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

BRIGHTON, Mass., Nov. 6, 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 fourth quarter ended September 30, 2014. For the quarter ended September 30, 2014, the Company reported a net loss of ($148,000), or ($0.03) per share, basic and diluted, as compared to net income of $461,000, or $0.07 per share, basic and diluted, for the comparable 2013 period, and net income of $539,000, or $0.09 per share, basic and diluted, for the quarter ended June 30, 2014.

On August 5, 2014, the Company, parent of Peoples Federal Savings Bank, and Independent Bank Corp. (Nasdaq:INDB), parent of Rockland Trust Company, signed a definitive agreement for Independent Bank Corp. to acquire Peoples Federal Bancshares, Inc. and Rockland Trust Company to acquire Peoples Federal Savings Bank. Under the terms of the merger agreement, the Company will merge with and into Independent Bank Corp. with Independent Bank Corp. surviving the merger. As a result, the Company incurred non-tax deductible merger expenses of $778,000 during the quarter ended September 30, 2014.

Total interest and dividend income was $5.1 million for the quarter ended September 30, 2014 compared to $4.8 million for the quarter ended September 30, 2013. Net interest and dividend income was $4.4 million for the quarter ended September 30, 2014 compared to $4.2 million for the quarter ended September 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 $391,000 for the quarter ended September 30, 2014 compared to $402,000 for the quarter ended September 30, 2013. The decrease was due to the decrease in customer service fees of $11,000, or 5.3%, a decrease in other income of $5,000 or 21.7%, a decrease in loan servicing fees of $4,000 or 30.8% and a decrease in income on life insurance policies of $4,000 or 2.5%, offset by an increase in gain on sales of mortgage loans of $13,000. There were no sales of loans during the quarter ended September 30, 2013. Total non-interest expense was $4.5 million for the quarter ended September 30, 2014 compared to $3.8 million for the quarter ended September 30, 2013. The increase is primarily due to non-tax deductible merger expenses of $778,000, noted above. The increase was offset by a decrease in salaries and employee benefits that decreased to $2.5 million for the quarter ended September 30, 2014 compared to $2.6 million for the quarter ended September 30, 2013. The decrease was primarily due to a decrease in pension expense offset by 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 both of the quarters ended September 30, 2014 and June 30, 2014. Net interest and dividend income was $4.4 million for the quarter ended September 30, 2014 compared to $4.5 million for the quarter ended June 30, 2014. Total non-interest income for the quarter ended September 30, 2014 increased to $391,000 from $376,000 for the quarter ended June 30, 2014. Total non-interest expense increased to $4.5 million for the quarter ended September 30, 2014 compared to $3.9 million for the quarter ended June 30, 2014.

Total assets increased $16.1 million, or 2.8%, to $601.3 million at September 30, 2014 from $585.2 million at September 30, 2013. Loans, net increased $20.9 million, or 4.5% during the fiscal year ended September 30, 2014, as residential loans (one-to four-family and multi-family), construction loans and commercial loans increased, while commercial real estate and consumer loans decreased. Cash and cash equivalents decreased $5.0 million to $32.1 million at September 30, 2014 from $37.1 million at September 30, 2013. Securities available-for-sale and held-to-maturity decreased $450,000, or 1.0%, to $45.8 million at September 30, 2014, from $46.3 million at September 30, 2013. Borrowings increased to $53.0 million at September 30, 2014 from $44.0 million at September 30, 2013.

Deposits increased $9.4 million to $434.5 million at September 30, 2014 from $425.1 million at September 30, 2013. Demand deposit accounts increased $3.0 million, money markets increased $3.2 million, NOW accounts increased $2.8 million and term certificates increased $1.2 million during fiscal 2014. Savings accounts decreased $786,000 during the same period.

