SE FINANCIAL CORP.
FOR IMMEDIATE RELEASE
CONTACT: PAMELA M. CYR
PRESIDENT AND CEO
(215) 468-1700
SE FINANCIAL CORP.
ANNOUNCES FOURTH QUARTER AND 2006 YEAR END RESULTS
Philadelphia, Pennsylvania, December 12 , 2006 - SE Financial Corp.
(OTCBB: SEFL) (the "Company"), the holding company for St. Edmond's Federal
Savings Bank, announced a net loss of $147.9 thousand for the three months ended
October 31, 2006 as compared to net income of $191.2 thousand for the same
period last year. For the twelve months ended October 31, 2006, the Company had
a net loss of $261.8 thousand compared to net income of $755.8 thousand for the
twelve months ended October 31, 2005.
Commenting on the Company's performance for the year ended October 31, 2006,
President and CEO Pam Cyr stated:
"This was another year of record loan and deposit growth for us.
Between October 31, 2005 and October 31, 2006, our total loans
increased by 33.3% and our deposits rose by 56.5%. Half of the deposit
growth came in core deposits. We also decreased FHLB borrowings by
approximately 50% this year.
Our results of operations have been impacted, however, by the costs
associated with expanding our footprint - we have gone from two
locations to five locations with the opening of offices in Roxborough,
Pennsylvania (opened December 2005), Ardmore, Pennsylvania (opened
February 2006) and Deptford, New Jersey (opened December 2006). Our
results this year were also impacted from pressure on our net interest
margin resulting from the generally flat yield curve that has
characterized the rate environment and higher provisions for loan
losses due to overall growth of the loan portfolio as well as special
provisions for impaired loans."
Key highlights for the three and twelve-month periods ended October 31, 2006
include:
o Total deposit growth was $6.2 million, or 4.8%, for the quarter and
$49.4 million, or 56.5%, for the year ended October 31, 2006. For the
year, core deposits (checking, money market and savings) increased
$25.0 million and certificates of deposit increased $24.3 million. As
of October 31, 2006, deposits at the Roxborough and Ardmore offices
(opened in December 2005 and February 2006, respectively) totaled
$24.0 million and $14.7 million.
o Total loan growth was $4.1 million, or 3.8%, for the quarter and $28.4
million, or 33.3% for the year ended October 31, 2006. For the
quarter, one-to-four family mortgage loans increased $2.9 million,
construction loans increased $802.0 thousand, and home equity loans
increased $823.4 thousand. For the year, one-to-four family mortgage
loans increased $12.8 million, construction loans increased $9.2
million, home equity loans increased $3.0 million and commercial loans
increased $2.7 million.
o We collected all amounts due in connection with a nonperforming
construction loan totaling $1.3 million.
SE FINANCIAL CORP.
QUARTER HIGHLIGHTS
(DOLLARS IN THOUSANDS)
QTR QTR $ Increase % Increase
10/31/2006 7/31/2006 (Decrease) (Decrease)
------------------------------------------------------------------------
Total Assets 175,514 171,964 3,550 2.06%
Investment Securities 48,398 47,853 545 1.14%
Loans 112,357 108,446 3,911 3.61%
Deposits 136,771 130,543 6,228 4.77%
Borrowings 13,941 16,614 (2,673) -16.09%
Equity 23,979 23,886 93 0.39%
Interest Income 2,683 2,537 146 5.75%
Interest Expense 1,500 1,390 110 7.91%
Net Interest Income 1,183 1,147 36 3.14%
Provision 252 116 136 117.24%
Other Income 138 122 16 13.11%
Non Interest Expense 1,309 1,185 124 10.46%
Net Income (Loss) (148) (23) (125) 543.48%
Net Interest Margin 2.96% 3.06% -0.10% -3.27%
Yield on Loans 7.46% 7.29% 0.17% 2.33%
Yield on Investments 4.79% 4.77% 0.02% 0.42%
Cost of Deposits 4.00% 3.80% 0.20% 5.26%
Cost of Borrowings 4.80% 4.71% 0.09% 1.91%
Comparison of the Results of Operations for the Three Months Ended October 31,
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2006 and October 31, 2005
- -------------------------
For the three months ended October 31, 2006 and 2005, net interest
income after provision for loan losses totaled $930.8 thousand and $1.1 million,
respectively. The average balance of interest-earning assets increased $31.5
million to $163.0 million for the three months ended October 31, 2006 as
compared to $131.5 million for the three months ended October 31, 2005 but was
offset by a decrease in the net interest margin of 50 basis points to 2.96% for
the three months ended October 31, 2006 from 3.46% for the three months ended
October 31, 2005. Management anticipates that if the yield curve remains flat to
inverted then the Bank will continue to experience pressure on its net interest
margin.
The provision for loan losses increased $198.6 thousand to $252.4
thousand for the three months ended October 31, 2006 from $53.8 thousand for the
three months ended October 31, 2005. The increase was primarily attributable to
loan growth and an increase in classified assets.
Non-interest income was $137.7 thousand for the three months ended
October 31, 2006 compared to $105.3 thousand for the three months ended October
31, 2005. The increase was due mainly to reimbursement of legal costs incurred
in connection with collection efforts on a loan previously classified as
impaired that was repaid.
Non-interest expense increased $381.3 thousand to $1.3 million for the
three months ended October 31, 2006 compared to $927.7 thousand for the three
months ended October 31, 2005. The increase in non-interest expense was due to
increases in compensation and employee benefits, occupancy and equipment costs,
other expense, and professional fees of $161.2 thousand, $106.8 thousand, $80.3
thousand, and $39.0 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, additions
to staff in the lending area and higher 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 to
increases in loan origination costs, advertising, telephone expense, and costs
associated with the Company's 2006 annual meeting of stockholders held in August
2006. The increase in professional fees was due to legal expenses incurred
related to loan workout activity.
