Sound Federal Bancorp, Inc. Announces First Fiscal Quarter Earnings
WHITE PLAINS, N.Y., July 27 /PRNewswire-FirstCall/ -- Sound Federal
Bancorp, Inc. (NASDAQ:SFFS) (the "Company"), the holding company
for Sound Federal Savings (the "Bank"), announced net income of
$1.5 million, or diluted earnings per share of $0.12 for the
quarter ended June 30, 2004, as compared to $1.7 million, or
diluted earnings per share of $0.14 for the quarter ended June 30,
2003, a decrease in net income of 12.8%. The decrease in net income
for the quarter ended June 30, 2004 as compared to the same quarter
in the prior year is primarily attributable to a $308,000 increase
in non-interest expense and a $72,000 decrease in net interest
income, partially offset by a $118,000 decrease in income tax
expense and a $67,000 increase in non-interest income. Bruno J.
Gioffre, Chairman of the Board, commented, "We remain focused on
our primary goal of building a quality bank franchise in
Westchester and Putnam counties in New York and in Fairfield county
in Connecticut. A quality bank franchise combines great service and
products with a strong market area and a management team that
understands the market's needs. In May 2004, we opened our newest
branch in Brookfield, Connecticut. We plan on opening a branch in
Carmel, New York by the end of 2004. In addition, we are exploring
opportunities to expand the Sound Federal franchise into the
fast-growing northern suburbs of our market area. The initial cost
of our branch expansion and the decrease in net interest income,
which reflects the current interest rate environment, has reduced
earnings for the current fiscal quarter. However, we believe that
the current economic climate is an ideal environment for us to grow
the franchise through a de novo strategy." Mr. Gioffre continued,
"We were able to avail ourselves of weakening stock prices
affecting most thrifts this quarter by repurchasing 627,332 shares
of the Company's common stock. The stock repurchases had the effect
of diluting book value but was accretive to earnings per share. The
de novo growth strategy and the repurchase program reduced the
Company's equity-to-asset ratio to 13.67% at June 30, 2004 from
16.73% at June 30, 2003." The Company's total assets amounted to
$914.6 million at June 30, 2004 as compared to $890.5 million at
March 31, 2004. The $24.1 million increase in total assets
primarily consists of a $22.8 million increase in net loans to
$501.2 million and a $4.5 million increase in securities to $342.2
million. These increases were partially offset by a decrease in
federal funds sold of $7.0 million to $13.8 million. Our asset
growth was funded principally by a $37.8 million increase in
deposits to $746.1 million at June 30, 2004 from $708.3 million at
March 31, 2004. Total stockholders' equity decreased $12.1 million
to $125.0 million at June 30, 2004 as compared to $137.1 million at
March 31, 2004. The decrease reflects treasury shares purchased at
a cost of $8.3 million, dividends paid of $755,000 and a decrease
of $5.0 million attributable to accumulated other comprehensive
income or loss, partially offset by net income of $1.5 million. The
change in accumulated other comprehensive income or loss reflects a
$7.1 million ($4.3 million after tax) net unrealized loss on
securities available for sale. The Company invests primarily in
mortgage-backed securities guaranteed by Ginnie Mae, Fannie Mae and
Freddie Mac, as well as U.S. Government and Agency securities. The
unrealized losses at June 30, 2004 were caused by increases in
market yields subsequent to purchase. There were no debt securities
past due or securities for which the Company currently believes it
is not probable that it will collect all amounts due according to
the contractual terms of the security. Because the Company has the
ability to hold securities with unrealized losses until a market
price recovery (which, for debt securities may be until maturity),
the Company did not consider these securities to be
other-than-temporarily impaired at June 30, 2004. Net interest
income for the quarter ended June 30, 2004 amounted to $6.5
million, a $72,000 decrease from the same quarter in the prior
year. The interest rate spread was 2.80% and 3.07% for the quarters
ended June 30, 2004 and 2003, respectively. The net interest margin
for those periods was 3.02% and 3.39%, respectively. The decreases
in interest rate spread and net interest margin for the comparative
quarters are primarily the result of the effect of mortgage
