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Peoples Federal Bancshares, Inc. Announces Fiscal Third Quarter 2014 Results

BRIGHTON, Mass., July 30, 2014 (GLOBE NEWSWIRE) -- Peoples Federal Bancshares, Inc. (the "Company") (Nasdaq:PEOP), the holding company for Peoples Federal Savings Bank (the "Bank"), reported financial results for the fiscal third quarter ended June 30, 2014. For the quarter ended June 30, 2014, the Company reported net income of $539,000, or $0.09 per share, basic and diluted, as compared to net income of $598,000, or $0.10 per share, basic and diluted, for the comparable 2013 period, and net income of $514,000, or $0.09 per share, basic and diluted, for the quarter ended March 31, 2014.

Total interest and dividend income was $5.1 million for the Company's quarter ended June 30, 2014 compared to $4.8 million for the quarter ended June 30, 2013. Net interest and dividend income was $4.5 million for the Company's quarter ended June 30, 2014 compared to $4.2 million for the quarter ended June 30, 2013. The low interest rate environment has continued to impact the Company's net interest and dividend income as recently originated loans reflect the current low interest rate environment. Total non-interest income was $376,000 for the quarter ended June 30, 2014 compared to $472,000 for the quarter ended June 30, 2013. The decrease was primarily due to the decrease in net gain on sales of mortgage loans of $42,000, or 100.0% and other income of $35,000, or 60.3%. Total non-interest expense was $3.9 million for the quarter ended June 30, 2014 compared to $3.6 million for the quarter ended June 30, 2013. Salaries and employee benefits increased to $2.6 million for the quarter ended June 30, 2014 compared to $2.4 million for the quarter ended June 30, 2013. The increase was primarily due to normal salary increases and additional staffing for the Westwood branch that opened during the Company's second fiscal quarter 2014.

On a linked quarter basis, total interest and dividend income was $5.1 million for the Company's quarter ended June 30, 2014 compared to $5.0 million for the previous quarter ended March 31, 2014. Net interest and dividend income was $4.5 million for the Company's quarter ended June 30, 2014 compared to $4.4 million for the previous quarter ended March 31, 2014. Total non-interest income for the fiscal third quarter of 2014 decreased to $376,000 from $444,000 for the fiscal second quarter ended March 31, 2014. Total non-interest expense decreased to $3.9 million for the quarter ended June 30, 2014 compared to $4.0 million for the quarter ended March 31, 2014.

Total assets increased $21.0 million, or 3.6%, to $606.2 million at June 30, 2014 from $585.2 million at September 30, 2013. Loans, net increased $27.4 million, or 5.9% during the nine months ended June 30, 2014, as residential loans, construction loans and commercial loans increased, while commercial real estate and consumer loans decreased. Cash and cash equivalents decreased $8.7 million to $28.4 million at June 30, 2014 from $37.1 million at September 30, 2013. Securities available-for-sale and held-to-maturity in total increased $1.6 million, or 3.5%, to $47.9 million at June 30, 2014, from $46.3 million at September 30, 2013. Borrowings increased to $59.0 million at June 30, 2014 from $44.0 million at September 30, 2013.

Deposits increased $9.4 million to $434.5 million at June 30, 2014 from $425.1 million at September 30, 2013. NOW accounts increased $4.5 million, term certificates increased $4.2 million, money market accounts increased $901,000 and demand deposit accounts increased $766,000 during the period. Savings accounts decreased $878,000 during the same period. At June 30, 2014, total stockholders' equity was $103.7 million, a decrease of $2.7 million from $106.4 million at September 30, 2013, resulting primarily from dividends paid of $2.3 million and the repurchase and retirement of 224,498 shares or $4.0 million, of the Company's common stock. The decrease in total stockholder's equity was offset, in part, by net income of $1.6 million, stock-based compensation of $1.6 million and common stock released and committed to be released by the ESOP of $384,000.

During the quarters ended June 30, 2014 and 2013, the Company paid quarterly cash dividends of $0.05 and $0.04 per common share, respectively. Dividends paid totaled $291,000 and $244,000, respectively, for the quarters ended June 30, 2014 and 2013.

Non-performing assets totaled $1.8 million, or 0.3% of total assets, at June 30, 2014, compared to $2.1 million, or 0.4% of total assets, at September 30, 2013. Classified assets decreased to $3.4 million at June 30, 2014, as compared to $4.1 million at September 30, 2013. The Company did not provide to the allowance for loan losses during the nine-month period ended June 30, 2014 reflecting little change in net loans and improvements in loan delinquencies, non-performing assets and classified assets.

