Sound Federal Bancorp (NASDAQ:SFFS)
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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/