SE Financial Corp.
FOR IMMEDIATE RELEASE
Contact: Pamela M. Cyr
President and CEO
(215) 468-1700
SE FINANCIAL CORP.
ANNOUNCES SECOND QUARTER 2006 RESULTS
Philadelphia, Pennsylvania, June 2, 2006 - SE Financial Corp. (OTCBB:
SEFL) (the "Company"), the holding company for St. Edmond's Federal Savings
Bank, announced a net loss of $99.0 thousand for the three months ended April
30, 2006 as compared to net income of $204.4 thousand for the same period last
year. For the six months ended April 30, 2006, the Company had a net loss of
$90.5 thousand compared to net income of $475.3 thousand for the six months
ended April 30, 2005.
Commenting on the results for the quarter, Pam Cyr, President and CEO,
stated, "During the quarter, the Bank experienced record deposit growth fueled
by the opening of our two new Neighborhood Banking Offices in Roxborough (opened
December 2005) and Ardmore, PA (opened February 2006). While we have been the
beneficiary of a growing and loyal customer base in South Philadelphia and
Sewell, NJ, the expansion of our geographic footprint and an enhanced menu of
products and services better position the Bank to develop and expand customer
relationships. Costs inherent in the opening of these new Banking Offices
resulted in increased non-interest expense related to construction, staffing,
advertising and operations as anticipated. However, the Bank is now
strategically positioned in high-opportunity markets which have already opened
doors to new deposit and loan relationships. The quarter was also affected by an
increase in the provision for loan losses primarily attributable to an increase
in classified assets, as well as loan growth. Classified assets increased
primarily due to the downgrade of a $1.3 million loan for the construction of 4
residential condominium units. Although pricing pressure, the current yield
curve, and the repricing of interest-bearing liabilities may continue to impact
earnings in the near term, we believe our Shareholders will benefit from
increased value resulting from these strategies in the long term. During the
quarter we continued to execute on several key strategic initiatives. Highlights
include:
o On February 6, 2006 we opened our newest Neighborhood Banking Office in
Ardmore, Pennsylvania, a western suburb of Philadelphia. Following a
successful grand-opening celebration, targeted advertising and promotional
activities we have focused our marketing efforts on building relationships
with local businesses and consumers through active participation in and
sponsorship of chamber of commerce, rotary, and other community
organizations resulting in more than $10 million in new deposits to date.
o Total asset growth of $15.2 million, or 10.2%, for the quarter and $17.5
million, or 11.9% for the six-month period.
o Total loan growth of $11.3 million, or 12.8%, for the quarter and $15.1
million, or 17.8% for the six-month period.
o Total deposit growth of $24.9 million, or 26.4%, for the quarter and $31.9
million or 36.5% for the six-month period.
o Core deposits, primarily money market accounts, increased by $17.3 million,
or 60.1%, and $19.0 million, or 70.4% for the six-month period.
o During the quarter two new commercial lenders joined the Bank, bringing
with them significant community bank lending experience, broad product
knowledge and long standing relationships. We anticipate that their
addition to our team will enhance our ability to meet the growing needs of
our customers and generate new banking relationships.
o On May 16, 2006, the Board of Directors declared the Company's 7th
consecutive cash dividend, its fifth consecutive dividend of $.03 per
share.
LINKED QUARTER HIGHLIGHTS
(Dollars in Thousands)
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QTR QTR Increase % Increase
4/30/2006 1/31/2006 (Decrease) (Decrease)
Total Assets 164,954 149,748 15,206 10.15%
Investment Securities 49,447 48,732 715 1.47%
Loans 99,664 88,390 11,274 12.75%
Deposits 119,336 94,431 24,905 26.37%
Borrowings 20,886 29,556 (8,670) (29.33%)
Stockholders' Equity 23,977 24,522 (545) (2.22%)
Interest Income 2,209 2,125 84 3.95%
Interest Expense 1,167 1,014 153 15.09%
Net Interest Income 1,042 1,111 (69) (6.21%)
Provision for Loan Losses 216 36 180 500.00%
Noninterest Income 105 86 19 22.09%
Noninterest Expense 1,115 1,179 (64) (5.43%)
Net Income (Loss) (99) 9 (108) (1200.00%)
Net Interest Margin 3.00% 3.20% (0.20%) (6.25%)
Yield on Loans 6.97% 6.98% (0.01%) (0.14%)
Yield on Investments 4.56% 4.62% (0.06%) (1.30%)
Cost of Deposits 3.49% 3.26% 0.23% 7.06%
Cost of Borrowings 4.12% 4.22% (0.10%) (2.37%)
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Comparison of the Results of Operations for the Three Months Ended April 30,
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2006 and April 30, 2005
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For the three months ended April 30, 2006 and 2005, net interest income
after provision for loan losses totaled $826 thousand and $1.0 million,
respectively. The average balance of interest-earning assets increased $26.8
million to $146.7 million for the three months ended April 30, 2006 as compared
to $120.0 million for the three months ended April 30, 2005 but was offset by a
decrease in the net interest margin of 63 basis points to 3.00% for the three
months ended April 30, 2006 from 3.63% for the three months ended April 30,
2005. Management anticipates that the Company may continue to experience margin
compression in the future as the current rate environment could result in
interest-bearing liabilities, primarily certificates of deposit, repricing
faster than interest-earning assets, primarily long term mortgage loans. The
provision for loan losses increased $182 thousand to $216.0 thousand for the
