Business of
St. Edmond's Federal Savings Bank beginning on page 43.

Business Strategy.

In the future, our business strategy will be to grow and improve our
profitability by:

o Emphasizing one- to four-family residential real estate lending
(both owner occupied and investor owned), while continuing to
originate multi-family and commercial real estate lending;

o Increasing our assets;

- --------------------------------------------------------------------------------

o Utilizing the capital raised in the offering to help manage our
interest rate risk;

o Offering new products and services to our customers; and

o Maintaining high asset quality.

How the Conversion Will Occur.

We will effect the conversion by exchanging the Bank's federal mutual
savings bank charter for a federal stock savings bank charter and the Bank will
become a wholly-owned subsidiary of SE Financial Corp. On the effective date, SE
Financial Corp. will commence business as a savings and loan holding company,
and St. Edmond's Federal Savings Bank will continue its business but as a
federally-chartered stock savings bank. See pages 77 to 81.

Reasons for the Conversion.

Over the past several years, the Board of Directors of St. Edmond's
Federal Savings Bank has extensively discussed both long-range and short-range
business strategies to achieve profitability and growth. The Board concluded
that operation in the future as a mutual thrift would limit the Bank's ability
to raise capital and to compete in a changing business environment. The Board
has therefore determined that it is in the best interest of the Bank to convert
to a stock association. The business purposes for the conversion include the
following:

o The proceeds from the sale of common stock of SE Financial Corp. will
provide the Bank with additional equity capital, which will support future
growth and expanded operations. While the Bank currently exceeds its
regulatory capital requirements, the sale of stock in connection with the
conversion, coupled with the accumulation of earnings, less dividends or
other reductions in capital, from year to year, represents a means for the
orderly preservation and expansion of the Bank's capital base, and allows
it flexibility to respond to sudden and unanticipated capital needs.

o We will be in a position after the conversion and offering, subject to
regulatory limitations and our financial position, to take advantage of any
expansion or diversification opportunities that may arise. The holding
company form of organization is expected to provide us with additional
flexibility to diversify our business activities through existing or newly
formed subsidiaries, or through acquisitions or mergers. However, we do not
have any current arrangements, understandings or agreements regarding any
such opportunities.

Our Use of the Proceeds Raised from the Sale of Stock.

SE Financial Corp. will use at least 50% of the net proceeds from the
offering to purchase all of St. Edmond's Federal Savings Bank's stock. SE
Financial Corp. will also lend St. Edmond's Federal Savings Bank's employee
stock ownership plan cash to enable the plan to buy 8% of the shares sold in the
offering. The balance will be retained as SE Financial Corp.'s initial
capitalization and used for general business purposes, which may include
investment in securities, paying cash dividends or repurchasing shares of its
common stock.

- --------------------------------------------------------------------------------

The funds received by St. Edmond's Federal Savings Bank will be used
for general business purposes, including originating loans and purchasing
securities. In addition, the Bank may also use the proceeds of the offering to
expand either through opening or acquiring branch offices. The Bank does not,
however, have any current arrangements, understandings or agreements for the
expansion of its branch offices. See Use of Proceeds beginning on page 16.

Assuming the sale of $16,575,000, $19,500,000, $22,425,000 and
$25,788,750 of common stock at the minimum, midpoint, maximum and maximum, as
adjusted, respectively, of the offering range, expenses of $466,000, $495,000,
$524,000 and $558,000, at the minimum, midpoint, maximum and maximum, as
adjusted, respectively, and the purchase of 8% of the shares by the employee
stock ownership plan, the following table shows the manner in which we will use
the net proceeds:

MAXIMUM, AS
MINIMUM MIDPOINT MAXIMUM ADJUSTED
----------------- ---------------- --------------- ----------------
$ % $ % $ % $ %
------- ----- ------- ----- ------- ----- ------- -----
(Dollars in thousands)

Loan to employee stock
ownership plan.......... $ 1,326 8.2% $ 1,560 8.2% $ 1,794 8.2% $ 2,063 8.2%
Investment in Bank.......... 8,054 50.0 9,503 50.0 10,951 50.0 12,616 50.0
SE Financial Corp.
working capital......... 6,729 41.8 7,942 41.8 9,156 41.8 10,552 41.8
------- ----- ------- ----- ------- ----- ------- -----
Net Proceeds....... $16,109 100.0% $19,005 100.0% $21,901 100.0% $25,231 100.0%
======= ===== ======= ===== ======= ===== ======= =====

$10.00 Per Share Stock Price and the Number of Shares to be Issued in the
Conversion.

The offering range is based on an independent valuation prepared by
FinPro, Inc., an appraisal firm experienced in appraisals of financial
institutions. FinPro has determined that as of March 4, 2004, our estimated
aggregate pro forma market value was $19.5 million, the mid-point of the
valuation range. Pursuant to regulations, a valuation range of $16.6 million to
$22.4 million has been established, subject to adjustment. Based on this
valuation and the $10.00 per share price, the number of shares of common stock
being issued by SE Financial Corp. will range from 1,657,500 to 2,242,500. The
$10.00 per share price was selected primarily because it is the price most
commonly used in stock offerings of this type.

The following table compares SE Financial Corp.'s pro forma price to
core earnings multiple and pro forma price to tangible book ratio at the
minimum, midpoint, maximum and maximum, as adjusted, of the offering range to
the median price to core earnings multiple and price to tangible book ratio for
the comparable publicly traded peer group companies identified in the valuation
report. See Pro Forma Data on page 19 for a description of the assumptions used
in calculating the pro forma price to core earnings multiples and pro forma
price to tangible book ratios for SE Financial Corp. See The Offering - Stock
Pricing and the Number of Shares to be Offered on page 90 for more information
about the procedures used by FinPro in preparing the independent valuation.

- --------------------------------------------------------------------------------

Pro Forma Pro Forma
Price to Core Price to
Earnings Tangible
Multiple Book Ratio
-------- ----------

SE Financial Corp.(1):
Minimum (1,657,500 shares sold)................... 24.39x 76.05%
Midpoint (1,950,000 shares sold).................. 27.78x 80.13%
Maximum (2,242,500 shares sold)................... 31.25x 83.40%
Maximum, as adjusted (2,578,875 shares sold)...... 35.71x 86.58%

Price to Core Price to
Earnings Tangible
Multiple Book Ratio
-------- ----------

Median for comparable peer group companies............. 21.18x 133.06%
Mean for comparable peer group companies............... 22.49x 135.90%

- -----------
(1) The price/core earnings multiples shown here for SE Financial Corp. are
based on core earnings as required by regulatory appraisal guidelines,
while the information presented in the tables under Pro Forma Data on page
19 is based on net income.

The ratios we have presented are commonly requested by prospective
investors in order to determine whether or not the stock meets the investor's
investment criteria. Because of differences in important factors such as
operating characteristics, financial performance, asset size, capital structure,
and business prospects between us and other fully converted institutions, you
should not rely on these comparative valuation ratios as an indication as to
whether or not the stock is an appropriate investment for you. The independent
valuation is not intended, and must not be construed, as a recommendation of any
kind as to the advisability of purchasing the common stock. Because the
independent valuation is based on estimates and projections on a number of
matters, all of which are subject to change from time to time, no assurance can
be given that persons purchasing the common stock will be able to sell their
shares at a price equal to or greater than the purchase price. See Risk Factors
- - You may not be able to sell your shares when you desire or for $10.00 or more
per share on page 11, Pro Forma Data on page 19 and The Offering - Stock Pricing
and the Number of Shares to be Offered on page 90.

We received authorization from the Office of Thrift Supervision on
March 15, 2004, based on the independent valuation, to issue between a minimum
of 1,657,500 shares and a maximum of 2,242,500 shares. The independent valuation
must be updated and confirmed by FinPro, Inc. before we may complete the stock
offering. Any changes in the appraisal would be subject to regulatory approval.
The maximum amount of common stock being offered may be increased by up to 15%
without notice to persons who have subscribed for stock, so that a total of
2,578,875 shares could be issued. If the updated independent valuation would
result in more than 2,578,875 shares being issued, we will be required to notify
all persons who have subscribed and such persons would have the opportunity to
change or cancel their subscription orders, and, unless an affirmative response
is received, a subscriber's funds will be returned with interest at St. Edmond's
Federal Savings Bank's regular savings account rate.

The Amount of Stock You May Purchase.

Minimum purchase = 25 shares
Maximum purchase = 10,000 shares

The maximum number of shares that any individual (or individuals through a
single account) may purchase is 10,000. The maximum number of shares that any
individual may purchase together with any associate or group of persons acting
in concert is 20,000 shares.

- --------------------------------------------------------------------------------

The Offering.

You might not receive any or all of the stock you request. St. Edmond's
Federal Savings Bank has granted subscription rights in the following order of
priority:

o Priority 1 - depositors of St. Edmond's Federal Savings Bank at the close
of business on December 31, 2002, with deposits of at least $50.00.

o Priority 2 - the tax qualified employee stock benefit plans of St. Edmond's
Federal Savings Bank.

o Priority 3 - depositors as of March 9, 2004 and borrowers as of September
29, 1995 who continue as borrowers as of the close of business on March 9,
2004.

The subscription offering will terminate at 12:00 noon, eastern time,
on April 19, 2004. We may extend this expiration date without notice to you for
up to 45 days, until June 3, 2004. Once submitted, your order is irrevocable
unless the offering is extended beyond June 3, 2004. We may request permission
from the Office of Thrift Supervision to extend the offering beyond June 3,
2004, but in no event may the offering be extended beyond May 4, 2006. If the
offering is extended beyond June 3, 2004, we will be required to notify each
subscriber and resolicit subscriptions. During any extension period, subscribers
will have the right to modify or rescind their subscriptions, and, unless an
affirmative response is received, a subscriber's funds will be returned with
interest at St. Edmond's Federal Savings Bank's regular savings account rate.

We may cancel the offering at any time prior to the special meeting of
members of the Bank to vote on the plan of conversion. If we do, orders for
common stock already submitted will be canceled and subscribers' funds will be
returned with interest.

We may also offer shares of common stock in a community offering. In
the community offering, people who reside in Philadelphia County, Pennsylvania
and Gloucester County, New Jersey will have first preference. This part of the
offering may commence concurrently with the subscription offering or any time
thereafter and may terminate at any time without notice but no later than June
3, 2004.

Shares not sold in the subscription or community offering may be
offered for sale in a syndicated community offering, which would be an offering
to the general public on a best efforts basis by a syndicate of broker dealers
managed by Sandler O'Neill & Partners, L.P. This part of the offering may
terminate at any time without notice but no later than June 3, 2004.

You cannot transfer your subscription rights. If you attempt to
transfer your rights, you may lose the right to purchase shares and may be
subject to criminal prosecution and/or other sanctions. With the exception of
IRA stock purchases, shares purchased in the subscription offering must be
registered in the names of all depositors on the qualifying account(s). Deleting
depositors or adding non-depositors or otherwise altering the form of beneficial
ownership of a qualifying account will void your subscription order.

We have the right to reject any orders for stock in the community
offering and syndicated community offering. We have described the offering in
greater detail beginning on page 81.

- --------------------------------------------------------------------------------

Stock Benefit Plans for Management.

In order to tie our employees', officers' and directors' interests
closer to our stockholders' interests, we intend to establish certain benefit
plans that use our stock as compensation. Officers, directors, and employees
will not be required to pay cash in exchange for shares received under the
employee stock ownership plan ("ESOP") or restricted shares but will be required
to pay the exercise price to exercise options.

The following table presents information regarding the participants in
each plan, the total amount, the percentage, and the dollar value of the stock
that we intend to set aside for the employee stock ownership plan and
stock-based incentive plans. The table below assumes the sale of 1,950,000
shares in the offering. It is assumed that the value of the stock in the table
is $10.00 per share. See pages 74 to75 for more information, including
regulatory restrictions on the maximum amount of benefits participants may
receive and the rate at which benefits may be earned under the incentive plans.

Estimated Percentage of
Value Number Total Shares Sold
Participants of Shares of Shares in the Offering
------------ --------- --------- ---------------

Employee Stock Ownership Plan...... Employees $1,560,000 156,000 8.0%
Stock-Based Incentive Plans:
Stock Awards.............. Officers and 780,000 78,000 4.0
Directors
Stock Options............. Officers and
Directors -- (1) 195,000 10.0%
---------- ------- ----
Total................ $2,340,000 429,000 22.0%
========== ======= ====

- -------------
(1) Options are given no value because their exercise price will be equal to
the fair market value of the stock on the day the options are granted. As a
result, anyone who receives an option will only benefit from the option if
the price of the stock rises above the exercise price and the option is
exercised.

Stockholders will experience a reduction or dilution in ownership
interest of approximately 12.3% if we use newly-issued shares to fund stock
options and stock awards made under these plans (dilution of approximately 9.1%
for the stock option plan and 3.8% for the restricted stock plan). It is our
intention to fund these plans through open market purchases.

Dividend Policy.

The Board of Directors has not yet determined whether SE Financial
Corp. will pay cash dividends after the conversion. There can be no assurance
that dividends will in fact be paid on the stock or that, if paid, dividends
will not be reduced or eliminated in future periods. The timing, amount and
frequency would be determined by the Board of Directors. There are also
restrictions on our ability to pay dividends. See Use of Proceeds on page 16 and
Dividend Policy on page 17.

Conditions to Be Satisfied to Complete the Offering and Issue the Stock.

The following must occur before we can complete the offering and issue
our stock:

o We must receive all the required approvals from the Office of Thrift
Supervision;

- --------------------------------------------------------------------------------

o St. Edmond's Federal Savings Bank's members must approve the conversion by
a majority of votes eligible to be cast; and

o We must sell at least the minimum number of shares offered.

Proposed Stock Purchases by Management.

Our directors and executive officers, together with their associates,
are expected to purchase approximately 101,500 shares of stock in the offering,
5.2% if a total of 1,950,000 shares, the midpoint of the offering range, are
sold. The purchase price paid by them will be the same $10.00 per share price
paid by all other persons who purchase shares of common stock in the offering.
Purchases of common stock in the offering by these persons will be counted
toward the minimum of 1,657,500 shares that must be sold in order to complete
the conversion and offering. Management may, but is not required to, purchase
additional shares in the offering to satisfy the minimum. See page 76.

Market for the Stock.

We expect the stock to be traded on the over-the-counter market with
quotations available on the OTC Electronic Bulletin Board. Prior to this
offering, there has not been a public market for the stock, and it is highly
unlikely that an active and liquid trading market for the stock will develop.
The lack of an active and liquid trading market may adversely affect the
liquidity and price of the stock. See Market for the Stock.

Restrictions on Acquisition of SE Financial Corp.

Our articles of incorporation and bylaws contain provisions that may
make it difficult for someone to acquire control of SE Financial Corp. These
provisions may discourage takeover attempts and prevent you from receiving a
premium over the market price of your shares as part of a takeover. These
provisions include:

o restrictions on the acquisition of our stock;
o limitations on voting rights;
o the election of only approximately one-fourth of our Board of
Directors each year;
o restrictions on the ability of stockholders to call special
stockholders' meetings;
o restrictions on the ability of stockholders to make stockholder
proposals or nominate persons for election as directors;
o the right of the Board of Directors to issue shares of preferred
or common stock without stockholder approval; and
o the requirement of an 80% vote of stockholders for the approval
of business combinations not approved by two-thirds of the Board
of Directors.

See Restrictions on Acquisition of SE Financial Corp. on page 96.

Additionally, Office of Thrift Supervision regulations and policies
prohibit anyone from acquiring us for three years after the conversion, unless
such prohibition is waived by the Office of Thrift Supervision.

- --------------------------------------------------------------------------------

Tax Effects of the Conversion.

We have received the opinion of our special counsel, Malizia Spidi &
Fisch, PC, that (i) no gain or loss will be recognized by depositors or
borrowers of St. Edmond's Federal Savings Bank upon the distribution to them of
the non-transferable subscription rights and (ii) that the conversion will not
be a taxable event for either SE Financial Corp. or St. Edmond's Federal Savings
Bank under federal or Pennsylvania state income tax laws. These opinions,
however, are not binding on the Internal Revenue Service or the Pennsylvania
state tax authorities. The full texts of the opinions are filed as exhibits to
the Registration

Statement of which this document is a part, and copies may be obtained from the
SEC. See The Conversion - Tax Effects on page 79 and Where You Can Find
Additional Information on page 101.

Receiving a Prospectus and an Order Form.

To ensure that each purchaser receives a prospectus at least 48 hours
before the applicable expiration date, in accordance with Rule 15c2-8 of the
Securities Exchange Act of 1934, no prospectus will be mailed any later than
five days prior to the expiration date or otherwise distributed any later than
two days prior to the expiration date. Execution of the order form will confirm
receipt or delivery in accordance with Rule 15c2-8. Order forms will only be
distributed with a prospectus.

Risk Factors.

Recent valuation of converting thrifts, including St. Edmond's Federal
Savings Bank, are at historically high levels. As such, you may not be able to
sell the stock at or above the $10.00 offering price. This investment is subject
to significant risks. See Risk Factors beginning on page 9.

For assistance, please contact the conversion center at (888) 234-6705.

- --------------------------------------------------------------------------------

RISK FACTORS

In addition to the other information in this document, you should
consider carefully the following risk factors in evaluating an investment in our
common stock.

The relatively small amount of stock being offered makes it highly unlikely that
an active and liquid trading market for the stock will exist, and the liquidity
and price of the stock may be adversely affected by a limited trading market.

Prior to this offering, SE Financial Corp. has not offered its stock to
the public. Consequently, there is not, at this time, any market for the stock.
Due to the relatively small size of the offering to the public, an active market
for the stock may not exist after the offering. This means that there may be
limited secondary market liquidity for our stock. This might make it difficult
for you to buy or sell the stock after the initial offering which may negatively
affect the price of the stock and cause significant volatility in the price of
our stock. Following the completion of the offering, we anticipate that
quotations for our stock will be available on the OTC Electronic Bulletin Board.
See Market for the Stock on page 17.

The liquidity of the trading market for our stock will also be affected
by the amount of stock purchased by our directors and executive officers and
their associates, who may purchase approximately 101,500 shares in the offering,
which represents 6.1%, 5.2%, and 4.5% of the total outstanding stock after the
offering at the minimum, midpoint and maximum of the offering range,
respectively. Shares purchased by directors and executive officers cannot be
sold for a period of one year following the offering. Furthermore, if
stockholders of SE Financial Corp. approve the restricted stock plan and the
stock option plan, and if all shares reserved under the restricted stock plan
are awarded and all options reserved under the stock option plan are awarded and
exercised, insider ownership would increase. In addition, St. Edmond's Federal
Savings Bank's employee stock ownership plan will purchase up to 8% of the
shares issued in the offering and such shares will be held in trust, further
limiting the publicly traded shares.

Future changes in interest rates may reduce our profits.

Our ability to make a profit largely depends on our net interest
income, which could be negatively affected by changes in interest rates. Net
interest income is the difference between:

o the interest income we earn on our interest-earning assets, such as
mortgage loans and investment securities; and

o the interest expense we pay on our interest-bearing liabilities, such as
deposits and amounts we borrow.

The rates we earn on our assets and the rates we pay on our liabilities
are generally fixed for a contractual period of time. We, like many savings
institutions, have liabilities that generally have shorter contractual
maturities than our assets. This imbalance can create significant earnings
volatility, because market interest rates change over time. In a period of
rising interest rates, the interest income earned on our assets may not increase
as rapidly as the interest paid on our liabilities. In a period of declining
interest rates, the interest income earned on our assets may decrease more
rapidly than the interest paid on our liabilities.

The Bank monitors its interest rate sensitivity through the use of an
asset/liability management model which estimates the change in its net portfolio
value (defined as the current market value of assets, less the

current market value of liabilities, plus or minus the current value of
off-balance sheet items) in the event of a range of assumed changes in market
interest rates. Our net portfolio value analysis, as calculated by the Office of
Thrift Supervision using information as of September 30, 2003, showed our
interest rate risk to be slightly higher than the thrift industry median. In an
immediate and permanent 2.0% increase in interest rates, our net portfolio value
decreases by 165 basis points while the thrift industry median net portfolio
value ratio would decrease by only 130 basis points. In addition, assuming no
change in interest rates, our net portfolio value ratio as of September 30, 2003
is 11.6%, slightly lower than the thrift industry median of 12.3%.

In addition, changes in interest rates can also affect the average life
of loans and mortgage-backed and related securities. A reduction in interest
rates results in increased prepayments of loans and mortgage- backed and related
securities, as borrowers refinance their debt in order to reduce their borrowing
cost. This causes reinvestment risk. This means that we may not be able to
reinvest prepayments at rates that are comparable to the rates we earned on the
prepaid loans or securities. Additionally, in a rising rate environment,
prepayments would decrease, extending the average life of our assets.

Additionally, at October 31, 2003, $24.2 million of the Bank's
certificates of deposit were five year certificates that have provisions which
allow depositors to withdraw funds without incurring an early withdrawal
penalty. If rates rise, these deposits may be withdrawn without penalty and the
actual maturity of these certificates of deposit may be materially less than
indicated. The Bank no longer offers certificates of deposit with this
no-penalty provision. See Sources of Funds - Deposits on page 59 for additional
information regarding these certificates of deposit.

St. Edmond's Federal Savings Bank entered into a supervisory agreement with its
primary regulator in 2002 and operated under such agreement until December 2003.

The Bank entered into a supervisory agreement with the Office of Thrift
Supervision in February 2002. The Office of Thrift Supervision had concerns
regarding oversight of the Bank by the Board and management, citing the failure
to establish and update appropriate policies for the Bank's operations and
failure to establish an internal audit program. Additionally, the Office of
Thrift Supervision had concerns regarding asset quality, in particular the
Bank's underwriting and credit administration and monitoring of the one- to
four- family non-owner occupied mortgage loan portfolio (investor loans). The
Bank's loan originations and asset growth were restricted while it was operating
under such agreement. The agreement was terminated on December 10, 2003
following the determination by the Office of Thrift Supervision that the Bank
was in compliance, in all material respects, with the directives the Office of
Thrift Supervision had made to the Bank in the supervisory agreement. The Bank
was also subject to a Safety and Soundness Compliance Plan from May 2001 to
October 31, 2003. See Supervisory Agreements on page 64.

We operate in a highly regulated environment and may be adversely affected by
changes in laws and regulations.

The Bank is subject to extensive regulation, supervision and
examination by the Office of Thrift Supervision and by the Federal Deposit
Insurance Corporation. Such regulation and supervision govern the activities in
which a bank and its holding company may engage. Such regulation and supervision
is intended primarily for the protection of the insurance fund and depositors
and not for the protection of investors in the common stock of SE Financial
Corp. Regulatory authorities have extensive discretion in connection with their
supervisory and enforcement activities, including the imposition of restrictions
on the operation of a bank, the classification of assets by a bank and a bank's
allowance for loan losses. Any change in regulation

and oversight, whether in the form of regulatory policy, regulations, or
legislation could have a material impact on SE Financial Corp., its subsidiaries
and their operations. See Regulation beginning on page 62.

Our return on equity after the offering is expected to be low; this may
negatively affect the price of our stock.

The net proceeds from the offering will substantially increase our
equity capital. It will take a significant period of time to prudently invest
this capital. For the year ended October 31, 2003, our return on average equity
was 7.23%. On a pro forma basis assuming that 1,950,000 shares had been sold at
the beginning of the fiscal year and the proceeds invested at an after-tax rate
of 1.44%, our return on average equity for the year ended October 31, 2003 would
have been approximately 2.61%. The median return on average equity for the
comparable peer group of 10 fully-converted thrift institutions selected by the
independent appraiser for comparison to St. Edmond's Federal Savings Bank was
6.45%. As a result, our return on equity following the offering, which is the
ratio of our earnings divided by our equity capital, may be lower than that of
similar companies. To the extent that the stock market values a company based in
part on its return on equity, our low return on equity relative to our peer
group could negatively affect the trading price of our stock.

You may not be able to sell your shares when you desire or for $10.00 or more
per share.

Publicly traded stocks can experience substantial market price
volatility. This is due, in part, to investors' shifting perceptions of the
effect on various industry sectors of changes and potential changes in the
economy. Volatility, therefore, may be unrelated to the current operating
performance of particular companies whose shares are traded. The purchase price
of common stock sold in conversion transactions is based on an independent
appraisal. Independent appraisals are not intended to be, and should not be
construed as, a recommendation as to the advisability of purchasing shares.
Recent valuations for converting thrifts, such as St. Edmond's Federal Savings
Bank, have been at an historically high level. After our common stock begins to
trade, the trading price will be determined by the marketplace. The trading
price will fluctuate because it will be influenced by many factors, including
prevailing interest rates, other economic conditions, our operating performance
and investor perceptions of the outlook for us and the banking industry in
general. We cannot assure you that if you choose to sell shares you purchased in
the stock offering, you will be able to sell them at or above the $10 per share
offering price.

The expenses related to our stock-based benefit plans and the expenses related
to being a public company will reduce our earnings.

We intend to adopt an employee stock ownership plan as part of the
stock offering. We also intend to adopt other stock-based benefit plans. The
money that we use to buy stock to fund our stock-based benefit plans will not be
available for investment and will increase our future expenses. In addition, the
public company costs of preparing reports for stockholders and the Securities
and Exchange Commission will cause our expenses to be higher than they would be
if we did not conduct the stock offering and become a public company. See Pro
Forma Data on page 19 and Management - Potential Stock Benefit Plans on page 74.

The future expenses related to the Bank's incentive compensation plan will
impact our future earnings.

The Bank implemented an Incentive Retirement Plan, effective January 1,
2004, to reward key management and the Board of Directors for achieving
strategic goals of the Bank, including long-term growth of net income. Under
such plan, units are awarded to plan participants and the future value of such

units will be based upon accumulated future retained earnings of the Bank on an
unconsolidated basis above the level of the Bank's retained earnings at January
1, 2004. The aggregate future value of such units awarded will equal up to 10%
of the accumulated future retained earnings of the Bank. Expenses accrued for
the increases in the future value of units awarded will reduce our future
earnings. See Management - Incentive Retirement Plan on page 73.

The implementation of stock-based benefit plans may dilute your ownership
interest in SE Financial Corp.

We intend to adopt a stock option plan and a restricted stock plan
following the stock offering. These stock benefit plans will be funded through
either open market purchases or from the issuance of authorized but unissued
shares. Stockholders would experience a reduction in ownership interest in the
event newly issued shares are used to fund stock options and awards made under
the restricted stock plan. The use of newly issued shares of stock to fund the
restricted stock plan instead of open market purchases would dilute the voting
interests of existing stockholders by approximately 3.8%. The use of newly
issued shares of stock to fund the stock option plan instead of open market
purchases would dilute the voting interests of existing stockholders by
approximately 9.1%. See Management - Potential Stock Benefit Plans on page 74.

The Bank originates "investor loans" as well as commercial real estate loans and
intends to continue its origination of such loans after the offering. The
repayment risk related to these types of loans is considered to be greater than
the risk related to mortgage loans on owner occupied one- to four-family
residential properties.

At October 31, 2003, approximately $10.9 million of the Bank's one- to
four-family mortgage loans consisted of mortgage loans on nonowner-occupied
properties, representing 30.1% of one- to four-family mortgage loans and 21.5%
of total loans. These consist primarily of "investor loans" secured by one- to-
four family residences. At October 31, 2003, the Bank also had $4.0 million of
multi-family and commercial real estate loans. It is the Bank's intention to
continue to originate these types of loans in the future. These types of loans
are generally considered to involve a higher degree of credit risk than
financing of owner occupied residential properties and any late payments or the
failure to repay such loans would hurt the Bank's earnings. See Business of St.
Edmond's Federal Savings Bank - Lending Activities on page 44.

We plan to remain independent.

It is our intention to continue operating as an independent financial
institution. We do not currently plan to undertake a sale of SE Financial Corp.
even if the acquisition would result in our stockholders receiving a substantial
premium over the market price of our stock at the time of a sale. Our articles
of incorporation and bylaws contain provisions that may make it difficult for
someone to acquire control of us. These provisions may discourage takeover
attempts and prevent you from receiving a premium over the market price of your
shares as part of a takeover.

Additionally, Office of Thrift Supervision regulations may also prevent
anyone from acquiring us for three years after the conversion. The Office of
Thrift Supervision's approval of the conversion will be conditioned on St.
Edmond's Federal Savings Bank retaining a charter that subjects it to Office of
Thrift Supervision jurisdiction for at least three years following the
conversion. This condition may make it unattractive for an entity that is not
regulated by the Office of Thrift Supervision to acquire St. Edmond's Federal
Savings Bank. See Restrictions on Acquisitions of SE Financial Corp. on page 96.

The amount of stock held by our officers and directors and stock benefit plans
could make it difficult for stockholders to adopt proposals or approve takeover
attempts not supported by management.

The amount of ownership and control of our stock by directors and
officers could make it difficult for stockholders to make successful stockholder
proposals if they are opposed by management and the Board of Directors. In
addition, directors and officers could use their voting power to block the
approval of transactions, such as business combinations and amendments to SE
Financial Corp.'s articles of incorporation or bylaws, which are required by the
articles of incorporation to be approved by at least 80% of the stockholders.
Our directors and officers are expected to purchase approximately 101,500 shares
of stock in the offering, 5.2% if 1,950,000 shares, the midpoint of the offering
range, are sold, and purchases of stock in the offering by these persons will be
counted toward the minimum of 1,657,500 shares that must be sold in order to
complete the offering. In addition, approximately 8% of the shares of common
stock issued in the offering are expected to be purchased by our employee stock
ownership plan. Shares owned by the St. Edmond's Federal Savings Bank's employee
stock ownership plan which have not yet been allocated to the accounts of
employees will be voted by a committee of non-employee directors. If we
implement stock benefit plans, the ownership and control by officers and
directors would increase, causing voting dilution to the other stockholders. See
Management - Executive Compensation - Employee Stock Ownership Plan and
Management - Potential Stock Benefit Plans.

Increases in market rates of interest could adversely affect our retained
earnings.

At October 31, 2003, St. Edmond's Federal Savings Bank held
approximately $27.3 million in available-for-sale securities. Generally accepted
accounting principles require that these securities be carried at fair value on
the Bank's balance sheet. Unrealized holding gains or losses on these
securities, that is, the difference between the fair value and the amortized
cost of these securities, net of deferred taxes, is reflected in retained
earnings.

When interest rates increase, the fair value of St. Edmond's Federal
Savings Bank's available-for- sale securities generally decreases, which also
decreases retained earnings. As of October 31, 2003, St. Edmond's Federal
Savings Bank's retained earnings included approximately $84,000 in other
comprehensive loss, which was comprised exclusively of net unrealized holding
losses on its available-for-sale securities portfolio.

Deposits are the Bank's major source of funds for lending and other investment
purposes, and a large portion of its deposits are certificates of deposit, which
are not as stable as other types of deposits.

At October 31, 2003, $51.9 million, or 71.6%, of the Bank's total
deposits were certificates of deposit, and of that amount $9.1 million, or 17.5%
of the certificates of deposit, were "jumbo" certificates of $100,000 or more.
Deposit inflows are significantly influenced by general interest rates and money
market conditions. The inflow of certificates of deposit and the retention of
such deposits upon maturity are particularly sensitive to general interest rates
and money market conditions, making certificates of deposits traditionally a
more volatile source of funding than core deposits. In order to retain
certificates of deposits, the Bank may have to pay a premium rate, resulting in
an increase in its cost of funds. In a rising rate environment, the Bank may be
unwilling or unable to pay a competitive rate. To the extent that such deposits
do not remain with the Bank, they may need to be replaced with borrowings which
could increase the Bank's cost of funds and negatively impact its interest rate
spread and its financial condition.

withdrawal penalty. If rates rise, these deposits may be withdrawn without
penalty and the actual maturity of these certificates of deposit may be
materially less than indicated. The Bank no longer offers certificates of
deposit with this no-penalty provision. At October 31, 2003, the weighted
average rate was 3.805% and the scheduled maturities on these certificates of
deposit were as follows: $3,722,000 within one year; $4,036,000 beyond one year
but within two years; $4,360,000 beyond two years but within three years;
$4,722,000 beyond three years but within four years; and $7,400,000 beyond four
years but within five years.

A downturn in the Bank's local economy may adversely affect its earnings.

The Bank's business of attracting deposits and making loans is
primarily conducted within its primary market areas. A downturn in the local
economy could reduce the amount of funds available for deposit and the ability
of borrowers to repay their loans and could negatively impact collateral values.
As a result, the Bank's earnings could be adversely affected.

If the Bank's allowance for loan losses is not sufficient to cover actual loan
losses, the Bank's earnings could decrease.

The Bank makes various assumptions and judgments about the
collectibility of its loan portfolio, including the creditworthiness of its
borrowers and the value of the real estate and other assets serving as
collateral for the repayment of many of its loans. In determining the amount of
the allowance for loan losses, the Bank reviews its loans and its loss and
delinquency experience and evaluates economic conditions. If the Bank's
assumptions are incorrect, its allowance for loan losses may not be sufficient
to cover losses inherent in its loan portfolio, resulting in additions to its
allowance. Material additions to the Bank's allowance would materially decrease
its net income.

In addition, regulators periodically review the Bank's allowance for
loan losses and may require it to increase its provision for loan losses or
recognize further loan charge-offs. Any increase in its allowance for loan
losses or loan charge-offs as required by these regulatory authorities may have
a material adverse effect on the Bank's results of operations and financial
condition.

If we receive orders for only the minimum number of shares required to be sold,
we will have less proceeds than if we sold more shares, which may affect our
business plans and earnings.

We are required to sell a minimum of 1,657,500 shares in order to
complete this stock offering. If we do not receive orders for more than the
minimum number of shares, we may still complete the offering, but we will have
approximately $16.1 million of net proceeds, compared to $21.9 million at the
maximum of the offering range. Having less net proceeds from the offering may
affect our earnings and our business plans because it means we will have less
funds to invest in loans and investments and less capital to fund the potential
expansion of our branch network. Our directors and officers are expected to
purchase approximately 101,500 shares of stock in the offering, 5.2% if
1,950,000 shares, the midpoint of the offering range, are sold, and purchases of
stock in the offering by these persons will be counted toward the minimum of
1,657,500 shares that must be sold in order to complete the offering.

We will have substantial discretion over the use of the proceeds of the
offering, and we may not apply the proceeds in the most profitable manner.

We will have broad discretion over the use of the proceeds from this
stock offering. Although we intend to use the net proceeds in the most
profitable manner, our failure to utilize these funds effectively

could hurt our profits. We will use at least 50% of the net proceeds from the
offering to make a capital contribution to St. Edmond's Federal Savings Bank.
The funds received by the Bank will be used for general business purposes,
including potentially expanding the branch office network. We will also lend the
Bank's employee stock ownership plan cash to enable the plan to buy up to 8% of
the shares issued in the offering. The balance of the net proceeds will be
retained by SE Financial Corp., and we will initially invest these proceeds in
short-term investment securities.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements about St. Edmond's
Federal Savings Bank and subsidiary. Forward-looking statements include
statements about anticipated operating and financial performance, such as loan
originations, operating efficiencies, loan sales, charge-offs and loan loss
provisions, growth opportunities, interest rates, and deposit growth. Words such
as "may," "could," "should," "would," "believe," "anticipate," "estimate,"
"expect," "intend," "project," "plan," and similar expressions are intended to
identify these forward-looking statements.

Forward-looking statements are necessarily subject to many risks and
uncertainties. A number of things could cause actual results to differ
materially from those indicated by the forward-looking statements. These
include, but are not limited to, the factors discussed immediately below, those
addressed under the caption Management's Discussion and Analysis of Financial
Condition and Results of Operations, other factors discussed elsewhere in this
document, and those presented elsewhere by management from time to time. Many of
the risks and uncertainties are beyond our control. The following factors could
cause our operating and financial performance to differ materially from the
plans, objectives, assumptions, expectations, estimates, and intentions
expressed in forward-looking statements:

o general economic conditions, either nationally, regionally or locally, may
be less favorable than we expect, resulting in a deterioration in the
credit quality of our loans, among other things;

o the effects of, and changes in, trade, monetary and fiscal policies and
laws, including interest-rate policies of the Federal Reserve Board;

o inflation, interest rate, market, and monetary fluctuations;

o the development and acceptance of new products and services of St. Edmond's
Federal Savings Bank and subsidiary and the perceived overall value of
these products and services by users, including the features, pricing, and
quality compared to competitors' products and services;

o the willingness of users to substitute our products and services for those
of competitors;

o the impact of changes in laws and regulations applicable to financial
services (including laws concerning taxes, banking, securities, and
insurance); and

o changes in consumer spending and saving habits.

Forward-looking statements are based on our beliefs, plans, objectives,
goals, assumptions, expectations, estimates, and intentions as of the date the
statements are made. Investors should exercise caution because St. Edmond's
Federal Savings Bank cannot give any assurance that these beliefs, plans,
objectives, goals, assumptions, expectations, estimates, and intentions will be
realized.

USE OF PROCEEDS

The net proceeds will depend on the expenses incurred by us in
connection with the offering and the total number of shares of stock issued in
the offering, which will depend on the independent valuation and marketing
considerations. Although the actual net proceeds from the sale of the common
stock cannot be determined until the offering is completed, we estimate that we
will receive net proceeds from the sale of common stock of between $16,109,000
at the minimum and $21,901,000 at the maximum of the offering range.

MAXIMUM, AS
MINIMUM MIDPOINT MAXIMUM ADJUSTED
---------------- ---------------- ----------------- ----------------
$ % $ % $ % $ %
------- ----- ------- ----- ------- ----- ------- -----
(Dollars in thousands)

Loan to employee stock
ownership plan.......... $ 1,326 8.2% $ 1,560 8.2% $ 1,794 8.2% $ 2,063 8.2%
Investment in Bank.......... 8,054 50.0 9,503 50.0 10,951 50.0 12,616 50.0
SE Financial Corp.
working capital......... 6,729 41.8 7,942 41.8 9,156 41.8 10,552 41.8
------- ----- ------- ----- ------- ----- ------- -----
Net Proceeds........ $16,109 100.0% $19,005 100.0% $21,901 100.0% $25,231 100.0%
======= ===== ======= ===== ======= ===== ======= =====

We will use at least 50% of the cash received in the offering to
purchase all of St. Edmond's Federal Savings Bank's stock. We will also lend the
Bank's employee stock ownership plan cash to enable the plan to buy 8% of the
shares sold in the offering. The balance will be retained as our initial
capitalization and used for general business purposes which may include
investment in securities, paying cash dividends or repurchasing shares of our
common stock. We will initially invest the proceeds in short-term investment
securities.