Comparison of the Results of Operations for the Twelve Months Ended October 31,
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2006 and October 31, 2005
- -------------------------
For the twelve months ended October 31, 2006 and 2005, net interest
income after provision for loan losses totaled $3.9 million and $4.1 million,
respectively. The average balance of interest-earning assets increased $27.9
million to $152.3 million for the twelve months ended October 31, 2006 compared
to $124.4 million for the twelve months ended October 31, 2005 but was offset by
a 50 basis point decrease in the net interest margin to 3.03% for the twelve
months ended October 31, 2006 from 3.53% for the twelve months ended October 31,
2005. Management anticipates that if the yield curve remains flat to inverted
the Bank will continue to experience pressure on its net interest margin.
The provision for loan losses increased $470.4 thousand primarily
due to loan growth and an increase in classified assets. The increase in
classified assets was primarily due to the downgrade of participation interests
on three loans to the same borrower, totaling approximately $1.5 million in
aggregate. There can be no assurance that future additions to the provision for
loan losses relating to these loans will not be necessary.
Non-interest income was $450.5 thousand for the twelve months ended
October 31, 2006 compared to $446.3 thousand for the twelve months ended October
31, 2005.
Non-interest expense increased $1.3 million to $4.8 million for the
twelve months ended October 31, 2006 compared to $3.5 million for the twelve
months ended October 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 $737.4 thousand, $345.0 thousand and $245.5 thousand,
respectively offset somewhat by a decrease in professional fees of $64.3
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, additions to the lending department and
higher 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 October 31, 2006 and October 31, 2005
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Total assets increased $28.1 million to $175.5 million at October 31,
2006 as compared to $147.4 million at October 31, 2005. Investment securities
decreased $3.8 million to $48.4 million at October 31, 2006 from $52.2 million
at October 31, 2005 due mainly to $7.9 million in sales, maturities and
repayments offset by $4.4 million in purchases. Net loans increased $27.8
million, or 32.8%, to $112.4 million at October 31, 2006 from $84.6 million at
October 31, 2005. Deposits increased $49.4 million, or 56.5%, to $136.8 million
at October 31, 2006 from $87.4 million at October 31, 2005. Borrowed money
decreased $14.0 million, or 50.1%, to $13.9 million at October 31, 2006 from
$27.9 million at October 31, 2005. Stockholders' equity decreased $7.1 million
to $24.0 million at October 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 per share
excluding brokerage commissions. The decrease was also attributable to (i) an
increase in accumulated other comprehensive loss of $222.7 thousand as a result
of a decrease in the market value of the Company's investment portfolio due to
rising market interest rates, (ii) the net loss of $262.0 thousand and (iii)
dividends paid of $242.8 thousand.
SE Financial Corp. is the holding company for St. Edmond's Federal
Savings Bank, a federally chartered stock savings institution with five
Neighborhood Banking Offices serving South Philadelphia, Roxborough and Ardmore,
Pennsylvania and Deptford 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 October 31, Twelve Months Ended October 31,
------------------------------ -------------------------------
2006 2005 2006 2005
----------- ---------- ---------- ----------
Interest income $ 2,683 $ 1,948 $ 9,555 $ 7,099
Interest expense 1,500 833 5,072 2,802
----------- ---------- ---------- ----------
Net interest income 1,183 1,115 4,483 4,297
Provision for loan losses 252 54 621 150
----------- ---------- ---------- ----------
Net interest income after provision for loan losses 931 1,061 3,862 4,147
Noninterest income 138 105 451 446
Noninterest expense 1,309 928 4,788 3,538
----------- ---------- ---------- ----------
(Loss) income before taxes (240) 238 (475) 1,055
Income tax (benefit) expense (92) 47 (213) 299
----------- ---------- ---------- ----------
Net income (loss) $ (148) $ 191 $ (262) $ 756
=========== ========== ========== ==========
Weighted average shares outstanding (1) 1,899,496 2,370,425 1,997,115 2,379,700
Earnings (loss) per share (1) ($0.08) $0.08 ($0.13) $0.32
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PERFORMANCE RATIOS (Unaudited) Three Months Ended October 31, Twelve Months Ended October 31,
------------------------------ -------------------------------
2006 2005 2006 2005
----------- ---------- ---------- ----------
Return on average assets (2) -0.34% 0.55% -0.16% 0.58%
Return on average equity (2) -2.46% 2.42% -1.02% 2.39%
Net interest margin on average interest
earning assets (2)(3) 2.96% 3.46% 3.03% 3.53%
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SELECTED BALANCE SHEET DATA (Unaudited)
(Dollars in thousands except per share data) October 31, October 31,
2006 2005
------------ -----------
Assets $ 175,514 $ 147,431
Loan receivable, net 112,357 84,602
Cash and cash equivalents 2,417 2,163
Investment securities 48,398 52,233
Deposits 136,771 87,408
FHLB borrowings 13,941 27,935
Total stockholders' equity 23,979 31,063
Ending shares outstanding (1) 1,902,206 2,352,169
Book value per share (1) 12.61 13.21
Stockholders' equity to total assets 13.66% 21.07%
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ASSET QUALITY (Unaudited)
(Dollars in thousands) October 31, October 31,
2006 2005
------------ -----------
Non-performing assets (4) $ 515 $ 69
Allowance for losses 1,112 507
Non-performing assets to total assets 0.29% 0.05%
Allowance for losses to total loans 0.99% 0.60%
Allowance for losses to non-performing assets 215.92% 734.78%
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(1) Shares outstanding does not include unreleased ESOP shares, unearned
nonvested RSP 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 months ended October 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.