refinancings, lower rates on new loans originated and lower returns
on our investment portfolio, as interest rates remained near
40-year lows. If interest rates increase, we expect the cost of our
interest-bearing liabilities will increase faster than the rates on
our interest-earning assets, resulting in a further decrease in our
net interest rate spread and net interest margin. Non-interest
income totaled $352,000 and $285,000 for the quarters ended June
30, 2004 and 2003, respectively. The increase in non-interest
income was primarily due to changes in the cash surrender value of
bank-owned life insurance. Non-interest expense totaled $4.3
million for the quarter ended June 30, 2004 as compared to $4.0
million for the quarter ended June 30, 2003. This increase is due
primarily to a $420,000 increase in compensation and benefits and a
$71,000 increase in occupancy and equipment expense, partially
offset by decreases of $163,000 in advertising and promotion and
$78,000 in other non-interest expense. The increase in compensation
and benefits is due primarily to additional staff to support the
growth in the Company's lending operations; the addition of the
Stamford and Brookfield branches, which opened in September 2003
and June 2004, respectively; and additional expense related to
stock awards made pursuant to the Company's 2004 Stock Incentive
Plan. The increase in occupancy and equipment expense is primarily
due to the new branch locations (Stamford and Brookfield,
Connecticut). The Bank is a federally-chartered savings bank
offering traditional financial services and products through its
New York branches in Mamaroneck, Harrison, Rye Brook, New Rochelle,
Peekskill, Yorktown, Somers and Cortlandt in Westchester County and
New City in Rockland County, and in Connecticut in Greenwich,
Stamford and Brookfield. This press release contains certain
forward-looking statements consisting of estimates with respect to
the financial condition, results of operations and business of the
Company and the Bank. These estimates are subject to various
factors that could cause actual results to differ materially from
these estimates. Such factors include (i) the effect that an
adverse movement in interest rates could have on net interest
income, (ii) customer preferences, (iii) national and local
economic and market conditions, (iv) higher than anticipated
operating expenses and (v) a lower level of or higher cost for
deposits than anticipated. The Company disclaims any obligation to
publicly announce future events or developments that may affect the
forward-looking statements herein. Balance sheets, statements of
income and other financial data are attached. Sound Federal
Bancorp, Inc. and Subsidiary CONSOLIDATED BALANCE SHEETS
(Unaudited) (Dollars in thousands, except per share data) June 30,
March 31, 2004 2004 Assets Cash and due from banks $10,873 $10,455
Federal funds sold and other overnight deposits 13,763 20,756
Securities: Available for sale, at fair value 332,277 337,730 Held
to maturity, at amortized cost 9,953 - Total securities 342,230
337,730 Loans, net: Mortgage loans 502,235 477,771 Consumer loans
1,791 3,396 Allowance for loan losses (2,787) (2,712) Total loans,
net 501,239 478,455 Accrued interest receivable 3,600 3,623 Federal
Home Loan Bank stock 5,738 5,303 Premises and equipment, net 5,608
5,630 Goodwill 13,970 13,970 Bank-owned life insurance 10,161
10,085 Prepaid pension costs 2,538 2,547 Deferred taxes 3,018 -
Other assets 1,872 1,987 Total assets $914,610 $890,541 Liabilities
and Stockholders' Equity Liabilities: Deposits $746,160 $708,330
Borrowings 38,000 35,000 Mortgagors' escrow funds 3,953 4,522 Due
to brokers for securities purchased - 4,000 Accrued expenses and
other liabilities 1,481 1,630 Total liabilities 789,594 753,482
Stockholders' equity: Preferred stock ($0.01 par value; 1,000,000
shares authorized; none issued and outstanding) - - Common stock
($0.01 par value; 24,000,000 shares authorized; 13,636,170 shares
issued) 136 136 Additional paid-in capital 102,793 102,637 Treasury
stock, at cost (1,086,629 and 459,297 shares at June 30, 2004 and
March 31, 2004, respectively) (15,474) (7,150) Common stock held by
the Employee Stock Ownership Plan (6,430) (6,556) Unearned stock
awards (5,322) (5,618) Retained earnings 53,650 52,908 Accumulated
other comprehensive (loss) income, net of taxes (4,337) 702 Total
stockholders' equity 125,016 137,059 Total liabilities and
stockholders' equity $914,610 $890,541 Sound Federal Bancorp, Inc.