three months ended April 30, 2006 from $34 thousand for the three months ended
April 30, 2005. The increase was primarily attributable to an increase in
classified assets, as well as loan growth. The increase in classified assets was
primarily due to the downgrade of a $1.3 million loan for the construction of
four residential condominium units located in Philadelphia. There can be no
assurance that future additions to the provision for loan losses relating to
this loan will not be necessary. Non-interest income was $105.1 thousand for the
three months ended April 30, 2006 compared to $115.8 thousand for the three
months ended April 30, 2005 due mainly to costs associated with check printing
charges in connection with new product offerings featuring a free first order of
checks. Non-interest expense increased $256.5 thousand to $1.1 million for the
three months ended April 30, 2006 compared to $858.6 thousand for the three
months ended April 30, 2005. The increase in non-interest expense was due to
increases in compensation and employee benefits, occupancy and equipment costs,
and other expense of $136.6 thousand, $96.7 thousand and $88.3 thousand,
respectively, offset by a decrease in professional fees and data processing
expense of $46.2 thousand and $22.6 thousand, respectively. The increase in
compensation and employee benefits was due primarily to additions to staff
including staff for the newly opened Roxborough and Ardmore, Pennsylvania
banking offices and additions to staff in the lending area, payroll taxes and
employee benefits expense as well as normal salary increases offset somewhat by
the severance package paid in the prior quarter a year ago to the former
President. The increase in occupancy and equipment costs was due to an increase
in depreciation, rent expense, utilities and maintenance expense related to the
opening of the two new banking offices discussed above. The increase in other
expense was due mainly to increased advertising and marketing costs, telephone
and information technology expense, and stationery and supplies expense. The
decrease in professional fees was due mainly to non-recurring legal expense and
accounting fees related to work performed for Sarbanes Oxley compliance. The
decrease in data processing expense was due to favorable contract negotiations
resulting in a short term decrease in monthly processing fees.
Comparison of the Results of Operations for the Six Months Ended April 30, 2006
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and April 30, 2005
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For the six months ended April 30, 2006 and 2005, net interest income
after provision for loan losses totaled $1.9 million and $2.0 million,
respectively. The average balance of interest-earning assets increased $24.7
million to $144.2 million for the six months ended April 30, 2006 compared to
$120.0 million for the six months ended April 30, 2005 but was offset by a
decrease in the net interest margin of 44 basis points to 3.12% for the six
months ended April 30, 2006 from 3.56% for the six months ended April 30, 2005.
Management anticipates that the Company may continue to experience margin
compression in the future as the current rate environment could result in
interest-bearing liabilities, primarily certificates of deposit, repricing
faster than interest-earning assets, primarily long term mortgage loans. The
provision for loan losses increased $201.1 thousand primarily due to an increase
in classified assets, as well as loan growth. The increase in classified assets
was primarily due to the downgrade of a $1.3 million loan for the construction
of four residential condominium units located in Philadelphia. There can be no
assurance that future additions to the provision for loan losses relating to
this loan will not be necessary. Non-interest income decreased $21.8 thousand to
$191.2 thousand for the six months ended April 30, 2006 compared to $213.0
thousand for the six months ended April 30, 2005 due mainly to a loss on the
sale of investment securities available for sale of $23.7 thousand versus a gain
on the sale of investment securities of $10.4 thousand in the same period of the
prior year offset by an increase of $17.3 thousand in earnings on bank-owned
life insurance. Non-interest expense increased $743.3 thousand to $2.3 million
for the six months ended April 30, 2006 compared to $1.6 million for the six
months ended April 30, 2005. The increase in non-interest expense was due to
increases in compensation and employee benefits, occupancy and equipment costs,
professional fees and other expense of $335.3 thousand, $143.5 thousand, $75.9
thousand, and $187.0 thousand, respectively. The increase in compensation and
employee benefits was due primarily to additions to staff including staff for
the newly opened Roxborough and Ardmore, Pennsylvania banking offices and
additions to the lending department, payroll taxes and employee benefits expense
as well as normal salary increases offset somewhat by the severance package paid
in the prior quarter a year ago to the former President. The increase in
occupancy and equipment costs was due to an increase in depreciation, rent
expense, utilities and maintenance expense related to the opening of the two new
banking offices discussed above. The increase in professional fees was due
mainly to costs incurred in connection with non-recurring legal expenses related
to the Company's Annual Meeting of Stockholders that were not resolved until the
first quarter of 2006. The increase in other expense was due mainly to increased
advertising costs and marketing costs, telephone and information technology
expense, and stationery and supplies expense.