The funds received by the Bank from us in exchange for all its stock to
be issued in the conversion will be used for general business purposes,
including originating loans and purchasing securities. Net proceeds may also be
used by the Bank to make contributions to the employee stock ownership plan
which in turn would be used to repay the loan from us.

In addition, the Bank may also use the proceeds of the offering to
expand either through opening or acquiring branch offices. The Bank may also
relocate its Sewell, New Jersey office to a new site. The Bank does not,
however, have any current understandings, agreements or arrangements for the
expansion of its business, either through repositioning existing branches or the
addition of new branch offices.

If the employee stock ownership plan does not purchase common stock in
the offering, it may purchase shares of common stock in the market after the
conversion. If the purchase price of the common stock is higher than $10 per
share, the amount of proceeds required for the purchase by the employee stock
ownership plan will increase and the resulting stockholders' equity will
decrease.

The net proceeds may vary significantly because total expenses of the
conversion may be significantly more or less than those estimated. The net
proceeds will also vary if the number of shares to be issued in the conversion
are adjusted to reflect a change in the estimated pro forma market value of SE
Financial Corp. and St. Edmond's Federal Savings Bank. Payments for shares made
through withdrawals from existing deposit accounts at the Bank will not result
in the receipt of new funds for investment but will result in a reduction of the
Bank's deposits and interest expense as funds are transferred from
interest-bearing certificates or other deposit accounts.

DIVIDEND POLICY

The timing, frequency and initial amount of any dividends would be
determined by the Board. In making its decision, the Board of Directors will
consider several factors, including financial condition, results of operations,
tax considerations, industry standards and general economic conditions.

SE Financial Corp.'s ability to pay dividends also depends on the
receipt of dividends from St. Edmond's Federal Savings Bank which is subject to
a variety of regulatory limitations on the payment of dividends. See Regulation
- - Regulation of St. Edmond's Federal Savings Bank - Dividend and Other Capital
Distribution Limitations. Furthermore, as a condition to Office of Thrift
Supervision approval of the conversion, SE Financial Corp. has agreed that it
will not initiate any action within one year of completion of the conversion in
the furtherance of payment of a special distribution or return of capital to
stockholders of the Company.

MARKET FOR THE STOCK

SE Financial Corp. has never issued capital stock. Consequently, there
is not, at this time, any market for the stock. Following the completion of the
offering, SE Financial Corp. anticipates that its stock will be traded on the
over-the-counter market with quotations available through the OTC Electronic
Bulletin Board. Sandler O'Neill & Partners, L.P. has advised us that it intends
to make a market in our common stock following the offering, but it is under no
obligation to do so.

The development of an active trading market depends on the existence of
willing buyers and sellers. Due to the small size of the offering, it is highly
unlikely that an active trading market will develop and be maintained after the
offering. The small amount of stock being issued to the public may make it
difficult to buy or sell our stock in the future. You could have difficulty
disposing of your shares and you should not view the shares as a short term
investment. We cannot assure you that an active trading market for the common
stock will develop or that, if it develops, it will continue. Nor can we assure
you that, if you purchase shares of common stock, you will be able to sell them
at or above $10.00 per share.

CAPITALIZATION

Set forth below is the historical capitalization of the Bank as of
October 31, 2003 and the pro forma capitalization of SE Financial Corp. after
giving effect to the offering. The table also gives effect to the assumptions
set forth under Pro Forma Data. We are offering for sale up to 2,242,500 shares
of common stock and must sell a minimum of 1,657,500 shares in order to complete
the offering. We may sell up to 2,578,875 shares because of changes in market or
general financial and economic conditions without notifying prospective
purchasers.

Pro Forma Capitalization at October 31, 2003
---------------------------------------------------------
Maximum,
Minimum Midpoint Maximum as adjusted
1,657,500 1,950,000 2,242,500 2,578,875
Actual, at Shares at Shares at Shares at Shares at
October 31, $10.00 per $10.00 per $10.00 per $10.00 per
2003 share share share share(1)
---- ----- ----- ----- --------
(In thousands)

Deposits(2)................................... $ 72,273 $ 72,273 $ 72,273 $ 72,273 $ 72,273
Borrowed funds................................ 6,637 6,637 6,637 6,637 6,637
-------- --------- --------- --------- ---------
Total deposits and borrowed funds............. $ 78,910 $ 78,910 $ 78,910 $ 78,910 $ 78,910
======== ========= ========= ========= =========
Retained earnings/Stockholders' equity:
Preferred stock, no par value, 2,000,000
shares authorized; none to be issued........ $ -- $ - $ -- $ -- $ --
Common stock, $0.10 par value, 8,000,000
shares authorized, assuming shares
outstanding as shown(3)..................... -- 166 195 224 258
Additional paid-in capital(3)(4).............. -- 15,943 18,810 21,677 24,973
Retained earnings(5).......................... 7,756 7,756 7,756 7,756 7,756
Accumulated other comprehensive income, net
of taxes.................................. (84) (84) (84) (84) (84)
Less:
Common stock acquired by ESOP(6)............ -- 1,326 1,560 1,794 2,063
Common stock acquired by
restricted stock plan(7).................. -- 663 780 897 1,032
-------- --------- --------- --------- ---------
Total retained earnings/stockholders' equity.. $ 7,672 $ 21,792 $ 24,337 $ 26,882 $ 29,808
======== ========= ========= ========= =========

- --------------
(1) As adjusted to give effect to an increase in the number of shares which
could occur due to an increase in the independent valuation and a
commensurate increase in the offering range of up to 15% to reflect changes
in market and financial conditions.
(2) Does not reflect withdrawals from deposit accounts for the purchase of
stock in the offering. Any withdrawals would reduce pro forma deposits by
an amount equal to the withdrawals.
(3) No effect has been given to the issuance of additional shares of stock
pursuant to any stock option plans that may be adopted by SE Financial
Corp. and the Bank and presented for approval by the stockholders after the
offering. An amount equal to 10% of the shares of stock sold in the
offering would be reserved for issuance upon the exercise of options to be
granted under the stock option plans within one year following the
conversion. See Management - Potential Stock Benefit Plans - Stock Options
Plans.
(4) Additional paid-in capital amounts are net of offering expenses.
(5) Retained earnings will be substantially restricted after the conversion.
(6) Assumes that 8% of the shares sold in the offering will be purchased by the
employee stock ownership plan, and that the funds used to acquire the ESOP
shares will be borrowed from SE Financial Corp. For an estimate of the
impact of the loan on earnings, see Pro Forma Data. The Bank intends to
make scheduled discretionary contributions to the employee stock ownership
plan sufficient to enable the plan to service and repay its debt over a ten
year period. The amount of shares to be acquired by the ESOP is reflected
as a reduction of stockholders' equity. See Management - Executive
Compensation - Employee Stock Ownership Plan. If the employee stock
ownership plan is unable to purchase stock in the conversion due to an
oversubscription in the offering by eligible account holders having first
priority, and the purchase price in the open market is greater than the
original $10.00 price per share, there will be a corresponding reduction in
stockholders' equity. See The Offering - Subscription Offering -
Subscription Rights.
(7) Assumes that an amount equal to 4% of the shares of stock sold in the
offering is purchased by the restricted stock plan. The stock purchased by
the restricted stock plan is reflected as a reduction of stockholders'
equity. See footnote (3) to the table under Pro Forma Data. See Management
- Potential Stock Benefit Plans - Restricted Stock Plan.

PRO FORMA DATA

We are offering for sale up to 2,242,500 shares of common stock and
must sell a minimum of 1,657,500 shares in order to complete the offering. We
may sell up to 2,578,875 shares if the independent valuation is increased
because of changes in market or general financial and economic conditions. The
actual net proceeds from the sale of the stock cannot be determined until the
offering is completed. However, investable net proceeds to SE Financial Corp.
are currently estimated to be between approximately $14.1 million and $19.2
million (or $22.1 million if the independent valuation is increased by 15%)
based on the following assumptions:

o an amount equal to the purchase price of 8% of the shares issued will be
loaned to the ESOP to fund its purchase of 8% of the shares issued;

o an amount equal to 4% of the shares issued will be awarded pursuant to the
restricted stock plan adopted no sooner than six months following the
offering, funded through open market purchases; and

o expenses of the offering are estimated to be between approximately $466,000
and $524,000 ($558,000 if the independent valuation is increased by 15%).

The following table sets forth our historical net income and net worth
prior to the conversion and our pro forma consolidated net income and
stockholders' equity following the conversion. In preparing this table and in
calculating pro forma data, we have made the following assumptions:

o Pro forma earnings have been calculated assuming the stock had been sold at
the beginning of the period and the net proceeds had been invested at an
average yield of 2.33% for the year ended October 31, 2003, which
approximates the yield on a three-year U.S. Treasury bill on October 31,
2003. The yield on a three-year U.S. Treasury bill, rather than an
arithmetic average of the average yield on interest-earning assets and
average rate paid on deposits, has been used to estimate income on net
proceeds because it is believed that the three-year U.S. Treasury bill rate
is a more accurate estimate of the rate that would be obtained on an
investment of net proceeds from the offering.

o The pro forma after-tax yield on the net proceeds is assumed to be 1.44%
for the year ended October 31, 2003, based on an effective tax rate of
38.00%.

o We did not include any withdrawals from deposit accounts to purchase shares
in the offering.

o Historical and pro forma per share amounts have been calculated by dividing
historical and pro forma amounts by the indicated number of shares of
stock, as adjusted in the pro forma net earnings per share to give effect
to the purchase of shares by the employee stock ownership plan.

o Pro forma stockholders' equity amounts have been calculated as if the stock
had been sold on October 31, 2003, and no effect has been given to the
assumed earnings effect of the transactions.

The following pro forma data relies on the assumptions we outlined
above, and this data does not represent the fair market value of the common
stock, the current value of assets or liabilities, or the amount of money that
would be distributed to stockholders if we liquidated SE Financial Corp. The pro
forma data does not predict how much we will earn in the future.

The following table summarizes historical data of St. Edmond's Federal
Savings Bank and pro forma data of SE Financial Corp. at or for the year ended
October 31, 2003 based on the assumptions set forth above and in the table and
should not be used as a basis for projections of market value of the stock
following the conversion. No effect has been given in the table to the possible
issuance of additional stock reserved for future issuance pursuant to a stock
option plan that may be adopted by the Board of Directors of SE Financial Corp.
within one year following the conversion, nor does book value give any effect to
the liquidation account to be established or the bad debt reserve in
liquidation. See The Conversion - Effects of the Conversion - Liquidation
Account on page 80 and Management - Potential Stock Benefit Plans - Stock Option
Plan on page 75.

At or For the Year Ended October 31, 2003
-----------------------------------------------------------------
$16,575,000 $19,500,000 $22,425,000 $25,788,750
Independent Independent Independent Independent
Valuation Valuation Valuation Valuation
----------- ----------- ----------- -----------
1,657,500 1,950,000 2,242,500 2,578,875
Shares Shares Shares Shares
----------- ----------- ----------- -----------
(Dollars in thousands, except per share amounts)

Gross proceeds ........................................ $ 16,575 $ 19,500 $ 22,425 $ 25,789
Less expenses ......................................... (466) (495) (524) (558)
----------- ----------- ----------- -----------
Estimated net proceeds ............................. 16,109 19,005 21,901 25,231
Less ESOP funded by SE Financial Corp. ................ (1,326) (1,560) (1,794) (2,063)
Less restricted stock plan adjustment ................. (663) (780) (897) (1,032)
----------- ----------- ----------- -----------
Estimated investable net proceeds .................. $ 14,120 $ 16,665 $ 19,210 $ 22,136
=========== =========== =========== ===========
Net Income:
Historical ......................................... $ 556 $ 556 $ 556 $ 556
Pro forma income on net proceeds(1) ................ 236 273 308 351
Pro forma ESOP adjustments(2) ...................... (82) (97) (111) (128)
Pro forma restricted stock plan adjustment(3) ...... (82) (97) (111) (128)
----------- ----------- ----------- -----------
Pro forma net income(1)(2)(3)(5) ................... $ 628 $ 635 $ 642 $ 651
=========== =========== =========== ===========
Per share net income
Historical ......................................... $ 0.36 $ 0.31 $ 0.27 $ 0.23
Pro forma income on net proceeds(1) ................ 0.15 0.15 0.15 0.15
Pro forma ESOP adjustments(2) ...................... (0.05) (0.05) (0.05) (0.05)
Pro forma restricted stock plan adjustment(3) ...... (0.05) (0.05) (0.05) (0.05)
----------- ----------- ----------- -----------
Pro forma net income per share(1)(2)(3)(5) ......... $ 0.41 $ 0.36 $ 0.32 $ 0.28
=========== =========== =========== ===========
Shares used in calculation of income per share(2) ..... 1,538,160 1,809,600 2,081,040 2,393,196
Stockholders' equity:
Historical ......................................... $ 7,672 $ 7,672 $ 7,672 $ 7,672
Estimated net proceeds ............................. 16,109 19,005 21,901 25,231
Less: Common Stock acquired ESOP(2) ................ (1,326) (1,560) (1,794) (2,063)
Less: Common Stock acquired by restricted
stock plan(3) ................................ (663) (780) (897) (1,032)
----------- ----------- ----------- -----------
Pro forma stockholders' equity(2)(3)(4)(5) ......... $ 21,792 $ 24,337 $ 26,882 $ 29,808
=========== =========== =========== ===========
Stockholders' equity per share:
Historical ......................................... $ 4.63 $ 3.93 $ 3.42 $ 2.97
Estimated net proceeds ............................. 9.72 9.75 9.77 9.78
Less: Common Stock acquired by the ESOP(2) ......... (0.80) (0.80) (0.80) (0.80)
Less: Common stock acquired by restricted
stock plan(3) ................................ (0.40) (0.40) (0.40) (0.40)
----------- ----------- ----------- -----------
Pro forma stockholders' equity per share(2)(3)(4)(5) $ 13.15 $ 12.48 $ 11.99 $ 11.55
=========== =========== =========== ===========
Offering price as a percentage of pro forma
stockholders' equity per share ...................... 76.05% 80.13% 83.40% 86.58%
=========== =========== =========== ===========
Offering price to pro forma
net income per share ................................ 24.39X 27.78X 31.25X 35.71%
=========== =========== =========== ===========
Shares used in calculation of stockholders' equity
per share ........................................... 1,657,500 1,950,000 2,242,500 2,578,875

- ------------------------
(1) Pro forma income on net proceeds gives effect to anticipated income
generated by the investment in bank-owned life insurance, approved by the
Board subsequent to October 31, 2003, and anticipated cost of the Incentive
Retirement Plan, implemented by the Bank effective January 2004. Such plan
provides for the award of units with an aggregate value of up to 10% of the
accumulated future retained earnings of the Bank earned after January 1,
2004 on an unconsolidated basis. The estimated pro forma net impact of the
investment in bank-owned life insurance and the implementation of the
Incentive Retirement Plan for the year ended October 31, 2003 is an after
tax positive adjustment of $33,000, $33,000, $32,000 and $32,000, at the
minimum, midpoint, maximum and 15% above the maximum of the range,
respectively, See Incentive Retirement Plan on page 73.

(2) Assumes that 8% of the shares of stock sold in the offering will be
purchased by the employee stock ownership plan and that the plan will
borrow funds from SE Financial Corp. The stock acquired by the employee
stock ownership plan is reflected as a reduction of stockholder's equity.
The Bank intends to make annual contributions to the plan in an amount at
least equal to the principal and interest requirement of the loan. This
table assumes a ten year amortization period. See Management - Executive
Compensation - Employee Stock Ownership Plan. The pro forma net earnings
assumes: (i) that the Bank's contribution to the employee stock ownership
plan for the principal portion of the debt service requirement for year
ended October 31, 2003 was made at the end of the period; (ii) that 13,260,
15,600, 17,940 and 20,631 shares at the minimum, midpoint, maximum, and 15%
above the maximum of the range, respectively, were committed to be released
during the year ended October 31, 2003, at an average fair value of $10.00
per share and were accounted for as a charge to expense in accordance with
Statement of Position ("SOP") No. 93-6; and (iii) only the employee stock
ownership plan shares committed to be released were considered outstanding
for purposes of the net earnings per share calculations. All employee stock
ownership plan shares were considered outstanding for purposes of the
stockholders' equity per share calculations.

(3) Gives effect to the restricted stock plan that may be adopted by the Bank
following the conversion and presented for approval at a meeting of
stockholders after completion of the conversion. If the restricted stock
plan is approved by the stockholders, the restricted stock plan would be
expected to acquire an amount of stock equal to 4% of the shares of stock
sold in the offering, or 66,300, 78,000, 89,700 and 103,155 shares of stock
respectively at the minimum, midpoint, maximum and 15% above the maximum of
the range through open market purchases. Funds used by the restricted stock
plan to purchase the shares will be contributed to the restricted stock
plan by the Bank. In calculating the pro forma effect of the restricted
stock plan, it is assumed that the required stockholder approval has been
received, that the shares were acquired by the restricted stock plan at the
beginning of the year ended October 31, 2003 through open market purchases,
at $10.00 per share, and that 20% of the amount contributed was amortized
to expense during the year ended October 31, 2003. The plan will be
amortized over five years. The issuance of authorized but unissued shares
of stock to the restricted stock plan instead of open market purchases
would dilute the voting interests of existing stockholders by approximately
3.8% and pro forma net income per share for the year ended October 31, 2003
would be $0.40, $0.34, $0.30 and $0.27, at the minimum, midpoint, maximum
and 15% above the maximum of the range, respectively, and pro forma
stockholders' equity per share at October 31, 2003 would be $12.64, $12.00,
$11.53 and $11.11, at the minimum, midpoint, maximum and 15% above the
maximum of the range, respectively. There can be no assurance that
stockholder approval of the restricted stock plan will be obtained, or the
actual purchase price of the shares will be equal to $10.00 per share. See
Management - Potential Stock Benefit Plans - Restricted Stock Plan.

(4) The retained earnings of SE Financial Corp. and the Bank will continue to
be substantially restricted after the conversion. See Dividend Policy, The
Conversion - Effects of Conversion - Liquidation Rights and Regulation -
Regulation of St. Edmond's Federal Savings Bank - Dividends and Other
Capital Distribution Limitations.

(5) No effect has been given to the issuance of additional shares of stock
pursuant to the stock option plan that may be adopted by the Bank following
the conversion which, in turn, would be presented for approval at a meeting
of stockholders to be held within one year after the completion of the
conversion. If the stock option plan is presented and approved by
stockholders, an amount equal to 10% of the stock sold in the offering, or
165,750, 195,000, 224,250 and 257,888 shares at the minimum, midpoint,
maximum and 15% above the maximum of the range, respectively, will be
reserved for future issuance upon the exercise of options to be granted
under the stock option plans. The issuance of authorized but unissued
shares of stock to the stock plan instead of open market purchases would
dilute the voting interests of existing stockholders by approximately 9.1%.
Assuming stockholder approval of the stock option plans and the exercise of
all options at the end of the period at an exercise price of $10.00 per
share, the pro forma net earnings per share would be $0.37, $0.32, $0.28
and $0.25, respectively at the minimum, midpoint, maximum and 15% above the
maximum of the range for the year ended October 31, 2003; pro forma
stockholders' equity per share would be $12.86, $12.26, $11.81 and $11.42,
respectively at the minimum, midpoint, maximum and 15% above the maximum of
the range at October 31, 2003. See Management - Potential Stock Benefit
Plans - Stock Option Plans.

HISTORICAL AND PRO FORMA CAPITAL COMPLIANCE

The following table presents the St. Edmond's Federal Savings Bank's
historical and pro forma capital position relative to its capital requirements
as of October 31, 2003. Pro forma capital levels assume receipt by St. Edmond's
Federal Savings Bank of 50% of the net proceeds. For a discussion of the
assumptions underlying the pro forma capital calculations presented below, see
Use of Proceeds, Capitalization and Pro Forma Data. The definitions of the terms
used in the table are those provided in the capital regulations issued by the
Office of Thrift Supervision. For a discussion of the capital standards
applicable to the Bank, see Regulation - Regulation of St. Edmond's Federal
Savings Bank - Regulatory Capital Requirements.

Pro Forma at October 31, 2003
-------------------------------------------------------------------------------------

Actual, at $16,575,000 $19,500,000 $22,425,000 $25,788,750
October 31, 2003 Offering Offering Offering Offering(1)
---------------- -------- -------- -------- -----------

Percentage Percentage Percentage Percentage Percentage
Amount of Assets(2) Amount of Assets(2) Amount of Assets(2) Amount of Assets(2) Amount of Assets(2)
------ ------------ ------ ------------ ------ ------------ ------ ------------ ------ ------------
(Dollars in thousands)

GAAP Capital(3)...... $ 7,672 8.78% $13,738 14.70% $14,835 15.69% $15,932 16.66% $17,193 17.74%

Tangible Capital:
Actual or
Pro Forma........ $ 7,756 8.86% $13,822 14.77% $14,919 15.76% $16,016 16.72% $17,277 17.81%
Required........... 1,313 1.50 1,404 1.50 1,420 1.50 1,436 1.50 1,455 1.50
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Excess............. $ 6,443 7.36% $12,418 13.27% $13,499 14.26% $14,580 15.22% $15,822 16.31%
======= ==== ======= ===== ======= ===== ======= ===== ======= =====

Core Capital:
Actual or
Pro Forma........ $ 7,756 8.86% $13,822 14.77% $14,919 15.76% $16,016 16.72% $17,277 17.81%
Required(4)........ 3,500 4.00 3,743 4.00 3,787 4.00 3,831 4.00 3,881 4.00
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Excess............. $ 4,256 4.86% $10,079 10.77% $11,132 11.76% $12,185 12.72% $13,396 13.81%
======= ==== ======= ===== ======= ===== ======= ===== ======= =====

Risk-Based Capital:
Actual or
Pro Forma(5)(6).. $ 8,018 21.03% $14,084 35.81% $15,181 38.38% $16,287 40.93% $17,539 43.82%
Required........... 3,050 8.00 3,147 8.00 3,164 8.00 3,182 8.00 3,202 8.00
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Excess............. $ 4,968 13.03% $10,937 27.81% $12,017 30.38% $13,105 32.93% $14,337 35.82%
======= ===== ======= ===== ======= ===== ======= ===== ======= =====

- ---------------
(1) As adjusted to give effect to an increase in the number of shares which
could occur due to an increase in the offering range of up to 15% as a
result of regulatory considerations or changes in market or general
financial and economic conditions following the commencement of the
offerings.
(2) Tangible and core capital levels are shown as a percentage of total
adjusted assets. The risk-based capital level is shown as a percentage of
risk-weighted assets.
(3) GAAP Capital includes unrealized gain on available-for-sale securities,
net, which is not included as regulatory capital.
(4) The current Office of Thrift Supervision core capital requirement for
savings banks is 3% of total adjusted assets for thrifts that receive the
highest supervisory rating for safety and soundness and a 4% to 5% core
capital ratio requirement for all other thrifts. See Regulation -
Regulation of St. Edmond's Federal Savings Bank - Regulatory Capital
Requirements.
(5) Assumes net proceeds are invested in assets that carry a 20% risk-weighing.
(6) The difference between retained earnings under GAAP and regulatory
risk-based capital is attributable to the addition of the general valuation
allowance of $246,000 at October 31, 2003 and the subtraction of net
unrealized losses on available for sale securities of $84,000.

RECENT DEVELOPMENTS

The following consolidated financial information and other data in this
section are derived from the Bank's unaudited consolidated financial statements
for the three months ended January 31, 2004 and 2003 and should be read together
with the Bank's consolidated financial statements and the notes thereto
beginning on page F-2 of this prospectus. In the opinion of management, all
adjustments consisting of normal recurring adjustments that are necessary for a
fair presentation of the interim periods have been reflected. The results of
operations and other data presented for the three months ended January 31, 2004
do not necessarily indicate the results that may be expected for the fiscal year
ending October 31, 2004 or any other period.

At At
January 31, October 31,
2004 2003
----------- -----------
(In thousands)
Balance Sheet:
Assets ..................................... $86,223 $87,367
Loans receivable, net ...................... 51,399 50,730
Investment securities ...................... 29,021 27,337
Cash and cash equivalents .................. 1,373 6,304
Deposits ................................... 70,647 72,273
FHLB borrowings ............................ 6,622 6,637
Total retained earnings .................... 7,946 7,672

For the Three Months Ended
January 31,
---------------------------
2004 2003
------- -------
(In thousands)
Summary of Operations:
Interest and dividend income ............... $ 1,181 $ 1,365
Interest expense ........................... 529 681
------- -------
Net interest income ........................ 652 684
Provision for loan losses .................. 9 9
------- -------
Net interest income after provision.........
for loan losses .......................... 643 675
Noninterest income ......................... 82 110
Noninterest expense ........................ 563 572
------- -------
Income before income taxes ................. 162 213
Income taxes ............................... 62 79
------- -------
Net income ................................. $ 100 $ 134
======= =======

Actual number (not in thousands):
Real estate loans outstanding .............. 860 863
Deposit accounts ........................... 6,611 6,709
Offices .................................... 2 2

Selected Financial Ratios

At or For
the Three Months Ended
January 31,
----------------------
2004 2003
----------------------

Performance Ratios:(1)
Return on average assets (net income divided by
average total assets) .......................... 0.46% 0.62%

Return on average equity (net income divided by
average equity) ................................. 5.13% 7.14%

Net interest rate spread ........................... 2.91% 3.02%

Net interest margin on average interest-earning
assets .......................................... 3.17% 3.33%

Average interest-earning assets to average
interest-bearing liabilities .................... 110.55% 109.36%

Efficiency ratio (noninterest expense divided by the
sum of net interest income and noninterest
income) ......................................... 76.70% 72.00%

Asset Quality Ratios:
Non-performing loans to total loans, net ........... 0.36% 1.08%

Non-performing assets to total assets .............. 0.22% 0.66%

Net charge-offs to average loans outstanding ....... 0.00% 0.02%

Allowance for loan losses to total loans ........... 0.53% 0.53%

Allowance for loan losses to non-performing loans .. 149.73% 49.35%

Capital Ratios:
Average equity to average assets
(average equity divided by average total assets) 8.92% 8.65%

Equity to assets at period end ..................... 9.22% 8.80%

Total risk-based capital ........................... 20.68% 20.44%

Tier I core capital ................................ 9.12% 8.55%

- --------------
(1) Performance ratios for the three months ended January 31, 2004 and 2003 are
annualized where appropriate.

Comparison of the Results of Operation for the Three Months Ended January 31,
2004 and January 31, 2003

The Bank recorded net income of $100,000 for the three months ended
January 31, 2004, which represents a decrease of $34,000, or 25.5%, over the
same period in 2003. The decrease in net income is primarily due to a reduction
of noninterest income and a decrease in net interest income.

Net Interest Income. Net interest income for the three months ended
January 31, 2004 decreased to $652,000 from $684,000 for the same period in
2003. Interest income for the three months ended January 31, 2004 totaled
$1,181,000 as compared to $1,365,000 for the three months ended January 31,
2003. This decrease of $184,000 was attributed primarily to a decrease in the
interest earned on loans receivable and mortgaged-backed securities and was the
product of both volume and rate fluctuations during the period.

Interest expense decreased to $529,000, representing a 22.3% decrease,
for the three months ended January 31, 2004 from $681,000 for the three months
ended January 31, 2003 and was primarily attributable to the current interest
rate environment that resulted in a lowering of the cost of funds to 2.79% for
the three months ended January 31, 2004 as compared to 3.59% for the same period
in 2003.

Loan Loss Provision. The provision for loan losses was $9,000 for the
three months ended January 31, 2004 which is the same amount as for the three
months ended January 31, 2003. The loan loss provision is based upon
management's assessment of a variety of factors, including types and amounts of
nonperforming loans, historical loss experience, collectibility of collateral
values and guaranties, pending legal action for collection of loans and related
guaranties, and current economic conditions. The allowance represents
management's best estimate of known and inherent losses in the loan portfolio at
the balance sheet date that are both probable and reasonable to estimate.
However, actual loan losses could exceed the amounts that have been charged to
operations.

Noninterest Income. Total noninterest income decreased to $82,000 for
the three months ended January 31, 2004 compared to $110,000 for the three
months ended January 31, 2003. The decrease is principally due to a reduction in
service charges and fees on deposit account activity in both the transactional
fees being charged and the volume of related transactions and a reduction in
miscellaneous loan fees. The Bank anticipates the investment in a bank-owned
life insurance product in 2004 should generate additional noninterest income.

Noninterest Expense. Noninterest expense decreased slightly to $563,000
for the three months ended January 31, 2004 from $572,000 for the three months
ended January 31, 2003. Compensation and employee benefit expense increased by
approximately $6,000, occupancy and equipment expense decreased by approximately
$19,000, real estate operation expense decreased by approximately $6,000 and
miscellaneous operating expenses increased by approximately $10,000.

Noninterest expenses are expected to increase in 2004 due to the
additional costs of professional fees associated with becoming a public company,
the implementation of an incentive retirement plan for key employees and
expenses from an employee stock ownership and restricted stock plan.

Additionally, the Bank currently plans to add seven full time employees
to its staff over the next several years, including up to three new
lender/business development officers, an assistant branch manager, and a support
staff employee in each of the accounting, lending and customer service
departments.

Income Taxes. Income taxes declined to $62,000 for the three months
ended January 31, 2004 from $79,000 for the same period in 2003. This was due to
a reduction in pretax income.

Comparison of Financial Condition at January 31, 2004 and October 31, 2003

Assets and Liabilities. The Bank's total assets decreased by $1,144,000
to $86,223,000 at January 31, 2004 from $87,367,000 at October 31, 2003.

Cash and cash equivalents decreased to $1,372,000 at January 31, 2004
from $6,304,000 at October 31, 2003. This decrease was primarily a result of a
reduction in the interest-bearing deposit account.

Investment securities available for sale increased $1,684,000 to
$29,021,000 at January 31, 2004 from $27,337,000 at October 31, 2003. The
increase is due to investment purchases primarily in U. S. government
mortgage-backed securities which were partially offset by investment calls and
maturities and principal repayment on mortgage-backed securities. The Bank
funded this growth with the utilization of excess cash and cash equivalents and
the reinvestment of called and matured securities during the three months ended
January 31, 2004.

Net loans receivable increased $669,000, or 1.3%, to $51,399,000 at
January 31, 2004 from $50,730,000 at October 31, 2003. A slight increase in net
loans receivable was noted during the three months ended January 31, 2004 as the
Bank continued to experience strong loan production and repayments were more
moderate.

The allowance for loan losses increased to $274,000 at January 31, 2004
from $263,000 at October 31, 2003 and represented .53% of the gross loan
portfolio at January 31, 2004. The Bank had nonaccrual loans of $171,000 and
$370,000 at January 31, 2004 and October 31, 2003. Management does not believe
the nonaccrual loans or any amounts classified as nonperforming will have a
significant effect on operations or liquidity in 2004. Furthermore, management
is not aware of any trends or uncertainties related to any loans classified as
doubtful or substandard that might have a material effect on earnings, liquidity
or capital resources.

Total deposits decreased to $70,647,000 at January 31, 2004 from
$72,273,000 at October 31, 2003. This was primarily a result of a decrease in
certificates of deposit. Although time deposits declined, they continued to
account for 71.05% of the total deposit portfolio and remain a dominant resource
for funds.

Federal Home Loan Bank borrowings decreased slightly to $6,622,000 at
January 31, 2004 from $6,637,000 at October 31, 2003.

Retained Earnings. Total retained earnings increased $274,000 to
$7,946,000 at January 31, 2004 from October 31, 2003. This increase was
attributable to net income of $100,000 and accumulated other comprehensive
income of $175,000. Accumulated other comprehensive income increased as a result
of changes in the net unrealized gain on investment securities available for
sale. Because of interest rate volatility, accumulated other comprehensive
income could materially fluctuate for each interim period and year end period
depending on economic and interest rate conditions. The Bank is currently in the
process of an initial stock offering, which will include an employee stock
ownership plan and may include a restricted stock plan. The proceeds would
result in additional equity in the immediate future which will be used for
general business purposes.

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

The following consolidated financial information and other data in this
section are derived from the Bank's audited consolidated financial statements
for the years ended October 31, 2003 and 2002 and should be read together with
the Bank's consolidated financial statements and the notes thereto beginning on
page F-2 of this prospectus. References to 2003 or 2002 refer to the fiscal
years ended October 31, 2003 and 2002, respectively.

At October 31,
---------------------------
2003 2002
--------- ----------
(In thousands)
Balance Sheet:
Assets..................................... $87,367 $85,261
Loans receivable, net...................... 50,730 51,689
Investment securities...................... 27,337 23,492
Cash and cash equivalents.................. 6,304 7,301
Deposits................................... 72,273 70,015
FHLB borrowings............................ 6,637 6,694
Total retained earnings.................... 7,672 7,387

For the Year Ended
October 31,
-------------------------
2003 2002
-------- --------
Summary of Operations: (In thousands)
Interest and dividend income............... $5,120 $5,837
Interest expense........................... 2,450 2,999
------ ------
Net interest income........................ 2,670 2,838
Provision for loan losses.................. 33 25
------ ------
Net interest income after provision
for loan losses.......................... 2,637 2,813
Noninterest income......................... 386 365
Noninterest expense........................ 2,177 2,285
------ ------
Income before income taxes................. 846 893
Income taxes............................... 290 364
------ ------
Net income................................. $ 556 $ 529
====== ======

Actual number (not in thousands):
Real estate loans outstanding.............. 863 1,007
Deposit accounts........................... 6,709 7,126
Offices.................................... 2 2

Selected Financial Ratios

At or For
the Year Ended
October 31,
--------------------
2003 2002
---- ----

Performance Ratios:
Return on average assets (net income divided by
average total assets) .......................... 0.64% 0.63%

Return on average equity (net income divided by
average equity) ................................. 7.23% 7.48%

Net interest rate spread ........................... 2.95% 3.18%

Net interest margin on average interest-earning
assets .......................................... 3.26% 3.54%

Average interest-earning assets to average
interest-bearing liabilities .................... 110.36% 109.56%

Efficiency ratio (noninterest expense divided by the
sum of net interest income and noninterest
income) ......................................... 71.24% 71.34%

Asset Quality Ratios:
Non-performing loans to total loans, net ........... 0.75% 1.06%

Non-performing assets to total assets .............. 0.48% 0.65%

Net charge-offs to average loans outstanding ....... 0.07% 0.33%

Allowance for loan losses to total loans ........... 0.51% 0.51%

Allowance for loan losses to non-performing loans .. 68.85% 48.54%

Capital Ratios:
Average equity to average assets
(average equity divided by average total assets) 8.89% 8.40%

Equity to assets at period end ..................... 8.78% 8.66%

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

The consolidated analysis of St. Edmond's Federal Savings Bank and its
wholly-owned subsidiary, SE Investment Services Corp, is intended to assist the
reader in evaluating the performance of the Bank for the years ended October 31,
2003 and 2002. This information should be read in conjunction with the audited
consolidated financial statements and accompanying notes to the consolidated
financial statements.

The Bank, which is subject to regulation and supervision by the Office
of Thrift Supervision, is a federally-chartered savings bank headquartered in
Philadelphia, Pennsylvania. The Bank entered into a supervisory agreement with
the Office of Thrift Supervision in February 2002. While in effect, the
agreement limited the Bank's loan originations and asset growth, including
restricting the Bank from originating non-owner occupied residential real estate
loans (both one- to four-family investor loans and multi-family loans). The
agreement was terminated on December 10, 2003. See Supervisory Agreements on
page 64.

The Bank's principal sources of revenue consist of income from its
residential real estate loans, commercial real estate loans and consumer loans
and its investment securities as well as from a variety of deposit services
offered to its customers through two offices located in Philadelphia County,
Pennsylvania, and Gloucester County, New Jersey.

For the year ended October 31, 2003, the Bank recognized net income of
$556,000 as compared to $529,000 for 2002. Return on average equity for 2003 was
7.23% as compared to 7.48% for 2002. The Bank's earnings reflect strategies
implemented in previous years to strengthen financial discipline by evaluating
inefficiencies within the organization that resulted in the closing of two
branch offices. Savings on occupancy and equipment costs resulting from the
closing of the Germantown office more than offset a reduction in net interest
margin to 3.26% for 2003 from 3.54% for 2002. Meanwhile, asset quality continued
to improve as the Bank focused on enhancing its credit risk management
procedures that resulted in a reduction of nonperforming assets. Average loans
outstanding declined during the period due to refinancings of mortgage loans as
customers took advantage of the low interest rate environment. Funding for
operations continues to be primarily from a competitively priced deposit product
portfolio, as well as from investment repayments and maturities. Leverage
capital ratios remained strong at 8.89% in 2003.

Business Strategy

In the future, the Bank's business strategy will be to grow and improve
its profitability by:

o Emphasizing one- to four-family residential real estate lending
(both owner occupied and investor owned), while continuing to
originate multi-family and commercial real estate lending;

o Increasing assets;

o Utilizing the capital raised in the offering to help manage
interest rate risk;

o Offering new products and services to the Bank's customers; and

o Maintaining high asset quality.

In addition, the Bank may expand either through opening or acquiring
branch offices. The Bank may also relocate its Sewell, New Jersey office to a
new site. The Bank does not, however, have any current understandings,
agreements or arrangements for the expansion of its business, either through
repositioning existing branches or the addition of new branch offices.

Furthermore, the Bank currently plans to add seven full time employees
to its staff over the next several years, including up to three new
lender/business development officers, an assistant branch manager, and a support
staff employee in each of the accounting, lending and customer service
departments.

Critical Accounting Policies

The Bank's accounting policies are integral to understanding the
results reported. The accounting policies are described in detail in Note 1 of
the consolidated financial statements. The Bank's most complex accounting
policies require management's judgment to ascertain the valuation of assets,
liabilities, commitments and contingencies. The Bank has established detailed
policies and control procedures that are intended to ensure valuation methods
are well controlled and applied consistently from period to period. In addition,
the policies and procedures are intended to ensure that the process for changing
methodologies occurs in an appropriate manner. Management believes that the
determination of the allowances for loan losses is a critical policy.

Allowance for Loan Losses. Evaluation of the allowance for loan losses
involves a high degree of judgment. The Bank's allowance for loan losses
provides for losses based upon evaluations of known and inherent losses in the
loan portfolio that are both probable and reasonable to estimate. Accordingly,
all loan losses are charged to the allowance, and all recoveries are credited to
it.

Management uses historical information to assess the allowance for loan
losses as well as the prevailing business environment, as it is affected by
changing economic conditions and various external factors, which may impact the
portfolio in ways currently unforeseen. The allowance is increased by provisions
for loan losses and by recoveries of loans previously charged off and reduced by
loans charged off. For a full discussion of the Bank's methodology of assessing
the allowance for loan losses, refer to Note 1 of the consolidated financial
statements commencing on page F-7.