At September 30, 2014, total stockholders' equity was $103.9 million, a decrease of $2.5 million from $106.4 million at September 30, 2013, resulting primarily from dividends paid of $2.6 million and the repurchase and retirement of 226,498 shares, or $4.1 million, of the Company's common stock. The decrease in total stockholder's equity was offset, in part, by net income of $1.5 million, stock-based compensation of $2.1 million and common stock released and committed to be released by the ESOP of $523,000.

During the quarters ended September 30, 2014 and 2013, the Company paid quarterly cash dividends of $0.05 and $0.04 per common share, respectively, totaling $289,000 and $239,000, respectively.

Non-performing assets totaled $2.1 million, or 0.4% of total assets, at September 30, 2014, unchanged from $2.1 million, or 0.4% of total assets, at September 30, 2013. Classified assets decreased to $3.4 million at September 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 fiscal year ended September 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
September 30,
2014 2013
(Unaudited)
(In thousands, except share data)
ASSETS
Cash and due from banks $ 4,301 $ 4,047
Interest-bearing demand deposits with other banks 25,945 30,906
Federal funds sold 364 79
Federal Home Loan Bank - overnight deposit 1,502 2,102
Total cash and cash equivalents 32,112 37,134
Securities available-for-sale 8,819 14,225
Securities held-to-maturity (fair values of $36,965 and $32,105) 37,010 32,054
Federal Home Loan Bank stock (at cost) 4,252 3,775
Loans 490,899 470,086
Allowance for loan losses (4,026) (4,037)
Loans, net 486,873 466,049
Premises and equipment, net 3,614 3,465
Cash surrender value of life insurance policies 20,639 20,007
Accrued interest receivable 1,486 1,448
Deferred income tax asset, net 5,238 5,432
Other assets 1,241 1,657
Total assets $ 601,284 $ 585,246
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing $ 60,862 $ 57,891
Interest-bearing 373,675 367,202
Total deposits 434,537 425,093
Short-term borrowings -- 6,000
Long-term debt 53,000 38,000
Accrued expenses and other liabilities 9,857 9,801
Total liabilities 497,394 478,894
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; 6,239,436
and 6,465,934 shares issued and outstanding at September 30, 2014 and
2013, respectively 62 65
Additional paid-in capital 56,814 60,039
Retained earnings 54,010 55,103
Accumulated other comprehensive loss (26) (30)
Unearned restricted shares; 162,866 and 256,894 shares at September 30, 2014 and
2013, respectively (2,614) (4,183)
Unearned compensation - ESOP (4,356) (4,642)
Total stockholders' equity 103,890 106,352
Total liabilities and stockholders' equity $ 601,284 $ 585,246
PEOPLES FEDERAL BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Years Ended
September 30, September 30,
2014 2013 2014 2013
(Unaudited)
(Dollars in thousands, except share data)
Interest and dividend income:
Interest and fees on loans $ 4,798 $ 4,574 $ 19,061 $ 18,690
Interest on debt securities:
Taxable 235 183 958 600
Other interest 14 17 54 87
Dividends on equity securities 15 4 47 16
Total interest and dividend income 5,062 4,778 20,120 19,393
Interest expense:
Interest on deposits 452 469 1,792 2,137
Interest on Federal Home Loan Bank advances 183 156 716 608
Total interest expense 635 625 2,508 2,745
Net interest and dividend income 4,427 4,153 17,612 16,648
Provision for loan losses -- -- -- 200
Net interest and dividend income, after provision for loan losses 4,427 4,153 17,612 16,448
Non-interest income:
Customer service fees 198 209 776 825
Loan servicing fees, net 9 13 39 43
