SE Financial Corp. Announces Second Quarter 2011 Results

SE Financial Corp. (Pink Sheets: SEFL) (the "Company”), the holding company for St. Edmond’s Federal Savings Bank, announced net income of $264.6 thousand for the three months ended April 30, 2011 as compared to $255.5 thousand for the same period last year. For the six months ended April 30, 2011, the Company announced net income of $195.0 thousand compared to $543.9 thousand for the same period last year.

• Total assets decreased $6.6 million from the quarter ended January 31, 2011 due primarily to a decrease in cash and cash equivalents and real estate owned. The decrease in cash was the result of the runoff of $5.2 million in higher-costing rate-sensitive deposits due to rate decreases. Real estate owned decreased $1.9 million due to the sale of two commercial properties and one single-family residential property.
• The decrease in deposits was due to a continued strategic effort to reprice certain rate-sensitive accounts which resulted in an increase of 5% in net interest income for the quarter and an improvement in the net interest margin of 32 basis points as compared to the linked quarter ending January 31, 2011. The net interest margin for the quarter ended April 30, 2011 was 3.38% versus 3.06% for the quarter ended January 31, 2011.
• Loans receivable increased $1.0 million to $194.6 million at April 30, 2011, as compared to loans receivable of $193.5 million at January 31, 2011. Loan originations for the quarter totaled $14 million consisting primarily of 1-4 family residential mortgage loans. Construction and land development loans decreased $1.9 million to 6.5% of the total loan portfolio versus 7.57% in the prior quarter. The decrease was the result of the sale of two residential properties. The yield on loans for the quarter ended April 30, 2011 increased 12 basis points to 5.77% as compared to 5.65% for the quarter ended January 31, 2011.
• The ratio of total non-performing assets to total assets decreased to 344 basis points from 386 basis points at January 31, 2011. Real estate owned at April 30, 2011 totaled $2.3 million and consisted of two properties secured by land for development and one single family residential property which are all aggressively being marketed for sale, and one commercial property and one residential property under agreements of sale with settlement anticipated in the third fiscal quarter.
• The allowance for loan losses to total loans was 136 basis points at April 30, 2011 as compared to 129 basis points at January 31, 2011. During the quarter ended April 30, 2011 additional provisions totaling $275.0 thousand were recorded due mainly to loan risk rating downgrades, trends in delinquency, charge-off history and other qualitative factors used to calculate the estimate of the allowance for loan losses. There were charge-offs during the quarter ended April 30, 2011 totaling $112.3 thousand. The allowance represents management's estimate of the amount necessary to cover known and inherent losses in the loan portfolio.
• Noninterest income increased $136 thousand primarily due to a decrease in real estate owned expenses. Real estate owned expenses totaled $364 thousand for the quarter ended January 31, 2011 versus $187 thousand for the quarter ended April 30, 2011.
• Total stockholders’ equity increased $575,000 due to a change in the accumulated other comprehensive (income) loss resulting from the change in the market value of mortgage-backed and agency securities available for sale as well as net income for the quarter of $265 thousand.
• On May 17, 2011 the Board of Directors declared a cash dividend of $.03 per share to stockholders of record as of May 31, 2011.

Comparison of the Results of Operations for the Three Months Ended April 30, 2011 and April 30, 2010

For the three-month periods ended April 30, 2011 and 2010, net interest income before provision for loan losses totaled $2.4 million and $2.3 million, respectively. The increase of $98 thousand was due to an increase in the net interest margin of 17 basis points to 3.38% for the three months ended April 30, 2011 from 3.21% for the three months ended April 30, 2010.

The provision for loan losses decreased $141.4 thousand to $275.0 thousand for the three months ended April 30, 2011 versus $416.4 thousand for the three months ended April 30, 2010 due to increased provisions in the prior year as a result of writedowns and impairment analysis.

Non-interest income was $3.9 thousand for the three months ended April 30, 2011 compared to $404.4 thousand for the three months ended April 30, 2010. The decrease of $400.5 thousand was due mainly to $196.4 thousand increase in real estate owned expenses and a decrease in gains on the sale of investment securities of $123.9 thousand.

Non-interest expense decreased $93.5 thousand to $1.8 million for the three months ended April 30, 2011 compared to $1.9 million for the three months ended April 30, 2010. The decrease in non-interest expense was due mainly to decreases in compensation and employee benefits expense of $70.1 thousand, occupancy and equipment costs of 20.0 thousand, professional fees of $11.0 thousand, data processing fees of $10.0 thousand, and other expenses (primarily advertising costs) of $25.0 thousand offset by increases in federal deposit insurance premiums. The $70.1 thousand decrease in compensation and employee benefits expense was due to a decrease in restricted stock expense. The $41.9 thousand increase in federal deposit insurance premiums is a result of the increased premiums.