Comparison of the Results of Operations for the Fiscal Years Ended October 31,
2003 and October 31, 2002

The Bank reported net income of $556,000 for 2003, which represents an
increase of $27,000, or 5.1%, over 2002. This increase in net income is
primarily due to a reduction in noninterest expenses of $108,000, which resulted
from savings associated with closing a branch office located in Germantown,
Pennsylvania coupled with a reduction in income taxes of $74,000. Partially
offsetting these reductions in expenses in 2003 was a decrease in net interest
income of $168,000.

Net Interest Income. Net interest income for 2003 decreased to
$2,670,000 as compared to $2,838,000 for 2002. The Bank's net interest margin
for 2003 was 3.26%, versus 3.54% for 2002.

Interest income for 2003 was $5,120,000 as compared to $5,837,000 for
2002. This decrease of $717,000 or 12.3% was influenced primarily by a decrease
in interest earned on loans receivable of $716,000 and was the product of both
volume and rate fluctuations during the period. The average balance of loans
receivable decreased $5,597,000 to $49,785,000 during 2003 and was the result of
mortgage loan

repayments due to customers refinancing in the current low interest rate
environment. The tax-equivalent yield on interest earning assets decreased to
6.21% for 2003 from 7.27% for 2002, and primarily resulted from a 113 basis
point and 50 basis point decrease in investment securities and loans receivable,
respectively. During 2003, funds from the rapid prepayment of loans and
mortgage-backed securities as well as new deposits were invested at
substantially lower rates than the previous year.

Interest expense decreased $550,000 or 18.3% for 2003 to $2,450,000
from $3,000,000 for 2002. Interest expense incurred on deposits decreased
$478,000 for 2003 as compared to 2002 and was primarily attributable to the
current interest rate environment that resulted in a lowering of the cost of
funds to 3.25% for 2003 from 4.08% for 2002. Although the Bank reduced its costs
on all deposit products during 2003, the largest decline was in certificate of
deposit rates which decreased by 94 basis points. Interest expense on borrowings
also decreased, $222,000 for 2003 as compared to $294,000 for 2002, as a result
of a decline in average balances.

Loan Loss Provision. The loan loss provision is based upon management's
assessment of a variety of factors, including types and amounts of nonperforming
loans, historical loss experience, collectibility of collateral values and
guaranties, pending legal action for collection of loans and related guaranties,
and current economic conditions. The allowance represents management's best
estimate of known and inherent losses in the loan portfolio at the balance sheet
date that are both probable and reasonable to estimate. However, actual loan
losses could exceed the amounts that have been charged to operations.

The provision for loan losses was $33,000 in 2003 as compared to
$25,000 in 2002. Non-performing loans decreased to $382,000 at October 31, 2003
compared to $550,000 the year prior. Average loans outstanding for 2003
decreased to $49.8 million from $55.4 million for 2002. The slight increase in
the provision in 2003 reflects mainly a change in the Bank's estimation methods
during 2003. During 2003, the Bank increased its recommended allowance on one-
to four-family loans, both owner occupied and non-owner occupied (investor
loans), and began using a four year loss average (with a 50% weighting given to
the latest year) versus a three year loss average being used in 2002. The
relatively high net charge-offs on loans for 2002 impacted the four year loss
average. Net charge-offs were $37,000 in 2003 versus $182,000 for 2002.

Noninterest Income. Total noninterest income increased slightly in 2003
to $386,000 from $365,000 for 2002. Noninterest income items are primarily
comprised of service charges and fees on deposit account activity, along with
fee income derived from other financial related services. The increase is
principally due to the recognition of additional fee income from deposit
accounts due to an increase in both the transactional fees being charged and the
volume of related transactions. Subsequent to October 31, 2003, the Bank
approved a $1,800,000 investment in bank-owned life insurance, and $1,500,000
had been invested as of December 31, 2003. Although funds for this investment
will come from other investments, thereby reducing net interest income, the Bank
expects that the after-tax return from this product, which will be reported as
noninterest income, will be more than offsetting.

Noninterest Expense. Noninterest expense decreased 4.7% to $2,177,000
for 2003 as compared to $2,285,000 for 2002. Noninterest expense items are
primarily comprised of compensation and employee benefits, occupancy and
equipment, federal insurance premiums, data processing, professional fees and
various other operational expenses. Compensation and employee benefits decreased
$70,000, or 6.0%, primarily as a result of a decrease in the number of full time
equivalent employees coupled with a reduction in discretionary benefit costs.
Occupancy and equipment expenses decreased 29.8% or $116,000 as a result of
closing the Bank's former Germantown branch and a reduction in depreciation
recognized

on capitalized assets. Net real estate operations consist of the costs incurred
in the temporary operation of other real estate owned, as well as the gains and
losses associated with the disposal of such properties; in 2003, the Bank
incurred an expense of $15,000 in this category, whereas in 2002, there was a
gain of $59,000 from the sale of such property, a negative change of $74,000 in
year to year comparisons. In addition, federal deposit insurance premiums
decreased 39.6% for 2003 as a result of the lowering of the Bank's risk rating,
while professional fees increased $20,000 during 2003 due to increased general
business activity.

Noninterest expenses are expected to increase in 2004 due to the
additional costs of professional fees associated with becoming a public company,
the implementation of an incentive retirement plan for key employees, and
expenses from employee stock ownership and restricted stock plans.

Income Taxes. Income taxes declined 20.3% to $290,000 for 2003 from
$364,000 for 2002 due to a reduction in pretax income and a decrease in the tax
rate. The effective tax rate was reduced to 34.2% for 2003 from 40.7% for 2002
as a result of adjustments to prior year estimates of income taxes and an
increase in tax-exempt income.

Comparison of Financial Condition at October 31, 2003 and October 31, 2002

Assets and Liabilities. The Bank's total assets increased $2,106,000,
or 2.5%, to $87,367,000 at October 31, 2003 from $85,261,000 at October 31,
2002. This increase primarily resulted from a $3,845,000, or 16.4%, increase in
investment securities available for sale that was primarily funded by a
$2,258,000 net increase in customer deposits.

Cash and cash equivalents decreased $997,000 to $6,304,000 at October
31, 2003 from $7,301,000 at October 31, 2002. The decrease resulted from
temporary fluctuations in deposits with other banks due to the timing of
customer activity. The Bank maintains an overnight interest bearing account with
the Federal Home loan Bank. Excess funds are deposited there while management
evaluates other investment opportunities and to meet current funding of loan
commitments.

Investment securities available for sale increased to $27,337,000 at
October 31, 2003 from $23,492,000 at October 31, 2002. During 2003, principal
repayments on mortgage-backed securities were utilized for other operational
purposes, including the purchase of U.S. government agency securities. This has
resulted in a more diversified investment portfolio mix between U.S. government
agency and mortgage-backed securities. These U.S. government agency securities,
which have all been classified as available for sale, typically have maturities
ranging from 5 to 10 years with yields between 3.0% and 5.5%.

The Bank also increased its holdings of insured municipal securities
during the year. These competitively yielding securities allow the Bank to
utilize the tax advantages of such securities based on the Bank's increased
earnings.

Net loans receivable, which remained relatively stable in 2003, were
$50,730,000 at October 31, 2003 as compared to $51,689,000 at October 31, 2002.
A slight decrease in one- to four-family mortgages

was noted during the year as customers refinanced loans in the low interest rate
environment. Multi-family loans decreased to $466,000 at October 31, 2003 as
compared to $1,289,000 at October 31, 2002 as a result of the regulatory
supervisory agreement the Bank entered into with the Office of Thrift
Supervision in February 2002. Such agreement restricted the Bank from
originating non-owner occupied residential real estate loans, and the balance of
this loan portfolio declined due to principal repayments not being offset by any
new originations during the time the Bank was subject to the agreement. The
agreement was terminated on December 10, 2003. Construction loans increased to
$1,416,000 at October 31, 2003 as compared to $151,000 at October 31, 2002 as a
result of the Bank purchasing participation interests in three loans with an
aggregate balance of $1,313,000 at October 31, 2003. Management maintains a loan
pricing structure that while competitive, also considers interest rate risk and
liquidity risk. As of October 31, 2003, the Bank had commitments to fund loans
of $3,273,000.

At October 31, 2003, the allowance for loan losses decreased to
$263,000 from $267,000 at October 31, 2002, and represented 0.51% of the gross
loan portfolio at both October 31, 2003 and 2002. Nonperforming loans as a
percentage of total net loans decreased to 0.75% at October 31, 2003 from 1.06%
the year before. The Bank had nonaccrual loans of $370,000 and $543,000 at
October 31, 2003 and 2002, respectively. Management does not believe the
nonaccrual loans or any amounts classified as nonperforming will have a
significant effect on operations or liquidity in 2004. Furthermore, management
is not aware of any trends or uncertainties related to any loans classified as
doubtful or substandard that might have a material effect on earnings,
liquidity, or capital resources.

Subsequent to October 31, 2003, the Bank approved a $1,800,000
investment in bank-owned life insurance, commonly referred to as "BOLI," and
$1,500,000 had been invested as of December 31, 2003. Bank-owned life insurance
consists of individual policies purchased on the lives of executive officers and
directors of the Bank, and the beneficiary of such policies is the Bank. Returns
on the investment of the cash value of the policy are included in the Bank's
noninterest income. Although funds for this investment will come from other
investments, thereby reducing net interest income, the Bank expects that the
after-tax return from this product, which will be reported as noninterest
income, will more than offset the related reduction in net interest income.
However, there can be no assurance that the return on this investment will
offset the reduction in net interest income. The earnings associated with this
product are considered to offset current employee benefits expense, as well as
the addition of deferred compensation plans for officers and directors.

Total deposits increased $2,258,000, or 3.2%, to $72,273,000 at October
31, 2003 from $70,015,110 at October 31, 2002. This growth was concentrated in
transactional, savings, and money market deposits, and reflected continual
marketing efforts as well as the competitive pricing of such products. Deposit
growth also was driven by a general shift in customer preference away from the
equity markets and into insured bank deposits. Although time deposits declined,
they continued to account for 71.6% of the total deposit portfolio and remain
the dominant source of funds.

Federal Home Loan Bank borrowings decreased slightly in 2003 to
$6,637,000 and approximately 60% of these borrowings will mature in 2004. The
proceeds from these borrowings were originally utilized to supplement the
funding of loan demand.

Retained Earnings. Total retained earnings increased $285,000 to
$7,672,000 at October 31, 2003 due to net income of $556,000 that was offset
partially by a decrease in accumulated other comprehensive income of $271,000.
Accumulated other comprehensive income decreased as a result of changes in the
net unrealized gain on investment securities available for sale due to
fluctuations in interest rates. The Bank has concluded that any impairment of
its investment securities portfolio is not other than

temporary and is not expected to result in the noncollection of principal and
interest during the period. Accumulated other comprehensive income will
fluctuate from period to period, reflecting changes in interest rate levels, and
such fluctuations can at times be material. The Bank has disclosed comprehensive
income of $285,000 and $531,000 for the years ending October 31, 2003 and 2002,
respectively. Comprehensive income considers the effects of recognizing
unrealized gains and losses on available for sale investment securities during
the period on net income.

The Bank is currently in the process of an initial stock offering,
which will include an employee stock ownership plan and a restricted stock plan.
The proceeds of the stock offering would result in additional equity in the
immediate future which would be used for general business purposes.

Liquidity and Capital Resources

Liquidity management for the Bank is measured and monitored on both a
short- and long-term basis, allowing management to better understand and react
to emerging balance sheet trends. After assessing actual and projected cash flow
needs, management seeks to obtain funding at the most economical cost to the
Bank. Both short- and long-term liquidity needs are addressed by maturities and
sales of investments securities, and loan repayments and maturities. The use of
these resources, in conjunction with access to credit, provides the core
ingredients for satisfying depositor, borrower, and creditor needs.

The Bank's liquid assets consist of cash and cash equivalents,
certificates of deposit in other financial institutions and investment
securities classified as available for sale. The level of these assets is
dependent on the Bank's operating, investing, and financing activities during
any given period. At October 31, 2003, cash and cash equivalents totaled
$6,304,000 or 7.2% of total assets while investment securities classified as
available for sale and certificates of deposit in other financial institutions
totaled $27,521,000 or 31.5% of total assets. Management believes that the
liquidity needs of the Bank are satisfied by the current balance of cash and
cash equivalents, readily available access to traditional funding sources, FHLB
borrowings, and the portion of the investment and loan portfolios that matures
within one year. These sources of funds will enable the Bank to meet cash
obligations and off-balance sheet commitments of $3,273,000 as they come due in
the upcoming year.

The Bank's liquidity could be reduced if a significant amount of
certificates of deposit, maturing within a short period of time, were not
renewed. It has been the Bank's experience that a significant portion of
certificates of deposit remain with the Bank after they mature and the Bank
believes that this will continue. Certificates of deposit maturing within one
year or less at October 31, 2003 and 2002 totaled $21,717,000 and $27,721,000,
respectively. Total certificates of deposit were $51,855,000 and $52,719,000 at
October 31, 2003 and 2002, respectively. Management does not anticipate any
change in its pricing strategy relative to certificates of deposit and expects
to maintain competitive pricing on these deposits, relative to the Bank's
liquidity needs. Depending on the Bank's liquidity needs, if replacement funding
were necessary, the Bank could borrow additional funds from the Federal Home
Loan Bank and could also sell available for sale securities. Additionally, the
liquidity provided by the stock offering in connection with the Bank's
mutual-to-stock conversion would offset any reduction in funds from the loss of
maturing certificates of deposit.

Operating activities provided net cash of $604,000 and $532,000 for
2003 and 2002, respectively, and were generated principally from net income of
$556,000 and $529,000 in each of these respective periods.

Investing activities consist primarily of loan originations and
repayments and investment purchases and maturities. For 2003, cash used by
investing activities primarily consisted of investment purchases of $19,541,000.
Partially offsetting the cash used by investing activities was $15,076,000 of
proceeds from investment security maturities and repayments, as well as net loan
repayments of $746,000. For the same period ended 2002, investing activities
provided $1,649,000 in funds principally from the net repayment of loans, the
proceeds from repayments and maturities of investment securities, and proceeds
from the sales of real estate acquired through foreclosure of $7,304,000,
$8,752,000, and $953,000 respectively. Partially offsetting these amounts was
the purchase of investment securities for $15,372,000. For both periods, the
lower interest rate environment has resulted in numerous securities being called
and one- to four-family loans being refinanced.

Subsequent to October 31, 2003, the Bank approved a $1,800,000
investment in bank-owned life insurance, commonly referred to as "BOLI," and
$1,500,000 had been invested as of December 31, 2003. Management does not expect
this BOLI investment to have any significant effect on the Bank's liquidity, as
the Bank has sufficient liquidity to meet its cash flow needs.

Financing activities consist of the solicitation and repayment of
customer deposits, borrowings and repayments, and advances by borrowers for
taxes and insurance. During 2003, net cash provided by financing activities
totaled $2,112,000 and was principally derived from an increase in deposits.
During 2002, net cash used for financing activities totaled $204,000, and was
principally used for repayments of Federal Home Loan Bank borrowings of
$1,151,000 that were partially offset by an increase in deposits of $1,099,000.
The Bank has $4,061,000 in FHLB borrowings coming due in 2004 and is expected to
roll a portion of this into another loan with the FHLB. The funds from the stock
offering in connection with the Bank's mutual-to-stock conversion are expected
to reduce the remaining portion, as well as fund general business operations.

The following table discloses the Bank's contractual borrowing
obligations as of October 31, 2003.

Less Than After
Total 1 Year 1-3 Years 4-5 Years 5 Years
----- ------ --------- --------- -------
(In thousands)

Federal Home Loan Bank borrowings............. $6,637 $4,061 $ 76 $1,500 $1,000
====== ====== ======= ====== ======

At October 31, 2003, the Bank had a maximum borrowing capacity of $58.8
million with the Federal Home Loan Bank.

The following table discloses the Bank's new loan commitments as of
October 31, 2003, including unused lines of credit.

Total
Amounts Less Than Over
Committed 1 Year 1-3 Years 4-5 Years 5 Years
--------- ------ --------- --------- -------
(In thousands)

Construction loans in process(1)............. $ 31 $ 31 $ - $ - $ -
Other commitments to extend credit(2)........ 3,242 3,242 - - -
------ ------ ------- ------- -------
Total..................................... $3,273 $3,273 $ - $ - $ -
====== ====== ======= ======= =======

- --------------
(1) Includes construction loans which will convert to permanent loans.
(2) Represents amounts committed to customers.

The impact of the additional capital from the stock offering will have
a material effect on the Bank's liquidity. Additionally, the Board may in the
future implement a $10.0 million leveraging strategy that would increase
borrowings and provide funding for the purchase of investment securities with a
favorable interest rate spread. Management is not aware of any other trends,
demands, commitments, events or uncertainties that will result in or that are
reasonably likely to result in the Bank's liquidity increasing or decreasing in
any material way.

Management is not aware of any material trends, favorable or
unfavorable, currently affecting the Bank's capital resources (other than the
mutual-to-stock conversion underway). Historically, the Bank's primary source of
capital has been retained earnings, which has supported past growth and
expansion. The proceeds of the stock offering in connection with the Bank's
mutual-to-stock conversion are part of management's new capital planning policy
to ensure compliance with regulations and to permit future expansion. The
infusion of this new capital will significantly increase the Bank's capital
resources by increasing equity by approximately $19.2 million to approximately
$26.9 million, if 2,242,500 shares, the maximum of the offering range, are sold
in the offering. Management also expects the implementation of the employee
stock ownership plan and the restricted stock plan and the accompanying costs of
such plans as well as the potential payment of cash dividends to stockholders of
SE Financial Corp. to have an impact on the consolidated capital position of SE
Financial Corp. and the Bank.

Regulatory Capital Requirements. The Bank is subject to federal
regulations imposing minimum capital requirements. Management monitors the
Bank's Total risk-based, Tier I risk-based, and Tier I leverage capital ratios
to assess compliance with regulatory guidelines. At October 31, 2003, the Bank
exceeded the minimum capital ratio requirements. The Bank's Total risk-based,
Tier I risk-based, and Tier I leverage capital ratios were 21.0%, 20.3%, and
8.9%, respectively, at October 31, 2003.

Recent Accounting Pronouncements

In August 2001, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("FAS") No. 143, Accounting
for Asset Retirement Obligations, which requires that the fair value of a
liability be recognized when incurred for the retirement of a long-lived asset
and the value of the asset be increased by that amount. The statement also
requires that the liability be maintained at its present value in subsequent
periods and outlines certain disclosures for such obligations. The adoption of
this statement, which was effective November 1, 2002, did not have a material
effect on the Bank's financial position or results of operations.

In July 2002, the FASB issued FAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities, which requires companies to
recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
This statement replaces EITF Issue No. 94-3, Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (Including
Certain Costs Incurred in a Restructuring). The new statement is effective for
exit or disposal activities initiated after December 31, 2002. The adoption of
this statement did not have a material effect on the Bank's financial position
or results of operations.

On December 31, 2002, the FASB issued FAS No. 148, Accounting for
Stock-Based Compensation -- Transition and Disclosure, which amends FAS No. 123,
Accounting for Stock-Based Compensation. FAS No. 148 amends the disclosure
requirements of FAS No. 123 to require more prominent and more frequent
disclosures in financial statements about the effects of stock-based
compensation. Under the provisions of FAS No. 123, companies that adopted the
preferable, fair value based method were required to apply that method
prospectively for new stock option awards. This contributed to a "ramp-up"
effect

on stock-based compensation expense in the first few years following adoption,
which caused concern for companies and investors because of the lack of
consistency in reported results. To address that concern, FAS No. 148 provides
two additional methods of transition that reflect an entity's full complement of
stock-based compensation expense immediately upon adoption, thereby eliminating
the ramp-up effect. FAS No. 148 also improves the clarity and prominence of
disclosures about the pro forma effects of using the fair value based method of
accounting for stock-based compensation for all companies -- regardless of the
accounting method used -- by requiring that the data be presented more
prominently and in a more user-friendly format in the footnotes to the financial
statements. In addition, the statement improves the timeliness of those
disclosures by requiring that this information be included in interim as well as
annual financial statements. The transition guidance and annual disclosure
provisions of FAS No. 148 are effective for fiscal years ending after December
15, 2002, with earlier application permitted in certain circumstances. The
interim disclosure provisions are effective for financial reports containing
financial statements for interim periods beginning after December 15, 2002. The
adoption of this statement did not have a material effect on the Bank's
financial position or results of operations, but may in the future after the
implementation of stock benefit plans.

In April, 2003, the FASB issued FAS No. 149, Amendment of Statement 133
on Derivative Instruments and Hedging Activities. This statement amends and
clarifies accounting for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities under FAS
No. 133. The amendments set forth in FAS No. 149 improve financial reporting by
requiring that contracts with comparable characteristics be accounted for
similarly. In particular, this statement clarifies under what circumstances a
contract with an initial net investment meets the characteristic of a derivative
as discussed in FAS No. 133. In addition, it clarifies when a derivative
contains a financing component that warrants special reporting in the statement
of cash flows. FAS No.149 amends certain other existing pronouncements. Those
changes will result in more consistent reporting of contracts that are
derivatives in their entirety or that contain embedded derivatives that warrant
separate accounting. This statement is effective for contracts entered into or
modified after September 30, 2003, except as stated below and for hedging
relationships designated after September 30, 2003. The guidance should be
applied prospectively. The provisions of this statement that relate to FAS No.
133 Implementation Issues that have been effective for fiscal quarters that
began prior to September 15, 2003, should continue to be applied in accordance
with their respective effective dates. In addition, certain provisions relating
to forward purchases or sales of when-issued securities or other securities that
do not yet exist, should be applied to existing contracts as well as new
contracts entered into after September 30, 2003. The adoption of this statement
did not have a material effect on the Bank's financial position or results of
operations.

In May 2003, the FASB issued FAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity. This
statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. It requires that an issuer classify a financial instrument that is
within its scope as a liability (or an asset in some circumstances). Such
instruments may have been previously classified as equity. This statement is
effective for financial instruments entered into or modified after May 31, 2003,
and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003, except for mandatorily redeemable financial
instruments of nonpublic entities. These financial instruments are subject to
the provisions of this Statement for the first fiscal period beginning after
December 15, 2003. The adoption of this statement has not and is not expected to
have a material effect on the Bank's reported equity.

In November 2002, the FASB issued Interpretation No. 45, Guarantor's
Accounting and Disclosure requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others. This

interpretation elaborates on the disclosures to be made by a guarantor in its
interim and annual financial statements about its obligations under certain
guarantees that it has issued. This interpretation clarifies that a guarantor is
required to disclose (a) the nature of the guarantee, including the approximate
term of the guarantee, how the guarantee arose, and the events or circumstances
that would require the guarantor to perform under the guarantee; (b) the maximum
potential amount of future payments under the guarantee; (c) the carrying amount
of the liability, if any, for the guarantor's obligations under the guarantee;
and (d) the nature and extent of any recourse provisions or available collateral
that would enable the guarantor to recover the amounts paid under the guarantee.
This interpretation also clarifies that a guarantor is required to recognize, at
the inception of a guarantee, a liability for the obligations it has undertaken
in issuing the guarantee, including its ongoing obligation to stand ready to
perform over the term of the guarantee in the event that the specified
triggering events or conditions occur. The objective of the initial measurement
of that liability is the fair value of the guarantee at its inception. The
initial recognition and initial measurement provisions of this interpretation
are applicable on a prospective basis to guarantees issued or modified after
December 31, 2002, irrespective of the guarantor's fiscal year-end. The
disclosure requirements in this interpretation are effective for financial
statements of interim or annual periods ending after December 15, 2002. The
adoption of this interpretation did not have a material effect on the Bank's
financial position or results of operations.

In January 2003, the FASB issued Interpretation No. 46, Consolidation
of Variable Interest Entities, in an effort to expand upon and strengthen
existing accounting guidance that addresses when a company should include in its
financial statements the assets, liabilities and activities of another entity.
The objective of this interpretation is not to restrict the use of variable
interest entities but to improve financial reporting by companies involved with
variable interest entities. Until now, one company generally has included
another entity in its financial statements only if it controlled the entity
through voting interests. This interpretation changes that by requiring a
variable interest entity to be consolidated by a company if that company is
subject to a majority of the risk of loss from the variable interest entity's
activities or entitled to receive a majority of the entity's residual returns or
both. The consolidation requirements of this interpretation apply immediately to
variable interest entities created after January 31, 2003. The consolidation
requirements apply to older entities in the first fiscal year or interim period
beginning after June 15, 2003. Certain of the disclosure requirements apply in
all financial statements issued after January 31, 2003, regardless of when the
variable interest entity was established. In October, 2003, the FASB decided to
defer to the fourth quarter from the third quarter the implementation date for
Interpretation No. 46. This deferral only applies to variable interest entities
that existed prior to February 1, 2003. The adoption of this interpretation has
not and is not expected to have a material effect on the Bank's financial
position or results of operations.

Impact of Inflation and Changing Prices

The Bank's consolidated financial statements and related data herein
have been prepared in accordance with accounting principles generally accepted
in the United States of America, which require measurement of financial
condition and results of operations in terms of historical dollars, without
considering changes in the relative purchasing power of money over time due to
inflation.

Because the primary assets and liabilities of the Bank are monetary in
nature, changes in the general level of prices for goods and services have a
relatively minor impact on total expenses. Increases in operating expenses such
as salaries and maintenance are in part attributable to inflation. However,
interest rates have a far more significant effect than inflation on the
performance of financial institutions, including the Bank.

Market Risk and Net Portfolio Value

Market risk is the risk of loss of income from adverse changes in
prices and rates that are set by the market. The Bank is at risk because changes
in interest rates may affect the income it receives on lending and investment
activities, as well as the costs associated with its deposits and borrowings. A
sudden and substantial change in interest rates may affect earnings if the rates
of interest that the Bank earns on its loans and investments does not change at
the same speed, to the same extent or on the same basis as the interest rates
the Bank pays on its deposits and borrowings. The Bank makes it a high priority
to actively monitor and manage its exposure to interest rate risk.

At October 31, 2003, $24.2 million of the Bank's certificates of
deposit were five year certificates that have provisions which allow depositors
to withdraw funds without incurring an early withdrawal penalty. If rates rise,
these deposits may be withdrawn without penalty and the actual maturity of these
certificates of deposit may be materially less than indicated. The Bank no
longer offers certificates of deposit with this no-penalty provision. See
Sources of Funds - Deposits on page 59 for additional information regarding
these certificates of deposit.

The Bank seeks to manage interest rate sensitivity through its asset
and liability committee which is comprised of members of management and the
Board of Directors. The committee begins by evaluating the interest rate risk
that is inherent in the makeup of the Bank's assets and liabilities. The
committee then considers the Bank's business strategy, current operating
environment, capital and liquidity requirements, as well as the Bank's current
performance objectives, to determine an appropriate level of risk. The Board of
Directors has adopted guidelines within which the Bank manages its interest rate
risk, trying to minimize to the extent practical its vulnerability to changes in
interest rates. These strategies include focusing the Bank's investment
activities on short and medium-term securities; emphasizing medium-term loans
and loans with adjustable rate features; maintaining and increasing transaction
deposit accounts, as these accounts are considered to be relatively resistant to
changes in interest rates; and utilizing deposit marketing programs to adjust
the term or repricing of its liabilities.

The Bank also monitors its interest rate sensitivity through the use of
an asset/liability management model which estimates the change in its net
portfolio value in the event of a range of assumed changes in market interest
rates. Net portfolio value is defined as the current market value of assets,
less the current market value of liabilities, plus or minus the current value of
off-balance sheet items. The change in net portfolio value measures the Bank's
vulnerability to changes in interest rates by estimating the change in the
market value of its assets, liabilities and off-balance sheet items as a result
of an instantaneous change in the general level of interest rates (i.e. shock
analysis). At October 31, 2003, the Bank had off-balance sheet items which are
described in Note 9 to the consolidated financial statements.

As market interest rates decreased during 2003, the average maturities
of loans and investment securities shortened due to quicker prepayments. Deposit
accounts have only relatively minor movements in a declining interest rate
environment, since they are primarily short term in nature, resulting in the
value of deposits decreasing more quickly than the value of assets increase. If
market interest rates begin to increase, the average maturities of loans and
securities will lengthen as prepayments decrease. Decreases in the value of
these loans and securities occur at a more rapid rate in the Bank's net
portfolio value model than increases in the value of its deposits. The slow
increase in the value of the Bank's deposits in a rising interest rate
environment is due to the high concentration of certificates of deposit in the
deposit base which have terms of one year or less.

The following table lists the percentage change in the Bank's net
portfolio value assuming an immediate change in interest rates of plus or minus
up to 300 basis points from the level at September 30, 2003. The -200bp and
- -300bp scenarios are not shown due to the low prevailing interest rate
environment.

Net Portfolio Value ("NPV") NPV as % of Present Value of Assets
----------------------------------------- -----------------------------------
Change in Change
Rates (basis Estimated Amount of Percent of NPV (basis
points) NPV ($)Change(1) NPV Change(2) Ratio(%)(3) points)(4)
------- --- ------------ ------------- ----------- ----------
(Dollars in thousands)

+300 $7,435 $(3,193) (30)% 8.70% (289)
+200 8,716 (1,912) (18)% 9.94% (165)
+100 9,812 (816) (8)% 10.93% (67)
0 10,628 11.59% -
-100 10,500 (128) (1)% 11.32% (27)

- --------------
(1) Represents the excess (deficiency) of the estimated NPV assuming the
indicated change in interest rates minus the estimated NPV assuming no
change in interest rates.
(2) Calculated as the amount of change in the estimated NPV divided by the
estimated NPV assuming no change in interest rates.
(3) Calculated as estimated NPV divided by present value of total assets.
(4) Calculated as the excess (deficiency) of the NPV ratio assuming the
indicated change in interest rates over the estimated NPV ratio assuming no
change in interest rates.

The net portfolio value model, shown above, which is prepared by the
Office of Thrift Supervision, has certain shortcomings and is as of September
30, 2003, and not the Bank's fiscal year end of October 31, 2003. Based on the
model, certain assumptions are made that may or may not actually reflect how
actual yields and costs will react to market interest rates. For example, the
net portfolio value model assumes that the makeup of its interest rate sensitive
assets and liabilities will remain constant over the period being measured.
Thus, although using such a model can be instructive in providing an indication
of the Bank's exposure to interest rate risk, the Bank cannot precisely forecast
the effects of a change in market interest rates, and the results indicated by
the model are likely to differ from actual results.

Average Balance Sheet. The following table sets forth certain
information relating to the Bank for the years ended October 31, 2003 and 2002.
The average yields and costs are derived by dividing income or expense by the
average balance of assets or liabilities, respectively, for the years presented.
Average balances are derived from daily balances. Yields on investment
securities have been computed on a tax-equivalent basis.

For the Year Ended October 31,
At October 31, ----------------------------------------------------------
2003 2003 2002
------------------- ----------------------------- ---------------------------
Average Average Average Average
Balance Yield/Cost Balance Interest Yield/Cost Balance Interest Yield/Cost
------- ---------- ------- -------- ---------- ------- -------- ----------
(Dollars in thousands)

Interest-earning assets:
Loans receivable, net (1)..................... $50,730 7.09% $49,785 $3,934 7.90% $55,382 $4,650 8.40%
Investment securities ........................ 27,337 4.63 27,839 1,111 4.13 20,972 1,094 5.26
Other interest-earning assets................. 6,547 0.95 5,487 75 1.37 4,117 93 2.26
------- ------- ------ ------- ------
Total interest-earning assets................ 84,614 5.82 83,111 $5,120 6.21 80,471 $5,837 7.27
------ ------
Non-interest-earning assets.................... 2,753 3,375 3,659
------- ------- -------
Total assets................................. $87,367 $86,486 $84,130
======= ======= =======
Interest-bearing liabilities:
Interest-bearing demand deposits.............. $ 3,232 1.19% $ 2,968 $ 36 1.21% $ 2,865 $ 39 1.36%
Money market deposits......................... 4,613 1.43 4,108 80 1.95 3,528 97 2.75
Savings accounts.............................. 9,683 1.49 9,081 146 1.61 8,657 178 2.06
Certificates of deposit....................... 51,855 3.32 52,490 1,966 3.75 51,038 2,391 4.68
FHLB borrowings............................... 6,637 3.22 6,664 222 3.33 7,359 294 4.00
------- ------- ------ ------- ------
Total interest-bearing liabilities.......... 76,020 2.87 75,311 $2,450 3.24 73,447 $2,999 4.09
------ ------
Non-interest-bearing liabilities............... 3,675 3,486 3,614
------- ------- -------
Total liabilities............................. 79,695 78,797 77,061
Retained earnings.............................. 7,672 7,689 7,069
------- ------- -------
Total liabilities and retained earnings....... $87,367 $86,486 $84,130
======= ======= =======
Net interest income............................ $2,670 $2,838
====== ======
Interest rate spread (2)....................... 2.95% 2.95% 3.18%
====== ====== ======
Interest margin on interest-earning assets(3).. 3.24% 3.26% 3.54%
====== ====== ======
Ratio of average interest-earning assets to
average interest-bearing liabilities........... 111.30% 110.36% 109.56%
====== ====== ======

- -----------------------
(1) Non-accruing loans have been included in loans receivable, net, and the
effect of such inclusion was not material.
(2) Interest rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing
liabilities.
(3) Net yield on interest-earning assets represents net interest income as a
percentage of average interest-earning assets.

Rate/Volume Analysis. The relationship between the volume and rates of
the Bank's interest-bearing assets and interest-bearing liabilities influences
the Bank's net interest income. The following table reflects the sensitivity of
the Bank's interest income and interest expense to changes in volume and in
prevailing interest rates during the periods indicated. Each category reflects
the: (1) changes in volume (changes in volume multiplied by old rate); (2)
changes in rate (changes in rate multiplied by old volume); and (3) net change.
The net change attributable to the combined impact of volume and rate has been
allocated proportionally to the absolute dollar amounts of change in each.

Year Ended October 31,
----------------------------------------------------
2003 vs. 2002 2002 vs. 2001
------------------- -------------------
Increase (Decrease) Increase (Decrease)
Due to Due to
------------------- -------------------

Volume Rate Net Volume Rate Net
------ ---- --- ------ ---- ---
(Dollars in thousands)

Interest and dividend income:
Loans receivable ...................... $(452) $(264) $(716) $(511) (130) $(641)
Investment securities ................. 49 (32) 17 249 (100) 149
Other interest-earning assets ......... 96 (114) (18) 21 (121) (100)
----- ----- ----- ----- ----- -----
Total interest-earning assets ........ $(307) $(410) $(717) $(241) $(351) $(592)
===== ===== ===== ===== ===== =====

Interest expense:
Interest-bearing demand deposits ...... 1 (4) (3) 5 1 6
Money market deposits ................. 22 (39) (17) 39 (50) (11)
Savings accounts ...................... 9 (41) (32) (13) (33) (46)
Certificates of deposit ............... 70 (495) (425) 111 (489) (378)
FHLB borrowings ....................... (26) (46) (72) (140) (161) (301)
----- ----- ----- ----- ----- -----
Total interest-bearing liabilities.... $ 76 $(625) $(549) $ 2 $(732) $(730)
===== ===== ===== ===== ===== =====

Change in net interest income .......... $(383) $ 215 $(168) $(243) $ 381 $ 138
===== ===== ===== ===== ===== =====

BUSINESS OF SE FINANCIAL CORP.

Upon completion of the conversion we will own all of the stock of the
Bank. We have not engaged in any significant business to date. Prior to the
conversion, we will not transact any material business. We will invest our
initial capitalization as discussed in the Use of Proceeds section on page 16.
In the future, we may pursue other business activities or diversification of
operations. There are, however, no current plans for these activities.
Initially, we will not maintain offices separate from those of the Bank or
employ any persons other than certain of the Bank's officers. Officers of SE
Financial Corp. will not be separately compensated for their service.

BUSINESS OF ST. EDMOND'S FEDERAL SAVINGS BANK

General

St. Edmond's Federal Savings Bank was originally chartered and began
operations in 1912 as St. Edmond's Building and Loan Association. It became a
federally-chartered savings bank in 1995. The Bank's deposits are federally
insured by the Savings Association Insurance Fund as administered by the Federal
Deposit Insurance Corporation. The Bank is regulated by the Office of Thrift
Supervision and the Federal Deposit Insurance Corporation.

At October 31, 2003, the Bank had total assets, deposits, and retained
earnings of $87.4 million, $72.3 million, and $7.7 million, respectively. The
Bank attracts deposits from the general public and uses these deposits primarily
to originate loans and to purchase mortgage-backed and other securities. The
principal sources of funds for the Bank's lending and investing activities are
deposits, the repayment and maturity of loans and the sale, maturity, and call
of securities. The principal source of income is interest on loans and
investment and mortgage-backed securities. The principal expense is interest
paid on deposits.

Market Area and Competition

The Bank defines its primary market areas to include certain postal
codes surrounding its main office located in Philadelphia, Pennsylvania, with an
emphasis on the south Philadelphia market, and certain postal codes surrounding
its branch office located in Sewell, New Jersey. The Bank also originates loans
on real estate located within a 100 mile radius of its main office and considers
this area as within its primary market area.

The Philadelphia market is an urban market area and can be
characterized as having a blue collar customer base, lower average household
incomes and lower average home prices. In comparison to the Philadelphia market,
the Sewell market is a more affluent suburban area with a more white collar
customer base, higher average household incomes and higher average home prices.

The Philadelphia office is the primary office for the Bank's
activities. At October 31, 2003, deposits at the Philadelphia office totaled
approximately $67.9 million and deposits at the Sewell office totaled
approximately $4.4 million.

The Bank's business of attracting deposits and making loans is
primarily conducted within its primary market areas. A downturn in the local
economy, therefore, could reduce the amount of funds available for deposit,
hamper the ability of borrowers to repay their loans and lower collateral
values, which would likely hurt the Bank's profitability.

The Bank faces substantial competition in attracting deposits, which
are its primary source of funds for lending, and in the origination of loans.
Many of the Bank's competitors are significantly larger institutions and have
greater financial and managerial resources. The Bank's ability to compete
successfully is a significant factor affecting its profitability.

The Bank's competition for deposits and loans historically has come
from other insured financial institutions such as local and regional commercial
banks, thrift institutions, and credit unions located in the Bank's primary
market areas. The Bank also competes with mortgage banking companies for real
estate loans, and commercial banks and savings institutions for consumer loans.
The Bank also faces competition for funds from investment products such as
mutual funds, short-term money funds and corporate and government securities.

