SE Financial Corp.
FOR IMMEDIATE RELEASE
Contact: Pamela M. Cyr
President and CEO
(215) 468-1700
SE FINANCIAL CORP.
ANNOUNCES THIRD QUARTER 2006 RESULTS
Philadelphia, Pennsylvania, September 1, 2006 - SE Financial Corp.
(OTCBB: SEFL) (the "Company"), the holding company for St. Edmond's Federal
Savings Bank, announced a net loss of $23.4 thousand for the three months ended
July 31, 2006 as compared to net income of $89.2 thousand for the same period
last year. For the nine months ended July 31, 2006, the Company had a net loss
of $113.9 thousand compared to net income of $564.5 thousand for the nine months
ended July 31, 2005.
Commenting on the results for the quarter, Pam Cyr, President and CEO,
stated, "During the quarter, the Bank experienced record deposit growth as our
two new Neighborhood Banking Offices in Roxborough (opened December 2005) and
Ardmore, PA (opened February 2006) were off to a strong start. The expansion of
our geographic footprint combined with an enhanced menu of products and services
better position the Bank to develop and expand customer relationships. 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 a sustained focus on expanding the deposit base
and growing the loan portfolio. During the quarter we continued to execute on
several key strategic initiatives, including:
o Total loan growth of $8.8 million, or 8.8%, for the quarter and $23.8
million, or 28.2% year to date.
o Total deposit growth of $11.2 million, or 9.4%, for the quarter and $43.1
million or 49.4% year to date. Our newest Neighborhood Banking Offices in
Ardmore and Roxborough grew to over $11 million and $18 million
respectively.
o On August 15, 2006, the Board of Directors declared a cash dividend of $.03
per share.
LINKED QUARTER HIGHLIGHTS
(Dollars in Thousands)
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QTR 7/31/06 QTR 4/30/06 Increase (Decrease) % Increase (Decrease)
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Total Assets 171,964 164,954 7,010 4.25%
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Investment Securities 47,853 49,447 (1,594) (3.22%)
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Loans 108,446 99,664 8,782 8.81%
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Deposits 130,544 119,336 11,208 9.39%
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Borrowings 16,614 20,886 (4,272) (20.45%)
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Stockholders' Equity 23,886 23,977 (91) (.38%)
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Interest Income 2,537 2,209 328 14.86%
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Interest Expense 1,390 1,167 223 19.11%
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Net Interest Income 1,147 1,042 105 10.09%
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Provision for Loan Losses 116 216 (100) (46.3%)
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Noninterest Income 122 105 17 16.19%
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Noninterest Expense 1,185 1,115 70 6.27%
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Net Income (Loss) (23) (99) 76 (76.77%)
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Net Interest Margin 3.06% 3.00% .06% 2.00%
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Yield on Loans 7.29% 6.97% .32% 4.59%
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Yield on Investments 4.77% 4.56% .21% 4.60%
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Cost of Deposits 3.80% 3.49% .31% 8.88%
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Cost of Borrowings 4.71% 4.12% .59% 14.32%
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Comparison of the Results of Operations for the Three Months Ended July 31, 2006
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and July 31, 2005
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For the three months ended July 31, 2006 and 2005, net interest income
after provision for loan losses totaled $1.0 million and $1.0 million,
respectively. The average balance of interest-earning assets increased $30.4
million to $157.7 million for the three months ended July 31, 2006 as compared
to $127.2 million for the three months ended July 31, 2005 but was offset by a
decrease in the net interest margin of 43 basis points to 3.06% for the three
months ended July 31, 2006 from 3.49% for the three months ended July 31, 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 $70.7 thousand to $116.1 thousand for the
three months ended July 31, 2006 from $45.4 thousand for the three months ended
July 31, 2005. The increase was primarily attributable to loan growth.
Non-interest income was $121.6 thousand for the three months ended July 31, 2006
compared to $128.4 thousand for the three months ended July 31, 2005. Gains on
the sale of investment securities were $21.8 thousand for the three months ended
July 31, 2005. There were no gains on the sale of investment securities for the
three months ended July 31, 2006. Earnings on bank-owned life insurance
increased $8.0 thousand for the three months ended July 31, 2006 versus the same
period of the prior year due to an additional purchase of $1.0 million.
Non-interest expense increased $125.7 thousand to $1.2 million for the three
months ended July 31, 2006 compared to $1.1 million for the three months ended
July 31, 2005. The increase in non-interest expense was due to increases in
compensation and employee benefits and occupancy and equipment costs of $240.9
thousand and $94.7 thousand, respectively, offset by a decrease in professional
fees and other expense of $179.2 thousand and $22.2 thousand. 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. 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. The decrease in
professional fees was due mainly to non-recurring legal expenses.