Certain statements herein constitute "forward-looking statements" and actual results may differ from those contemplated by these statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could" or "may." Certain factors that could cause actual results to differ materially from expected results include changes in the interest rate environment, changes in general economic conditions, legislative and regulatory changes that adversely affect the businesses in which Peoples Federal Bancshares, Inc. is engaged and changes in the securities market. The Company disclaims any intent or obligation to update any forward-looking statements, whether in response to new information, future events or otherwise.

PEOPLES FEDERAL BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, September 30,
2014 2013
(Unaudited)
(In thousands, except share data)
ASSETS
Cash and due from banks $ 4,197 $ 4,047
Interest-bearing demand deposits with other banks 22,550 30,906
Federal funds sold 184 79
Federal Home Loan Bank - overnight deposit 1,502 2,102
Total cash and cash equivalents 28,433 37,134
Securities available-for-sale 9,298 14,225
Securities held-to-maturity (fair values of $38,782 and $32,105) 38,557 32,054
Federal Home Loan Bank stock (at cost) 4,252 3,775
Loans 497,408 470,086
Allowance for loan losses (4,023) (4,037)
Loans, net 493,385 466,049
Premises and equipment, net 3,736 3,465
Cash surrender value of life insurance policies 20,486 20,007
Accrued interest receivable 1,496 1,448
Deferred income tax asset, net 5,064 5,432
Other assets 1,494 1,657
Total assets $ 606,201 $ 585,246
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing $ 58,656 $ 57,891
Interest-bearing 375,887 367,202
Total deposits 434,543 425,093
Short-term borrowings 2,000 6,000
Long-term debt 57,000 38,000
Accrued expenses and other liabilities 8,931 9,801
Total liabilities 502,474 478,894
Stockholders' equity:
Preferred stock, $0.01 par value; 50,000,000 shares authorized; none issued -- --
Common stock, $0.01 par value; 100,000,000 shares authorized; 6,241,436 and 6,465,934 shares issued and outstanding at June 30, 2014 and September 30, 2013, respectively 62 65
Additional paid-in capital 56,633 60,039
Retained earnings 54,447 55,103
Accumulated other comprehensive income (loss) 19 (30)
Unearned restricted shares; 186,373 and 256,894 shares at June 30, 2014 and September 30, 2013, respectively (3,006) (4,183)
Unearned compensation - ESOP (4,428) (4,642)
Total stockholders' equity 103,727 106,352
Total liabilities and stockholders' equity $ 606,201 $ 585,246
PEOPLES FEDERAL BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Nine Months Ended
June 30, June 30,
2014 2013 2014 2013
(Unaudited)
(Dollars in thousands, except share data)
Interest and dividend income:
Interest and fees on loans $ 4,831 $ 4,644 $ 14,263 $ 14,116
Interest on debt securities:
Taxable 249 147 723 417
Other interest 13 26 40 70
Dividends on equity securities 14 3 32 12
Total interest and dividend income 5,107 4,820 15,058 14,615
Interest expense:
Interest on deposits 448 501 1,340 1,668
Interest on Federal Home Loan Bank advances 189 152 533 452
Total interest expense 637 653 1,873 2,120
Net interest and dividend income 4,470 4,167 13,185 12,495
Provision for loan losses -- -- -- 200
Net interest and dividend income, after provision for loan losses 4,470 4,167 13,185 12,295
Non-interest income:
Customer service fees 194 213 578 616
Loan servicing fees, net 9 16 30 30
Net gain on sales of mortgage loans -- 42 11 189
Net gain on sales of securities available-for-sale -- -- 3 --
Increase in cash surrender value of life insurance 150 143 479 486
Other income 23 58 118 131
Total non-interest income 376 472 1,219 1,452
Non-interest expense:
Salaries and employee benefits 2,602 2,444 7,867 7,173
Occupancy expense 272 241 810 719
Equipment expense 122 87 324 294
Professional fees 192 104 523 398
Advertising expense 174 142 507 379
Data processing expense 227 218 670 637
Deposit insurance expense 70 81 201 211
Other expense 269 254 782 768
Total non-interest expense 3,928 3,571 11,684 10,579
Income before income taxes 918 1,068 2,720 3,168
Provision for income taxes 379 470 1,113 1,344
Net income $ 539 $ 598 $ 1,607 $ 1,824
Weighted-average shares outstanding:
Basic 5,611,087 5,869,813 5,690,205 5,913,414
Diluted 5,678,343 5,905,052 5,745,742 5,950,470
Earnings per common share:
Basic $ 0.09 $ 0.10 $ 0.27 $ 0.30
Diluted $ 0.09 $ 0.10 $ 0.27 $ 0.30
PEOPLES FEDERAL BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
June 30, March 31,
2014 2014
(Unaudited)
(Dollars in thousands, except share data)
Interest and dividend income:
Interest and fees on loans $ 4,831 $ 4,759
Interest on debt securities:
Taxable 249 241
Other interest 13 12
Dividends on equity securities 14 14
Total interest and dividend income 5,107 5,026
Interest expense:
Interest on deposits 448 438
Interest on Federal Home Loan Bank advances 189 176
Total interest expense 637 614
Net interest and dividend income 4,470 4,412
Provision for loan losses -- --
Net interest and dividend income, after provision for loan losses 4,470 4,412
Non-interest income:
Customer service fees 194 188
Loan servicing fees, net 9 8
Net gain on sales of mortgage loans -- 11
Net gain on sales of securities available-for-sale -- 3
Increase in cash surrender value of life insurance 150 161
Other income 23 73
Total non-interest income 376 444
Non-interest expense:
Salaries and employee benefits 2,602 2,655
Occupancy expense 272 310
Equipment expense 122 103
Professional fees 192 174
Advertising expense 174 200
Data processing expense 227 224
Deposit insurance expense 70 70
Other expense 269 260
Total non-interest expense 3,928 3,996
Income before income taxes 918 860
Provision for income taxes 379 346
Net income $ 539 $ 514
Weighted-average shares outstanding:
Basic 5,611,087 5,712,699
Diluted 5,678,343 5,748,215
Earnings per common share:
Basic $ 0.09 $ 0.09
Diluted $ 0.09 $ 0.09