Lending Activities

General. The Bank's loan portfolio is primarily comprised of one- to
four-family residential real estate loans, most of which have fixed rates of
interest.

In the future, the Bank intends to grow its total loan portfolio while
generally maintaining the same relative percentage of each category as they
stood at October 31, 2003.

The following table analyzes the composition of the Bank's loan
portfolio by loan category at the dates indicated.

At October 31,
-------------------------------------
2003 2002
----------------- ---------------
Amount Percent Amount Percent
------ ------- ------ -------
(Dollars in thousands)
Type of Loans:
Mortgage loans:
One- to four-family(1)........... $36,151 70.78% $37,810 72.51%
Multi-family..................... 466 0.91 1,289 2.47
Commercial real estate........... 4,006 7.84 4,334 8.31
Construction(2).................. 1,416 2.77 151 0.29

Home equity loans.................. 8,409 16.46 7,794 14.95

Loans on savings accounts.......... 473 0.93 425 0.82
Other.............................. 151 0.31 343 0.65
------- ------ ------- ------

Total loans........................ 51,072 100.00% 52,146 100.00%
====== ======

Less:
Net deferred loan fees and
unamortized premiums......... 79 190
Allowance for loan losses........ 263 267
------- -------
Total loans, net................... $50,730 $51,689
======= =======

- ---------------
(1) Included in this category are lines of credit, mixed-use loans and investor
loans.
(2) Included in this category are participation interests in three loans with
an aggregate balance of $1,313,000 at October 31, 2003.

Loan Maturity Schedule. The following table sets forth the contractual
maturity or period to repricing of the Bank's loan portfolio at October 31,
2003.

One- to Home Loans
four- Multi- Commercial equity on savings
family(1) family real estate Construction loans accounts Other Total
--------- ------ ----------- ------------ ----- -------- ----- -----
(In thousands)

Amounts Due:
Within 1 Year ............. $ 271 $ 53 $ 187 $ 634 $ 263 $ 44 $ 58 $ 1,510

After 1 year:
1 to 3 years ............ 591 213 469 782 404 163 16 2,638
3 to 5 years ............ 1,061 -- 96 -- 547 266 39 2,009
5 to 10 years ........... 12,768 21 2,576 -- 6,738 -- -- 22,103
10 to 15 years .......... 21,096 179 678 -- 457 -- 38 22,448
Over 15 years ........... 364 -- -- -- -- -- -- 364
------- ------- ------- ------- ------- ------- ------- -------

Total due after one year... 35,880 413 3,819 782 8,146 429 93 49,562
------- ------- ------- ------- ------- ------- ------- -------
Total amount due .......... $36,151 $ 466 $ 4,006 $ 1,416 $ 8,409 $ 473 $ 151 $51,072
======= ======= ======= ======= ======= ======= ======= =======

- --------------
(1) Included in this category are lines of credit, mixed-use loans and investor
loans.

The following table sets forth the dollar amount of all loans at
October 31, 2003 due after October 31, 2004, which have fixed interest rates and
which have floating or adjustable interest rates.

Floating or
Fixed Rates Adjustable Rates Total
----------- ---------------- -----
(In thousands)
One- to four-family(1)......... $30,654 $5,226 $35,880
Multi-family................... 413 - 413
Commercial real estate......... 2,892 927 3,819
Construction................... - 782 782
Home equity loans.............. 6,489 1,657 8,146
Loans on savings accounts...... 429 - 429
Other.......................... 93 - 93
------- ------ -------
Total........................ $40,970 $8,592 $49,562
======= ====== =======
- ----------------
(1) Included in this category are lines of credit, mixed-use loans and investor
loans.

One- To Four-Family Mortgage Loans. The Bank's primary lending activity
consists of the origination of one- to four-family mortgage loans, the majority
of which are secured by property located in Philadelphia County, Pennsylvania.
Included in this category are mortgage loans on mixed-use properties, which are
properties that combine retail or service activity with up to four units of
residential housing. Also included in the one- to four-family category are home
equity lines of credit.

The Bank generally originates mortgage loans in amounts up to 80% of
the lesser of the appraised value or purchase price of a mortgaged property, but
will also permit loan-to-value ratios up to 95%. For loans exceeding an 80%
loan-to-value ratio, the Bank requires the borrower to obtain private mortgage
insurance covering the Bank for any loss on the amount of the loan in excess of
80% in the event of foreclosure. The majority of the Bank's one- to four-family
mortgage loans are originated with fixed rates, and generally have terms of 15
years or less, although some have maturities of up to 30 years. The Bank also
offers adjustable-rate loans which have interest rates that adjust annually to
the yield on one-year, three-year or five-year U.S. Treasury securities plus a
margin. These adjustable-rate loans have maturities of up to 30 years. The
Bank's one and three-year adjustable-rate mortgages generally have a cap of two
percentage points on rate adjustments during any one year and five percentage
points over the life of the loan. The five-year adjustable rate loan does not
have such limitations.

The Bank generally makes its fixed rate mortgage loans to meet the
secondary mortgage market standards of Fannie Mae. The Bank also makes some
non-conforming loans in order to meet the needs of its community and customers.

Substantially all of the Bank's residential mortgages include "due on
sale" clauses, which are provisions giving the Bank the right to declare a loan
immediately payable if the borrower sells or otherwise transfers an interest in
the property to a third party. Property appraisals on real estate securing the
Bank's single-family residential loans are made by state certified or licensed
independent appraisers approved by the Board of Directors. Appraisals are
performed in accordance with applicable regulations and policies. The Bank
generally requires title insurance policies on all first mortgage real estate
loans originated. All property secured loans require fire and casualty
insurance. Loans made on property located in designated flood zones require
minimum flood insurance coverage based on the amount of the loan.

Reflecting the Bank's Philadelphia market area, at October 31, 2003 and
2002, approximately $10.9 million and $12.7 million, respectively, of the Bank's
one- to four-family mortgage loan portfolio consisted of mortgage loans on
nonowner-occupied properties (investor loans), representing 30.1% and 33.6% of
one- to four-family mortgage loans and 21.5% and 24.6% of total loans. Such
loans are generally originated in amounts of up to 75% of the lesser of the
appraised value or purchase price of a mortgaged property. These loans generally
have fixed rates and terms of up to 20 years.

Multi-Family and Commercial Real Estate Loans. The Bank originates a
limited number of commercial real estate mortgage loans, including loans on
multi-family dwellings, retail/service space, and other income-producing
properties. The Bank generally requires no less than 25% downpayment or equity
for loans on multi-family properties and 30% for non-residential properties.
Typically these loans are made with fixed rates of interest, terms of up to
twenty-five years and may have a balloon feature. Essentially all of the Bank's
commercial real estate loans are within the Bank's primary market areas.

Multi-family and commercial real estate loans generally are considered
to entail significantly greater risk than that which is involved with one- to
four-family real estate lending. The repayment of these loans typically is
dependent on the successful operations and income stream of the commercial real
estate and the borrower. These risks can be significantly affected by economic
conditions. In addition, commercial real estate lending generally requires
substantially greater evaluation and oversight efforts compared to residential
real estate lending.

Construction Lending. The Bank participates in loans to
builders/developers for the construction of multi-unit or mixed-use properties.
The Bank's construction lending also includes loans to individuals for
construction of a primary residence. The Bank originates construction loans in
an amount up to 75% of the appraised value for a multi-family or commercial real
estate construction loan, and up to 80% for a one- to four-family residential
construction loan. The Bank typically converts construction loans to individuals
into permanent loans on completion of construction but does not require take-out
financing prior to origination. Essentially all of the Bank's construction
lending is in its primary market areas.

Construction loans increased to $1,416,000 at October 31, 2003 as
compared to $151,000 at October 31, 2002 as a result of the Bank purchasing
participation interests in three loans with an aggregate balance of $1,313,000
at October 31, 2003. The Bank's largest construction loan had a balance of
approximately $634,000 at October 31, 2003, representing a 50% participation on
the construction of a six unit townhouse development in downtown Philadelphia.
The other two loans consist of a mixed-space project of four stores and seven
apartment units with a balance of approximately $394,000 at October 31, 2003 and
a multi-unit residential housing project with a balance of approximately
$284,000 at October 31, 2003. The Bank will continue to consider opportunities
to participate in construction loans if presented.

Construction lending is generally considered to involve a higher degree
of credit risk than long- term permanent financing of residential properties.
The Bank's risk of loss on a construction loan is dependent largely upon the
accuracy of the initial estimate of the property's value at completion of
construction and the estimated cost of construction. If the estimate of
construction cost and the marketability of the property upon completion of the
project prove to be inaccurate, the Bank may be compelled to advance additional
funds to complete the construction. Furthermore, if the final value of the
completed property is less than the estimated amount, the value of the property
might not be sufficient to assure the repayment of the loan. If the Bank is
forced to foreclose on a project prior to completion, there is no assurance that
it will be able to recover all of the unpaid portion of the loan and it may have
to advance additional amounts for completion and/or hold the property for an
indeterminate period of time.

Home Equity Loans. The Bank's home equity loan portfolio includes fixed
rate second mortgage loans with terms of up to fifteen years. Home equity loans
are primarily originated in the Bank's primary market areas and are made in
amounts up to 80% of value. The Bank also offers home equity loans on investment
properties in addition to loans on primary residences. Loans on investment
properties are made in amounts up to 75% of value.

Loans on Savings Accounts. The Bank originates loans on passbook
savings accounts for terms up to five years and loans on certificates of deposit
with the Bank for terms equal to the certificate maturity. The Bank will
generally lend up to 90% of the account balance on a savings secured loan, not
to exceed $100,000. Amortization on such loans may be up to thirty years, with a
balloon payment on the maturity date.

Other Loans. Other loans offered by the Bank consist of unsecured
consumer loans up to a maximum of $5,000 per loan with terms generally up to
five years. Such loans have fixed rates of interest.

Consumer loans entail greater risks than residential mortgage loans,
particularly consumer loans that are unsecured. Further, consumer loan repayment
is dependent on the borrower's continuing financial stability and is more likely
to be adversely affected by job loss, divorce, illness or personal bankruptcy.
Finally, the application of various federal laws, including federal and state
bankruptcy and insolvency laws, may limit the amount which can be recovered on
consumer loans in the event of a default.

Loans to One Borrower. Under federal law, savings institutions have,
subject to certain exemptions, lending limits to one borrower in an amount equal
to the greater of $500,000 or 15% of the institution's unimpaired capital and
surplus. Accordingly, as of October 31, 2003, the Bank's loans to one borrower
limit was approximately $1.2 million.

The Bank's largest single borrower had an aggregate loan balance
outstanding of approximately $842,000 at October 31, 2003, representing one loan
secured by a residential investment property and one construction loan for
condominiums. The Bank's second largest borrower had an aggregate loan balance
outstanding of approximately $670,000 at October 31, 2003, representing a loan
secured by his personal residence. The Bank's third largest borrower had an
aggregate loan balance outstanding of approximately $500,000 at October 31,
2003, representing four loans secured by commercial real estate, including one
commercial property and three mixed-use properties, and one loan secured by a
residential investment property. The Bank's fourth largest borrower had an
aggregate loan balance outstanding of approximately $499,000 at October 31,
2003, representing a loan secured by his personal residence. The Bank's fifth
largest borrower had an aggregate loan balance outstanding of approximately
$464,000 at October 31, 2003, representing real estate loans secured by two
commercial properties and three two- to four-family properties in the Bank's
market areas and one loan secured by a second home. At October 31, 2003, all of
these lending relationships were current and performing in accordance with the
terms of their loan agreements.

Loan Originations, Purchases and Solicitation and Processing. The
Bank's customary sources of loan applications include repeat customers,
real-estate brokers who meet the Bank's underwriting standards, referrals,
"walk-in" customers, and customers responding to advertising in local
publications.

The Bank generally does not purchase whole loans. The Bank does
occasionally purchase participations in loans originated by others. The Bank
purchased participations totaling $1.8 million in 2003 and did not purchase any
participations in 2002. As of October 31, 2003, the Bank's largest

participation loan had a balance of approximately $634,000, representing a 50%
participation on a condominium construction project in downtown Philadelphia.

Loan Commitments. The Bank gives written commitments to prospective
borrowers on all mortgage loans. Generally, the commitment requires acceptance
within sixty days of the date of the issuance. The total amount of commitments
to extend credit for mortgage and consumer loans as of October 31, 2003, was
approximately $3.3 million, including commitments on lines of credit and
including undisbursed portions of construction loans totaling $31,000.

Loan Approvals. The management committee has authority to approve real
estate loans to any one borrower up to an aggregate of $300,000. Loans in excess
of $300,000 and up to 10% of the Bank's unimpaired capital may be approved by
the Board loan committee. Loans in excess of 10% of the Bank's unimpaired
capital must be approved by the full Board of Directors.

Non-Performing Loans and Problem Assets

Collection Procedures. The borrower is notified by mail when a loan is
15 days delinquent. If the delinquency continues, subsequent efforts are made to
contact the delinquent borrower and a second collection notice is sent. When a
loan is ninety days delinquent, it is referred to an attorney for collection.
All reasonable attempts are made to collect from the borrower prior to referral
to an attorney for collection. In certain instances, the Bank may at its
determination modify the loan to enable the borrower to reorganize his financial
affairs and the Bank attempts to work with the borrower to establish a repayment
schedule to cure the delinquency.

As to mortgage loans, if a foreclosure action is taken and the loan is
not reinstated, paid in full or refinanced, the property is sold at judicial
sale at which the Bank may be the buyer if there are no adequate offers to
satisfy the debt. Any property acquired as the result of foreclosure or by deed
in lieu of foreclosure is classified as real estate owned ("REO") until it is
sold or otherwise disposed of by the Bank. When REO is acquired, it is recorded
at the lower of the unpaid principal balance of the related loan or its fair
market value less estimated selling costs. The initial writedown of the property
is charged to the allowance for loan losses. Adjustments to the carrying value
of the properties that result from subsequent declines in value are charged to
operations in the period in which the declines occur.

Loans are reviewed on a regular basis and are placed on a non-accrual
status when they are more than ninety days delinquent. Loans may be placed on a
non-accrual status at any time if, in the opinion of management, the collection
of additional interest is doubtful. Interest accrued and unpaid at the time a
loan is placed on non-accrual status is charged against interest income.
Subsequent payments are either applied to the outstanding principal balance or
recorded as interest income, depending on the assessment of the ultimate
collectibility of the loan.

Non-Performing Assets. The following table provides information
regarding the Bank's non- performing loans and other non-performing assets as of
the end of each of the last two fiscal years.

At
October 31,
-----------
2003 2002
---- ----
(Dollars in thousands)

Loans accounted for on a non-accrual basis:
Mortgage loans:
One- to four-family.................................. $ 311 $ 499
Multi-family......................................... 59 -
Commercial real estate............................... - 18
Home equity loans...................................... - 26
----- -----
Total.................................................. $ 370 $ 543
===== =====

Accruing loans which are contractually past
due 90 days or more:
Loans on savings accounts.............................. 12 1
Other.................................................. - 6
----- -----
Total.................................................. $ 12 $ 7
===== =====
Total non-performing loans............................. $ 382 $ 550
===== =====
Real estate owned...................................... $ 39 $ 25
===== =====
Other non-performing assets............................ $ - $ -
===== =====
Total non-performing assets............................ $ 421 $ 575
===== =====
Total non-performing loans to net loans................ 0.75% 1.06%
===== =====
Total non-performing loans to total assets............. 0.44% 0.65%
===== =====
Total non-performing assets to total assets............ 0.48% 0.67%
===== =====

For the year ended October 31, 2003, the amount of interest that would
have been recorded on loans accounted for on a non-accrual basis if those loans
had been current according to the original loan agreements for the entire period
was $51,000. This amount was not included in the Bank's interest income for the
period. The amount of interest income on loans accounted for on a non-accrual
basis that was included in income during the year ended October 31, 2003 was
$27,000.

Classified Assets. Management, in compliance with Office of Thrift
Supervision guidelines, has instituted an internal loan review program, whereby
loans are classified as special mention, substandard, doubtful or loss. When a
loan is classified as substandard or doubtful, management is required to
establish a valuation reserve for loan losses in an amount considered prudent by
management. When management classifies a portion of a loan as loss, a reserve
equal to 100% of the loss amount is required to be established or the loan is to
be charged off.

An asset is considered substandard if it is inadequately protected by
the paying capacity and net worth of the obligor or the collateral pledged, if
any. Substandard assets include those characterized by the distinct possibility
that the insured institution will sustain some loss if the deficiencies are not
corrected. Assets classified as doubtful have all of the weaknesses inherent in
those classified substandard, with the added characteristic that the weaknesses
present make collection or liquidation in full, highly questionable and
improbable, on the basis of currently existing facts, conditions, and values.
Assets classified as loss are those considered uncollectible and of so little
value that their continuance as assets without the

establishment of a specific loss reserve is not warranted. Assets which do not
currently expose the insured institution to a sufficient degree of risk to
warrant classification in one of the aforementioned categories but possess
credit deficiencies or potential weaknesses are required to be designated
special mention by management.

Management's classification of assets is reviewed by the Board on a
monthly basis and by the regulatory agencies as part of their examination
process. The following table discloses the Bank's classification of assets and
designation of certain loans as special mention as of October 31, 2003. At
October 31, 2003, all of the classified assets and special mention designated
assets were loans. At October 31, 2003, all of the $305,000 reported as
substandard is included within the $382,000 of non-performing loans reported for
that same date. At October 31, 2003, the allowance for loan losses totaled
$263,000 and $38,000 of that was recorded in connection with the loans reported
as substandard for that same date.

At October 31,
2003
----
(In thousands)

Special Mention................... $551
Substandard....................... 305
Doubtful.......................... -
Loss.............................. -
----
Total........................... $856
====

Allowance for Loan Losses. The allowance for loan losses is a valuation
account that reflects the Bank's evaluation of the losses known and inherent in
its loan portfolio that are both probable and reasonable to estimate associated
both with lending activities and particular problem assets. The Bank maintains
the allowance through provisions for loan losses that are charged to income in
the period they are established. The Bank charges losses on loans against the
allowance for loan losses when it believes the collection of loan principal is
unlikely. Unsecured loans are charged as loss when they become 90 days
delinquent. There is no fixed number of days after which mortgage loans are
charged off. Rather, the Bank generally institutes foreclosure proceedings on
mortgage loans when they become 90 days delinquent and makes determination as to
when a mortgage loan should be charged off based on the sufficiency of the
collateral for that particular mortgage loan. Recoveries on loans previously
charged off are added back to the allowance.

The Bank's evaluation of the allowance for loan losses includes
separate review of all loans on which the collectibility of principal may not be
reasonably assured. The Bank evaluates all classified loans individually and
bases its determination of a loss factor on the likelihood of collectibility of
principal including consideration of the value of the underlying collateral
securing the loan. Larger loans, which would generally include multi-family
mortgages, other commercial real estate loans and construction loans, are also
generally evaluated for impairment individually. The Bank also segregates loans
by loan category as part of its allowance evaluation, and evaluates homogenous
loans as a group.

Although there may be other factors that also warrant consideration in
maintaining an allowance at a level sufficient to provide for probable and
reasonably estimable losses, the Bank considers the following factors in
connection with its determination of loss factors and as part of its overall
evaluation of the allowance for loan losses:

o its historical loan loss experience;
o internal analysis of credit quality;
o general levels of non-performing loans and delinquencies;
o changes in loan concentrations by loan category;
o current estimated collateral values;
o evaluation of credit quality conducted in bank regulatory
examinations; and
o economic and market trends impacting the Bank's lending area.

This evaluation is inherently subjective as it requires estimates that
are susceptible to significant revisions as more information becomes available
or as future events change. Future additions to the allowance for loan losses
may be necessary if economic and other conditions in the future differ
substantially from the current operating environment. In addition, the Office of
Thrift Supervision as an integral part of its examination process, periodically
reviews the Bank's loan and foreclosed real estate portfolios and the related
allowance for loan losses and valuation allowance for foreclosed real estate.
The Office of Thrift Supervision may require the Bank to increase the allowance
for loan losses or the valuation allowance for foreclosed real estate based on
its review of information available at the time of the examination, which would
negatively affect the Bank's earnings.

It is the Bank's policy to review its loan portfolio, in accordance
with regulatory classification procedures, on at least a quarterly basis.
Additionally, the Bank maintains a program of reviewing loan applications prior
to making the loan and immediately after loans are made in an effort to maintain
loan quality.

The following table sets forth information with respect to the Bank's
allowance for loan losses for the periods indicated:

For the Year Ended
October 31,
---------------------
2003 2002
-------- --------

(Dollars in thousands)

Allowance balance (at beginning of period) $ 267 $ 424
-------- --------
Provision for loan losses ................ 33 25
-------- --------
Loans charged off:
Mortgage loans:
One- to four-family .................... 45 179
Multi-family ........................... - 9
Other .................................... 4 9
-------- --------
Total charge-offs ........................ 49 197

Recoveries:
Mortgage loans ........................... - -
Other .................................... 12 15
-------- --------
Total recoveries ......................... 12 15
-------- --------
Net (charge-offs) recoveries ............. (37) (182)
-------- --------
Allowance balance (at end of period) ..... $ 263 $ 267
======== ========

Total loans outstanding .................. $ 51,072 $ 52,146
======== ========
Average loans outstanding ................ $ 49,785 $ 55,382
======== ========
Allowance for loan losses as a percent
of total loans outstanding ............ 0.51% 0.51%
======== ========
Net loans charged off as a percent of
average loans outstanding ............. 0.07% 0.33%
======== ========

Allocation of Allowance for Loan Losses. The following table sets forth
the allocation of the Bank's allowance for loan losses by loan category and the
percent of loans in each category to total loans receivable, net, at the dates
indicated. The portion of the loan loss allowance allocated to each loan
category does not represent the total available for future losses which may
occur within the loan category since the total loan loss allowance is a
valuation reserve applicable to the entire loan portfolio.

At October 31,
-----------------------------------------
2003 2002
-------------------- -------------------
Percent of Percent of
Loans to Loans to
Amount Total Loans Amount Total Loans
------ ----------- ------ -----------
(Dollars in thousands)
At end of period allocated to:
Mortgage loans:
One- to four-family................ $193 70.78% $211 72.51%
Multi-family....................... 4 0.91 3 2.47
Commercial real estate............. 32 7.84 33 8.31
Construction....................... 10 2.77 1 0.29
Home equity loans.................... 17 16.46 10 14.95
Loans on savings accounts............ - 0.93 - 0.82
Other................................ 7 0.31 9 0.65
---- ----- ---- -----
Total allowance...................... $263 100.00% $267 100.00%
==== ====== ==== ======

Investment Activities

General. Federally chartered savings banks have the authority to invest
in various types of liquid assets, including United States government and
government agency obligations, securities of various federal agencies and
government-sponsored entities (including securities collateralized by
mortgages), certificates of deposits of insured banks and savings institutions,
municipal securities and corporate debt securities.

SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," requires that securities be categorized as "held to maturity,"
"trading securities" or "available for sale," based on management's intent as to
the ultimate disposition of each security. SFAS No. 115 allows debt securities
to be classified as "held to maturity" and reported in financial statements at
amortized cost only if the reporting entity has the positive intent and ability
to hold these securities to maturity. Securities that might be sold in response
to changes in market interest rates, changes in the security's prepayment risk,
increases in loan demand, or other similar factors cannot be classified as "held
to maturity."

The Bank does not currently use or maintain a trading account. Debt and
equity securities not classified as "held to maturity" are classified as
"available for sale." These securities are reported at fair value, and
unrealized gains and losses on the securities are excluded from earnings and
reported, net of deferred taxes, as a separate component of equity.

All of the Bank's securities carry market risk insofar as increases in
market rates of interest may cause a decrease in their market value. Investments
in securities are made based on certain considerations, which include the
interest rate, tax considerations, yield, settlement date and maturity of the
security, the Bank's liquidity position, and anticipated cash needs and sources.
The effect that the proposed security would have on the Bank's credit and
interest rate risk and risk-based capital is also considered. The Bank

purchases securities to provide necessary liquidity for day-to-day operations,
and when investable funds exceed loan demand.

The investment policy of the Bank, which is established by the Board of
Directors, is designed to foster earnings and liquidity within prudent interest
rate risk guidelines, while complementing the Bank's lending activities.
Generally, the Bank's investment policy is to invest funds in various categories
of securities and maturities based upon the Bank's liquidity needs,
asset/liability management policies, investment quality, marketability and
performance objectives. Investment authority is held by the President and
Executive Vice President/Chief Financial Officer, individually, up to $2.0
million and jointly up to $5.0 million. All investments greater than $5.0
million must be approved by the Board. The Board of Directors reviews the Bank's
securities portfolio on a monthly basis.

The Bank's investment policy does not permit participation in hedging
programs, interest rate swaps, or other activities involving the use of
off-balance sheet derivative financial instruments. Further, the Bank's
investment policy does not permit investment in securities which are not rated
investment grade 'A' or higher at time of purchase.

The various obligations held in the Bank's securities portfolio have
varying characteristics as to rate, maturity and call provisions. Expected
maturities will differ from contractual maturities due to scheduled repayments
and because borrowers may have the right to call or prepay obligations with and
without prepayment penalties. Callable securities totaled approximately $14.9
million at October 31, 2003, and the Bank's investment yield could be reduced if
these securities are called prior to maturity.

Mortgage-backed Securities. Mortgage-backed securities represent a
participation interest in a pool of one- to four-family or multi-family
mortgages, although the Bank focuses its investments on mortgage-backed
securities secured by one- to four-family mortgages.

The mortgage originators use intermediaries (generally United States
government agencies and government-sponsored enterprises) to pool and repackage
the participation interests in the form of securities, with investors such as
the Bank receiving the principal and interest payments on the mortgages. Such
United States government agencies and government-sponsored enterprises guarantee
the payment of principal and interest to investors.

Mortgage-backed securities are typically issued with stated principal
amounts, and the securities are backed by pools of mortgage loans that have
interest rates within a specific range and similar maturities. The
characteristics of the underlying pool of mortgages, i.e., fixed-rate or
adjustable-rate, as well as prepayment risk, are passed on to the certificate
holder. Thus, the life of a mortgage-backed security approximates the life of
the underlying mortgages. Mortgage-backed securities are generally referred to
as mortgage participation certificates or pass-through certificates. The Bank's
mortgage-backed securities consist primarily of securities issued by the
Government National Mortgage Association, Freddie Mac and Fannie Mae.
Mortgage-backed securities generally yield less than the mortgage loans
underlying such securities because of their payment guarantees or credit
enhancements which offer nominal credit risk to the security holder.

Securities Portfolio

The following table sets forth the carrying value of the Bank's
investment and mortgage-backed securities portfolio at the dates indicated. At
the dates indicated, the Bank had no securities classified as held-to-maturity.

At October 31,
-----------------
2003 2002
------- -------
(In thousands)

Securities Available for Sale (at fair value):
----------------------------------------------
Mortgage-backed securities......................... $10,933 $17,523
U.S. government agency securities.................. 13,482 4,779
Municipal securities............................... 2,741 1,012
Mutual funds....................................... 181 178
------- -------
Total securities available for sale............... $27,337 $23,492
======= =======

Carrying Values, Yields and Maturities. The following table sets forth
certain information regarding the carrying values, weighted average yields and
maturities of the Bank's investment and mortgage-backed securities portfolio at
October 31, 2003.

At October 31, 2003
---------------------------------------------------------------------------------------------------
More than
One Year or Less One to Five Years Five to Ten Years Ten Years Total Investment Securities
---------------- ----------------- ----------------- ---------------- ---------------------------
Carrying Average Carrying Average Carrying Average Carrying Average Carrying Average Market
Value Yield Value Yield Value Yield Value Yield Value Yield Value
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
(Dollars in thousands)

Mortgage-backed securities... $ - -% $ 74 8.00% $ - -% $10,859 4.99% $10,933 4.99% $10,933

U.S. government agency
securities................ - - 976 4.30 2,215 3.89 10,291 4.08 13,482 4.06 13,482

Municipal securities......... - - 457 3.74 2,004 3.73 280 6.50 2,741 3.99 2,741

Mutual funds................. 181 2.09 - - - - - - 181 2.12 181
----- ---- ------- ---- ------- ---- ------- ---- ------- ---- -------

Total...................... $ 181 2.09% $ 1,507 4.31% $ 4,219 3.81% $21,430 4.57% $27,337 4.41% $27,337
===== ==== ======= ==== ======= ==== ======= ==== ======= ==== =======

Sources of Funds

General. Deposits are the major source of the Bank's funds for lending
and other investment purposes. In addition, the Bank derives funds from loan and
mortgage-backed securities principal repayments, and proceeds from the maturity,
call and sale of mortgage-backed securities and investment securities. While
scheduled loan and mortgage-backed securities payments are a relatively stable
source of funds, deposit inflows and loan and mortgage-backed securities
prepayments are significantly influenced by general interest rates and money
market conditions. Borrowings (principally from the FHLB) are also periodically
used to supplement the amount of funds for lending and investment.

Deposits. Deposits are obtained primarily from residents of
Philadelphia County, Pennsylvania, and to a lesser degree, Gloucester County,
New Jersey. Historically, the Bank has used traditional methods of advertising,
including print media, direct mail and inserts included with customer
statements; however, it relies primarily on its reputation in the community and
referrals to attract new customers and deposits. The Bank has from time to time
utilized the services of deposit brokers but does not currently do so. At
October 31, 2003, brokered deposits totalled $1.1 million. The Bank occasionally
offers premiums or incentives for opening accounts.

The Bank's determination of interest rates is based upon a number of
factors, including: (1) the Bank's need for funds based on loan demand, current
maturities of deposits and other cash flow needs; (2) a current survey of a
selected group of competitors' rates for similar products; (3) the Bank's
current cost of funds and its yield on assets; and (4) the alternate cost of
funds on a wholesale basis, in particular the cost of borrowings from the FHLB.
Interest rates are reviewed and set by management weekly.

The Bank has a high percentage of certificates of deposit in its
deposit portfolio (71.6% at October, 31, 2003). The Bank's liquidity could be
reduced if a significant amount of certificates of deposit, maturing within a
short period of time, were not renewed. Historically, a significant portion of
the certificates of deposit has remained with the Bank after they mature and the
Bank believes that this will continue. However, the need to retain these time
deposits could result in an increase in the Bank's cost of funds.

Deposit accounts are summarized at October 31, 2003 and 2002,
respectively, as follows:

2003 2002
----------------- -----------------
Amount % Amount %
------- ----- ------- -----
(Dollars in thousands)
Non interest-bearing demand..... $2,890 4.0% $2,479 3.5%
NOW accounts.................... 3,232 4.5 2,362 3.4
Money market deposit............ 4,613 6.5 3,886 5.6
Savings......................... 9,683 13.4 8,569 12.2
------- ----- ------- -----
20,418 28.4 17,296 24.7
------- ----- ------- -----
Time certificates of deposit:
0.90 - 2.00%.................. 13,400 18.5 101 0.1
2.01 - 4.00%.................. 18,534 25.6 26,451 37.8
4.01 - 6.00%.................. 18,953 26.2 24,927 35.6
6.01 - 8.00%.................. 968 1.3 1,240 1.8
------- ----- ------- -----
51,855 71.6 52,719 75.3
------- ----- ------- -----
Total...................... $72,273 100.0% $70,015 100.0%
======= ===== ======= =====

The scheduled maturities of time certificates of deposit as of October 31,
2003 are as follows (in thousands):

Within one year.......................................... $21,717
Beyond one year but within two years..................... 6,186
Beyond two years but within three years.................. 6,476
Beyond three years but within four years................. 6,563
Beyond four years but within five years.................. 10,913
-------
Total........................................... $51,855
=======

Included in the above table are five year certificates of deposit that
have provisions which allow depositors to withdraw funds without incurring an
early withdrawal penalty. At October 31, 2003, such certificates of deposit
totaled $24,241,000. The Bank no longer offers certificates of deposit with this
no- penalty provision. At October 31, 2003, the weighted average rate was 3.805%
and the scheduled maturities on these certificates of deposit were as follows:
$3,722,000 within one year; $4,036,000 beyond one year but within two years;
$4,360,000 beyond two years but within three years; $4,722,000 beyond three
years but within four years; and $7,400,000 beyond four years but within five
years. As such, the actual maturity of these certificates of deposit may be
materially less than indicated.

The following table shows the amount of the Bank's certificates of
deposit of $100,000 or more by time remaining until maturity as of October 31,
2003.

Maturity Period Certificates of Deposits
--------------- ------------------------
(In thousands)

Within three months.................... $1,579
Three through six months............... 778
Six through twelve months.............. 1,396
Over twelve months..................... 5,331
------
Total............................. $9,084(1)
======

- -------------
(1) Includes $4,067,000 of five-year certificates of deposit that allow
depositors to withdraw funds without penalty.

Borrowings. Deposits are the primary source of funds of the Bank's
lending and investment activities and for its general business purposes. The
Bank, as the need arises or in order to take advantage of funding opportunities,
borrows funds in the form of borrowings from the FHLB to supplement its supply
of lendable funds and to meet deposit withdrawal requirements. Borrowings from
the FHLB are typically secured by the Bank's stock in the FHLB and a portion of
the Bank's residential mortgage loans and may be secured by other assets, mainly
securities which are obligations of or guaranteed by the U.S. government.

Maturities of FHLB borrowings at October 31, 2003 and 2002,
respectively, are summarized as follows:

2003 2002
----------------------- -----------------------
Year Ending Weighted- Weighted-
October 31, Amount Average Rate Amount Average Rate
- ----------- ------ ------------ ------ ------------
(Dollars in thousands)
2003 $ - - $ 57 2.04%
2004 4,061 1.38% 4,061 6.47%
2005 65 6.47% 65 6.47%
2006 11 6.47% 11 6.47%
2008 1,500 6.24% 1,500 6.24%
2010 1,000 5.91% 1,000 5.91%
------ ------
$6,637 3.22% $6,694 3.65%
====== ======

See Note 7 of the notes to the consolidated financial statements for
more information regarding the Bank's borrowings.

Subsidiary Activity

The Bank is permitted to invest its assets in the capital stock of, or
originate secured or unsecured loans to, subsidiary corporations. The Bank has
one inactive service corporation.

Personnel

As of October 31, 2003, the Bank had 21 full-time employees and two
part-time employees. The employees are not represented by a collective
bargaining unit. The Bank believes its relationship with its employees to be
satisfactory.

Properties and Equipment

The Bank's main office is located at 1901-03 East Passyunk Avenue,
Philadelphia, Pennsylvania. The Bank uses an outside service company for its
data processing.

The following table sets forth the location of the Bank's main office
and branch office, the year the offices were opened and the net book value of
each office and its related equipment.

Year Facility Leased or Net Book Value at
Office Location Opened Owned October 31, 2003
- --------------- ------ ----- ----------------

Main Office
1901-03 E. Passyunk Avenue 1991 Owned $1,057,500
Philadelphia, PA 19148

Washington Township Branch(1)
438 Ganttown Road
Suite 1-A
Sewell, NJ 08080 1996 Owned $ 91,500

- -------------
(1) The Bank may relocate this office to a new site.

Legal Proceedings

The Bank, from time to time, is a party to routine litigation, which
arises in the normal course of business, such as claims to enforce liens and
other issues incident to the business of the Bank. There were no lawsuits
pending or known to be contemplated against the Bank at October 31, 2003 that
would have a material effect on our operations or income.

REGULATION

Set forth below is a brief description of certain laws that relate to
the regulation of the Bank and SE Financial Corp. The description does not
purport to be complete and is qualified in its entirety by reference to
applicable laws and regulations. The Bank and SE Financial Corp. operate in a
highly regulated industry. This regulation and supervision establishes a
comprehensive framework of activities in which a federal savings institution may
engage and is intended primarily for the protection of the deposit insurance
fund and depositors.

Any change in applicable statutory and regulatory requirements, whether
by the Office of Thrift Supervision, the Federal Deposit Insurance Corporation
or the United State Congress, could have a material adverse impact on SE
Financial Corp. and St. Edmond's Federal Savings Bank, and their operations. The
adoption of regulations or the enactment of laws that restrict the operations of
St. Edmond's Federal Savings Bank and/or SE Financial Corp. or impose burdensome
requirements upon one or both of them could reduce their profitability and could
impair the value of the Bank's franchise, resulting in negative effects on the
trading price of SE Financial Corp. common stock.

Regulation of SE Financial Corp.

General. Upon completion of the conversion, SE Financial Corp. will
become a savings and loan holding company within the meaning of Section 10(o) of
the Home Owners' Loan Act. It will be required to register as a savings and loan
holding company and file reports with the Office of Thrift Supervision and will
be subject to regulation and examination by the Office of Thrift Supervision. In
addition, the Office of Thrift Supervision will have enforcement authority over
SE Financial Corp. and any non-savings institution subsidiaries. This will
permit the Office of Thrift Supervision to restrict or prohibit activities that
it determines to be a serious risk to the Bank. This regulation is intended
primarily for the protection of the depositors and not for the benefit of you,
as stockholders of SE Financial Corp.

Activities Restrictions. As a savings and loan holding company, SE
Financial Corp. will be subject to statutory and regulatory restrictions on its
business activities. The nonbanking activities of SE Financial Corp. are
restricted to certain activities specified by Office of Thrift Supervision
regulation, which include performing services and holding properties used by a
savings institution subsidiary, activities authorized for savings and loan
holding companies as of March 5, 1987, and nonbanking activities permissible for
bank holding companies pursuant to the Bank Holding Company Act of 1956 or
authorized for financial holding companies pursuant to the Gramm-Leach-Bliley
Act. Before engaging in any non- banking activity or acquiring a company engaged
in any such activities, SE Financial Corp. must file with the Office of Thrift
Supervision either a prior notice of (in the case of non-banking activities
permissible for bank holding companies) an application regarding its planned
activity or acquisition.

Mergers and Acquisitions. SE Financial Corp. must obtain approval from
the Office of Thrift Supervision before acquiring more than 5% of the voting
stock of another savings institution or savings and loan holding company or
acquiring such an institution or holding company by merger, consolidation

or purchase of its assets. In evaluating an application for SE Financial Corp.
to acquire control of a savings institution, the Office of Thrift Supervision
would consider the financial and managerial resources and future prospects of SE
Financial Corp. and the target institution, the effect of the acquisition on the
risk to the insurance funds, the convenience and the needs of the community
(including St. Edmond's Federal Savings Bank's record of performance under the
Community Reinvestment Act) and competitive factors.