Comparison of the Results of Operations for the Nine Months Ended July 31, 2006
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and July 31, 2005
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For the nine months ended July 31, 2006 and 2005, net interest income
after provision for loan losses totaled $2.9 million and $3.1 million,
respectively. The average balance of interest-earning assets increased $26.5
million to $148.7 million for the nine months ended July 31, 2006 compared to
$122.2 million for the nine months ended July 31, 2005 but was offset by a
decrease in the net interest margin of 50 basis points to 3.04% for the nine
months ended July 31, 2006 from 3.54% for the nine months ended July 31, 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 $271.8 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 $28.2 thousand to
$312.8 thousand for the nine months ended July 31, 2006 compared to $341.0
thousand for the nine months ended July 31, 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 $32.2 thousand in the same period of the
prior year offset by an increase of $25.1 thousand in earnings on bank-owned
life insurance. Non-interest expense increased $869.4 thousand to $3.5 million
for the nine months ended July 31, 2006 compared to $2.6 million for the nine
months ended July 31, 2005. The increase in non-interest expense was due to
increases in compensation and employee benefits, occupancy and equipment costs,
and other expense of $576.1 thousand, $238.2 thousand and $165.2 thousand,
respectively offset somewhat by a decrease in professional fees of $103.3
thousand. 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. 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.
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. The decrease in professional fees was due to a decrease in
accounting fees related to work performed for Sarbanes Oxley compliance and a
decrease in legal fees due to non-recurring legal expenses.
Comparison of Financial Condition at July 31, 2006 and October 31, 2005
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Total assets increased $24.5 million to $172.0 million at July 31, 2006
as compared to $147.4 million at October 31, 2005. Investment securities
decreased $4.4 million to $47.9 million at July 31, 2006 from $52.2 million at
October 31, 2005 due mainly to $7.4 million in sales, maturities and repayments
offset by $3.0 million in purchases. Net loans increased $23.8 million, or
28.2%, to $108.4 million at July 31, 2006 from $84.6 million at October 31,
2005. Deposits increased $43.1 million, or 49.4%, to $130.5 million at July 31,
2006 from $87.4 million at October 31, 2005. Borrowed money decreased $11.3
million, or 40.5%, to $16.6 million at July 31, 2006 from $27.9 million at
October 31, 2005. Stockholders' equity decreased $7.2 million to $23.9 million
at July 31, 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 $457.7 thousand as a result of a
decrease in the market value of the Company's investment portfolio due to rising
market interest rates, the year to date net loss of $113.9 thousand and
dividends paid of $197.4 thousand.
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 July 31, Nine Months Ended July 31,
-------------------------- ------------------------------
2006 2005 2006 2005
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Interest income $ 2,537 $ 1,823 $ 6,871 $ 5,151
Interest expense 1,390 733 3,572 1,969
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Net interest income 1,147 1,090 3,299 3,182
Provision for loan losses 116 45 368 96
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Net interest income after provision for loan losses 1,031 1,045 2,931 3,086
Noninterest income 122 128 313 341
Noninterest expense 1,185 1,059 3,479 2,610
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(Loss) income before taxes (32) 114 (235) 817
Income tax (benefit) expense (9) 25 (121) 252
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Net income (loss) $ (23) $ (89) $ (114) $ 565
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Weighted average shares outstanding (1) 1,896,994 2,386,086 2,027,592 2,384,036
Earnings (loss) per share (1) ($0.01) $0.04 ($0.06) $0.24
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Performance Ratios (Unaudited) Three Months Ended July 31, Nine Months Ended July 31,
--------------------------- --------------------------
2006 2005 2006 2005
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Return on average assets (2) -0.05% 0.27% -0.10% 0.59%
Return on average equity (2) -0.39% 1.12% -0.58% 2.38%
Net interest margin on average interest earning assets (2) 3.06% 3.49% 3.04% 3.54%
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Selected Balance Sheet Data (Unaudited)
(Dollars in thousands except per share data)
July 31, October 31,
2006 2005
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Assets $ 171,964 $ 147,431
Loan receivable, net 108,446 84,602
Cash and cash equivalents 3,413 2,163
Investment securities 47,853 52,233
Deposits 130,544 87,408
FHLB borrowings 16,614 27,935
Total stockholders' equity 23,886 31,063
Ending shares outstanding (1) 1,898,222 2,352,169
Book value per share (1) 12.58 13.21
Stockholders' equity to total assets 13.89% 21.07%
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Asset Quality (Unaudited)
(Dollars in thousands)
July 31, October 31,
2006 2005
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Non-performing assets (4) $ 256 $ 69
Allowance for losses 859 507
Non-performing assets to total assets 0.15% 0.05%
Allowance for losses to total loans 0.79% 0.60%
Allowance for losses to non-performing assets 335.55% 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 nine months ended July 31, 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.