Net gain on sales of mortgage loans 13 -- 24 189
Net gain on sales of securities available-for-sale -- -- 3 --
Increase in cash surrender value of life insurance 153 157 632 643
Other income 18 23 136 154
Total non-interest income 391 402 1,610 1,854
Non-interest expense:
Salaries and employee benefits 2,474 2,626 10,341 9,799
Occupancy expense 274 246 1,084 965
Equipment expense 122 96 446 390
Professional fees 90 172 613 570
Advertising expense 144 118 651 497
Data processing expense 226 216 896 853
Deposit insurance expense 79 57 280 268
Merger expense 778 -- 778 --
Other expense 347 236 1,129 1,004
Total non-interest expense 4,534 3,767 16,218 14,346
Income before income taxes 284 788 3,004 3,956
Provision for income taxes 432 327 1,545 1,671
Net (loss) income $ (148) $ 461 $ 1,459 $ 2,285
Weighted-average shares outstanding:
Basic 5,639,461 5,763,952 5,672,374 5,875,741
Diluted 5,639,461 5,811,421 5,714,026 5,915,400
(Loss) earnings per common share:
Basic $ (0.03) $ 0.07 $ 0.25 $ 0.37
Diluted $ (0.03) $ 0.07 $ 0.25 $ 0.37
PEOPLES FEDERAL BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
September 30, June 30,
2014 2014
(Unaudited)
(Dollars in thousands, except share data)
Interest and dividend income:
Interest and fees on loans $ 4,798 $ 4,831
Interest on debt securities:
Taxable 235 249
Other interest 14 13
Dividends on equity securities 15 14
Total interest and dividend income 5,062 5,107
Interest expense:
Interest on deposits 452 448
Interest on Federal Home Loan Bank advances 183 189
Total interest expense 635 637
Net interest and dividend income 4,427 4,470
Provision for loan losses -- --
Net interest and dividend income, after provision for loan losses 4,427 4,470
Non-interest income:
Customer service fees 198 194
Loan servicing fees, net 9 9
Net gain on sales of mortgage loans 13 --
Increase in cash surrender value of life insurance 153 150
Other income 18 23
Total non-interest income 391 376
Non-interest expense:
Salaries and employee benefits 2,474 2,602
Occupancy expense 274 272
Equipment expense 122 122
Professional fees 90 192
Advertising expense 144 174
Data processing expense 226 227
Deposit insurance expense 79 70
Merger expense 778 --
Other expense 347 269
Total non-interest expense 4,534 3,928
Income before income taxes 284 918
Provision for income taxes 432 379
Net (loss) income $ (148) $ 539
Weighted-average shares outstanding:
Basic 5,639,461 5,611,087
Diluted 5,639,461 5,678,343
(Loss) earnings per common share:
Basic $ (0.03) $ 0.09
Diluted $ (0.03) $ 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 September 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) $ 491,507 $ 4,798 3.90% $ 460,109 $ 4,574 3.98%
Taxable securities (3) 47,000 235 2.00 43,861 183 1.67
Other interest-earning assets 28,938 14 0.19 33,521 17 0.20
FHLB stock 4,252 15 1.41 3,775 4 0.42
Total interest-earning assets 571,697 5,062 3.54 541,266 4,778 3.53
Non-interest-earning assets 36,258 35,540
Total assets $ 607,955 $ 576,806
Interest-bearing liabilities:
Deposits:
Savings $ 55,764 15 0.11 $ 55,991 14 0.10
Money market accounts 153,084 162 0.42 151,019 158 0.42
NOW accounts 43,165 6 0.06 39,075 6 0.06
Term certificates 124,355 269 0.87 122,769 291 0.95
Total deposits 376,368 452 0.48 368,854 469 0.51
FHLB advances 57,565 183 1.27 35,685 156 1.75
Total interest-bearing liabilities 433,933 635 0.59 404,539 625 0.62
Demand deposits 60,239 55,890
Other non-interest-bearing liabilities 9,689 9,782
Total non-interest-bearing liabilities 69,928 65,672
Total liabilities 503,861 470,211
Stockholders' equity 104,094 106,595
Total liabilities and stockholders' equity $ 607,955 $ 576,806