Sarbanes-Oxley Act of 2002. On July 30, 2002, the President signed into
law the Sarbanes-Oxley Act of 2002 (the "Act"), which implemented legislative
reforms intended to address corporate and accounting fraud. In addition to the
establishment of a new accounting oversight board that will enforce auditing,
quality control and independence standards and will be funded by fees from all
publicly traded companies, the Act places certain restrictions on the scope of
services that may be provided by accounting firms to their public company audit
clients. Any non-audit services being provided to a public company audit client
will require preapproval by the company's audit committee. In addition, the Act
makes certain changes to the requirements for partner rotation after a period of
time. The Act requires chief executive officers and chief financial officers, or
their equivalent, to certify to the accuracy of periodic reports filed with the
Securities and Exchange Commission, subject to civil and criminal penalties if
they knowingly or willingly violate this certification requirement. In addition,
under the Act, counsel will be required to report evidence of a material
violation of the securities laws or a breach of fiduciary duty by a company to
its chief executive officer or its chief legal officer, and, if such officer
does not appropriately respond, to report such evidence to the audit committee
or other similar committee of the board of directors or the board itself.

Under the Act, longer prison terms will apply to corporate executives
who violate federal securities laws; the period during which certain types of
suits can be brought against a company or its officers is extended; and bonuses
issued to top executives prior to restatement of a company's financial
statements are now subject to disgorgement if such restatement was due to
corporate misconduct. Executives are also prohibited from insider trading during
retirement plan "blackout" periods, and loans to company executives (other than
loans by financial institutions permitted by federal rules and regulations) are
restricted. In addition, a provision directs that civil penalties levied by the
Securities and Exchange Commission as a result of any judicial or administrative
action under the Act be deposited to a fund for the benefit of harmed investors.
The Federal Accounts for Investor Restitution provision also requires the
Securities and Exchange Commission to develop methods of improving collection
rates. The legislation accelerates the time frame for disclosures by public
companies, as they must immediately disclose any material changes in their
financial condition or operations. Directors and executive officers must also
provide information for most changes in ownership in a company's securities
within two business days of the change.

The Act also increases the oversight of, and codifies certain
requirements relating to audit committees of public companies and how they
interact with the company's "registered public accounting firm." Audit Committee
members must be independent and are absolutely barred from accepting consulting,
advisory or other compensatory fees from the issuer. In addition, companies must
disclose whether at least one member of the committee is a "financial expert"
(as such term will be defined by the Securities and Exchange Commission) and if
not, why not. Under the Act, a company's registered public accounting firm will
be prohibited from performing statutorily mandated audit services for a company
if such company's chief executive officer, chief financial officer, comptroller,
chief accounting officer or any person serving in equivalent positions had been
employed by such firm and participated in the audit of such company during the
one-year period preceding the audit initiation date. The Act also prohibits any
officer or director of a company or any other person acting under their
direction from taking any action to fraudulently influence, coerce, manipulate
or mislead any independent accountant engaged in the audit

of the company's financial statements for the purpose of rendering the financial
statements materially misleading. The Act also requires the Securities and
Exchange Commission to prescribe rules requiring inclusion of any internal
control report and assessment by management in the annual report to
shareholders. The Act requires the company's registered public accounting firm
that issues the audit report to attest to and report on management's assessment
of the company's internal controls.

Regulation of St. Edmond's Federal Savings

General. As a federally chartered, Federal Deposit Insurance
Corporation-insured savings bank, St. Edmond's Federal Savings Bank is subject
to extensive regulation by the Office of Thrift Supervision and the Federal
Deposit Insurance Corporation. This regulatory structure gives the regulatory
authorities extensive discretion in connection with their supervisory and
enforcement activities and examination policies, including policies regarding
the classification of assets and the level of the allowance for loan losses. The
activities of federal savings banks are subject to extensive regulation,
including restrictions or requirements with respect to loans to one borrower,
percentages of certain types of loans and investments to total assets, capital
distributions, permissible investments and lending activities, liquidity,
transactions with affiliates and community reinvestment. Federal savings banks
are also subject to reserve requirements imposed by the Federal Reserve System.
St. Edmond's Federal Savings Bank's relationship with its depositors and
borrowers is also regulated by federal law, especially in such matters as the
ownership of savings accounts and the form and content of the Bank's mortgage
documents.

St. Edmond's Federal Savings Bank must file reports with the Office of
Thrift Supervision and the Federal Deposit Insurance Corporation concerning its
activities and financial condition, and must obtain regulatory approvals prior
to entering into certain transactions such as mergers with or acquisitions of
other financial institutions. Any change in applicable statutory and regulatory
requirements, whether by the Office of Thrift Supervision, the Federal Deposit
Insurance Corporation or the United States Congress, could have a material
adverse impact on SE Financial Corp. and St. Edmond's Federal Savings Bank, and
their operations.

Supervisory Agreements. The Office of Thrift Supervision regularly
examines St. Edmond's Federal Savings Bank and prepares reports to the Bank's
Board of Directors on deficiencies, if any, found in its operations. Based on an
examination of the Bank commenced in August 2001, the Office of Thrift
Supervision concluded that the Bank had engaged in acts and practices that (i)
had resulted in violations of laws and regulations to which the Bank is subject
and/or (ii) were considered by the Office of Thrift Supervision to be unsafe and
unsound. The Office of Thrift Supervision had concerns regarding oversight of
the Bank by the Board and management, citing the failure to establish and update
appropriate policies for the Bank's operations and failure to establish an
internal audit program. Additionally, the Office of Thrift Supervision had
concerns regarding asset quality, in particular the Bank's underwriting and
credit administration and monitoring of the one- to four-family non-owner
occupied mortgage loan portfolio (investor loans).

As a result of this determination by the Office of Thrift Supervision,
the Bank entered into a supervisory agreement with the Office of Thrift
Supervision in February 2002. The Bank operated under such agreement until it
was terminated on December 10, 2003 following the determination by the Office of
Thrift Supervision that the Bank was in compliance, in all material respects,
with the directives the Office of Thrift Supervision had made to the Bank in
supervisory agreement. The Bank's loan originations and asset growth were
restricted while it was operating under such agreement. In addition, the Bank
was subject to a Safety and Soundness Compliance Plan from May 2001 to October
31, 2003.

Insurance of Deposit Accounts. The Federal Deposit Insurance
Corporation administers two separate deposit insurance funds. Generally, the
Bank Insurance Fund (the "BIF") insures the deposits of commercial banks and the
SAIF ("SAIF") insures the deposits of savings institutions. The Federal Deposit
Insurance Corporation is authorized to increase deposit insurance premiums if it
determines such increases are appropriate to maintain the reserves of either the
SAIF or BIF or to fund the administration of the Federal Deposit Insurance
Corporation. In addition, the Federal Deposit Insurance Corporation is
authorized to levy emergency special assessments on BIF and SAIF members.

In addition, all Federal Deposit Insurance Corporation-insured
institutions are required to pay assessments to the Federal Deposit Insurance
Corporation to fund interest payments on bonds issued by the Financing
Corporation, an agency of the federal government established to recapitalize the
predecessor to the Savings Association Insurance Fund. These assessments will
continue until the Financing Corporation bonds mature in 2019.

Regulatory Capital Requirements. Office of Thrift Supervision capital
regulations require savings institutions to meet three capital standards: (1)
tangible capital equal to 1.5% of total adjusted assets, (2) "Tier 1" or "core"
capital equal to at least 4% (3% if the institution has received the highest
possible rating on its most recent examination) of total adjusted assets, and
(3) risk-based capital equal to 8% of total risk-weighted assets. For St.
Edmond's Federal Savings Bank's compliance with these regulatory capital
standards, see Historical and Pro Forma Capital Compliance on page 22.

In addition, the Office of Thrift Supervision may require that a
savings institution that has a risk- based capital ratio of less than 8%, a
ratio of Tier 1 capital to risk-weighted assets of less than 4% or a ratio of
Tier 1 capital to total adjusted assets of less than 4% (3% if the institution
has received the highest rating on its most recent examination) take certain
action to increase its capital ratios. If the savings institution's capital is
significantly below the minimum required levels of capital or if it is
unsuccessful in increasing its capital ratios, the Office of Thrift Supervision
may restrict its activities.

Tier 1 is defined as common stockholders' equity, non-cumulative
perpetual preferred stock and related surplus, minority interests in the equity
accounts of consolidated subsidiaries and certain non- withdrawable accounts and
pledged deposits of mutual savings banks. St. Edmond's Federal Savings Bank does
not have any active subsidiaries, non-withdrawable accounts or pledged deposits.
Tier 1 capital is reduced by an institution's intangible assets, with limited
exceptions for certain servicing rights, interest- only strips and purchased
credit card relationships. Tier 1 capital is further reduced by an amount equal
to the savings institution's debt and equity investments in "non-includable"
subsidiaries engaged in activities not permissible for national banks, other
than subsidiaries engaged in activities undertaken as agent for customers or in
mortgage banking activities and subsidiaries that are depository institutions or
their holding companies.

Total capital equals the sum of Tier 1 and supplementary capital. The
components of supplementary capital include, among other items, cumulative
perpetual preferred stock, perpetual subordinated debt, mandatory convertible
subordinated debt, intermediate-term preferred stock, the allowance for loan
losses not designated for specific loan losses (up to 1.25% of risk-weighted
assets) and up to 45% of unrealized gains on equity securities. Overall,
supplementary capital is limited to 100% of Tier 1 capital. For purposes of
determining total capital, a savings institution's assets are reduced by the
amount of capital instruments held by other depository institutions pursuant to
reciprocal arrangements and by the amount of the institution's equity
investments (other than those deducted from Tier 1 and tangible capital) and its
high loan-to-value ratio land loans and non-residential construction loans. A
savings institution's risk-based capital requirement is measured against
risk-weighted assets, which equal the sum

of each on-balance-sheet asset and the credit-equivalent amount of each
off-balance-sheet item after being multiplied by an assigned risk weight. These
risk weights range from 0% for cash to 100% for delinquent loans, property
acquired through foreclosure, commercial loans, and certain other assets.

Prompt Corrective Regulatory Action. Under the Office of Thrift
Supervision Prompt Corrective Action regulations, the Office of Thrift
Supervision is required to take supervisory actions against undercapitalized
institutions. For this purpose, a savings bank is placed in one of the following
five categories based on the bank's capital:

o well-capitalized (at least 5% leverage capital, 6% tier 1 risk-based
capital and 10% total risk-based capital);

o adequately capitalized (at least 3% leverage capital, 4% tier 1 risk-based
capital and 8% total risk-based capital);

o undercapitalized (less than 8% total risk-based capital, 4% tier 1
risk-based capital or 3% leverage capital);

o significantly undercapitalized (less than 6% total risk-based capital, 3%
tier 1 risk-based capital or 3% leverage capital); and

o critically undercapitalized (less than 2% tangible capital).

Generally, the banking regulator is required to appoint a receiver or
conservator for an institution that is "critically undercapitalized." The
regulation also provides that a capital restoration plan must be filed with the
Office of Thrift Supervision within forty-five days of the date an institution
receives notice that it is "undercapitalized," "significantly undercapitalized"
or "critically undercapitalized." A capital restoration plan must disclose,
among other things, the steps an insured institution will take to become
adequately capitalized without appreciably increasing the risk to which the
institution is exposed. In addition, each company that controls the institution
must guarantee that the institution will comply with the plan until the
institution has been adequately capitalized on average during each of four
consecutive calendar quarters. Such guarantee could have a material adverse
affect on the financial condition of such guarantor. In addition, numerous
mandatory supervisory actions become immediately applicable to the institution,
including, but not limited to, restrictions on growth, investment activities,
capital distributions, and affiliate transactions. The Office of Thrift
Supervision may also take any one of a number of discretionary supervisory
actions against undercapitalized institutions, including the issuance of a
capital directive and the replacement of senior executive officers and
directors. If the institution fails to submit an acceptable plan, it is treated
as if it were "significantly undercapitalized." Institutions that are
significantly or critically undercapitalized are subject to a wider range of
regulatory requirements and restrictions.

Dividend and Other Capital Distribution Limitations. The Office of
Thrift Supervision imposes various restrictions or requirements on the ability
of savings institutions to make capital distributions, including cash dividends.

A savings institution that is a subsidiary of a savings and loan
holding company, as St. Edmond's Federal Savings Bank will be following the
conversion, must file an application or a notice with the Office of Thrift
Supervision at least thirty days before making a capital distribution. A savings
institution must file an application for prior approval of a capital
distribution if: (i) it is not eligible for expedited treatment

under the applications processing rules of the Office of Thrift Supervision;
(ii) the total amount of all capital distributions, including the proposed
capital distribution, for the applicable calendar year would exceed an amount
equal to the savings institution's net income for that year to date plus the
institution's retained net income for the preceding two years; (iii) it would
not adequately be capitalized after the capital distribution; or (iv) the
distribution would violate an agreement with the Office of Thrift Supervision or
applicable regulations.

The Office of Thrift Supervision may disapprove a notice or deny an
application for a capital distribution if: (i) the savings institution would be
undercapitalized following the capital distribution; (ii) the proposed capital
distribution raises safety and soundness concerns; or (iii) the capital
distribution would violate a prohibition contained in any statute, regulation or
agreement. In addition, a federal savings institution cannot distribute
regulatory capital that is required for its liquidation account.

In addition, the Federal Deposit Insurance Act provides that an insured
depository institution shall not make a capital distribution if, after making
such distribution, the institution would be undercapitalized.

St. Edmond's Federal Savings Bank will be required to file a capital
distribution notice or application with the Office of Thrift Supervision before
paying any dividend to SE Financial Corp. Capital distributions by SE Financial
Corp., as a savings and loan holding company, will not be subject to the Office
of Thrift Supervision capital distribution rules, except that SE Financial Corp.
will be restricted by Office of Thrift Supervision regulations from paying a
cash dividend to its stockholders during the three years following the
conversion (the term of the business plan submitted to the Office of Thrift
Supervision in connection with the Bank's conversion application) if such
dividend would constitute a return of capital.

Qualified Thrift Lender Test. Federal savings institutions must meet a
qualified thrift lender ("QTL") test or they become subject to the business
activity restrictions and branching rules applicable to national banks. To
qualify as a QTL, a savings institution must either (i) be deemed a "domestic
building and loan association" under the Internal Revenue Code by maintaining at
least 60% of its total assets in specified types of assets, including cash,
certain government securities, loans secured by and other assets related to
residential real property, educational loans and investments in premises of the
institution or (ii) satisfy the statutory QTL test set forth in the Home Owners'
Loan Act by maintaining at least 65% of its "portfolio assets" in certain
"Qualified Thrift Investments" (defined to include residential mortgages and
related equity investments, certain mortgage-related securities, small business
loans, student loans and credit card loans, and 50% of certain community
development loans). For purposes of the statutory QTL test, portfolio assets are
defined as total assets minus intangible assets, property used by the
institution in conducting its business and liquid assets equal to 20% of total
assets. A savings institution must maintain its status as a QTL on a monthly
basis in at least nine out of every twelve months. St. Edmond's Federal Savings
Bank met the QTL test as of October 31, 2003 and in each of the last twelve
months and, therefore, qualifies as a QTL.

Transactions with Affiliates. Generally, federal banking law requires
that transactions between a savings institution or its subsidiaries and its
affiliates must be on terms as favorable to the savings institution as
comparable transactions with non-affiliates. In addition, certain types of these
transactions are restricted to an aggregate percentage of the savings
institution's capital. Collateral in specified amounts must usually be provided
by affiliates in order to receive loans from the savings institution. In
addition, a savings institution may not extend credit to any affiliate engaged
in activities not permissible for a bank holding company or acquire the
securities of any affiliate that is not a subsidiary. The Office of Thrift
Supervision has the discretion to treat subsidiaries of savings institutions as
affiliates on a case-by-case basis.

Community Reinvestment Act. Under the Community Reinvestment Act
("CRA"), every insured depository institution, including St. Edmond's Federal
Savings Bank, has a continuing and affirmative obligation consistent with its
safe and sound operation to help meet the credit needs of its entire community,
including low and moderate income neighborhoods. The CRA does not establish
specific lending requirements or programs for financial institutions nor does it
limit an institution's discretion to develop the types of products and services
that it believes are best suited to its particular community. The CRA requires
the Office of Thrift Supervision to assess each savings institution's record of
meeting the credit needs of its community and to take such record into account
in its evaluation of certain applications by such institution, such as a merger
or the establishment of a branch by St. Edmond's Federal Savings Bank. An
unsatisfactory CRA examination rating may be used as the basis for the denial of
an application by the Office of Thrift Supervision. St. Edmond's Federal Savings
Bank received a "satisfactory" overall rating in its most recent CRA assessment
by the Office of Thrift Supervision.

Federal Home Loan Bank System. St. Edmond's Federal Savings Bank is a
member of the FHLB of Pittsburgh, which is one of twelve regional FHLBs. Each
FHLB serves as a reserve or central bank for its members within its assigned
region. It is funded primarily from funds deposited by financial institutions
and proceeds derived from the sale of consolidated obligations of the FHLB
System. It makes loans to members pursuant to policies and procedures
established by the board of directors of the FHLB.

As a member, St. Edmond's Federal Savings Bank is required to purchase
and maintain stock in the FHLB of Pittsburgh in an amount equal to the greater
of 1% of its aggregate unpaid residential mortgage loans, home purchase
contracts or similar obligations at the beginning of each year or 5% of FHLB
borrowings. The Bank is in compliance with this requirement. The FHLB imposes
various limitations on borrowings such as limiting the amount of certain types
of real estate related collateral to 30% of a member's capital and limiting
total borrowings to a member.

The USA Patriot Act. In response to the events of September 11, 2001,
the Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001, or the USA Patriot Act, was signed
into law on October 26, 2001. The USA Patriot Act gives the federal government
new powers to address terrorist threats through enhanced domestic security
measures, expanded surveillance powers, increased information sharing and
broadened anti-money laundering requirements. By way of amendments to the Bank
Secrecy Act, Title III of the USA Patriot Act takes measures intended to
encourage information sharing among bank regulatory agencies and law enforcement
bodies. Further, certain provisions of Title III impose affirmative obligations
on a broad range of financial institutions, including banks, thrifts, brokers,
dealers, credit unions, money transfer agents and parties registered under the
Commodity Exchange Act.

Among other requirements, Title III of the USA Patriot Act imposes the
following requirements with respect to financial institutions:

o Pursuant to Section 352, all financial institutions must establish
anti-money laundering programs that include, at minimum: (i) internal
policies, procedures, and controls; (ii) specific designation of an
anti-money laundering compliance officer; (iii) ongoing employee training
programs; and (iv) an independent audit function to test the anti-money
laundering program.

o Section 326 authorizes the Secretary of the Department of Treasury, in
conjunction with other bank regulators, to issue regulations by October 26,
2002 that provide for minimum standards with respect to customer
identification at the time new accounts are opened.

o Section 312 requires financial institutions that establish, maintain,
administer, or manage private banking accounts or correspondence accounts
in the United States for non-United States persons or their representatives
(including foreign individuals visiting the United States) to establish
appropriate, specific, and, where necessary, enhanced due diligence
policies, procedures, and controls designed to detect and report money
laundering.

o Effective December 25, 2001, financial institutions are prohibited from
establishing, maintaining, administering or managing correspondent accounts
for foreign shell banks (foreign banks that do not have a physical presence
in any country), and will be subject to certain record keeping obligations
with respect to correspondent accounts of foreign banks.

o Bank regulators are directed to consider a holding company's effectiveness
in combating money laundering when ruling on Federal Reserve Act and Bank
Merger Act applications.

The federal banking agencies have begun to propose and implement
regulations pursuant to the USA Patriot Act. These proposed and interim
regulations would require financial institutions to adopt the policies and
procedures contemplated by the USA Patriot Act.

TAXATION

Federal Taxation

Savings institutions are subject to the Internal Revenue Code of 1986,
as amended (the "Code"), in the same general manner as other corporations.

All thrift institutions are now subject to the same provisions as banks
with respect to deductions for bad debts. Thrift institutions that are treated
as "small banks" (the average adjusted bases for all assets of such institution
equals $500 million or less) under the Code may account for bad debts by using
the experience method for determining additions to their bad debt reserve.
Thrift institutions that are not treated as small banks must now use the
specific charge-off method.

SE Financial Corp. may exclude from its income 100% of dividends
received from St. Edmond's Federal Savings Bank as a member of the same
affiliated group of corporations. A 70% dividends received deduction generally
applies with respect to dividends received from corporations that are not
members of such affiliated group.

St. Edmond's Federal Savings Bank's federal income tax returns for 1998
and 1999 tax years were audited by the IRS in 2002.

State Taxation

The Bank is required to file and SE Financial Corp. will be required to
file a Pennsylvania income tax return. Pennsylvania imposes an income tax of
approximately 11.5% of net income as computed under generally accepted
accounting principles. The Bank is also required to file a New Jersey income tax
return for the apportioned amount of the Bank's income attributable to its New
Jersey branch office and is subject to a New Jersey state income tax that is
calculated based on federal taxable income, subject to certain adjustments. In
July 2002, New Jersey eliminated the 3% tax rate formerly applicable to thrift
institutions located in New Jersey, and such institutions are now subject to the
9% tax rate applicable to New Jersey corporations. Such change was retroactive
to January 1, 2002.

St. Edmond's Federal Savings Bank's state income tax returns have not
been audited during the past five years. For additional information, see Note 8
of the notes to the consolidated financial statements.

MANAGEMENT

Directors and Officers of the SE Financial Corp. and St. Edmond's Federal
Savings Bank

The Bank's Board of Directors is currently composed of 11 members each
of whom serves for a term of three years, with approximately one-third of the
directors elected each year. The Bank's officers are elected annually by the
Board and serve at the Board's discretion.

SE Financial Corp.'s Board of Directors is currently composed of 10
members each of whom serves for a term of four years, with approximately
one-fourth of the directors elected each year. All of the directors of the Bank
became directors of SE Financial Corp. upon its incorporation, other than Frank
S. DePaolo. The terms for directors of SE Financial Corp. will be the same as
those of the Bank, except for Marcy C. Panzer and Gilbert Barsky whose terms
will expire in 2008 and Ben Kovnat whose term will expire in 2007. SE Financial
Corp.'s officers are elected annually by the Board and serve at the Boards'
discretion.

The following table sets forth information with respect to the current
directors and executive officers of SE Financial Corp. and St. Edmond's Federal
Savings Bank.

Mr. P. Charles DeRita, who served as a director of the Bank since 1991,
passed away in March 2004. Mr. DeRita was the sole owner of Hallmark Abstract
Co., Inc., a title insurance company located in Philadelphia, Pennsylvania. He
provided many years of quality service to the Bank.

Age at Current
ctober 31, Director Term
2003 Position Since Expires (1)
---- -------- ----- -----------

Directors:
Marcy C. Panzer(2) 53 Chairman of the Board 1983 2007
Gilbert Barsky 80 Director 1962 2007
Samuel Barsky(2) 49 Director and Secretary 1989 2005
Frank S. DePaolo(2) 54 Director, President and Chief 2004 2005
Executive Officer
Andrew A. Hines 76 Director 1985 2005
Ben Kovnat 86 Director 1983 2006
Megan L. Mahoney 43 Director 2003 2007
J. William Parker, Jr. 44 Director 2002 2006
Dr. Nicholas M. Renzi 67 Director 1980 2007
William F. Saldutti, III 44 Director 2001 2005
Susanne Spinell Shuster 53 Director 2001 2006

Director Emeritus:
Mitchell Panzer 86 Director Emeritus N/A N/A

Executive Officer:
Joseph Sidebotham, Sr.(2) 48 Executive Vice President, Chief N/A N/A
Financial Officer and Controller

- ---------------
(1) Shows terms for the Bank. Directors serve three year terms at the Bank and
four year terms at SE Financial Corp. For this reason, the terms for
directors of SE Financial Corp. will be the same as those of the Bank,
except for Marcy C. Panzer and Gilbert Barsky whose terms will expire in
2008 and Ben Kovnat whose term will expire in 2007.
(2) Such individual will also serve in the same capacity as an officer of SE
Financial Corp. Mr. DePaolo is a director of the Bank but is not a director
of SE Financial Corp.

The business experience of each director, director emeritus and
executive officer of the Bank is set forth below. Each has held his or her
present position for at least the past five years, except as otherwise
indicated.

Directors

Marcy C. Panzer has been a director since 1983 and became Chairman of
the Board in May 2002. Ms. Panzer is an attorney admitted to practice in the
Commonwealth of Pennsylvania. She was previously employed as Senior Vice
President and Counsel by American Business Financial Services until 2000. She is
the daughter of Director Emeritus Mitchell Panzer.

Gilbert Barsky has been a director since 1962. Mr. Barsky is retired
and was previously employed by St. Edmond's Savings Bank. He served as Vice
President and Treasurer at the time of his retirement. Mr. Barsky serves as the
Inspector of Elections for Montgomery County, Pennsylvania. Gilbert Barsky is
the father of Director Samuel Barsky.

Samuel Barsky has been a director since 1989 and Secretary of the Bank
since May 2002. Mr. Barsky is a certified public accountant with the firm of
Gitomer & Berenhulz P.C. He is the son of Director Gilbert Barsky.

Frank S. DePaolo has been President and Chief Executive Officer of St.
Edmond's Federal Savings Bank since October 2000 and has over 30 years banking
experience. He was appointed to the Bank's Board of Directors in March 2004.
Prior to joining the Bank, Mr. DePaolo was employed by Merchants National Bank
of Bangor, starting as executive vice president in 1986 and becoming chief
executive officer of such institution in 1987. Mr. DePaolo is a member of the
Greater Philadelphia Chamber of Commerce and the Home Builders Association of
Bucks and Montgomery Counties and a board member of the Pennsylvania Association
of Community Bankers. Mr. DePaolo has previously served as Elected Auditor of
Plainfield Township and a member of the Governing Council of the Pennsylvania
Banker's Association.

Andrew A. Hines has been a director since 1985. Mr. Hines is retired
from ARCO.

Ben Kovnat has been a director since 1983. Mr. Kovnat is retired from
the Iron Works Company.

Megan L. Mahoney has been a director since 2003. Ms. Mahoney is a
regional sales manager with Platinum Direct Funding and was previously employed
by American Business Financial Services, Inc. as a senior vice president.

J. William Parker, Jr. has been a director since 2002. Mr. Parker is
the sole owner of Signator Financial Network, which provides retirement,
investment and insurance planning services.

Dr. Nicholas M. Renzi has been a director since 1980. Dr. Renzi is a
retired physician.

William F. Saldutti, III has been a director since 2001. Mr. Saldutti
is an attorney and a partner at the law firm of Dembo & Saldutti.

Susanne Spinell Shuster has been a director since 2001. Ms. Shuster is
a certified public accountant and audit partner with Asher & Co., Ltd.

Director Emeritus

Mitchell Panzer served as a director of the Bank from 1946 to 1991. He
became a director emeritus in 1991. Mr. Panzer was counsel to the Bank from 1946
to 1988 and was a partner with the law firm of Wolf, Block, Schorr and
Solis-Cohen. He retired in 1988. Mr. Panzer is the father of Chairman of the
Board, Marcy C. Panzer.

Executive Officer

Joseph Sidebotham, Sr. has been at St. Edmond's Federal Savings Bank as
Executive Vice President, Chief Financial Officer and Controller since February
2001. Prior to that, Mr. Sidebotham was employed by South Jersey Savings and
Loan Association for over twenty years and held the offices of Controller,
Senior Vice President, Corporate Secretary and Chief Accounting Officer.

Meetings and Committees of the Board of Directors

Following the offering, SE Financial Corp.'s Board of Directors will
establish committees as deemed appropriate by the Board and as required by
applicable laws and regulations. SE Financial Corp.'s Board of Directors did not
meet during the year ended October 31, 2003 as the company was not formed until
2004.

The Board of Directors of the Bank conducts its business through
meetings of the Board and through activities of its committees. During the year
ended October 31, 2003, the Bank's Board of Directors met 13 times. No director
attended fewer than 75% of the total meetings of the Bank's Board of Directors
and committees on which he served during the year ended October 31, 2003. The
Bank's Board has an Audit Committee, a Loan Committee, a Compliance Committee, a
Human Resources Committee, an REO/Classified Assets Committee, an
Asset/Liability Committee, a Business Development Committee and an Advisory
Committee. There is no standing nominations committee.

The Audit Committee consists of Directors Susanne Shuster, Samuel
Barsky, Marcy C. Panzer and J. William Parker, Jr. and President Frank S.
DePaolo and Executive Vice President Joseph Sidebotham. This committee meets
quarterly with the internal auditor and independent accountants and periodically
as needed with the Bank's compliance auditors.

The Human Resource Committee consists of Directors Andrew A. Hines, Ben
Kovnat and Megan L. Mahoney and President Frank S. DePaolo, Executive Vice
President Joe Sidebotham and Vice President Rick Lemcoe. Messrs. DePaolo,
Sidebotham and Lemcoe do not participate in committee decisions regarding their
own compensation. This committee meets at least quarterly.

Director Compensation

Board Fees. Each director is paid an annual retainer of $5,000 paid in
twelve monthly installments. The Chairman of the Board and the Secretary receive
an additional retainer of $20,600 and

$12,360, respectively. Directors receive $50 per committee meeting attended and
committee chairpersons receive an additional $500 per year. The total fees paid
to the directors for the year ended October 31, 2003 were approximately $69,000.
The Bank's director emeritus is paid an annual fee of $5,000, and advisory
directors are paid an annual fee of $2,500. Committee members who are also
full-time Bank employees do not receive compensation as committee members.

Incentive Retirement Plan. The Bank implemented an incentive
compensation plan, effective January 1, 2004, to reward key management and the
Board of Directors for achieving strategic goals of the Bank. Under such plan,
the future value of units awarded to plan participants will be based upon the
accumulation of future retained earnings of the Bank, on an unconsolidated
basis, above the level of the Bank's retained earnings at January 1, 2004. As of
the date of such award on January 1, 2004, such units have no value. The
aggregate future value of such units will equal up to 10% of the accumulated
future retained earnings of the Bank. Expenses accrued for the increases in the
future value of units awarded will reduce the Bank's future earnings. There are
no specific performance targets set under the plan at this time.

The units were awarded to the executive officers and directors of the
Bank as of January 1, 2004 in proportion to the 2003 compensation paid to such
persons. Sixty percent of such units have been awarded to the directors of the
Bank and 40% of such units have been awarded to the executive officers,
including approximately 24% of such aggregate units to Frank S. DePaolo,
President of the Bank. Such units are earned and non-forfeitable after
participants have completed not less than three years of service (including
prior service) with the Bank. Distributions of benefits under the plan will be
made following retirement, termination of service, death or a change in control
of the Bank. The benefit paid to a plan participant will be the accumulated
value of his or her units calculated based upon the growth in the Bank's
reported retained earnings between January 1, 2004 and the time of distribution
of the benefit to a plan participant. Payments are forfeited if the participant
violates a non-compete agreement with the Bank, if any. The future value of such
units awarded and the annual expense of the plan is based upon the future
earnings of the Bank and increases in the Bank's future retained earnings on an
unconsolidated basis. To the extent the Bank implements other compensation and
benefit programs, including any stock-based compensation programs, which may
increase the Bank's expenses, the accumulated value of the units awarded under
this plan will be adversely affected.

Executive Compensation

Summary Compensation Table. The following table sets forth the cash and
non-cash compensation awarded to or earned by the Bank's president for the year
ended October 31, 2003. No other officer received a total annual salary and
bonus in excess of $100,000 during the reporting period.

Annual Compensation
---------------------------------------
Fiscal Other Annual
Name and Principal Position Year Salary Bonus Compensation
- --------------------------- ---- ------ ----- ------------
Frank S. DePaolo, President 2003 $116,568 $8,490 $5,828(1)
2002 113,047 4,950 5,668
2001 110,000 117 -

- ------------
(1) Consists of Bank's contribution under 401(k) Plan.

Executive Life Insurance Program. The Bank has implemented a life
insurance program for President DePaolo and Executive Vice President Sidebotham.
Such plan provides for a death benefit of

250% of salary up to a maximum benefit of $400,000. Such benefit remains in
effect following termination of employment with not less than three years of
service.

Change in Control/Employment Agreements. The Board of Directors may
enter into employment agreements and/or change in control agreements with the
Chairman of the Board, the President and the Executive Vice President. It is
anticipated that such agreements, if they are entered into, would provide that
if SE Financial Corp. or St. Edmond's Federal Savings Bank is acquired and the
officer's employment is terminated, he or she will receive a cash severance
payment. Such severance payment would in no event exceed 2.999 times the
terminated officer's prior five year average taxable compensation. The Board has
not yet determined the terms of such agreements or whether to enter into such
agreements.

Potential Stock Benefit Plans

Employee Stock Ownership Plan. We intend to establish an employee stock
ownership plan for the exclusive benefit of participating employees of the Bank,
to be implemented at the completion of the offering. Participating employees are
employees who have completed one year of service and have attained the age of
21. An application for a letter of determination as to the tax-qualified status
of the employee stock ownership plan will be submitted to the IRS. Although no
assurances can be given, we expect that the employee stock ownership plan will
receive a favorable letter of determination from the IRS.

The employee stock ownership plan is to be funded by contributions made
by St. Edmond's Federal Savings Bank in cash or common stock. Benefits may be
paid either in shares of the common stock or in cash. The plan will borrow funds
with which to acquire up to 8% of the shares issued in the offering. The
employee stock ownership plan may elect, in whole or in part, to fill its order
through open market purchases subsequent to the closing of the offering, subject
to any required regulatory approval. The employee stock ownership plan intends
to borrow funds from SE Financial Corp. The loan is expected to be for a term of
ten years at an annual interest rate approximately equal to the prime rate as
published in The Wall Street Journal. Presently it is anticipated that the
employee stock ownership plan will purchase up to 8% of the shares issued in the
offering. The loan will be secured by the shares purchased and earnings of
employee stock ownership plan assets. Shares purchased with loan proceeds will
be held in a suspense account for allocation among participants as the loan is
repaid. It is anticipated that all contributions will be tax-deductible. This
loan is expected to be fully repaid in approximately ten years.

Contributions to the employee stock ownership plan and shares released
from the suspense account will be allocated among participants on the basis of
base compensation. All participants must be employed at least 1,000 hours in a
plan year, or have terminated employment following death, disability or
retirement, in order to receive an allocation. Participant benefits become fully
vested in plan allocations following three years of service. Employment before
the adoption of the employee stock ownership plan shall be credited for the
purposes of vesting, and vesting is accelerated in the event of a change of
control. Contributions to the employee stock ownership plan by St. Edmond's
Federal Savings Bank are discretionary and may cause a reduction in other forms
of compensation, including the Bank's 401(k) Plan. As a result, benefits payable
under this plan cannot be estimated.

A committee, consisting of non-employee directors, will administer the
plan and serve as the plan's trustees. The trustees must vote all allocated
shares held in the plan as directed by plan participants. Unallocated shares and
allocated shares for which no timely direction is received will be voted as
directed by the Board of Directors or the plan's committee, subject to the
trustees' fiduciary duties.

Stock Option Plan. We intend to adopt a stock option plan for the
benefit of directors and officers after the passage of one year from the
completion of the offering. We may, however, decide to adopt the stock option
plan sooner than one year following the offering, but in no event will the plan
be adopted sooner than six months subsequent to the completion of the offering.
If the stock option plan is implemented within one year of the completion of the
offering, it will comply with the Office of Thrift Supervision regulations
related to such plans, including limitations on vesting and allocation of
awards. Office of Thrift Supervision regulations also require that any plan
adopted within one year of the completion of the offering will be subject to
stockholder approval at a meeting of stockholders held no sooner than six months
subsequent to the completion of the offering. Up to 10% of the number of shares
of common stock issued in the offering will be reserved for issuance under the
stock option plan. No determinations have been made as to the specific terms of,
or awards under, the stock option plan.

The purpose of the stock option plan will be to attract and retain
qualified personnel in key positions, provide officers and directors with a
proprietary interest in SE Financial Corp. as an incentive to contribute to our
success and reward directors and officers for outstanding performance. Although
the terms of the stock option plan have not yet been determined, it is expected
that the stock option plan will provide for the grant of: (1) options to
purchase the common stock intended to qualify as incentive stock options under
the Internal Revenue Code (incentive stock options); and (2) options that do not
so qualify (non-incentive stock options). Any stock option plan would be in
effect for up to ten years from the earlier of adoption by the Board of
Directors or approval by the stockholders. Options would expire no later than
ten years from the date granted and would expire earlier if the option committee
so determines or in the event of termination of employment. Options would be
granted based upon several factors, including seniority, job duties and
responsibilities and job performance.

Restricted Stock Plan. We also intend to establish a restricted stock
plan to provide our officers and directors with a proprietary interest in SE
Financial Corp. We intend to adopt the restricted stock plan after the passage
of at least one year from the completion of the offering. We may, however,
decide to adopt the restricted stock plan sooner than one year following the
offering, but in no event will the plan be adopted sooner than six months
subsequent to the completion of the offering. If the restricted stock plan is
implemented within one year of the completion of the offering, it will comply
with the Office of Thrift Supervision regulations related to such plans,
including limitations on vesting and allocation of awards. Any plan adopted
within one year of the completion of the offering will be subject to stockholder
approval at a meeting of stockholders held no sooner than six months subsequent
to the completion of the offering. The restricted stock plan is expected to
provide for the award of common stock, subject to vesting restrictions, to
eligible officers and directors.

We expect to contribute funds to the restricted stock plan to acquire,
in the aggregate, up to 4% of the number of shares of common stock issued in the
offering, provided, however, that, pursuant to the regulations of the Office of
Thrift Supervision, if the plan is adopted within one year of the completion of
the offering, the plan will be limited to up to 3% if St. Edmond's Federal
Savings Bank does not have tangible capital of at least 10% at the time the plan
is established. Shares used to fund the restricted stock plan may be acquired
through open market purchases or provided from authorized but unissued shares.
No determinations have been made as to the specific terms of the restricted
stock plan.

Transactions with Management and Others

No directors, officers or their immediate family members were engaged
in transactions with the Bank or any subsidiary involving more than $60,000
(other than through a loan) during the year ended October 31, 2003.

The Bank has followed the policy of offering residential mortgage loans
for the financing of personal residences and consumer loans to its officers,
directors and employees. Loans are made in the ordinary course of business and
are also made on substantially the same terms and conditions, other than a 1%
discount for officers and employees on the interest rate paid while the person
remains employed by the Bank, as those of comparable transactions prevailing at
the time with other persons, and do not include more than the normal risk of
collectibility or present other unfavorable features. At October 31, 2003, loans
to directors and officers of the Bank totaled $459,000, consisting of loans to
two individuals.