The following tables set forth average assets, liability and equity account balances, average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments were made, as the effect thereof was not material. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances, but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees, discounts and premiums that are amortized or accreted to interest income or expense.

Three Months Ended June 30,
2014 2013
Average Interest Average Average Interest Average
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Balance Paid Rate (1) Balance Paid Rate (1)
(Unaudited)
(Dollars in thousands)
Interest-earning assets:
Loans (2) $ 489,204 $ 4,831 3.95% $ 450,486 $ 4,644 4.12%
Taxable securities (3) 48,094 249 2.07 39,533 147 1.49
Other interest-earning assets 24,599 13 0.21 44,511 26 0.23
FHLB stock 4,144 14 1.35 3,775 3 0.32
Total interest-earning assets 566,041 5,107 3.61 538,305 4,820 3.58
Non-interest-earning assets 36,286 35,920
Total assets $ 602,327 $ 574,225
Interest-bearing liabilities:
Deposits:
Savings $ 55,810 15 0.11 $ 54,572 17 0.12
Money market accounts 152,376 157 0.41 152,231 173 0.45
NOW accounts 42,488 7 0.07 39,035 6 0.06
Term certificates 122,694 269 0.88 125,434 305 0.97
Total deposits 373,368 448 0.48 371,272 501 0.54
FHLB advances 58,088 189 1.30 33,000 152 1.84
Total interest-bearing liabilities 431,456 637 0.59 404,272 653 0.65
Demand deposits 57,831 52,647
Other non-interest-bearing liabilities 9,395 9,089
Total non-interest-bearing liabilities 67,226 61,736
Total liabilities 498,682 466,008
Stockholders' equity 103,645 108,217
Total liabilities and stockholders' equity $ 602,327 $ 574,225
Net interest income $ 4,470 $ 4,167
Net interest rate spread (4) 3.02% 2.93%
Net interest-earning assets (5) $ 134,585 $ 134,033
Net interest margin (6) 3.16% 3.10%
Ratio of interest-earning assets to total interest-bearing liabilities 1.31 x 1.33 x
(1) Yields are annualized.
(2) Average loans include non-accrual loans and are net of average deferred loan fees/costs.
(3) Average balances are presented at average amortized cost.
(4) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(5) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(6) Net interest margin represents net interest income divided by average total interest-earning assets.
Nine Months Ended June 30,
2014 2013
Average Interest Average Average Interest Average
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Balance Paid Rate (1) Balance Paid Rate (1)
(Unaudited)
(Dollars in thousands)
Interest-earning assets:
Loans (2) $ 479,568 $ 14,263 3.97% $ 450,874 $ 14,116 4.17%
Taxable securities (3) 47,914 723 2.01 39,077 417 1.42
Other interest-earning assets 25,382 40 0.21 44,168 70 0.21
FHLB stock 3,940 32 1.08 3,916 12 0.41
Total interest-earning assets 556,804 15,058 3.61 538,035 14,615 3.62
Non-interest-earning assets 36,225 35,963
Total assets $ 593,029 $ 573,998
Interest-bearing liabilities:
Deposits:
Savings $ 56,214 43 0.10 $ 52,964 56 0.14
Money market accounts 151,778 466 0.41 153,624 609 0.53
NOW accounts 41,371 20 0.06 37,932 18 0.06