and Subsidiary CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In
thousands, except per share data) For the Quarter Ended June 30,
2004 2003 Interest and Dividend Income Loans $6,897 $6,769
Mortgage-backed and other securities 2,792 2,837 Federal funds sold
and other overnight deposits 59 128 Other earning assets 21 57
Total interest and dividend income 9,769 9,791 Interest Expense
Deposits 2,941 2,879 Borrowings 365 365 Other interest-bearing
liabilities 5 17 Total interest expense 3,311 3,261 Net interest
income 6,458 6,530 Provision for loan losses 75 50 Net interest
income after provision for loan losses 6,383 6,480 Non-Interest
Income Service charges, fees and other income 352 285 Non-Interest
Expense Compensation and benefits 2,412 1,992 Occupancy and
equipment 633 562 Data processing service fees 300 242 Advertising
and promotion 251 414 Other 696 774 Total non-interest expense
4,292 3,984 Income before income tax expense 2,443 2,781 Income tax
expense 946 1,064 Net income $1,497 $1,717 Basic earnings per share
$0.13 $0.14 Diluted earnings per share $0.12 $0.14 Sound Federal
Bancorp, Inc. and Subsidiary Other Financial Data (Unaudited)
(Dollars in thousands, except per share data) At or for the Quarter
Ended June 30, March 31, Dec. 31, Sept. 30, June 30, 2004 2004 2003
2003 2003 Net interest income $6,458 $6,770 $6,687 $6,205 $6,530
Provision for loan losses 75 75 75 75 50 Non-interest income 352
276 252 228 285 Non-interest expense: Compensation and benefits
2,412 2,628 2,107 2,006 1,992 Occupancy and equipment 633 592 553
584 562 Other non-interest expense 1,247 1,318 1,276 1,058 1,430
Total non-interest expense 4,292 4,538 3,936 3,648 3,984 Income
before income tax expense 2,443 2,433 2,928 2,710 2,781 Income tax
expense 946 977 1,133 1,060 1,064 Net income $1,497 $1,456 $1,795
$1,650 $1,717 Total assets $914,610 $890,541 $881,637 $850,988
$835,635 Loans, net 501,239 478,455 461,453 437,205 422,461
Mortgage-backed securities: Available for sale 246,850 255,853
269,604 264,359 250,529 Held to maturity 7,157 - - - - Other
securities: Available for sale 85,427 81,877 86,656 93,532 88,752
Held to maturity 2,796 - - - - Deposits 746,160 708,330 698,416
653,395 633,265 Borrowings 38,000 35,000 35,000 55,000 35,000
Stockholders' equity 125,016 137,059 132,091 137,780 139,822
Performance Data: Return on average assets (1) 0.66% 0.67% 0.82%
0.80% 0.85% Return on average equity (1) 4.49% 4.49% 5.26% 4.76%
4.97% Average interest rate spread (1) 2.80% 2.98% 2.92% 2.85%
3.07% Net interest margin (1) 3.02% 3.20% 3.17% 3.14% 3.39%
Efficiency ratio 63.02% 64.41% 56.72% 56.71% 58.46% Per Common
Share Data: Basic earnings per common share $0.13 $0.12 $0.15 $0.13
$0.14 Diluted earnings per common share $0.12 $0.12 $0.14 $0.13
$0.14 Book value per share (2) $9.96 $10.40 $10.32 $10.46 $10.55
Tangible book value per share (2) $8.85 $9.34 $9.23 $9.40 $9.50
Dividends per share $0.06 $0.06 $0.06 $0.05 $0.05 Capital Ratios:
Equity to total assets (consolidated) 13.67% 15.39% 14.98% 16.19%
16.73% Tier 1 leverage capital (Bank) 10.71% 10.92% 10.74% 10.82%
11.14% Asset Quality Data: Total non-performing loans $1,728 $1,981
$1,290 $1,751 $889 Total non-performing assets $1,728 $1,981 $1,290
$1,751 $889 (1) Ratios are annualized. (2) Computed based on total
common shares issued, less treasury shares. DATASOURCE: Sound
Federal Bancorp, Inc. CONTACT: Anthony J. Fabiano, Senior Vice
President, Chief Financial Officer and Corporate Secretary of Sound
Federal Bancorp, Inc., +1-914-761-3636 Web site:
http://www.soundfed.com/
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