Proposed Stock Purchases by Management

The following table sets forth for each of the directors and executive
officers (including in each case all "associates" of such persons) the number of
shares of common stock which each director and executive officer intends to
purchase, assuming the sale of 1,950,000 shares of common stock. The table does
not include purchases by the employee stock ownership plan (8% of the common
stock sold in the offering), and does not take into account any stock benefit
plans to be adopted following the conversion. See Management - Potential Stock
Benefit Plans.

Percentage of Total
Total Number Outstanding Shares
of Shares to at Midpoint of the
Name be Purchased Offering Range
- ------------------------- ------------ --------------
Marcy C. Panzer 20,000 1.0%
Gilbert Barsky 500 *
Samuel Barsky 10,000 *
Andrew A. Hines 5,000 *
Ben Kovnat 7,000 *
Megan L. Mahoney 10,000 *
J. William Parker, Jr. 13,000 *
Dr. Nicholas M. Renzi 1,000 *
William F. Saldutti, III 10,000 *
Susanne Spinell Shuster 5,000 *
Frank S. DePaolo 10,000 *
Joseph Sidebotham, Sr. 10,000 *
------- ---
Total 101,500 5.2%
======= ===

- ------------
* Less than 1%.

If the stockholders of SE Financial Corp. approve the stock benefit
plans as discussed in this prospectus (including 4% of the shares issued in the
offering for the restricted stock plan and 10% of the shares issued in the
offering for the stock option plan), and assuming that all of the shares of
common stock available for award under the restricted stock plan are awarded and
all of the options available under the stock option plan are awarded and
exercised, the aggregate ownership of directors and executive officers would
increase to 17.2% at the midpoint of the offering range, assuming that the plans
are funded with newly issued shares instead of shares acquired in open market
purchases and assuming that no awards are made to non-executive officers. See
Management - Potential Stock Benefit Plans on page 74.

Purchases of common stock in the offering by directors and executive
officers will be counted toward the minimum of 1,657,500 shares required to be
sold to complete the offering. Management may, but is not required to, purchase
additional shares in the offering to satisfy the minimum, subject to the

limitation on the individual maximum share purchase limitations and the
requirement that directors, executive officers and their associates may not
purchase, in the aggregate, more than 34% of the shares sold in the offering.

Shares of common stock purchased by directors and executive officers
cannot be sold for a period of one year following the offering, and stock
certificates issued to directors and executive officers will bear a legend
restricting their sale. See The Offering - Restrictions on Transferability by
Directors and Officers on page 95.

THE CONVERSION

The Board of Directors of St. Edmond's Federal Savings Bank adopted the
plan authorizing the conversion and the offering on January 15, 2004, subject to
the approval of the Office of Thrift Supervision and of the members of the Bank
and the satisfaction of certain other conditions. The Office of Thrift
Supervision gave authorization to conduct the conversion on March 15, 2004.
Office of Thrift Supervision approval does not constitute a recommendation or
endorsement of the plan by the Office of Thrift Supervision. Pursuant to the
Plan, all interpretations and applications of the Plan's provisions shall be by
a majority of the Board of Directors.

General

On January 15, 2004, the Board of Directors of St. Edmond's Federal
Savings Bank adopted the plan of conversion and stock issuance, subsequently
amended by the Board, pursuant to which the Bank proposes to reorganize from a
federally chartered mutual savings institution to a federally chartered stock
savings institution. The Bank will become a wholly-owned subsidiary of SE
Financial Corp. Concurrently with the conversion, SE Financial Corp. will sell
its common stock in the offering to the Bank's members and, if necessary, the
general public. The Board of Directors unanimously adopted the Plan after
consideration of the advantages and the disadvantages of the conversion and
offering. After we receive all the required approvals from the government
agencies that regulate us, the approval of the plan by the Bank's members and
the satisfaction of all other conditions precedent to the conversion, the Bank
will effect the conversion by exchanging its federal mutual savings institution
charter for a federal stock savings institution charter and becoming a wholly
owned subsidiary of SE Financial Corp., and having the depositors of the Bank
receive liquidation interests in the federal stock savings institution as they
have in the Bank before the conversion. See The Conversion - Description of the
Conversion. On the effective date, SE Financial Corp. will commence business as
SE Financial Corp., a savings and loan holding company, and the Bank will
commence business as a federally chartered stock savings bank. The conversion
will be accomplished in accordance with the procedures set forth in the plan,
the requirements of applicable laws and regulations, and the policies of the
Office of Thrift Supervision.

For additional information concerning the offering, see The Offering.

Purposes of the Conversion

The Board of Directors of St. Edmond's Federal Savings Bank has
determined that the conversion is in the best interest of the Bank and has
several business purposes for the conversion.

The conversion will structure the Bank in the stock form, which is used
by commercial banks, most major business corporations and an increasing number
of savings institutions. Formation of the Bank as a capital stock savings
institution subsidiary of SE Financial Corp. will permit SE Financial Corp. to
issue

stock, which is a source of capital not available to mutual savings
institutions. The holding company form of organization is expected to provide
additional flexibility to diversify the Bank's business activities through
existing or newly formed subsidiaries, or through acquisitions of or mergers
with other financial institutions, as well as other companies. Although the Bank
has no current arrangements, understandings or agreements regarding any
opportunities, SE Financial Corp. will be in a position after the conversion and
offering, subject to regulatory limitations and SE Financial Corp.'s financial
position, to take advantage of any acquisition, merger or diversification
opportunities that may arise.

SE Financial Corp. is offering for sale its common stock in the
offering at an aggregate price based on an independent appraisal. The proceeds
from the sale of common stock of SE Financial Corp. will provide the Bank with
new equity capital, which will support future growth and expanded operations.
While the Bank currently meets or exceeds all regulatory capital requirements,
the sale of stock in connection with the conversion, coupled with the
accumulation of earnings, less dividends or other reductions in capital, from
year to year, represents a means for the orderly preservation and expansion of
the Bank's capital base, and allows flexibility to respond to sudden and
unanticipated capital needs. After the conversion and offering, SE Financial
Corp. may repurchase shares of its common stock. The investment of the net
proceeds of the offering also will provide additional income to enhance further
the Bank's future capital position.

The ability of SE Financial Corp. to issue stock will enable it in the
future to establish stock benefit plans for management and employees of SE
Financial Corp. and the Bank, including incentive stock option plans, stock
award plans, and employee stock ownership plans.

SE Financial Corp. will also be able to borrow funds, on a secured and
unsecured basis, and to issue debt to the public or in a private placement. The
proceeds of any borrowings or debt issuance may be contributed to the Bank as
core capital for regulatory capital purposes. SE Financial Corp. has not made a
determination to borrow funds or issue debt at the present time.

Description of the Conversion

After receiving all of the required approvals from the government
agencies that regulate us and the ratification of the plan of conversion by the
Bank's members, the conversion will be completed. After the conversion, the
legal existence of the Bank will not terminate, the converted stock bank will be
a continuation of the Bank and all property of the Bank, including its right,
title, and interest in and to all property of any kind and nature, interest and
asset of every conceivable value or benefit then existing or pertaining to the
Bank, or which would inure to the Bank immediately by operation of law and
without the necessity of any conveyance or transfer and without any further act
or deed, will continue to be owned by the Bank. The Bank will possess and hold
the same in its right and fully and to the same extent as the same was possessed
and held by the Bank. The Bank will continue to have, succeed to, and be
responsible for all the rights, liabilities, and obligations of the Bank.

The foregoing description of the conversion is qualified in its
entirety by reference to the plan and the articles of incorporation and bylaws
of the Bank and SE Financial Corp.

Effects of the Conversion

General. The conversion will not have any effect on the Bank's present
business of accepting deposits and investing its funds in loans and other
investments permitted by law. The conversion will not result in any change in
the existing services provided to depositors and borrowers, or in existing
offices,

management, and staff. After the conversion, the Bank will continue to be
subject to regulation, supervision, and examination by the Office of Thrift
Supervision and the Federal Deposit Insurance Corporation.

Deposits and Loans. Each holder of a deposit account in the Bank at the
time of the conversion will continue as an account holder in the Bank after the
conversion, and the conversion will not affect the deposit balance, interest
rate, or other terms. Each deposit account will be insured by the Federal
Deposit Insurance Corporation to the same extent as before the conversion.
Depositors will continue to hold their existing certificates, savings records,
checkbooks, and other evidence of their accounts. The conversion will not affect
the loans of any borrower from the Bank. The amount, interest rate, maturity,
security for, and obligations under each loan will remain contractually fixed as
they existed prior to the conversion. See The Conversion - Effects of the
Conversion - Voting Rights and - Liquidation Rights below for a discussion of
the effects of the conversion on the voting and liquidation rights of the
depositors of the Bank.

Voting Rights. As a federally chartered mutual savings institution, the
Bank has no authority to issue capital stock and thus, no stockholders. Control
of the Bank in its mutual form is vested in the Board of Directors of the Bank.
The Directors are elected by the Bank's members. Holders of qualifying deposits
in the Bank are members of the Bank. In the consideration of all questions
requiring action by members of the Bank, each holder of a qualifying deposit is
permitted to cast one vote for each $100, or fraction thereof, of the withdrawal
value of the voting depositor's account. Each borrower as of September 29, 1995
has one vote for the period of time that such borrowing is in existence. No
member may cast more than 1,000 votes.

After the conversion, all voting rights will be held solely by
stockholders. A stockholder will be entitled to one vote for each share of
common stock owned.

Tax Effects. We have received an opinion from our counsel, Malizia
Spidi & Fisch, PC, on the federal tax consequences of the conversion. The
opinion has been filed as an exhibit to the registration statement of which this
prospectus is a part and covers those federal tax matters that are material to
the transaction. The opinion provides that:

o the conversion will qualify as a reorganization under Section
368(a)(1)(F) of the Code, and no gain or loss will be recognized
by the Bank by reason of the proposed conversion;

o no gain or loss will be recognized by the Bank upon the receipt
of money from SE Financial Corp. for the Bank's stock, and no
gain or loss will be recognized by SE Financial Corp. upon the
receipt of money for the shares;

o no gain or loss will be recognized by the Eligible Account
Holders and Other Members upon the issuance to them of
withdrawable savings accounts in the Bank in the stock form in
the same dollar amount as their savings accounts in the Bank in
the mutual form plus an interest in the liquidation account of
the Bank in the stock form in exchange for their savings accounts
in the Bank in the mutual form;

o the part of the taxable year of the Bank before the conversion
and the part of the taxable year of the Bank after the conversion
will constitute a single taxable year of the Bank. Consequently,
the Bank will not be required to file a federal income tax return
for any portion of such taxable year;

o the Bank after the conversion will succeed to and take into
account the earnings and profits or deficit in earnings and
profits of the Bank as of the date or dates of transfer; and

o no gain or loss will be recognized by Eligible Account Holders
and Other Members upon the distribution to them of the
non-transferable subscription rights to purchase shares of stock.

The opinion in the last bullet above is predicated on representations
from the Bank that no person shall receive any payment, whether in money or
property, in lieu of the issuance of subscription rights. The opinion in the
last bullet above is based on the position that the subscription rights to
purchase shares of common stock received by Eligible Account Holders and Other
Members have a fair market value of zero. In reaching their opinion stated in
the last bullet above, Malizia Spidi & Fisch, PC has noted that the subscription
rights will be granted at no cost to the recipients, will be legally
non-transferable and of short duration, and will provide the recipients with the
right only to purchase shares of common stock at the same price to be paid by
members of the general public in any community offering. Malizia Spidi & Fisch,
PC believes that it is more likely than not that the fair market value of the
subscription rights to purchase common stock is zero.

If the non-transferable subscription rights to purchase common stock
are subsequently found to have a fair market value, income may be recognized by
various recipients of the subscription rights (in certain cases, whether or not
the rights are exercised), and we may be taxed on the distribution of the
subscription rights.

We are also subject to Pennsylvania income taxes and have received an
opinion from Malizia Spidi & Fisch, PC that the conversion will be treated for
Pennsylvania state tax purposes similar to the treatment of the conversion for
federal tax purposes.

Unlike a private letter ruling from the IRS, the opinions of Malizia
Spidi & Fisch, PC have no binding effect or official status, and no assurance
can be given that the conclusions reached in any of those opinions would be
sustained by a court if contested by the IRS or the Pennsylvania tax
authorities. Eligible Account Holders and Other Members are encouraged to
consult with their own tax advisers as to the tax consequences in the event the
subscription rights are determined to have any market value.

Liquidation Account. In the unlikely event of the Bank's complete
liquidation in the Bank's present mutual form, each depositor is entitled to
share in a distribution of the Bank's assets, remaining after payment of claims
of all creditors (including the claims of all depositors to the withdrawal value
of their accounts). Each depositor's pro rata share of the remaining assets
would be in the same proportion as the value of his deposit accounts was to the
total value of all deposit accounts in the Bank at the time of liquidation.

Upon a complete liquidation after the conversion, each depositor would
have a claim, as a creditor, of the same general priority as the claims of all
other general creditors of the Bank. Except as described below, a depositor's
claim would be solely in the amount of the balance in his deposit account plus
accrued interest. A depositor would not have an interest in the residual value
of the Bank's assets above that amount, if any.

The Bank's plan of conversion provides for the establishment, upon the
completion of the conversion, of a special "liquidation account" for the benefit
of Eligible Account Holders. The liquidation account will be maintained as a
separate account at St. Edmond's Federal Savings Bank.

Each Eligible Account Holder, if he continues to maintain his deposit
account with the Bank, would be entitled on a complete liquidation of the Bank
after conversion, to an interest in the liquidation account prior to any payment
to stockholders. Each Eligible Account Holder would have an initial interest in
the liquidation account for each deposit account held in the Bank on the
qualifying date, December 31, 2002. The interest as to each deposit account
would be in the same proportion of the total liquidation account as the balance
of the deposit account on December 31, 2002 was to the aggregate balance in all
the deposit accounts of Eligible Account Holders on December 31, 2002. However,
if the amount in the deposit account on any annual closing date of the Bank
(October 31) is less than the amount in the liquidation account on December 31,
2002, then the interest in this special liquidation account would be reduced
from time to time by an amount proportionate to any reduction, and the interest
would cease to exist if the deposit account were closed. Decreases in deposit
accounts on any annual closing date will be reflected by a corresponding
decrease in the amount held in the liquidation account. An individual's interest
in and the total amount held in the liquidation account will never be increased
despite any increase in deposit accounts after December 31, 2002.

The Bank's plan of conversion requires the liquidation account to be
established in an amount equal to its net worth as of the latest practicable
date prior to conversion (i.e., the net worth disclosed in the consolidated
financial statements included in this prospectus).

No merger, consolidation, purchase of bulk assets with assumptions of
savings accounts and other liabilities, or similar transactions with another
insured institution in which the Bank, in its converted form, is not the
surviving institution, shall be considered a complete liquidation. In these
transactions, the liquidation account shall be assumed by the surviving
institution.

Conditions to the Conversion

Before we can complete the conversion, we must receive all the required
approvals from the Office of Thrift Supervision. The receipt of these approvals
or non-objections from the Office of Thrift Supervision does not constitute a
recommendation or endorsement of the plan or conversion by the Office of Thrift
Supervision. Completion of the conversion also is subject to ratification of the
plan by a majority of the total votes of members at a special meeting called for
the purpose of approving the plan. The Board of Directors may decide to complete
the conversion without forming a holding company.

Amendment or Termination of the Plan of Conversion

If determined to be necessary or desirable by the Board of Directors of
the Bank, the plan may be amended by a two-thirds vote of the Bank's Board of
Directors, with the concurrence of the Office of Thrift Supervision, at any time
prior to or after submission of the plan to members of the Bank for
ratification. The plan may be terminated by the Board of Directors of the Bank
at any time prior to or after ratification by the members, by a two-thirds vote
with the concurrence of the Office of Thrift Supervision.

THE OFFERING

General

Concurrently with the conversion, we are offering between a minimum of
1,657,500 shares and a maximum of 2,242,500 shares of common stock in the
offering (subject to adjustment to up to 2,578,875 shares if our estimated pro
forma market value has increased at the conclusion of the offering). The
offering will expire at 12:00 noon, eastern time, on April 19, 2004 unless
extended. The minimum

purchase is 25 shares of common stock (minimum investment of $250). Our common
stock is being offered at a fixed price of $10.00 per share in the offering.

Conduct of the Offering

Subject to the limitations of the plan, shares of common stock are
being offered in descending order of priority in the subscription offering to:

o Eligible Account Holders (depositors at the close of business on December
31, 2002 with deposits of at least $50.00);

o the employee stock ownership plan; and

o Other Members: depositors as of March 9, 2004 and borrowers as of September
29, 1995 who continue as borrowers as of the close of business on March 9,
2004.

To the extent that shares remain available and depending on market
conditions at or near the completion of the subscription offering, we may
conduct a community offering and possibly a syndicated community offering. The
community offering, if any, may commence simultaneously with, during or
subsequent to the completion of the subscription offering. A syndicated
community offering, if we conducted one, would commence just prior to, or as
soon as practicable after, the termination of the subscription offering. In any
community offering or syndicated community offering, we must first fill orders
for our common stock up to a maximum of 2% of the shares issued in the
conversion in a manner that will achieve a wide distribution of the stock, and
thereafter any remaining shares will be allocated on an equal number of shares
per order basis, until all orders have been filled or the shares have been
exhausted. If an oversubscription occurs in the offering by Eligible Account
Holders, the employee stock ownership plan may, in whole or in part, fill its
order through open market purchases subsequent to the closing of the offering,
subject to any required regulatory approval.

Subscription Offering

Subscription Rights. Non-transferable subscription rights to subscribe
for the purchase of common stock have been granted under the plan of conversion
to the following persons:

Priority 1: Eligible Account Holders. Each Eligible Account Holder
shall be given the opportunity to purchase, subject to the overall limitations
described under The Offering - Limitations on Purchases of Stock, up to the
greater of (i) the maximum purchase limitation in the community offering (i.e.,
10,000 shares or $100,000), (ii) one-tenth of 1% of the total offering of shares
of common stock offered in the subscription offering, or (iii) 15 times the
product (rounded down to the next whole number) obtained by multiplying the
total number of shares of common stock offered in the subscription offering by a
fraction, of which the numerator is the amount of the qualifying deposits of the
Eligible Account Holder and the denominator is the total amount of all
qualifying deposits of all Eligible Account Holders.

The following example illustrates how the maximum subscription
limitation is calculated. Assuming that shares of common stock are sold at the
maximum of the offering range (2,242,500 shares), a depositor had $25,000 on
deposit as of December 31, 2002, and there were $72.3 million of qualifying
deposits as of that date, then the depositor would receive subscription rights
to subscribe for an amount of stock equal to the greater of:

(i) 10,000 shares;

(ii) 2,242 shares, which is one-tenth of one percent of a 2,242,500
share offering; or

(iii) 11,628 shares, which is the product of: 15 x 2,242,500 shares of
common stock x ($25,000/$72.3 million).

If there are insufficient shares available to satisfy all subscriptions
of Eligible Account Holders, shares will be allocated to Eligible Account
Holders so as to permit each subscribing Eligible Account Holder to purchase a
number of shares sufficient to make his total allocation equal to the lesser of
100 shares or the number of shares ordered. Thereafter, unallocated shares will
be allocated to remaining subscribing Eligible Account Holders whose
subscriptions remain unfilled in the same proportion that each subscriber's
qualifying deposit bears to the total amount of qualifying deposits of all
subscribing Eligible Account Holders, in each case on December 31, 2002, whose
subscriptions remain unfilled. Subscription rights received by persons who were
officers and directors one year prior to the eligibility record date, based on
their increased deposits in St. Edmond's Federal Savings Bank in the one year
preceding the eligibility record date will be subordinated to the subscription
rights of other eligible account holders. To ensure proper allocation of stock,
each Eligible Account Holder must list on his order form all accounts in which
he had an ownership interest as of the Eligibility Record Date.

Priority 2: The Employee Plans. The tax qualified employee plans may be
given the opportunity to purchase in the aggregate up to 10% of the common stock
issued in the subscription offering. It is expected that the employee stock
ownership plan will purchase up to 8% of the common stock issued in the
offering. If an oversubscription occurs in the offering by Eligible Account
Holders, the employee stock ownership plan may, in whole or in part, fill its
order through open market purchases subsequent to the closing of the offering,
subject to any required regulatory approval.

Priority 3: Other Members. If there are sufficient shares remaining
after satisfaction of all subscriptions by the Eligible Account Holders and the
tax-qualified employee stock benefit plans, each Other Member (depositors as of
March 9, 2004 and borrowers as of September 29, 1995 who continue as borrowers
as of the close of business on March 9, 2004) who is not an Eligible Account
Holder shall have the opportunity to purchase up to the greater of 10,000 shares
of common stock or one-tenth of 1% of the total offering of shares of common
stock offered in the subscription offering, subject to the overall purchase
limitations described under - Limitations on Purchases of Common Stock. If Other
Members subscribe for a number of shares which, when added to the shares
subscribed for by Eligible Account Holders and the tax-qualified employee stock
benefit plans, is in excess of the total number of shares offered in the
offering, the subscriptions of Other Members will be allocated among subscribing
Other Members to permit each subscribing Other Member to purchase a number of
shares sufficient to make his total allocation of common stock equal to the
lesser of 100 shares or the number of shares subscribed for by Other Members.
Any shares remaining will be allocated among the subscribing Other Members whose
subscriptions remain unsatisfied on a 100 shares (or whatever lesser amount is
available) per order basis until all orders have been filled or the remaining
shares have been allocated.

State Securities Laws. We, in our sole discretion, will make reasonable
efforts to comply with the securities laws of any state in the United States in
which St. Edmond's Federal Savings Bank members reside, and will only offer and
sell the common stock in states in which the offers and sales comply with state
securities laws. However, no person will be offered or allowed to purchase any
common stock under the plan if he resides in a foreign country, or in a state of
the United States with respect to which:

o a small number of persons otherwise eligible to purchase shares under the
plan reside; or

o the offer or sale of shares of common stock to these persons would require
us or St. Edmond's Federal Savings Bank or our employees to register, under
the securities laws of that state, as a broker or dealer or to register or
otherwise qualify its securities for sale in that state; or

o registration or qualification would be impracticable for reasons of cost or
otherwise.

Restrictions on Transfer of Subscription Rights and Shares. The plan
prohibits any person with subscription rights, including Eligible Account
Holders and Other Members, from transferring or entering into any agreement or
understanding to transfer the legal or beneficial ownership of the subscription
rights issued under the plan or the shares of common stock to be issued when
they are exercised. Subscription rights may be exercised only by the person to
whom they are granted and only for his or her account. With the exception of IRA
stock purchases, the subscription rights of a qualifying account may not be
transferred to an account that is in a different form of ownership. Adding or
deleting a name or otherwise altering the form of beneficial ownership of a
qualifying account will void a subscription order. Each person subscribing for
shares will be required to certify that he or she is purchasing shares solely
for his or her own account and that he or she has no agreement or understanding
regarding the sale or transfer of the shares. The regulations also prohibit any
person from offering or making an announcement of an offer or intent to make an
offer to purchase subscription rights or shares of common stock before the
completion of the offering.

SE Financial Corp. and St. Edmond's Federal Savings Bank will pursue
any and all legal and equitable remedies in the event we become aware of the
transfer of subscription rights and will not honor orders which we determine
involve the transfer of subscription rights.

Deadlines for Purchasing Stock

The subscription offering will terminate at 12:00 noon, eastern time,
on April 19, 2004. We may extend this expiration date without notice to you for
up to 45 days, until June 3, 2004. Once submitted, your order is irrevocable
unless the offering is extended beyond June 3, 2004. We may request permission
from the Office of Thrift Supervision to extend the offering beyond June 3,
2004, and the Office of Thrift Supervision may grant one or more extensions of
the offering of up to 90 days per extension, but in no event may the offering be
extended beyond May 4, 2006. If the offering is extended beyond June 3, 2004, we
will be required to notify each subscriber and resolicit subscriptions. During
any extension period, subscribers will have the right to modify or rescind their
subscriptions, and, unless an affirmative response is received, a subscriber's
funds will be returned with interest at St. Edmond's Federal Savings Bank's
regular savings account rate. A community offering and a syndicated community
offering, if such offerings are conducted, may terminate at any time without
notice but no later than June 3, 2004.

Community Offering and Syndicated Community Offering

Community Offering. If less than the total number of shares of common
stock to be subscribed for in the offering are sold in the subscription offering
and depending on market conditions at or near the

completion of the subscription offering, shares remaining unsubscribed may be
made available for purchase in the community offering to certain members of the
general public. The maximum amount of common stock that any person may purchase
in the community offering is 10,000 shares, or $100,000. In the community
offering, if any, shares will be available for purchase by the general public
with preference given first to natural persons residing in Philadelphia County,
Pennsylvania and Gloucester County, New Jersey. We will attempt to issue the
shares in a manner that would promote a wide distribution of common stock.

If purchasers in the community offering, whose orders would otherwise
be accepted, subscribe for more shares than are available for purchase, the
shares available to them will be allocated among persons submitting orders in
the community offering in an equitable manner we determine.

The community offering, if any, may commence simultaneously with,
during or subsequent to the completion of the subscription offering. The
community offering, if any, must be completed within 45 days after the
completion of the subscription offering unless otherwise extended by the Office
of Thrift Supervision.

We, in our absolute discretion, reserve the right to reject any or all
orders in whole or in part which are received in the community offering, at the
time of receipt or as soon as practicable following the completion of the
community offering.

Syndicated Community Offering. If shares remain available after the
subscription offering, and depending on market conditions at or near the
completion of the subscription offering, we may offer shares to selected persons
through a syndicated community offering on a best-efforts basis conducted
through Sandler O'Neill in accordance with such terms, conditions and procedures
as may be determined by the Boards of Directors of SE Financial Corp. and St.
Edmond's Federal Savings Bank. A syndicate of broker-dealers (selected dealers)
may be formed to assist in the syndicated community offering. A syndicated
community offering, if we conducted one, would commence just prior to, or as
soon as practicable after, the termination of the subscription offering.

Orders received in connection with the syndicated community offering,
if any, will receive a lower priority than orders received in the subscription
offering and community offering. Common stock sold in the syndicated community
offering will be sold at the same price as all other shares in the subscription
offering. A syndicated community offering would be open to the general public
beyond the local community; however, we have the right to reject orders, in
whole or in part, in our sole discretion in the syndicated community offering.
No person will be permitted to purchase more than 10,000 shares, or $100,000, of
common stock in the syndicated community offering.

The date by which orders must be received in the syndicated community
offering will be set by us at the time the syndicated community offering
commences; but if the syndicated community offering is extended beyond June 3,
2004, each purchaser will have the opportunity to maintain, modify, or rescind
his order. In that event, all funds received in the syndicated community
offering will be promptly returned with interest to each purchaser unless he
requests otherwise.

Limitations on Purchases of Stock

The following additional limitations have been imposed on purchases of
shares of common stock:

1. The maximum number of shares which may be purchased in the
offering by any individual (or individuals through a single
account) shall not exceed 10,000 shares, or $100,000. This limit
applies to stock purchases in total in the subscription,
community and syndicated community offerings.

2. The maximum number of shares that may be purchased by any
individual together with any associate or group of persons acting
in concert is 20,000 shares, or $200,000. This limit applies to
stock purchases in total in the subscription, community and
public offerings. This limit does not apply to the Bank's
employee stock benefit plans, which in the aggregate may
subscribe for up to 10% of the common stock issued in the
offering.

3. The maximum number of shares which may be purchased in all
categories in the offering by officers and directors of St.
Edmond's Federal Savings Bank and their associates in the
aggregate shall not exceed 34% of the total number of shares
issued in the offering.

4. The minimum order is 25 shares.

5. If the number of shares otherwise allocable to any person or that
person's associates would be in excess of the maximum number of
shares permitted as set forth above, the number of shares
allocated to that person shall be reduced to the lowest
limitation applicable to that person, and then the number of
shares allocated to each group consisting of a person and that
person's associates shall be reduced so that the aggregate
allocation to that person and his associates complies with the
above maximums, and the maximum number of shares shall be
reallocated among that person and his associates in proportion to
the shares subscribed by each (after first applying the maximums
applicable to each person, separately).

6. Depending on market or financial conditions, the Board of
Directors of St. Edmond's Federal Savings Bank, without further
approval of the depositors, may decrease or increase the purchase
limitations in the plan, provided that the maximum purchase
limitations may not be increased to a percentage in excess of 5%
of the offering. If SE Financial Corp. increases the maximum
purchase limitations, SE Financial Corp. is only required to
resolicit persons who subscribed for the maximum purchase amount
and may, in the sole discretion of SE Financial Corp., resolicit
certain other large subscribers.

7. If the total number of shares offered increases in the offering
due to an increase in the maximum of the estimated valuation
range of up to 15% (the adjusted maximum) the additional shares
will be used in the following order of priority: (a) to fill the
Employee Stock Ownership Plan's subscription up to 8% of the
adjusted maximum (unless the employee stock ownership plan elects
to purchase stock subsequent to the offering in the open market);
(b) if there is an oversubscription at the Eligible Account
Holder level, to fill unfilled subscriptions of Eligible Account
Holders; (c) if there is an oversubscription at the Other Member
level, to fill unfilled subscriptions of Other Members; (d) to
fill orders received in a community offering with preference
given to persons who live in the local community; and (e) to fill
orders received in the syndicated community offering.

8. No person will be allowed to purchase any stock if that purchase
would be illegal under any federal law or state law or regulation
or would violate regulations or policies of the NASD. SE
Financial Corp. or St. Edmond's Federal Savings Bank and/or its
agents may

ask for an acceptable legal opinion from any purchaser regarding
the legality of the purchase and may refuse to honor any purchase
order if that opinion is not timely furnished.

9. The Board of Directors has the right to reject any order
submitted by a person whose representations it believes are
untrue or who it believes is violating, circumventing, or intends
to violate, evade, or circumvent the terms and conditions of the
plan, either alone or acting in concert with others.

10. The above restrictions also apply to purchases by persons acting
in concert under applicable regulations of the Office of Thrift
Supervision. Under regulations of the Office of Thrift
Supervision, directors of St. Edmond's Federal Savings Bank are
not considered to be affiliates or a group acting in concert with
other directors solely as a result of membership on the Board.

11. In addition, in any community offering or syndicated community
offering, we must first fill orders for our common stock up to a
maximum of 2% of the shares issued in the conversion in a manner
that will achieve a wide distribution of the stock, and
thereafter any remaining shares will be allocated on an equal
number of shares per order basis, until all orders have been
filled or the shares have been exhausted.

The term "associate" of a person is defined in the plan to mean:

(1) any corporation or organization of which a person is an officer
or partner or is, directly or indirectly, the beneficial owner of
10% or more of any class of equity securities;

(2) any trust or other estate in which a person has a substantial
beneficial interest or as to which a person serves as trustee or
in a similar fiduciary capacity; or

(3) any relative or spouse of a person or any relative of a spouse,
who has the same home as that person or who is a director or
officer of St. Edmond's Federal Savings Bank, or any of its
parents or subsidiaries.

For example, a corporation for which a person serves as an officer
would be an associate of that person and all shares purchased by that
corporation would be included with the number of shares which that person
individually could purchase under the above limitations.

The term "acting in concert" means:

(1) knowing participation in a joint activity or interdependent
conscious parallel action towards a common goal whether or not
pursuant to an express agreement; or

(2) a combination or pooling of voting or other interests in the
securities of an issuer for a common purpose pursuant to any
contract, understanding, relationship, agreement or other
arrangement, whether written or otherwise.

A person or company which acts in concert with another person or
company ("other party") shall also be deemed to be acting in concert with any
person or company who is also acting in concert with that other party, except
that any tax-qualified employee stock benefit plan will not be deemed to be
acting in

concert with its trustee or a person who serves in a similar capacity solely for
the purpose of determining whether stock held by the trustee and stock held by
the plan will be aggregated. We will presume that certain persons are acting in
concert based upon various facts, including the fact that persons have joint
account relationships or the fact that such persons have filed joint Schedules
13D with the Securities and Exchange Commission with respect to other companies.
We reserve the right to make an independent investigation of any facts or
circumstances brought to our attention that indicate that one or more persons
acting independently or as a group acting in concert may be attempting to
violate or circumvent the regulatory prohibition on the transferability of
subscription rights.

We have the right, in our sole discretion, to determine whether
prospective purchasers are "associates" or "acting in concert." These
determinations are in our sole discretion and may be based on whatever evidence
we believe to be relevant, including joint account relationships or shared
addresses on the Bank's records.

Each person purchasing shares of the common stock in the offering will
be considered to have confirmed that his or her purchase does not conflict with
the maximum purchase limitation. If the purchase limitation is violated by any
person or any associate or group of persons affiliated or otherwise acting in
concert with that person, we will have the right to purchase from that person at
the $10.00 purchase price per share all shares acquired by that person in excess
of that purchase limitation or, if the excess shares have been sold by that
person, to receive the difference between the purchase price per share paid for
the excess shares and the price at which the excess shares were sold by that
person. Our right to purchase the excess shares will be assignable.

Common stock purchased pursuant to the offering will be freely
transferable, except for shares purchased by directors and officers of St.
Edmond's Federal Savings Bank. For certain restrictions on the common stock
purchased by directors and officers, see The Offering - Restrictions on
Transferability by Directors and Officers. In addition, under guidelines of the
NASD, members of the NASD and their associates are subject to certain
restrictions on the purchase of securities.

Ordering and Receiving Common Stock

Use of Order Forms. Rights to subscribe may only be exercised by
completion of an order form. Any person receiving an order form who desires to
subscribe for shares of common stock must do so prior to the applicable
expiration date by delivering by mail or in person to St. Edmond's Federal
Savings Bank a properly executed and completed order form, together with full
payment of the purchase price for all shares for which subscription is made;
provided, however, that if the employee plans subscribe for shares during the
subscription offering, the employee plans will not be required to pay for the
shares at the time they subscribe but rather may pay for the shares upon
completion of the conversion. All subscription rights under the plan will expire
on the expiration date, whether or not St. Edmond's Federal Savings Bank has
been able to locate each person entitled to subscription rights. Once tendered,
subscription orders cannot be revoked without the consent of St. Edmond's
Federal Savings Bank.

If a stock order form:

o is not delivered and is returned to St. Edmond's Federal Savings Bank by
the United States Postal Service or St. Edmond's Federal Savings Bank is
unable to locate the addressee;

o is not received or is received after the applicable expiration date;

o is not completed correctly or executed; or

o is not accompanied by the full required payment for the shares subscribed
for including instances where a savings account or certificate balance from
which withdrawal is authorized is insufficient to fund the required
payment, but excluding subscriptions by the employee plans;

then the subscription rights for that person will lapse as though that person
failed to return the completed order form within the time period specified.

However, we may, but will not be required to, waive any irregularity on
any order form or require the submission of corrected order forms or the
remittance of full payment for subscribed shares by a date that we may specify.
The waiver of an irregularity on an order form in no way obligates us to waive
any other irregularity on any other order form. Waivers will be considered on a
case by case basis. We will not be required to accept orders received on
photocopies or facsimile order forms, or for which payment is to be made by wire
transfer or payment from private third parties. Our interpretation of the terms
and conditions of the plan and of the acceptability of the order forms will be
final, subject to the authority of the Office of Thrift Supervision.

To ensure that each purchaser receives a prospectus at least 48 hours
before the applicable expiration date, in accordance with Rule 15c2-8 of the
Securities Exchange Act of 1934, no prospectus will be mailed any later than
five days prior to the expiration date or delivered any later than two days
prior to the expiration date. Execution of the order form will confirm receipt
or delivery in accordance with Rule 15c2-8. Order forms will only be distributed
with a prospectus.

Payment for Shares. For subscriptions to be valid, payment for all
subscribed shares will be required to accompany all properly completed order
forms, on or prior to the expiration date specified on the order form unless we
extend the date. Employee plans subscribing for shares during the subscription
offering may pay for those shares upon completion of the conversion. Payment for
shares of common stock may be made

o by check or money order made payable to St. Edmond's Federal Savings Bank;
or
o for shares subscribed for in the subscription offering, by authorization of
withdrawal from savings accounts maintained with St. Edmond's Federal
Savings Bank.

Appropriate means by which account withdrawals may be authorized are
provided on the order form. Once a withdrawal has been authorized, none of the
designated withdrawal amount may be used by a subscriber for any purpose other
than to purchase the common stock for which a subscription has been made until
the offering has been completed or terminated. In the case of payments
authorized to be made through withdrawal from savings accounts, all sums
authorized for withdrawal will continue to earn interest at the contract rate
until the offering has been completed or terminated. Interest penalties for
early withdrawal applicable to certificate accounts will not apply to
withdrawals authorized for the purchase of shares; however, if a partial
withdrawal results in a certificate account with a balance less than the
applicable minimum balance requirement, the certificate shall be canceled at the
time of withdrawal, without penalty, and the remaining balance will earn
interest at the regular savings account rate subsequent to the withdrawal. In
the case of payments made in cash or by check or money order, funds will be
placed in a segregated account and interest will be paid by St. Edmond's Federal
Savings Bank at the regular savings account rate from the date payment is
received until the offering is completed or terminated. An executed order form,
once we receive it, may not be modified, amended, or rescinded without our
consent, unless the offering is not completed within 45 days after the
conclusion of the subscription offering, in

which event subscribers may be given the opportunity to increase, decrease, or
rescind their subscription for a specified period of time. If the offering is
not completed for any reason, all funds submitted pursuant to the offerings will
be promptly refunded with interest as described above.

Owners of self-directed IRAs may use the assets of their IRAs to
purchase shares of common stock in the offerings, provided that their IRAs are
not maintained on deposit at St. Edmond's Federal Savings Bank. Persons with
IRAs maintained at St. Edmond's Federal Savings Bank must have their accounts
transferred to an unaffiliated institution or broker to purchase shares of
common stock in the offerings. There is no early withdrawal or IRS interest
penalties for these transfers. Instructions on how to transfer self-directed
IRAs maintained at St. Edmond's Federal Savings Bank can be obtained from the
conversion center. Depositors interested in using funds in a St. Edmond's
Federal Savings Bank IRA to purchase common stock should contact the conversion
center as soon as possible so that the necessary forms may be forwarded,
executed and returned prior to the expiration date.

Federal regulations prohibit St. Edmond's Federal Savings Bank from
lending funds or extending credit to any person to purchase the common stock in
the conversion.

Conversion Center. The conversion center is located at 1901-03 East
Passyunk Avenue, Philadelphia, Pennsylvania 19148. Its phone number is (888)
234-6705.