Net interest income $ 4,427 $ 4,153
Net interest rate spread (4) 2.95% 2.91%
Net interest-earning assets (5) $ 137,764 $ 136,727
Net interest margin (6) 3.10% 3.07%
Ratio of interest-earning assets
to total interest-bearing liabilities 1.32 x 1.34 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.
Years Ended September 30,
2014 2013
Average Interest Average Average Interest Average
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Balance Paid Rate Balance Paid Rate
(Unaudited)
(Dollars in thousands)
Interest-earning assets:
Loans (1) $ 482,578 $ 19,061 3.95% $ 453,202 $ 18,690 4.12%
Taxable securities (2) 47,713 958 2.01 40,283 600 1.49
Other interest-earning assets 26,278 54 0.21 41,484 87 0.21
FHLB stock 4,019 47 1.17 3,880 16 0.41
Total interest-earning assets 560,588 20,120 3.59 538,849 19,393 3.60
Non-interest-earning assets 36,203 35,834
Total assets $ 596,791 $ 574,683
Interest-bearing liabilities:
Deposits:
Savings $ 56,101 58 0.10 $ 53,727 72 0.13
Money market accounts 152,107 628 0.41 152,967 767 0.50
NOW accounts 41,823 26 0.06 38,220 24 0.06
Term certificates 121,342 1,080 0.89 126,255 1,274 1.01
Total deposits 371,373 1,792 0.48 371,169 2,137 0.58
FHLB advances 53,616 716 1.34 33,518 608 1.81
Total interest-bearing liabilities 424,989 2,508 0.59 404,687 2,745 0.68
Demand deposits 57,490 52,293
Other non-interest-bearing liabilities 9,628 9,380
Total non-interest-bearing liabilities 67,118 61,673
Total liabilities 492,107 466,360
Stockholders' equity 104,684 108,323
Total liabilities and stockholders' equity $ 596,791 $ 574,683
Net interest income $ 17,612 $ 16,648
Net interest rate spread (3) 3.00% 2.92%
Net interest-earning assets (4) $ 135,599 $ 134,162
Net interest margin (5) 3.14% 3.09%
Ratio of interest-earning assets
to total interest-bearing liabilities 1.32 x 1.33 x
(1) Average loans include non-accrual loans and are net of average deferred loan fees/costs.
(2) Average balances are presented at average amortized cost.
(3) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(4) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(5) Net interest margin represents net interest income divided by average total interest-earning assets.
Three Months Ended
September 30, 2014 June 30, 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) $ 491,507 $ 4,798 3.90% $ 489,204 $ 4,831 3.95%
Taxable securities (3) 47,000 235 2.00 48,094 249 2.07
Other interest-earning assets 28,938 14 0.19 24,599 13 0.21
FHLB stock 4,252 15 1.41 4,144 14 1.35
Total interest-earning assets 571,697 5,062 3.54 566,041 5,107 3.61
Non-interest-earning assets 36,258 36,286
Total assets $ 607,955 $ 602,327
Interest-bearing liabilities:
Deposits:
Savings $ 55,764 15 0.11 $ 55,810 15 0.11
Money market accounts 153,084 162 0.42 152,376 157 0.41
NOW accounts 43,165 6 0.06 42,488 7 0.07
Term certificates 124,355 269 0.87 122,694 269 0.88
Total deposits 376,368 452 0.48 373,368 448 0.48
FHLB advances 57,565 183 1.27 58,088 189 1.30
Total interest-bearing liabilities 433,933 635 0.59 431,456 637 0.59
Demand deposits 60,239 57,831
Other non-interest-bearing liabilities 9,689 9,395
Total non-interest-bearing liabilities 69,928 67,226
Total liabilities 503,861 498,682
Stockholders' equity 104,094 103,645
Total liabilities and stockholders' equity $ 607,955 $ 602,327
Net interest income $ 4,427 $ 4,470
Net interest rate spread (4) 2.95% 3.02%
Net interest-earning assets (5) $ 137,764 $ 134,585
Net interest margin (6) 3.10% 3.16%
Ratio of interest-earning assets
to total interest-bearing liabilities 1.32 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) 254-0707

Source:Peoples Federal Bancshares, Inc.