Comparison of the Results of Operations for the Six Months Ended April 30, 2011 and April 30, 2010

For the six month periods ended April 30, 2011 and 2010, net interest income before provision for loan losses totaled $4.6 million and $4.7 million respectively. The average balance of interest-earning assets increased $913 thousand to $292.7 million for the six months ended April 30, 2011 as compared to $291.8 million for the six months ended April 30, 2010 and the net interest margin decreased 3 basis points to 3.19% for the six months ended April 30, 2011 from 3.22% for the six months ended April 30, 2010.

The provision for loan losses decreased $186.3 thousand to $679.1 thousand for the six months ended April 30, 2011 versus $865.4 thousand for the six months ended April 30, 2010 due to increased provisions in the prior year as a result of writedowns and impairment analysis.

Non-interest income was a loss of $64.1 thousand for the six months ended April 30, 2011 compared to income of $716.1 thousand for the six months ended April 30, 2010. The decrease of $780.2 thousand was due to expenses related to real estate owned of approximately $545.5 thousand as well as other than temporary impairment charges on pooled trust preferred securities of $197.5 thousand.

Non-interest expense decreased $43.2 thousand to $3.66 million for the six months ended April 30, 2011 compared to $3.70 million for the six months ended April 30, 2010. The decrease in non-interest expense was due mainly to a decrease in compensation and employee benefits of $178 thousand offset by increases in federal deposit insurance premiums and professional fees (mainly legal fees for loan workout) of $89 thousand and $77 thousand, respectively. The decrease in compensation and employee benefits expense was due to a decrease in restricted stock expense.

The decrease in income tax expense from the prior year of approximately $237.1 thousand for the six months ended April 30, 2011 compared to the same period last year is due to the decrease in pretaxable income.

Comparison of Financial Condition at April 30, 2011 and October 31, 2010

Total assets decreased $16.8 million to $305.1 million at April 30, 2011 as compared to $321.9 million at October 31, 2010. Cash and cash equivalents decreased $31.5 million to $17.4 million at April 30, 2011 from $48.9 million at October 31, 2010 due mainly to purchases of mortgage-backed and agency securities and the runoff of higher-costing deposits. Loans receivable increased $842 thousand to $194.6 million at April 30, 2011 from $193.7 million at October 31, 2010. Investments increased $14.6 million to $74.2 million from $59.6 million at April 31, 2011 due to purchases of mortgage-backed and agency securities. Deposits decreased $13.6 million to $268.7 million at April 30, 2011 from $282.4 million at October 31, 2010 due to the runoff of higher-costing rate-sensitive deposits resulting from rate decreases. Borrowed money decreased $2.1 million to $11.2 million at April 30, 2011 from $13.3 million at October 31, 2010 due to the maturity of a federal home loan bank advance. Stockholders’ equity decreased $881 thousand to $24.5 million at April 30, 2011 from $25.4 million at October 31, 2010 due mainly to a change in accumulated other comprehensive income (loss) resulting from the change in the market value of mortgage-backed and agency securities available for sale.

Company Information

SE Financial Corp. is the holding company for St. Edmond’s Federal Savings Bank, a federally chartered stock savings institution with six Neighborhood Banking Offices serving South Philadelphia, Roxborough, Ardmore and Drexel Hill, Pennsylvania and Deptford and Sewell, New Jersey. SE Financial Corp. is incorporated under the laws of the Commonwealth of Pennsylvania and its executive offices are located at 1901-03 East Passyunk Avenue, Philadelphia, Pennsylvania 19148. As of April 30, 2010, there were issued and outstanding 2,179,571 shares of common stock, par value $0.10 per share of SE Financial Corp. Registrar and Transfer Company serves as the transfer agent for SE Financial Corp. and its address is 10 Commerce Drive, Cranford, New Jersey 07016.

Senior Management: Pamela M. Cyr, President and CEO, J. Christopher Jacobsen, EVP and Chief Operating Officer, Charles F. Miller, EVP and Chief Lending and Credit Officer, and Caroline H. Doyle, Chief Financial Officer.

Board of Directors: Marcy C. Panzer (Chairman), Samuel Barsky (Secretary), Charles M. Cahn, Andrew A. Hines, Megan L. Mahoney, J. W. Parker, Jr., CPA, William F. Saldutti, III, Susanne Spinell Shuster, CPA.

Forward-Looking Statements Disclaimer

This news release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Any statement that is not a historical fact is a forward-looking statement. 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.