Delivery of Stock Certificates. Certificates representing common stock
issued in the offering will be mailed to the persons entitled thereto at the
address noted on the order form, as soon as practicable following completion of
the offering. Any certificates returned as undeliverable will be held until
claimed by persons legally entitled thereto or otherwise disposed of in
accordance with applicable law. Until certificates for the common stock are
available and delivered to subscribers, subscribers may not be able to sell the
shares of stock for which they subscribed.

Restrictions on Repurchase of Shares

Generally, during the first year following the conversion, SE Financial
Corp. may not repurchase its shares unless it can show extraordinary
circumstances. If extraordinary circumstances exist and if SE Financial Corp.
can show a compelling and valid business purpose for the repurchase, the Office
of Thrift Supervision may approve repurchases of up to 5% of the outstanding
stock during the first year after conversion. After the first year following the
conversion, we can repurchase any amount of stock so long as the repurchase
would not cause the Bank to become undercapitalized. In addition, Securities and
Exchange Commission rules also govern the method, time, price, and number of
shares of common stock that may be repurchased by SE Financial Corp. and
affiliated purchasers. If, in the future, the rules and regulations regarding
the repurchase of stock are liberalized, SE Financial Corp. may utilize the
rules and regulations then in effect.

Stock Pricing and the Number of Shares to be Offered

FinPro, Inc. has been retained to prepare an appraisal of the estimated
pro forma market value of the common stock (the "Independent Valuation") in
accordance with applicable regulations and policies of the Office of Thrift
Supervision. The independent valuation will express St. Edmond's Federal Savings
Bank's pro forma market value in terms of an aggregate dollar amount. The
appraisal is an independent appraisal reviewed but not approved by the Board of
Directors.

The number of shares of common stock to be offered in the offering will
be based on the estimated pro forma market value of the common stock and the
purchase price of $10.00 per share. FinPro has determined that as of March 4,
2004, St. Edmond's Federal Savings Bank's estimated aggregate pro forma market
value was $19,500,000. Pursuant to regulations, a valuation range of $16,575,000
to $22,425,000 has been established. We have determined to offer shares of
common stock in the offering at a price of $10.00 per share. The appraisal
contains an analysis of a number of factors, including but not limited to the
Bank's financial condition and results of operations as of October 31, 2003, the
Bank's operating trends, the competitive environment in which it operates,
operating trends of certain savings institutions and savings and loan holding
companies, relevant economic conditions both nationally and in Pennsylvania
which affect the operations of savings institutions, stock market values of
certain institutions, and stock market conditions for publicly traded savings
institutions and savings and loan holding companies. In addition, FinPro
considered the effect of the additional capital raised by the sale of the common
stock on the estimated pro forma market value.

We are offering a maximum of 2,242,500 shares in the offering, subject
to adjustment. The actual number of shares to be sold in the offering may be
increased or decreased before completion of the offering, subject to approval
and conditions that may be imposed by the Office of Thrift Supervision, to
reflect any change in St. Edmond's Federal Savings Bank's estimated pro forma
market value.

Depending on market and financial conditions at the time of the
completion of the offering, St. Edmond's Federal Savings Bank may increase or
decrease the number of shares to be issued in the conversion and offering. No
resolicitation of purchasers will be made and purchasers will not be permitted
to modify or cancel their purchase orders unless the change in the number of
shares to be issued in the offering results in fewer than 1,657,500 shares or
more than 2,578,875 shares being sold in the offering at the purchase price of
$10.00, in which event St. Edmond's Federal Savings Bank may also elect to
terminate the offering. If St. Edmond's Federal Savings Bank terminates the
offering, purchasers will receive a prompt refund of their purchase orders,
together with interest earned thereon from the date of receipt to the date of
termination of the offering. Furthermore, any account withdrawal authorizations
will be terminated. If we receive orders for less than 1,657,500 shares, at the
discretion of the Board of Directors and subject to approval of the Office of
Thrift Supervision, we may establish a new offering range and resolicit
purchasers. If we resolicit, purchasers will be allowed to modify or cancel
their purchase orders. Any adjustments in St. Edmond's Federal Savings Bank's
pro forma market value as a result of market and financial conditions or a
resolicitation of prospective purchasers must be approved by the Office of
Thrift Supervision.

The independent valuation will be updated at the time of the completion
of the offering, and the number of shares to be issued may increase or decrease
to reflect the changes in market conditions, the results of the offering, or the
estimated pro forma market value of St. Edmond's Federal Savings Bank. If the
updated independent valuation increases, SE Financial Corp. may increase the
number of shares sold in the offering to up to 2,578,875 shares. Subscribers
will not be given the opportunity to change or withdraw their orders unless more
than 2,578,875 shares or fewer than 1,657,500 shares are sold in the offering.
Any adjustment of shares of common stock sold will have a corresponding effect
on the estimated net proceeds of the offering and the pro forma capitalization
and per share data of St. Edmond's Federal Savings Bank. An increase in the
total number of shares to be issued in the conversion would decrease a
subscriber's percentage ownership interest and pro forma net worth (book value)
per share and increase the pro forma net income and net worth (book value) on an
aggregate basis. In the event of a reduction in the valuation, SE Financial
Corp. may decrease the number of shares to be issued to reflect the reduced
valuation. A decrease in the number of shares to be issued in the conversion
would increase a subscriber's percentage ownership interest and the pro forma
net worth (book value) per share and

decrease the pro forma net income and net worth on an aggregate basis. For a
presentation of the possible effects of an increase or decrease in the number of
shares to be issued, see Pro Forma Data.

The following table compares the pro forma price to core earnings
multiple and pro forma price to tangible book ratio for SE Financial Corp. to
the median price to core earnings multiple and price to tangible book ratio for
the comparable publicly traded peer group companies identified in the valuation
report. See Pro Forma Data on page 19 for a description of the assumptions used
in calculating SE Financial Corp.'s pro forma price to core earnings multiples
and pro forma price to tangible book ratios.

Pro Forma Pro Forma
Price to Core Price to
Earnings Tangible
Multiple Book Ratio
-------- ----------

SE Financial Corp.(1):
Minimum (1,657,500 shares sold)...................... 24.39x 76.05%
Midpoint (1,950,000 shares sold)..................... 27.78x 80.13%
Maximum (2,242,500 shares sold)...................... 31.25x 83.40%
Maximum, as adjusted (2,578,875 shares sold)......... 35.71x 86.58%

Price to Core Price to
Earnings Tangible
Multiple Book Ratio
-------- ----------

Median for comparable peer group companies................ 21.18x 133.06%
Mean for comparable peer group companies.................. 22.49x 135.90%

- ------------
(1) The price/core earnings multiples shown here for SE Financial Corp. are
based on core earnings as required by regulatory appraisal guidelines,
while the information presented in the tables under Pro Forma Data on page
19 is based on net income.

The ratios presented above are commonly requested by prospective
investors in order to determine whether or not the stock meets the investor's
investment criteria. Because of differences and important factors such as
operating characteristics, financial performance, asset size, capital structure,
and business prospects between us and other fully converted institutions, you
should not rely on these comparative valuation ratios as an indication as to
whether or not the stock is an appropriate investment for you.

FinPro, Inc.'s valuation takes into account the effect of the
additional capital raised by the sale of the common stock on St. Edmond's
Federal Savings Bank's estimated pro forma market value. In preparing its
independent valuation, FinPro, Inc. focused primarily on the price to core
earnings and price to tangible book valuation methodologies. Core earnings
differ from net income as presented in the income statement. Core earnings are
net income before extraordinary items, less the after-tax portion of investment
securities, nonrecurring items and other gains on sale. FinPro, Inc. chose this
metric as a means of excluding components of income that are not likely to recur
and are therefore considered by FinPro, Inc. to be less reliable for valuation
purposes.

FinPro, Inc.'s valuation is based on an analysis of St. Edmond's
Federal Savings Bank relative to a selected group of ten "comparable" financial
institutions that are "fully converted". FinPro, Inc. made valuation adjustments
relative to the "comparable" group based on the following factors:

o financial condition;
o balance sheet growth;

o earnings quality, predictability and growth;
o market area;
o cash dividends;
o liquidity of the issue; and
o recent regulatory matters.

The valuation of St. Edmond's Federal Savings Bank is priced at a
discount relative to the comparable group's price to tangible book value
multiple. In determining the valuation, FinPro, Inc. has made adjustments to the
market value relative to the comparable group. Taken collectively, FinPro, Inc.
determined that the value of St. Edmond's Federal Savings Bank should be
discounted relative to the comparable group multiples, for reasons including
that the comparable group consists of Nasdaq traded companies, while SE
Financial Corp. will not trade on Nasdaq and thus will not have as active a
trading market. FinPro, Inc. also considered the market area of St. Edmond's
Federal Savings Bank's relative to that of the comparable group, and determined
that a downward adjustment to the appraisal was warranted because of how St.
Edmond's Federal Savings Bank compared to the comparable group. FinPro, Inc.
also considered the pricing of other thrift stock issuances in the appraisal.

The independent valuation is not intended, and must not be construed,
as a recommendation of any kind as to the advisability of purchasing the common
stock. In preparing the independent valuation, FinPro has relied on and assumed
the accuracy and completeness of financial and statistical information provided
by St. Edmond's Federal Savings Bank. FinPro did not independently verify the
consolidated financial statements and other information provided by St. Edmond's
Federal Savings Bank, nor did FinPro value independently the assets and
liabilities of St. Edmond's Federal Savings Bank. The independent valuation
considers St. Edmond's Federal Savings Bank only as a going concern and should
not be considered as a indication of the liquidation value of St. Edmond's
Federal Savings Bank. Moreover, because the independent valuation is based on
estimates and projections on a number of matters, all of which are subject to
change from time to time, no assurance can be given that persons purchasing the
common stock will be able to sell their shares at a price equal to or greater
than the purchase price. In addition, the Board of Directors of SE Financial
Corp. does not make any recommendation as to whether or not the stock will be a
good investment for you.

No sale of shares of common stock may be completed unless FinPro
confirms that, to the best of its knowledge, nothing of a material nature has
occurred that, taking into account all relevant factors, would cause FinPro to
conclude that the independent valuation is incompatible with its estimate of St.
Edmond's Federal Savings Bank's pro forma market value at the conclusion of the
offering. Any change that would result in an aggregate value that is below
$16,575,000 or above $25,788,750 would be subject to Office of Thrift
Supervision approval. If confirmation from FinPro is not received, St. Edmond's
Federal Savings Bank may extend the offering, reopen or commence a new offering,
request a new Independent Valuation, establish a new offering range and commence
a resolicitation of all purchasers with the approval of the Office of Thrift
Supervision, or take other action as permitted by the Office of Thrift
Supervision in order to complete the offering.

Office of Thrift Supervision regulations require that the independent
valuation be performed by an independent firm experienced and expert in
corporate appraisals and that such firm be acceptable to the Office of Thrift
Supervision. Since 1996, FinPro has acted as the conversion appraiser on over 40
thrift conversions of various structures, making FinPro one of the top three
conversion appraisal firms nationally over that time period. FinPro will receive
fees of $28,000 for its appraisal services for St. Edmond's Federal Savings
Bank, including the final appraisal, and assistance in preparation of the
business plan, and

$6,500 for any appraisal updates, plus reimbursement for reasonable
out-of-pocket expenses incurred in connection with the independent valuation and
business plan. St. Edmond's Federal Savings Bank has agreed to indemnify FinPro
under certain circumstances against liabilities and expenses arising out of or
based on any misstatement or untrue statement of a material fact contained in
the information supplied by St. Edmond's Federal Savings Bank to FinPro, except
where FinPro is determined to have been negligent or failed to exercise due
diligence in the preparation of the independent valuation.

Plan of Distribution/Marketing Arrangements

Offering materials have been initially distributed to certain persons
by mail, with additional copies made available through the conversion center and
Sandler O'Neill. All prospective purchasers are to send payment directly to St.
Edmond's Federal Savings Bank, where such funds will be held in a separate
escrow account earning interest at the regular savings account rate and not
released until the offering is completed or terminated.

We have engaged Sandler O'Neill, a broker-dealer registered with the
NASD, as a financial and marketing advisor in connection with the offering of
our common stock. In its role as financial and marketing advisor, Sandler
O'Neill will assist us in the offering as follows: (i) consulting as to the
securities marketing implications of any aspect of the plan of conversion or
related corporate documents; (ii) reviewing with our Board of Directors the
financial implications of the independent appraiser's appraisal of the common
stock; (iii) reviewing all offering documents, including the prospectus, stock
order forms and related offering materials (we are responsible for the
preparation and filing of such documents); (iv) assisting in the design and
implementation of a marketing strategy for the offering; (v) assisting us in
preparing for meetings with potential investors and broker-dealers; and (vi)
providing such other general advice and assistance regarding financial and
marketing aspects of the conversion. For these services, Sandler O'Neill will
receive a fee of 1% of the aggregate dollar amount of the common stock sold in
the subscription and community offerings if the conversion is consummated. We
have made an advance payment of $25,000 to Sandler O'Neill.

To the extent any shares of the common stock remain available after the
subscription and community offering, Sandler O'Neill, at our request, may seek
to form a syndicate of registered broker-dealers to assist in the solicitation
of orders of the common stock in a syndicated community offering, subject to the
terms and conditions to be set forth in a selected dealer's agreement. Sandler
O'Neill has agreed to use its best efforts to assist us with the solicitation of
subscriptions and orders for shares of our common stock in the syndicated
community offering. Sandler O'Neill is not obligated to take or purchase any
shares of our common stock in the offering. Sandler O'Neill has expressed no
opinion as to the prices at which the common stock may trade nor has Sandler
O'Neill provided any written report or opinion to us as to the fairness of the
conversion. If there is a syndicated community offering, the total fees payable
to Sandler O'Neill and other NASD member firms in the syndicated community
offering shall not exceed 7% of the aggregate dollar amount of the common stock
sold in the syndicated community offering.

In addition, we have engaged Sandler O'Neill to act as conversion agent
in connection with the offering. In its role as conversion agent, Sandler
O'Neill will assist us in the offering as follows: (i) consolidation of accounts
and development of a central file; (ii) preparation of proxy, order and/or
request forms; (iii) organization and supervision of the conversion center; (iv)
proxy solicitation and special meeting services; and (v) subscription services.
For these services, Sandler O'Neill will receive a fee of $10,000 and
reimbursement for its reasonable out-of-pocket expenses. For these services, we
have made an advance payment of $5,000 to Sandler O'Neill.

We also will reimburse Sandler O'Neill for its reasonable out-of-pocket
expenses associated with its marketing effort, up to a maximum of $50,000
(including legal fees and expenses). If the plan of conversion is terminated or
if Sandler O'Neill terminates its agreement with us in accordance with the
provisions of the agreement, Sandler O'Neill will only receive reimbursement of
its reasonable out-of-pocket expenses. We will indemnify Sandler O'Neill against
liabilities and expenses (including legal fees) incurred in connection with
certain claims or litigation arising out of or based upon untrue statements or
omissions contained in the offering material for the common stock, including
liabilities under the Securities Act of 1933.

Our directors and executive officers will not participate in the
solicitation of offers to purchase common stock. Other trained employees may
participate in the offering in ministerial capacities, providing clerical work
in effecting a sales transaction or answering questions of a ministerial nature.
Other questions of prospective purchasers will be directed to registered
representatives of Sandler O'Neill. No officer, director, or employee will be
compensated for his participation by the payment of commissions or other
remuneration based either directly or indirectly on the transactions in the
common stock.

The offering will comply with the requirements of Rule 10b-9
promulgated under the Securities Exchange Act of 1934.

Restrictions on Transferability by Directors and Officers

Shares of the common stock purchased by directors or officers of SE
Financial Corp. cannot be sold for a period of one year following completion of
the conversion, except for a disposition of shares after the death of a
stockholder. To ensure this restriction is upheld, shares of the common stock
issued to directors and officers will bear a legend restricting their sale. Any
shares issued to directors and officers as a stock dividend, stock split, or
otherwise with respect to restricted stock will be subject to the same
restriction.

For a period of three years following the conversion, no director or
officer of SE Financial Corp. or their associates may, without the prior
approval of the Office of Thrift Supervision, purchase our common stock except
from a broker or dealer registered with the Securities and Exchange Commission.
This prohibition does not apply to negotiated transactions including more than
1% of our common stock or purchases made for tax qualified or non-tax qualified
employee stock benefit plans which may be attributable to individual officers or
directors.

Restrictions on Agreements or Understandings Regarding Transfer of Common Stock
to be Purchased in the Offering

Before the completion of the conversion and offering, no depositor may
transfer or enter into an agreement or understanding to transfer any
subscription rights or the legal or beneficial ownership of the shares of common
stock to be purchased in the offering. Depositors who submit an order form will
be required to certify that their purchase of common stock is solely for their
own account and there is no agreement or understanding regarding the sale or
transfer of their shares. We intend to pursue any and all legal and equitable
remedies after we become aware of any agreement or understanding, and will not
honor orders we reasonably believe to involve an agreement or understanding
regarding the sale or transfer of shares.

RESTRICTIONS ON ACQUISITION OF SE FINANCIAL CORP.

General

The principal federal regulatory restrictions that affect the ability
of any person, firm or entity to acquire SE Financial Corp., St. Edmond's
Federal Savings Bank or their respective capital stock are described below. Also
discussed are certain provisions in SE Financial Corp.'s articles of
incorporation and bylaws which may be deemed to affect the ability of a person,
firm or entity to acquire SE Financial Corp.

Statutory and Regulatory Restrictions on Acquisition

The Change in Bank Control Act provides that no person, acting directly
or indirectly or through or in concert with one or more other persons, may
acquire control of a savings institution unless the Office of Thrift Supervision
has been given 60 days prior written notice. The Home Owners' Loan Act provides
that no company may acquire "control" of a savings institution without the prior
approval of the Office of Thrift Supervision. Any company that acquires such
control becomes a savings and loan holding company subject to registration,
examination and regulation by the Office of Thrift Supervision. Pursuant to
federal regulations, control of a savings institution is conclusively deemed to
have been acquired by, among other things, the acquisition of more than 25% of
any class of voting stock of the institution or the ability to control the
election of a majority of the directors of an institution. Moreover, control is
presumed to have been acquired, subject to rebuttal, upon the acquisition of
more than 10% of any class of voting stock, or of more than 25% of any class of
stock of a savings institution, where certain enumerated "control factors" are
also present in the acquisition.

The Office of Thrift Supervision may prohibit an acquisition of control
if:

o it would result in a monopoly or substantially lessen competition;

o the financial condition of the acquiring person might jeopardize the
financial stability of the institution; or

o the competence, experience or integrity of the acquiring person indicates
that it would not be in the interest of the depositors or of the public to
permit the acquisition of control by such person.

These restrictions do not apply to the acquisition of a savings
institution's capital stock by one or more tax-qualified employee stock benefit
plans, provided that the plans do not have beneficial ownership of more than 25%
of any class of equity security of the savings institution.

For a period of three years following completion of the conversion,
Office of Thrift Supervision regulations generally prohibit any person from
acquiring or making an offer to acquire beneficial ownership of more than 10% of
the stock of SE Financial Corp. or St. Edmond's Federal Savings Bank without
Office of Thrift Supervision approval.

Articles of Incorporation and Bylaws of SE Financial Corp.

The following discussion is a summary of certain provisions of the
articles of incorporation and bylaws of SE Financial Corp. that relate to
corporate governance. The description is necessarily general

and qualified by reference to the articles of incorporation and bylaws and
refers to the newly-formed Pennsylvania incorporated company.

Classified Board of Directors. The Board of Directors of SE Financial
Corp. is required by the articles of incorporation to be divided into four
staggered classes which are as equal in size as is possible. One class is
required to be elected annually for four year terms, and classes are elected in
series. A classified board promotes continuity and stability of management of SE
Financial Corp., but makes it more difficult for stockholders to change a
majority of the directors because it generally takes at least two annual
elections of directors for this to occur.

Director Qualification Provisions. SE Financial Corp.'s bylaws provide
several qualification provisions applicable to members of its Board of Directors
that serve to ensure the loyalty and professional integrity of each individual
director. In particular, the bylaws provide that each director must, at all
times, reside within 50 miles of the home office or branch office location of
the Company's wholly-owned subsidiary, St. Edmond's Federal Savings Bank. In
addition, the bylaws provide that each director be a shareholder of SE Financial
Corp. and, at all times, hold a minimum of 500 shares of its stock.

SE Financial Corp.'s bylaws also prohibit persons from serving as
director if that individual is currently serving as a management official of
another depository institution or depository holding company, as those terms are
defined by the regulations of the Office of Thrift Supervision. Further, to
ensure the integrity and good character of SE Financial Corp.'s directors, the
bylaws prohibit a person from serving as a director if he: (1) is under
indictment for, or has ever been convicted of, a criminal offense, involving
dishonesty or breach of trust and the penalty for such offense could be
imprisonment for more than one year; (2) is a person against whom a federal or
state bank regulatory agency has, within the past ten years, issued a cease and
desist order for conduct involving dishonesty or breach of trust and that order
is final and not subject to appeal; (3) has been found either by any federal or
state regulatory agency whose decision is final and not subject to appeal, or by
a court to have (a) committed a wilful violation of any law, rule or regulation
governing banking, securities, commodities or insurance, or any final cease and
desist order issued by a banking, securities, commodities or insurance
regulatory agency; or (b) breached a fiduciary duty involving personal profit;
or (4) has been nominated by a person who would be disqualified from serving as
a director under (1), (2) or (3).

In addition to discouraging a takeover attempt which a majority of our
stockholders might determine to be in their best interest or in which our
stockholders might receive a premium over the current market prices for their
shares, the effect of these provisions may render the removal of our management
more difficult.

Authorized but Unissued Shares of Capital Stock. Following the stock
offering, SE Financial Corp. will have authorized but unissued shares of
preferred stock and common stock. See Description of Capital Stock on page 99.
These shares could be used by the Board of Directors to make it more difficult
or to discourage an attempt to obtain control of SE Financial Corp. through a
merger, tender offer, proxy contest or otherwise.

Special Meetings of Stockholders. SE Financial Corp.'s articles of
incorporation provide that special meetings of stockholders may be called only
by SE Financial Corp.'s Board of Directors, except as provided by Pennsylvania
law.

Prohibition on Cumulative Voting. SE Financial Corp.'s articles of
incorporation provide that there will not be cumulative voting by stockholders
for the election of SE Financial Corp.'s directors. This could prevent minority
stockholder representation on SE Financial Corp.'s Board of Directors.

Restrictions on Acquisition of Shares and Vote Sterilization. SE
Financial Corp.'s articles of incorporation provide that for a period of five
years from the date of completion of the conversion, no person may offer to
acquire or acquire the beneficial ownership of more than 10% of any class of
equity security of SE Financial Corp. In addition, following the expiration of
the five year prohibition on acquisition of shares, all shares owned over the
10% limit may not be voted in any matter submitted to stockholders for a vote.
This vote sterilization provision does not have an expiration date.

Procedures for Stockholder Nominations. SE Financial Corp.'s bylaws
provide that any stockholder wanting to make a nomination for the election of
directors or a proposal for new business at a meeting of stockholders must send
written notice to the Secretary of SE Financial Corp. at least 60 days before
the anniversary date of the prior year's annual meeting. The bylaws further
provide that the Board of Directors may reject any nominations or proposals for
new business that do not follow the prescribed procedures. Management believes
that it is in the best interests of SE Financial Corp. and its stockholders to
provide enough time for management to disclose to stockholders information about
a dissident slate of nominations for directors. This advance notice requirement
may also give management time to solicit its own proxies in an attempt to defeat
any dissident slate of nominations if management thinks it is in the best
interest of stockholders generally. Similarly, adequate advance notice of
stockholder proposals will give management time to study such proposals and to
determine whether to recommend to the stockholders that such proposals be
adopted.

Procedures for Business Combinations. Our articles of incorporation
prohibit any merger, consolidation, sale, liquidation, or dissolution (each, a
business combination) of SE Financial Corp. with any "interested stockholder"
for a period of five years following the interested stockholder's stock
acquisition date unless the business combination is approved by a two-thirds
vote of the Board prior to the stock acquisition date. An interested stockholder
is any person who, directly or indirectly, has the right to vote or to sell 10%
or more of the outstanding shares. Affiliates and associates of an interested
shareholder are also considered to be interested shareholders.

In addition, our articles of incorporation require that at least one of
the following conditions be met to engage in a business combination with an
interested stockholder: (i) approval by a vote of two-thirds of the Board prior
to the interested stockholder's stock acquisition date and thereafter approved
by stockholders; (ii) approval by the affirmative vote of the holders of at
least 80% of the voting shares not beneficially owned by that interested
stockholder at a meeting called for such purpose; or (iii) satisfaction of
certain minimum price conditions, as set forth in our articles of incorporation.

In addition to the interested shareholder restrictions, our articles of
incorporation also require the affirmative vote of at least 80% of the
outstanding shares in order for us to enter into any merger, consolidation,
sale, liquidation, or dissolution of us, unless the transaction is approved by
two-thirds of our Board of Directors.

Amendment to Articles of Incorporation and Bylaws. Amendments to our
articles of incorporation must be approved by our Board of Directors and also by
the holders of a majority of the shares. Approval by at least 80% of the shares
is required to amend provisions relating to preemptive rights; stockholder
meetings; cumulative voting; proxies; stockholder proposals and nominations;
directors; removal of directors; restrictions on the acquisition and voting of
more than 10% of the common stock; approval of

business combinations with interested stockholders; directors' and officers'
liability; and indemnification of officers and directors; amendment of the
bylaws; and amendment of the articles of incorporation.

Our bylaws may be amended by a two-thirds vote of our Board of
Directors or by the holders of at least 80% of the shares.

DESCRIPTION OF CAPITAL STOCK

SE Financial Corp. is authorized to issue 8,000,000 shares of common
stock, par value $0.10 per share and 2,000,000 shares of serial preferred stock,
no par value. Upon payment of the purchase price shares of common stock issued
in the offering will be fully paid and non-assessable. Each share of common
stock will have the same relative rights as, and will be identical in all
respects with, each other share of common stock. The common stock will represent
non-withdrawable capital, will not be an account of insurable type and will not
be insured by the Federal Deposit Insurance Corporation or any other
governmental agency. The Board of Directors can, without stockholder approval,
issue additional shares of common stock.

Common Stock

Distributions. SE Financial Corp. can pay dividends if, as and when
declared by its Board of Directors, subject to compliance with limitations that
are imposed by law. See Dividend Policy on page 17. The holders of common stock
of SE Financial Corp. will be entitled to receive and share equally in such
dividends as may be declared by the Board of Directors of SE Financial Corp. out
of funds legally available therefor. If SE Financial Corp. issues preferred
stock, the holders thereof may have a priority over the holders of the common
stock with respect to dividends.

Voting Rights. The holders of common stock will possess exclusive
voting rights in SE Financial Corp. The holder of shares of common stock will be
entitled to one vote for each share held on all matters subject to stockholder
vote and will not have any right to cumulate votes in the election of directors.

Liquidation Rights. In the event of any liquidation, dissolution, or
winding-up of SE Financial Corp., the holders of the common stock generally
would be entitled to receive, after payment of all debts and liabilities of SE
Financial Corp. (including all debts and liabilities of St. Edmond's Federal
Savings Bank and distribution of the balance in the special liquidation account
of St. Edmond's Federal Savings Bank to eligible account holders), all assets of
SE Financial Corp. available for distribution. If preferred stock is issued, the
holders thereof may have a priority over the holders of the common stock in the
event of liquidation or dissolution.

Preemptive Rights; Redemption. Because the holders of the common stock
do not have any preemptive rights with respect to any shares SE Financial Corp.
may issue, the Board of Directors may sell shares of capital stock of SE
Financial Corp. without first offering such shares to existing stockholders. The
common stock will not be subject to any redemption provisions.

Preferred Stock

We are authorized to issue up to 2,000,000 shares of serial preferred
stock and to fix and state voting powers, designations, preferences, or other
special rights of preferred stock and the qualifications, limitations and
restrictions of those shares as the Board of Directors may determine in its
discretion. Preferred stock may be issued in distinctly designated series, may
be convertible into common stock and

may rank prior to the common stock as to dividend rights, liquidation
preferences, or both, and may have full or limited voting rights. The issuance
of preferred stock could adversely affect the voting and other rights of holders
of common stock.

The authorized but unissued shares of preferred stock and the
authorized but unissued and unreserved shares of common stock will be available
for issuance in future mergers or acquisitions, in future public offerings or
private placements. Except as otherwise required to approve the transaction in
which the additional authorized shares of preferred stock would be issued, no
stockholder approval generally would be required for the issuance of these
shares.

LEGAL AND TAX OPINIONS

The legality of the issuance of the common stock being offered and
certain matters relating to the conversion and federal and state taxation will
be passed upon for us by Malizia Spidi & Fisch, PC, Washington, D.C. Certain
legal matters will be passed upon for Sandler O'Neill & Partners, L.P. by Luse
Gorman Pomerenk & Schick, P.C., Washington, D.C.

EXPERTS

The consolidated financial statements of St. Edmond's Federal Savings
Bank at October 31, 2003 and 2002 and for each of the years in the two year
period ended October 31, 2003 have been included in this prospectus in reliance
upon the report of S.R. Snodgrass, A.C., Wexford, Pennsylvania, appearing
elsewhere in this prospectus, and upon the authority of said firm as experts in
accounting and auditing.

FinPro, Inc. has consented to the publication in this document of a
summary of its letter to St. Edmond's Federal Savings Bank setting forth its
conclusion as to the estimated pro forma market value of the Bank and has also
consented to the use of its name and statements with respect to it appearing in
this document.

REGISTRATION REQUIREMENTS

Our common stock will be registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). We will be
subject to the information, proxy solicitation, insider trading restrictions,
tender offer rules, periodic reporting and other requirements of the Securities
and Exchange Commission under the Exchange Act. We may not deregister the common
stock under the Exchange Act for a period of at least three years following the
conversion.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We are subject to the informational requirements of the Exchange Act
and must file reports and other information with the Securities and Exchange
Commission.

We have filed with the Securities and Exchange Commission a
registration statement on Form SB-2 under the Securities Act of 1933, as
amended, with respect to the common stock offered in this document. As permitted
by the rules and regulations of the Securities and Exchange Commission, this
document does not contain all the information set forth in the registration
statement. This information can be examined without charge at the public
reference facilities of the Securities and Exchange Commission located at 450
Fifth Street, N.W., Washington, D.C. 20549, and copies of the registration
materials can be obtained from the Securities and Exchange Commission at
prescribed rates. You may obtain information on the operation of the Public
Reference Room by calling 1-800-SEC-0330. The Securities and Exchange Commission
also

100

maintains an internet address ("Web site") that contains reports, proxy and
information statements and other information regarding registrants, including SE
Financial Corp., that file electronically with the Securities and Exchange
Commission. The address for this Web site is "http://www.sec.gov." The
statements contained in this document as to the contents of any contract or
other document filed as an exhibit to the Form SB-2 are, of necessity, brief
descriptions, and each statement is qualified by reference to the complete
contract or document.

The Bank has filed an application for conversion with the Office of
Thrift Supervision. This prospectus omits certain information contained in that
application. That information can be examined without charge at the public
reference facilities of the Office of Thrift Supervision located at 1700 G
Street, N.W., Washington, D.C. 20552.

101

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

ST. EDMOND'S FEDERAL SAVINGS BANK

Independent Auditor's Report v F-1

Consolidated Balance Sheet F-2

Consolidated Statement of Income F-3

Consolidated Statement of Changes in Retained Earnings F-4

Consolidated Statement of Cash Flows F-5

Notes to the Consolidated Financial Statements F-6

Other schedules are omitted as they are not required or are not
applicable or the required information is shown in the consolidated financial
statements or related notes.

Separate financial statements for SE Financial Corp. have not been
included in this prospectus because SE Financial Corp., which has engaged in
only organizational activities to date, has no significant assets, contingent or
other liabilities, revenues, expenses or earnings per share.

102

REPORT OF INDEPENDENT AUDITORS
------------------------------

Board of Directors
St. Edmond's Federal Savings Bank

We have audited the accompanying consolidated balance sheet of St. Edmond's
Federal Savings Bank and Subsidiary as of October 31, 2003 and 2002, and the
related consolidated statements of income, changes in retained earnings, and
cash flows for the years then ended. These financial statements are the
responsibility of the Bank's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of St. Edmond's
Federal Savings Bank and Subsidiary as of October 31, 2003 and 2002, and the
results of their operations and their cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.

/s/ S.R. Snodgrass, A.C.

Wexford, PA
December 12, 2003, except for Note 14
as to which the date is January 15, 2004

F-1

ST. EDMOND'S FEDERAL SAVINGS BANK AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET

October 31,
2003 2002
------------ ------------

ASSETS
Cash and due from banks $ 675,001 $ 4,343,329
Interest-bearing deposits with other institutions 5,628,890 2,957,378
------------ ------------

Cash and cash equivalents 6,303,891 7,300,707

Certificates of deposit in other financial institutions 183,483 178,744
Investment securities available for sale 27,337,238 23,491,988
Loans receivable (net of allowance for loan losses
of $262,561 and $266,700) 50,729,660 51,689,179
Accrued interest receivable 482,538 495,369
Federal Home Loan Bank stock 735,000 642,100
Real estate owned 38,881 25,000
Premises and equipment, net 1,148,993 1,124,397
Other assets 407,622 313,669
------------ ------------

TOTAL ASSETS $ 87,367,306 $ 85,261,153
============ ============

LIABILITIES AND RETAINED EARNINGS
Deposits $ 72,272,834 $ 70,015,110
Federal Home Loan Bank borrowings 6,637,204 6,694,342
Advances by borrowers for taxes and insurance 477,386 565,950
Accrued interest payable 49,703 74,126
Other liabilities 258,521 524,734
------------ ------------

TOTAL LIABILITIES 79,695,648 77,874,262
------------ ------------

Commitments and contingencies (Note 9)

Retained earnings - substantially restricted 7,755,558 7,199,733
Accumulated other comprehensive income (loss) (83,900) 187,158
------------ ------------

TOTAL RETAINED EARNINGS 7,671,658 7,386,891
------------ ------------

TOTAL LIABILITIES AND RETAINED EARNINGS $ 87,367,306 $ 85,261,153
============ ============

See accompanying notes to the consolidated financial statements.

F-2

ST. EDMOND'S FEDERAL SAVINGS BANK AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME

Year Ended October 31,
2003 2002
----------- -----------

INTEREST AND DIVIDEND INCOME
Loans receivable $ 3,934,009 $ 4,649,646
Investment securities:
Taxable 1,034,380 1,075,990
Exempt from federal income tax 76,690 18,502
Interest-bearing deposits with other institutions 57,321 67,672
Other dividend income 17,589 25,678
----------- -----------
Total interest and dividend income 5,119,989 5,837,488
----------- -----------

INTEREST EXPENSE
Deposits 2,227,809 2,705,330
Federal Home Loan Bank borrowings 221,872 294,229
----------- -----------
Total interest expense 2,449,681 2,999,559
----------- -----------

NET INTEREST INCOME 2,670,308 2,837,929
Provision for loan losses 33,000 25,000
----------- -----------

NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 2,637,308 2,812,929
----------- -----------

NONINTEREST INCOME
Service fees on deposit accounts 319,052 302,872
Other 66,780 62,479
----------- -----------
Total noninterest income 385,832 365,351
----------- -----------

NONINTEREST EXPENSE
Compensation and employee benefits 1,094,923 1,164,884
Occupancy and equipment 271,647 387,215
Real estate operations, net 15,377 (59,119)
Federal deposit insurance premiums 44,859 74,234
Data processing expense 296,342 289,646
Professional fees 96,465 76,934
Other 357,717 351,703
----------- -----------
Total noninterest expense 2,177,330 2,285,497
----------- -----------

Income before income taxes 845,810 892,783
Income taxes 289,985 363,999
----------- -----------

NET INCOME $ 555,825 $ 528,784
=========== ===========

See accompanying notes to the consolidated financial statements.

F-3

ST. EDMOND'S FEDERAL SAVINGS BANK AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN RETAINED EARNINGS

Retained Accumulated
Earnings - Other Total
Substantially Comprehensive Retained Comprehensive
Restricted Income (Loss) Earnings Income
------------------ ----------------- ----------------- -----------------

Balance, October 31, 2001 $ 6,670,949 $ 185,310 $ 6,856,259

Net income 528,784 528,784 $ 528,784
Other comprehensive income:
Unrealized gain on available
for sale securities
net of taxes of $1,267 1,848 1,848 1,848
-----------------
Comprehensive income $ 530,632
------------------ ----------------- ----------------- =================

Balance, October 31, 2002 7,199,733 187,158 7,386,891

Net income 55,825 555,825 $ 555,825
Other comprehensive income:
Unrealized loss on available
for sale securities
net of tax benefit of $163,887 (271,058) (271,058) (271,058)
-----------------
Comprehensive income $ 284,767
------------------ ----------------- ----------------- =================

Balance, October 31, 2003 $ 7,755,558 $ (83,900) $ 7,671,658
================== ================= =================

See accompanying notes to the consolidated financial statements.

F-4

ST. EDMOND'S FEDERAL SAVINGS BANK AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS

Year Ended October 31,
2003 2002
------------ ------------

OPERATING ACTIVITIES
Net income $ 555,825 $ 528,784
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses 33,000 25,000
Depreciation, amortization, and accretion 167,784 172,683
Deferred federal income taxes 77,339 25,571
Decrease in accrued interest receivable 12,831 24,069
Decrease in accrued interest payable (24,423) (43,296)
Other, net (218,021) (200,475)
------------ ------------
Net cash provided by operating activities 604,335 532,336
------------ ------------

INVESTING ACTIVITIES
Investment securities available for sale:
Proceeds from principal repayments and maturities 15,076,499 8,751,548
Purchases (19,541,205) (15,372,142)
Decrease in loans receivable, net 746,406 7,303,725
Proceeds from sales of real estate acquired through
foreclosure 260,235 953,097
Redemption (purchase) of Federal Home Loan Bank stock (92,900) 58,700
Purchase of premises and equipment (162,208) (46,393)
------------ ------------
Net cash provided by (used for) investing activities (3,713,173) 1,648,535
------------ ------------

FINANCING ACTIVITIES
Increase in deposits, net 2,257,724 1,098,726
Repayment of Federal Home Loan Bank borrowings (57,138) (1,151,020)
Decrease in advances by borrowers
for taxes and insurance, net (88,564) (152,038)
------------ ------------
Net cash provided by (used for) financing activities 2,112,022 (204,332)
------------ ------------

Increase (decrease) in cash and cash equivalents (996,816) 1,976,539

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 7,300,707 5,324,168
------------ ------------

CASH AND CASH EQUIVALENTS AT END OF YEAR $ 6,303,891 $ 7,300,707
============ ============

SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid:
Interest $ 2,474,104 $ 3,042,855
Income taxes 317,717 405,160
Noncash transactions:
Transfers from loans to real estate acquired through foreclosure 312,813 660,169

See accompanying notes to the consolidated financial statements.