Term certificates 120,326 811 0.90 127,429 985 1.03
Total deposits 369,689 1,340 0.48 371,949 1,668 0.60
FHLB advances 52,286 533 1.36 32,788 452 1.84
Total interest-bearing liabilities 421,975 1,873 0.59 404,737 2,120 0.70
Demand deposits 56,564 51,081
Other non-interest-bearing liabilities 9,608 9,274
Total non-interest-bearing liabilities 66,172 60,355
Total liabilities 488,147 465,092
Stockholders' equity 104,882 108,906
Total liabilities and stockholders' equity $ 593,029 $ 573,998
Net interest income $ 13,185 $ 12,495
Net interest rate spread (4) 3.02% 2.92%
Net interest-earning assets (5) $ 134,829 $ 133,298
Net interest margin (6) 3.16% 3.10%
Ratio of interest-earning assets to total interest-bearing liabilities 1.32 x 1.33 x
(1) Yields are annualized.
(2) Average loans include non-accrual loans and are net of average deferred loan fees/costs.
(3) Average balances are presented at average amortized cost.
(4) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(5) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(6) Net interest margin represents net interest income divided by average total interest-earning assets.
Three Months Ended
June 30, 2014 March 31, 2014
Average Interest Average Average Interest Average
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Balance Paid Rate (1) Balance Paid Rate (1)
(Unaudited)
(Dollars in thousands)
Interest-earning assets:
Loans (2) $ 489,204 $ 4,831 3.95% $ 482,360 $ 4,759 3.95%
Taxable securities (3) 48,094 249 2.07 46,492 241 2.07
Other interest-earning assets 24,599 13 0.21 24,096 12 0.20
FHLB stock 4,144 14 1.35 3,904 14 1.43
Total interest-earning assets 566,041 5,107 3.61 556,852 5,026 3.61
Non-interest-earning assets 36,286 36,592
Total assets $ 602,327 $ 593,444
Interest-bearing liabilities:
Deposits:
Savings $ 55,810 15 0.11 $ 56,470 14 0.10
Money market accounts 152,376 157 0.41 152,485 154 0.40
NOW accounts 42,488 7 0.07 40,565 6 0.06
Term certificates 122,694 269 0.88 119,639 264 0.88
Total deposits 373,368 448 0.48 369,159 438 0.47
FHLB advances 58,088 189 1.30 54,556 176 1.29
Total interest-bearing liabilities 431,456 637 0.59 423,715 614 0.58
Demand deposits 57,831 55,844
Other non-interest-bearing liabilities 9,395 8,846
Total non-interest-bearing liabilities 67,226 64,690
Total liabilities 498,682 488,405
Stockholders' equity 103,645 105,039
Total liabilities and stockholders' equity $ 602,327 $ 593,444
Net interest income $ 4,470 $ 4,412
Net interest rate spread (4) 3.02% 3.03%
Net interest-earning assets (5) $ 134,585 $ 133,137
Net interest margin (6) 3.16% 3.17%
Ratio of interest-earning assets to total interest-bearing liabilities 1.31 x 1.31 x
(1) Yields are annualized.
(2) Average loans include non-accrual loans and are net of average deferred loan fees/costs.
(3) Average balances are presented at average amortized cost.
(4) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(5) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(6) Net interest margin represents net interest income divided by average total interest-earning assets.

CONTACT: Maurice H. Sullivan, Jr. (617) 254-0707Source:Peoples Federal Bancshares, Inc.