Comparison of Financial Condition at April 30, 2006 and October 31, 2005
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Total assets increased $17.5 million to $164.9 million at April 30,
2006 as compared to $147.4 million at October 31, 2005. Investment securities
decreased $2.8 million to $49.4 million at April 30, 2006 from $52.2 million at
October 31, 2005 due mainly to $5.2 million in sales, maturities and repayments
offset by $3.0 million in purchases. Net loans increased $15.1 million, or
17.8%, to $99.7 million at April 30, 2006 from $84.6 million at October 31,
2005. Deposits increased $31.9 million, or 36.5%, to $119.3 million at April 30,
2006 from $87.4 million at October 31, 2005. Borrowed money decreased $7.0
million, or 25.2%, to $20.9 million at April 30, 2006 from $27.9 million at
October 31, 2005. Stockholders' equity decreased $7.1 million to $24.0 million
at April 30, 2006 from $31.1 million at October 31, 2005 due mainly to the
completion of the 10% stock repurchase plan announced in July 2005 and the 10%
stock repurchase plan announced in January 2006. A total of 465,000 shares of
common stock were repurchased at an average price of $14.04 excluding brokerage
commissions. The decrease was also attributable to an increase in the
accumulated other comprehensive loss of $405.9 thousand as a result of a
decrease in the market value of the Company's investment portfolio due to rising
market interest rates.
SE Financial Corp. is the holding company for St. Edmond's Federal
Savings Bank, a federally chartered stock savings institution with four
Neighborhood Banking Offices serving South Philadelphia, Roxborough and Ardmore,
Pennsylvania and Sewell, New Jersey.
Statements contained in this news release, which are not historical
facts, contain forward-looking statements as that term is defined in the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements are
subject to risk and uncertainties, which could cause actual results to differ
materially from those currently anticipated due to a number of factors, which
include, but are not limited to, factors discussed in documents filed by the
Company with the Securities and Exchange Commission from time to time.
SE FINANCIAL CORP.
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Selected Income Statement Data (Unaudited)
(Dollars in thousands except per share data) Three Months Ended April 30, Six Months Ended April 30,
------------------------------ --------------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
Interest income $ 2,209 $ 1,692 $ 4,335 $ 3,328
Interest expense 1,167 621 2,182 1,236
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Net interest income 1,042 1,071 2,153 2,092
Provision for loan losses 216 34 252 51
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Net interest income after provision for loan losses 826 1,037 1,901 2,041
Noninterest income 105 116 191 213
Noninterest expense 1,115 859 2,294 1,552
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(Loss) income before taxes (184) 294 (202) 702
Income tax (benefit) expense (85) 90 (112) 227
----------- ----------- ----------- -----------
Net income (loss) $ (99) $ 204 $ (90) $ 475
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Weighted average shares outstanding (1) 1,893,338 2,386,115 2,095,850 2,283,005
Earnings (loss) per share (1) $(0.05) $0.09 $(0.04) $0.20
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Performance Ratios (Unaudited) Three Months Ended April 30, Six Months Ended April 30,
---------------------------- --------------------------
2006 2005 2006 2005
------------- ----------- ------------- --------
Return on average assets (2) -0.25% 0.65% -0.12% 0.76%
Return on average equity (2) -1.63% 2.58% -0.66% 3.00%
Net interest margin on average interest earning assets (2)(3) 3.00% 3.63% 3.12% 3.56%
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Selected Balance Sheet Data (Unaudited)
(Dollars in thousands except per share data) April 30, October 31,
2006 2005
---------- ----------
Assets $ 164,954 $ 147,431
Loan receivable, net 99,664 84,602
Cash and cash equivalents 3,735 2,163
Investment securities 49,447 52,233
Deposits 119,336 87,408
FHLB borrowings 20,886 27,935
Total stockholders' equity 23,977 31,063
Ending shares outstanding (1) 1,894,538 2,352,169
Book value per share (1) 12.66 13.21
Stockholders' equity to total assets 14.54% 21.07%
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Asset Quality (Unaudited)
(Dollars in thousands) April 30, October 31,
2006 2005
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Non-performing assets (4) $ 103 $ 69
Allowance for losses 743 507
Non-performing assets to total assets 0.06% 0.05%
Allowance for losses to total loans 0.75% 0.60%
Allowance for losses to non-performing assets 721.36% 734.78%
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(1) Shares outstanding does not include unreleased ESOP shares or shares held
in the Stock Compensation Trust for purposes of the weighted average shares
outstanding calculation and the ending shares outstanding calculation.
(2) Annualized for the three and six months ended April 30, 2006 and (2005.)
(3) The yield on municipal securities has been adjusted to a tax-equivalent
basis.
(4) Non-performing assets include non-accrual loans and real estate owned.