F-5

ST. EDMOND'S FEDERAL SAVINGS BANK AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of significant accounting and reporting policies applied in the
presentation of the accompanying consolidated financial statements follows:

Nature of Operations and Basis of Presentation
- ----------------------------------------------

St. Edmond's Federal Savings Bank (the "Bank") is a federally-chartered savings
bank located in Philadelphia, Pennsylvania. The Bank's principal sources of
revenue emanate from its investment securities portfolio, its portfolio of
residential real estate, commercial, and consumer loans as well as a variety of
deposit services offered to its customers through two offices located in
Philadelphia County, Pennsylvania, and Gloucester County, New Jersey. The Bank
is subject to regulation and supervision by the Office of Thrift Supervision.

The consolidated financial statements include the accounts of the Bank and its
wholly-owned subsidiary, SE Investment Services Corp. ("Services Corp."), an
inactive investment services and products provider. All intercompany
transactions have been eliminated in consoli-dation. The investment in
subsidiary on the Bank's financial statements is carried at the Bank's equity in
the underlying net assets of the Services Corp.

The accounting principles followed by the Bank and the Services Corp. and the
methods of applying these principles conform with accounting principles
generally accepted in the United States of America and to general practice
within the banking industry. In preparing the consolidated financial statements,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the balance sheet date and
related revenues and expenses for the period. Actual results could differ
significantly from those estimates.

Investment Securities
- ---------------------

The Bank has classified investment securities, including mortgage-backed
securities, as available for sale to serve principally as a source of liquidity.
Unrealized holding gains and losses for securities available for sale are
reported as a separate component of retained earnings, net of tax, until
realized. Realized securities gains and losses are computed using the specific
identification method. Interest and dividends on investment securities are
recognized as income when earned.

Common stock of the Federal Home Loan Bank ("FHLB") represents ownership in an
institution that is wholly-owned by other financial institutions. This equity
security is accounted for at cost and classified separately on the Consolidated
Balance Sheet.

Loans Receivable
- ----------------

Loans are stated at the principal amount outstanding less the allowance for loan
losses and net of deferred loan origination fees and costs. Interest on loans is
recognized as income when earned on the accrual method.

Loans on which the accrual of interest has been discontinued are designated as
nonaccrual loans. Accrual of interest on loans is generally discontinued when it
is determined that a reasonable doubt exists as to the collectibility of
principal, interest, or both. Loans are returned to accrual status when past due
interest is collected and the collection of principal is probable.

Loan origination fees and certain direct loan origination costs are being
deferred and the net amount amortized as an adjustment of the related loan's
yield. The Bank is amortizing these amounts over the contractual life of the
related loans using the interest method.

F-6

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Allowance for Loan Losses
- -------------------------

The allowance for loan losses is maintained at a level by management which
represents the evaluation of known and inherent losses in the loan portfolio at
the balance sheet date. The allowance method is used in providing for loan
losses. Accordingly, all loan losses are charged to the allowance, and all
recoveries are credited to it. The allowance is established through a provision
which is charged to operations. Management's evaluation takes into
consideration the risks inherent in the loan portfolio, past experience with
losses, the impact of economic conditions on borrowers, and other relevant
factors. The estimates used in determining the adequacy of the allowance,
including the amounts and timing of future cash flows expected on impaired
loans, are particularly susceptible to significant changes in the near term.

A commercial real estate loan is considered impaired when it is probable the
borrower will not repay the loan according to the original contractual terms of
the loan agreement. Management has determined that first mortgage loans on
one-to-four family properties and all consumer loans represent large groups of
smaller-balance homo-geneous loans that are to be collectively evaluated. Loans
that experience insignificant payment delays, which are defined as 90 days or
less, generally are not classified as impaired. A loan is not impaired during a
period of delay in payment if the Bank expects to collect all amounts due
including interest accrued at the contractual interest rate for the period of
delay. All loans identified as impaired are evaluated independently by
management. The Bank estimates credit losses on impaired loans based on the
present value of expected cash flows or the fair value of the underlying
collateral if the loan repayment is expected to come from the sale or operation
of such collateral. Impaired loans, or portions thereof, are charged off when it
is determined that a realized loss has occurred. Until such time, an allowance
is maintained for estimated losses. Cash receipts on impaired loans are applied
first to accrued interest receivable unless otherwise required by the loan
terms, except when an impaired loan is also a nonaccrual loan, in which case the
portion of the receipts related to interest is recognized as income.

Mortgage loans on one-to-four family properties and all consumer loans are large
groups of smaller-balance homogeneous loans and are measured for impairment
collectively. Loans that experience insignificant payment delays, which are
defined as 90 days or less, generally are not classified as impaired. Management
determines the significance of payment delays on a case-by-case basis taking
into consideration all of the circumstances surrounding the loan and the
borrower including the length of the delay, the borrower's prior payment record,
and the amount of shortfall in relation to the principal and interest owed.

Premises and Equipment
- ----------------------

Premises, leasehold improvements, and equipment are stated at cost less
accumulated depreciation and amortization. Depreciation and amortization are
calculated using the straight-line method over the useful lives of the related
assets, which range from two to ten years for furniture, fixtures, and equipment
and 30 to 31.5 years for building premises. Leasehold improvements are amortized
over the shorter of their estimated useful lives or their respective lease
terms, which range from three to five years. Expenditures for maintenance and
repairs are charged to operations as incurred. Costs of major additions and
improvements are capitalized.

Real Estate Owned
- -----------------

Real estate owned acquired in settlement of foreclosed loans is carried at the
lower of cost or fair value minus estimated costs to sell. Valuation allowances
for estimated losses are provided when the carrying value of the real estate
acquired exceeds fair value minus estimated costs to sell. Operating expenses of
such properties, net of related income, are expensed in the period incurred.

F-7

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Federal Income Taxes
- --------------------

The Bank and subsidiary file a consolidated Federal income tax return. Deferred
tax assets and liabilities are reflected based on the differences between the
financial statement and the income tax basis of assets and liabilities using the
enacted marginal tax rates. Deferred income tax expense and benefit are based on
the changes in the deferred tax assets or liabilities from period to period.

Cash and Cash Equivalents
- -------------------------

The Bank has defined cash and cash equivalents as cash and due from banks and
interest-bearing deposits with other institutions that have original maturities
of less than 90 days.

Comprehensive Income
- --------------------

The Bank is required to present comprehensive income and its components in a
full set of general-purpose financial statements for all periods presented.
Other comprehensive income is comprised exclusively of net unrealized holding
gains (losses) on its available-for-sale securities portfolio. The Bank has
elected to report the effects of other comprehensive income as part of the
Consolidated Statement of Changes in Retained Earnings.

Recent Accounting Pronouncements
- --------------------------------

In August 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("FAS") No. 143, Accounting for
Asset Retirement Obligations, which requires that the fair value of a liability
be recognized when incurred for the retirement of a long-lived asset and the
value of the asset be increased by that amount. The statement also requires that
the liability be maintained at its present value in subsequent periods and
outlines certain disclosures for such obligations. The adoption of this
statement, which was effective November 1, 2002, did not have a material effect
on the Bank's financial position or results of operations.

In July 2002, the FASB issued FAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities, which requires companies to recognize costs
associated with exit or disposal activities when they are incurred rather than
at the date of a commitment to an exit or disposal plan. This statement replaces
EITF Issue No. 94-3, Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred
in a Restructuring). The new statement is effective for exit or disposal
activities initiated after December 31, 2002. The adoption of this statement did
not have a material effect on the Bank's financial position or results of
operations.

On December 31, 2002, the FASB issued FAS No. 148, Accounting for Stock-Based
Compensation - Transition and Disclosure, which amends FAS No. 123, Accounting
for Stock-Based Compensation. FAS No. 148 amends the disclosure requirements of
FAS No. 123 to require more prominent and more frequent disclosures in financial
statements about the effects of stock-based compensation. Under the provisions
of FAS No. 123, companies that adopted the preferable, fair value based method
were required to apply that method prospectively for new stock option awards.
This contributed to a "ramp-up" effect on stock-based compensation expense in
the first few years following adoption, which caused concern for companies and
investors because of the lack of consistency in reported results. To address
that concern, FAS No. 148 provides two additional methods of transition that
reflect an entity's full complement of stock-based compensation expense
immediately upon adoption, thereby eliminating the ramp-up effect. FAS No. 148
also improves the clarity and prominence of disclosures about the pro forma
effects of using the fair value based method of accounting for stock-based
compensation for all companies -- regardless of the accounting method used -- by
requiring that the data be presented more prominently and in a

F-8

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements (Continued)
- --------------------------------------------

more user-friendly format in the footnotes to the financial statements. In
addition, the statement improves the timeliness of those disclosures by
requiring that this information be included in interim as well as annual
financial statements. The transition guidance and annual disclosure provisions
of FAS No. 148 are effective for fiscal years ending after December 15, 2002,
with earlier application permitted in certain circumstances. The interim
disclosure provisions are effective for financial reports containing financial
statements for interim periods beginning after December 15, 2002. The adoption
of this statement did not have a material effect on the Bank's financial
position or results of operations.

In April, 2003, the FASB issued FAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. This statement amends and
clarifies accounting for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities under FAS
No. 133. The amendments set forth in FAS No. 149 improve financial reporting by
requiring that contracts with comparable characteristics be accounted for
similarly. In particular, this statement clarifies under what circumstances a
contract with an initial net investment meets the characteristic of a derivative
as discussed in FAS No. 133. In addition, it clarifies when a derivative
contains a financing component that warrants special reporting in the statement
of cash flows. FAS No.149 amends certain other existing pronouncements. Those
changes will result in more consistent reporting of contracts that are
derivatives in their entirety or that contain embedded derivatives that warrant
separate accounting. This statement is effective for contracts entered into or
modified after September 30, 2003, except as stated below and for hedging
relationships designated after September 30, 2003. The guidance should be
applied prospectively. The provisions of this statement that relate to FAS No.
133 Implementation Issues that have been effective for fiscal quarters that
began prior to September 15, 2003, should continue to be applied in accordance
with their respective effective dates. In addition, certain provisions relating
to forward purchases or sales of when-issued securities or other securities that
do not yet exist, should be applied to existing contracts as well as new
contracts entered into after September 30, 2003. The adoption of this statement
did not have a material effect on the Bank's financial position or results of
operations.

In May 2003, the FASB issued FAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. This statement
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). Such instruments may have
been previously classified as equity. This statement is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise is
effective at the beginning of the first interim period beginning after June 15,
2003, except for mandatorily redeemable financial instrument of nonpublic
entities. These financial instrument are subject to the provisions of this
Statement for the first fiscal period beginning after December 15, 2003. The
adoption of this statement has not and is not expected to have a material effect
on the Bank's reported equity.

In November 2002, the FASB issued Interpretation No. 45, Guarantor's Accounting
and Disclosure requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others. This interpretation elaborates on the disclosures to be
made by a guarantor in its interim and annual financial statements about its
obligations under certain guarantees that it has issued. This interpretation
clarifies that a guarantor is required to disclose (a) the nature of the
guarantee, including the approximate term of the guarantee, how the guarantee
arose, and the events or circumstances that would require the guarantor to
perform under the guarantee; (b) the maximum potential amount of future payments
under the guarantee; (c) the carrying amount of the liability, if any, for the
guarantor's obligations under the guarantee; and (d) the nature and extent of
any recourse provisions or available collateral that would enable the guarantor
to recover the amounts paid under the guarantee. This interpretation also
clarifies that a guarantor is required to recognize, at the inception of a
guarantee, a liability for the obligations it has undertaken in issuing the
guarantee, including its ongoing obligation to stand ready to perform over the
term of the guarantee in the event that the specified triggering events or
conditions occur. The objective of the initial measurement of

F-9

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements (Continued)
- --------------------------------------------

that liability is the fair value of the guarantee at its inception. The initial
recognition and initial measurement provisions of this interpretation are
applicable on a prospective basis to guarantees issued or modified after
December 31, 2002, irrespective of the guarantor's fiscal year-end. The
disclosure requirements in this interpretation are effective for financial
statements of interim or annual periods ending after December 15, 2002. The
adoption of this interpretation did not have a material effect on the Bank's
financial position or results of operations.

In January, 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities, in an effort to expand upon and strengthen existing
accounting guidance that addresses when a company should include in its
financial statements the assets, liabilities and activities of another entity.
The objective of this interpretation is not to restrict the use of variable
interest entities but to improve financial reporting by companies involved with
variable interest entities. Until now, one company generally has included
another entity in its consolidated financial statements only if it controlled
the entity through voting interests. This interpretation changes that by
requiring a variable interest entity to be consolidated by a company if that
company is subject to a majority of the risk of loss from the variable interest
entity's activities or entitled to receive a majority of the entity's residual
returns or both. The consolidation requirements of this interpretation apply
immediately to variable interest entities created after January 31, 2003. The
consolidation requirements apply to older entities in the first fiscal year or
interim period beginning after June 15, 2003. Certain of the disclosure
requirements apply in all financial statements issued after January 31, 2003,
regardless of when the variable interest entity was established. In October,
2003, the FASB decided to defer to the fourth quarter from the third quarter the
implementation date for Interpretation No. 46. This deferral only applies to
variable interest entities that existed prior to February 1, 2003. The adoption
of this interpretation has not and is not expected to have a material effect on
the Bank's financial position or results of operations.

Reclassification of Comparative Amounts
- ---------------------------------------

Certain items previously reported have been reclassified to conform to the
current year's reporting format. Such reclassifications did not affect net
income or retained earnings.

2. INVESTMENT SECURITIES

The amortized cost and estimated market value of investment securities
available for sale are summarized as follows:

2003
-------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
------------- -------------- ----------- -----------

Available for Sale
Fannie Mae $ 7,935,480 $ 73,560 $ (26,103) $ 7,982,937
Freddie Mac 1,676,458 15,283 (3,668) 1,688,073
Government National Mortgage
Association securities 1,229,529 32,871 -- 1,262,400
----------- ----------- ----------- -----------
Total mortgage-backed
securities 10,841,467 121,714 (29,771) 10,933,410

U.S. Government
agency securities 13,721,409 40,534 (279,773) 13,482,170
Municipal securities 2,728,283 32,596 (20,369) 2,740,510
----------- ----------- ----------- -----------
Total debt securities 27,291,159 194,844 (329,913) 27,156,090
Mutual funds 180,706 442 -- 181,148
----------- ----------- ----------- -----------
Total $27,471,865 $ 195,286 $ (329,913) $27,337,238
=========== =========== =========== ===========

F-10

2. INVESTMENT SECURITIES (Continued)

2002
---------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
------------- -------------- -------------- -----------

Available for Sale
Fannie Mae $10,784,093 $ 128,954 $ (22,809) $10,890,238
Freddie Mac 4,145,968 46,146 (14,870) 4,177,244
Government National Mortgage
Association securities 2,394,363 60,735 -- 2,455,098
----------- ----------- ----------- -----------
Total mortgage-backed
securities 17,324,424 235,835 (37,679) 17,522,580
U.S. Government agency
securities 4,694,769 4,779,021 85,635 (1,383)
Municipal securities - tax-exempt 978,905 1,012,016 37,991 (4,880)
----------- ----------- ----------- -----------
Total debt securities 22,998,098 359,461 (43,942) 23,313,617
Mutual funds 178,371 -- -- 178,371
----------- ----------- ----------- -----------

Total $23,176,469 $ 359,461 $ (43,942) $23,491,988
=========== =========== =========== ===========

The amortized cost and estimated market value of debt securities at October 31,
2003, by contractual maturity, are shown below. Mortgaged-backed securities
provide for periodic, generally monthly, payments of principal and interest and
have contractual maturities ranging from five to thirty years. Expected
maturities will differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without call or prepayment
penalties.

Estimated
Amortized Market
Cost Value
----------------- -----------------

Due within one year $ 9,004,443 $ 8,832,416
Due after one year through five years 6,261,724 6,194,592
Due after five years through ten years 1,250,000 1,260,792
Due after ten years 10,774,992 10,868,290
----------------- -----------------

Total $ 27,291,159 $ 27,156,090
================= =================

Investment securities with amortized cost and estimated market values of
$6,639,705 and $6,737,536 at October 31, 2003 and $7,812,955 and $7,957,073 at
October 31, 2002, were pledged to secure deposits and other purposes required by
law.

3. LOANS RECEIVABLE

Loans receivable consist of the following:

2003 2002
----------------- -----------------

Mortgage loans:
One-to-four family $ 36,149,150 $ 37,809,477
Multi-family 466,356 1,288,988
Commercial 4,005,520 4,333,878
Construction 1,416,030 150,701
----------------- -----------------
42,037,056 43,583,044

Home equity loans 8,409,279 7,793,997
Loans on savings accounts 473,141 425,452
Other 151,234 343,029
----------------- -----------------
51,070,710 52,145,522
Less:
Net deferred loan fees and unamortized premiums 78,489 189,643
Allowance for loan losses 262,561 266,700
----------------- -----------------

Total $ 50,729,660 $ 51,689,179
================= =================

F-11

3. LOANS RECEIVABLE (Continued)

Mortgage loans serviced by the Bank for others amounted to $5,886,718 and
$10,176,477 at October 31, 2003 and 2002, respectively.

The Bank's primary business activity is with customers located within its local
trade area. Commercial, residential, and personal loans are granted.
Approximately $10.9 million or 21.3 percent, and $12.7 million or 24.6 percent,
of the loan portfolio at October 31, 2003 and 2002, respectively, was comprised
of non owner-occupied rental property loan arrangements. In general, a
substantial portion of the Bank's loan customers' abilities to honor their loan
agreements is dependent upon the economic stability of the immediate trade area.

Activity in the allowance for loan losses for the years ended October 31 is
summarized as follows:

2003 2002
----------------- -----------------

Balance, beginning of period $ 266,700 $ 424,453
Add:
Provision charged to operations 33,000 25,000
Loan recoveries 10,124 14,899
----------------- -----------------
309,824 464,352
Less:
Charge-offs 47,263 197,652
----------------- -----------------

Balance, end of period $ 262,561 $ 266,700
================= =================

The Bank had nonaccrual loans of $155,168 and $385,782 at October 31, 2003 and
2002, respectively, which in management's opinion did not meet the definition of
impaired. Interest income on loans would have been increased by approximately
$15,000 and $23,000, respectively, if these loans had performed in accordance
with their original terms.

At October 31, 2003 and 2002, respectively, the recorded investment in loans
which were considered to be impaired was $214,672 and $157,301, of which all
were nonaccrual. In addition, $16,453 and $41,517, for 2003 and 2002,
respectively, of the related allowance for loan losses was allocated for
impaired loans. The average recorded investment in impaired loans during the
years ended October 31, 2003 and 2002, respectively, was $109,746 and $159,364.
For the years ended October 31, 2003 and 2002, the Bank recognized interest
income on impaired loans of $34,471 and $11,227, respectively.

In the normal course of business, loans are extended to officers, directors, and
corporations in which they are beneficially interested as stockholders,
officers, or directors. A summary of loan activity for those officers and
directors with aggregate loan balances in excess of $60,000 for the year ended
October 31, 2003, is as follows:

Amounts
2002 Additions Collected 2003
---------- ---------------- ----------- -----------

$ 540,230 $ - $ 81,073 $ 459,157

4. FEDERAL HOME LOAN BANK STOCK

The Bank is a member of the Federal Home Loan Bank System. As a member, the Bank
maintains an investment in the capital stock of the FHLB of Pittsburgh in an
amount not less than 70 basis points of the outstanding unused FHLB borrowing
capacity and one twentieth of its outstanding FHLB borrowings, as calculated
throughout the year.

F-12

5. PREMISES AND EQUIPMENT

Premises and equipment consist of the following:

2003 2002
--------------- -----------------

Land $ 150,000 $ 150,000
Buildings and leasehold improvements 1,309,924 1,295,555
Furniture, fixtures, and equipment 1,502,128 1,354,476
--------------- -----------------
2,962,052 2,800,031
Less accumulated depreciation 1,813,059 1,675,634
--------------- -----------------

Total $ 1,148,993 $ 1,124,397
=============== =================

Depreciation expense amounted to $137,612 and $207,795 for the years ended
October 31, 2003 and 2002, respectively.

6. DEPOSITS

Deposit accounts are summarized at October 31, as follows:

2003 2002
----------------------- -----------------------
Amount % Amount %
-------------- ------- -------------- -------

Non interest-bearing demand $ 2,889,656 4.0 % $ 2,478,535 3.5 %
NOW accounts 3,232,298 4.5 2,362,208 3.4
Money market deposit 4,612,594 6.5 3,885,936 5.6
Savings 9,683,297 13.4 8,569,198 12.2
-------------- ------- -------------- -------
20,417,845 28.4 17,295,877 24.7
-------------- ------- -------------- -------

Time certificates of deposit:
0.90 - 2.00% 13,400,400 18.5 100,578 0.1
2.01 - 4.00% 18,534,202 25.6 26,451,371 37.8
4.01 - 6.00% 18,953,245 26.2 24,926,897 35.6
6.01 - 8.00% 967,142 1.3 1,240,387 1.8
-------------- ------- -------------- -------
51,854,989 71.6 52,719,233 75.3
-------------- ------- -------------- -------

Total $ 72,272,834 100.0 % $ 70,015,110 100.0 %
============== ======= ============== =======

The schedule maturities of time certificates of deposit as of October 31, 2003
are as follows:

Within one year $ 21,716,551
Beyond one year but within two years 6,186,512
Beyond two years but within three years 6,476,535
Beyond three years but within four years 6,562,823
Beyond four years but within five years 10,912,568
--------------

$ 51,854,989
==============

Time deposits include certificates of deposit in denominations of $100,000 or
more. Such deposits aggregated $9,083,688 and $8,992,436 at October 31, 2003 and
2002, respectively. Deposits in excess of $100,000 are not federally insured.

F-13

6. DEPOSITS (Continued)

The scheduled maturities of time certificates of deposit in denominations of
$100,000 or more at October 31, 2003, are as follows:

Within three months 1,579,498
Three through six months 777,973
Six through twelve months 1,395,465
Over twelve months 5,330,752
--------------

9,083,688
==============

Interest expense by deposit category is as follows:

2003 2002
-------------- -------------

NOW $ 36,174 $ 38,586
Money market 80,146 97,340
Savings 146,084 177,980
Time certificates of deposit 1,965,405 2,391,424
-------------- -------------

Total $ 2,227,809 $ 2,705,330
============== =============

7. FEDERAL HOME LOAN BANK BORROWINGS

The following tables set forth information concerning advances with the FHLB:

Weighted Stated
Maturity average interest At October 31,
Description Date interest rate rate 2003 2002
--------------------- ----------- --------------- --------- ------------- --------------

Convertible 2/18/2010 5.91 % 5.91 % $ 1,000,000 $ 1,000,000
Fixed rate 8/20/2008 6.24 6.24 1,500,000 1,500,000
Fixed rate amortizing 11/3/2005 6.47 6.47 137,204 194,342
Line 4/5/2004 1.31 1.31 4,000,000 4,000,000
------------ --------------

$ 6,637,204 $ 6,694,342
=========== ===========

Maturities of FHLB borrowings at October 31, are summarized as follows:

2003 2002
------------------------------- -----------------------------
Year Ending Weighted- Weighted-
October 31, Amount average Rate Amount average Rate
--------------- ------------ ----------------- ------------ ---------------

2003 $ - - $ 57,138 2.04%
2004 4,060,946 1.38% 4,060,946 6.47%
2005 65,009 6.47% 65,009 6.47%
2006 11,249 6.47% 11,249 6.47%
2008 1,500,000 6.24% 1,500,000 6.24%
2010 1,000,000 5.91% 1,000,000 5.91%
----------- -----------
$ 6,637,204 3.22% $ 6,694,342 3.65%
=========== ===========

F-14

7. FEDERAL HOME LOAN BANK BORROWINGS (Continued)

FHLB "RepoPlus" advances are short-term borrowings that mature within one year,
bear a variable rate of interest that adjusts daily, and are not subject to
prepayment penalties. The Bank has a maximum borrowing capacity of $58.8 million
with the FHLB at October 31, 2003.

The Bank entered into a ten-year "Convertible Select" fixed commitment advance
arrangement for $1,000,000 with the FHLB. Rates may be reset at the FHLB's
discretion on a quarterly basis based on the three-month LIBOR rate. At each
rate change the Bank may exercise a put option and satisfy the obligation
without penalty.

All borrowings from the FHLB are secured by a blanket lien on qualified
collateral, defined principally as investment securities and mortgage loans
which are owned by the Bank free and clear of any liens or encumbrances. In
addition, the Bank has a maximum borrowing capacity of $58.8 million with the
FHLB at October 31, 2003.

8. INCOME TAXES

The provision for income taxes consists of:

2003 2002
---------------- ---------------
Federal tax expense:
Current $ 151,955 $ 263,429
Deferred 77,339 25,571
---------------- ---------------
229,294 289,000
State and local
Current 60,691 74,999
---------------- ---------------

Total $ 289,985 $ 363,999
================ ===============

The tax effects of deductible and taxable temporary differences that gave rise
to significant portions of the deferred tax assets and deferred tax liabilities,
respectively, at October 31 are as follows:

2003 2002
-------------- ---------------
Deferred tax assets:
Allowance for loan losses $ 84,674 $ 79,728
Allowance for REO losses 6,100 23,710
Premises and equipment - 26,362
Nonaccrual interest 6,627 16,630
Net unrealized loss on securities 50,727 -
-------------- ---------------
Total gross deferred tax assets 148,128 146,430
-------------- ---------------

Deferred tax liabilities:
Premises and equipment 28,310 -
Net unrealized gain on securities - 128,361
-------------- ---------------
Total gross deferred tax liabilities 28,310 128,361
-------------- ---------------

Net deferred tax assets $ 119,818 $ 18,069
============== ===============

No valuation allowance was established at October 31, 2003 and 2002, in view of
the Bank's ability to carryback to taxes paid in previous years and certain tax
strategies coupled with the anticipated future taxable income as evidenced by
the Bank's earnings potential.

F-15

8. INCOME TAXES (Continued)

The reconciliation of the federal statutory rate and the Bank's effective income
tax rate are as follows:

2003 2002
------------------------ --------------------
% of % of
Pre-tax Pre-tax
Amount Income Amount Income
--------- ------------ --------- --------

Provision of statutory rate $287,524 34.0 % $303,546 34.0 %
State tax expense,
net of federal tax 40,056 4.7 49,499 5.5
Tax-exempt (22,322) (2.7) (5,415) (0.6)
Other, net (15,273) (1.8) 16,369 1.8
--------- ---------- --------- --------
Actual tax expense and
effective rate $289,985 34.2 % $363,999 40.7 %
========= ========== ========= ========

The Bank is subject to the Pennsylvania Mutual Thrift Institutions Tax that is
calculated at 11.5 percent of earnings based on accounting principles generally
accepted in the United States of America with certain adjustments.

9. COMMITMENTS AND CONTINGENT LIABILITIES

Commitments
- -----------

In the normal course of business, management makes various commitments which are
not reflected in the accom-panying financial statements. These commitments
involve, to varying degrees, elements of credit and interest rate risk in excess
of the amount recognized in the balance sheet. The Bank's exposure to credit
loss in the event of nonperformance by the other parties to the financial
instruments is represented by the contractual amounts as disclosed. The Bank
minimizes its exposure to credit loss under these commitments by subjecting them
to credit approval and review procedures and collateral requirements, as deemed
necessary, in compliance with lending policy guidelines. Generally, collateral,
usually in the form of real estate, is required to support financial instruments
with credit risk.

The off-balance sheet commitments were comprised of the following:

2003 2002
----------------- -----------------

Commitments to extend credit $ 3,272,732 $ 1,575,734

Included above are fixed rate commitments of approximately $1,250,000 with
interest rates ranging from 4.87 percent to 7.25 percent. The commitments
outstanding at October 31, 2003, contractually mature in less than one year.

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the loan agreement. These
commitments are comprised primarily of available commercial and personal lines
of credit and loans approved but not yet funded. Commitments generally have
fixed expiration dates or other termination clauses and may require payment of a
fee.

Contingent Liabilities
- ----------------------

The Bank is involved in various legal actions from the normal course of business
activities. Management believes the liability, if any, arising from such actions
will not have a material adverse effect on the Bank's financial position.

F-16

10. EMPLOYEE BENEFITS

The Bank currently sponsors a 401(k) savings plan for substantially all
employees and officers of the Bank. Under the terms of the plan, the Bank may
match eligible employee contributions at the discretion of the Board of
Directors not to exceed amounts allowable by law. All employees with at least
one year of service who work over 1,000 hours per year are eligible to
participate in the plan. The Bank contributes 100 percent of the first 4 percent
of an employee's contribution and 50 percent of the next 2 percent, for a
maximum match of 5 percent. Such matching contributions vest over a three-year
period. The Bank made contributions of approximately $39,000 and $31,000 for the
years ended October 31, 2003 and 2002, respectively.

11. REGULATORY RESTRICTIONS

Regulatory Capital Requirements
- -------------------------------

Federal regulations require the Bank to maintain minimum amounts of capital.
Specifically, each is required to maintain certain minimum dollar amounts and
ratios of Total and Tier I capital to risk-weighted assets and of Core capital
to average total assets.

In addition to the capital requirements, the Federal Deposit Insurance
Corporation Improvement Act ("FDICIA") established five capital categories
ranging from "well capitalized" to "critically undercapitalized." Should any
institution fail to meet the requirements to be considered "adequately
capitalized," it would become subject to a series of increasingly restrictive
regulatory actions. Management believes, as of October 31, 2003 and 2002, the
Bank met all capital adequacy requirements to which they are subject.

As of October 31, 2003 and 2002, the Office of Thrift Supervision categorized
the Bank as well capitalized under the regulatory framework for prompt
corrective action. To be classified as a well capitalized financial institution,
Total risk-based, Tier 1 risk-based, Core capital, and Tangible equity capital
ratios must be at least 10.0 percent, 6.0 percent, 5.0 percent, and 1.5 percent,
respectively. There are no conditions or events, since the notification, that
management believes have changed the Bank's category.

The Bank's actual capital ratios are presented in the following tables, which
show that the Bank met all regulatory capital requirements.

The following table reconciles the Bank's capital under accounting principles
generally accepted in the United States of America to regulatory capital.

2003 2002
------------- -----------

Total retained earnings $7,671,658 $7,386,891
Accumulated other comprehensive (income) loss 83,900 (187,158)
----------- -----------

Tier I, core, and tangible capital 7,755,558 7,199,733
Allowance for loan losses 246,108 225,183
----------- -----------

Total risk-based capital $8,001,666 $7,424,916
=========== ===========

F-17

11. REGULATORY RESTRICTIONS (Continued)

Regulatory Capital Requirements
- -------------------------------

The Bank's actual capital ratios are presented in the following table:

2003 2002
--------------------------- --------------------------
Amount Ratio Amount Ratio
-------------- ----------- ------------- ----------

Total Capital
(to Risk-weighted Assets)
-------------------------

Actual $ 8,001,666 21.0 % $ 7,424,916 20.6 %
For Capital Adequacy Purposes 3,049,680 8.0 2,878,000 8.0
To Be Well Capitalized 3,812,100 10.0 3,597,500 10.0
Tier I Capital
(to Risk-weighted Assets)
-------------------------

Actual $ 7,755,558 20.3 % $ 7,199,733 20.0 %
For Capital Adequacy Purposes 1,524,840 4.0 1,439,000 4.0
To Be Well Capitalized 2,287,260 6.0 2,158,500 6.0

Core Capital
(to Adjusted Assets)
--------------------

Actual $ 7,755,558 8.9 % $ 7,199,733 8.4 %
For Capital Adequacy Purposes 3,500,132 4.0 3,423,067 4.0
To Be Well Capitalized 4,375,165 5.0 4,278,834 5.0

Tangible Capital
(to Adjusted Assets)
--------------------

Actual $ 7,755,558 8.9 % $ 7,199,733 8.4 %
For Capital Adequacy Purposes 1,312,550 1.5 1,283,650 1.5
To Be Well Capitalized N/A N/A N/A N/A

F-18

12. FAIR VALUE DISCLOSURE

The estimated fair values of the Bank's financial instruments are as follows:

2003 2002
---------------------------- -----------------------------
Carrying Fair Carrying Fair
Value Value Value Value
------------- ------------- -------------- ------------

Financial assets:
Cash and cash equivalents $ 6,303,891 6,303,891 $ 7,300,707 7,300,707
Cerfiticates of deposit in other
financial institutions 183,483 184,000 178,744 179,000
Investment Securities
Available for sale 27,337,238 27,337,238 23,491,988 23,491,988
Net loans receivable 50,729,660 53,767,557 51,689,179 54,832,889
Accrued interest receivable 482,538 482,538 495,369 495,369
Federal Home Loan Bank stock 735,000 735,000 642,100 642,100

Financial liabilities:
Deposits 72,272,834 73,962,039 70,015,110 72,923,517
Federal Home Loan Bank borrowings 6,637,204 6,977,845 6,694,342 6,978,145
Accrued interest payable 49,703 49,703 74,126 74,126

Financial instruments are defined as cash, evidence of ownership interest in an
entity, or a contract which creates an obligation or right to receive or deliver
cash or another financial instrument from/to a second entity on potentially
favorable or unfavorable terms.

Fair value is defined as the amount at which a financial instrument could be
exchanged in a current transaction between willing parties other than in a
forced or liquidation sale. If a quoted market price is available for a
financial instrument, the estimated fair value would be calculated based upon
the market price per trading unit of the instrument.

If no readily available market exists, the fair value estimates for financial
instruments should be based upon management's judgment regarding current
economic conditions, interest rate risk, expected cash flows, future estimated
losses, and other factors as determined through various option pricing formulas
or simulation modeling. As many of these assumptions result from judgments made
by management based upon estimates which are inherently uncertain, the resulting
estimated fair values may not be indicative of the amount realizable in the sale
of a particular financial instrument. In addition, changes in assumptions on
which the estimated fair values are based may have a significant impact on the
resulting estimated fair values.

As certain assets such as deferred tax assets and premises and equipment are not
considered financial instruments, the estimated fair value of financial
instruments would not represent the full value of the Bank.

The Bank employed simulation modeling in determining the estimated fair value of
financial instruments for which quoted market prices were not available based
upon the following assumptions:

Cash and Cash Equivalents, Accrued Interest Receivable, Federal Home Loan Bank
- --------------------------------------------------------------------------------
Stock, and Accrued Interest Payable
- -----------------------------------

The fair value is equal to the current carrying value.

Investment Securities Available for Sale
- ----------------------------------------

The fair value of investment securities available for sale is equal to the
available quoted market price. If no quoted market price is available, fair
value is estimated using the quoted market price for similar securities.

F-19

12. FAIR VALUE DISCLOSURE (Continued)

Loans Receivable, Certificates of Deposit in other Financial Institutions,
Deposits, and Federal Home Loan Bank Borrowings

The fair value for loans is estimated by discounting contractual cash flows and
adjusting for prepayment estimates. Discount rates are based upon rates
generally charged for such loans with similar characteristics. Demand, savings,
and money market deposit accounts are valued at the amount payable on demand as
of year-end. Fair values for certificates of deposit in other financial
institutions, time deposits, and Federal Home Loan Bank borrowings are estimated
using a discounted cash flow calculation that applies contractual costs
currently being offered in the existing portfolio to current market rates being
offered for products of similar remaining maturities.

Commitments to Extend Credit
- ----------------------------

These financial instruments are generally not subject to sale, and estimated
fair values are not readily available. The carrying value, represented by the
net deferred fee arising from the unrecognized commitment, and the fair value,
determined by discounting the remaining contractual fee over the term of the
commitment using fees currently charged to enter into similar agreements with
similar credit risk, are not considered material for disclosure. The contractual
amounts of unfunded commitments are presented in Note 9.

14. PLAN OF CONVERSION

On January 15, 2004, the Board of Directors of the Bank, subject to regulatory
approval, ratified a Plan of Conversion (the "Plan") to convert from a federally
chartered mutual savings institituion to a federally chartered stock savings
institution. The Bank will become a wholly-owned subsidiary of a concurrently
formed holding company. The plan provides that the holding company will offer
nontransferable subscription rights to purchase common stock of the holding
company. The rights will be offered first to eligible account holders, the
tax-qualified employee stock benefit plans, and other members. Any shares
remaining may then be offered to the general public.

The Plan provides for the establishment, upon completion of the conversion, of a
special "liquidation account" in an amount equal to the Bank's net worth as of
the latest practicable date prior to the conversion. This account is for the
benefit of eligible account holders in the event of liquidation of the Bank.
The interest as to each deposit account will be in the same proportion of the
total liquidation account as the balance of the deposit account on the
qualifying dates was to the aggregate balance of all deposit account of eligible
account ^holders on the qualifying dates. The liquidation account will be
reduced in a proportionate amount if the amount in any deposit account on any
annual closing date is less that it was on the respective qualifying dates. The
liquidation account will not be increased despite any increase in a deposit
account after the respective qualifying dates.

The regulations of the OTS prohibit the Bank from declaring or paying a cash
dividend if the effect thereof would cause the Bank's regulatory capital to be
reduced below either the amount required for the liquidation account or the
federal regulatory capital requirement in section 567.2 of the Rules and
Regulations of the OTS.

Costs associated with the conversion will be deferred and deducted from the
proceeds of the stock offering. If, for any reason, the offering is not
successful, the deferred costs will be charged to operations. As of October 31,
2003, there were no costs associated with the conversion.

F-20

You should rely only on the information contained in this document or to that to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document does not constitute an offer to
sell, or the solicitation of an offer to buy, any of the securities offered
hereby to any person in any jurisdiction in which such offer or solicitation
would be unlawful. The affairs of SE Financial Corp. and its subsidiaries may
change after the date of this prospectus. Delivery of this document and the
sales of shares made hereunder does not mean otherwise.

SE Financial Corp.
(Proposed Holding Company for St. Edmond's Federal Savings Bank)

Up to 2,242,500 Shares of Common Stock
(Subject to Increase to up to 2,578,875 Shares)

----------

PROSPECTUS

----------

Sandler O'Neill & Partners, L.P.

March 15, 2004

Until the later of June 13, 2004, or 90 days after commencement of the offering,
all dealers effecting transactions in these securities, whether or not
participating in this distribution, may be required to deliver a prospectus.
This is in addition to the obligation of the dealers to deliver a prospectus
when acting as underwriters and with respect to their unsold allotments or
subscriptions.