Peoples Federal Bancshares, Inc. Announces Fiscal First Quarter 2015 Results

BRIGHTON, Mass., Feb. 2, 2015 (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 first quarter ended December 31, 2014. For the quarter ended December 31, 2014, the Company reported net income of $146,000, or $0.03 per share basic and $0.02 per share diluted, as compared to net income of $554,000, or $0.09 per share, basic and diluted, for the comparable 2013 period. The Company had a net loss of ($148,000), or ($0.03) per share, basic and diluted, for the quarter ended September 30, 2014.

Total interest and dividend income was $5.0 million for the quarter ended December 31, 2014 compared to $4.9 million for the quarter ended December 31, 2013. Net interest and dividend income was $4.3 million for both quarters ended December 31, 2014 and 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 $398,000 for the quarter ended December 31, 2014 compared to $399,000 for the quarter ended December 31, 2013. The decrease was due primarily to a decrease in loan servicing fees, net of $13,000, or 100%. Loan servicing fees were offset by amortization of mortgage servicing rights for the three months ended December 31, 2014 compared to loan servicing fees, net of $13,000 for the three months ended December 31, 2013. In addition, income from the increase in cash surrender value of life insurance decreased to $161,000 for the three months ended December 31, 2014 from $168,000 for the three months ended December 31, 2013. These decreases in non-interest income were offset by net gain on sales of mortgage loans of $20,000 for the three months ended December 31, 2014. There were no sales of mortgages for the three months ended December 31, 2013. Non-interest expense increased to $4.0 million for the quarter ended December 31, 2014 compared to $3.8 million for the quarter ended December 31, 2013 due primarily to the increase in merger expense of $205,000, or 100%. During the quarters ended December 31, 2014 and 2013, the Company made a provision of $194,000 and $10,000, respectively, to the valuation allowance against the deferred tax asset related to the charitable contribution made to Peoples Federal Savings Bank Charitable Foundation in 2010. A valuation allowance is established against deferred tax assets when, based upon the available evidence, including historical and projected taxable income, management determines that it is more likely than not that some or all of the deferred tax asset will not be realized.

On a linked quarter basis, total interest and dividend income was $5.0 million for the quarter ended December 31, 2014 compared to $5.1 million for the quarter ended September 30, 2014. Net interest and dividend income was $4.3 million for the quarter ended December 31, 2014 compared to $4.4 million for the quarter ended September 30, 2014. Total non-interest income for the quarter ended December 31, 2014 increased to $398,000 from $391,000 for the quarter ended September 30, 2014. Total non-interest expense decreased to $4.0 million for the quarter ended December 31, 2014 compared to $4.5 million for the quarter ended September 30, 2014 due mainly to the decrease in merger expense of $573,000, or 73.7%, to $205,000 for the quarter ended December 31, 2014 from $778,000 for the quarter ended September 30, 2014. Provision for income taxes increased to $581,000 for the quarter ended December 31, 2014 compared to $432,000 for the quarter ended September 30, 2014. The increase was due primarily to a provision of $194,000 to the valuation allowance as noted above. The Company did not make a provision to the valuation allowance during the quarter ended September 30, 2014.

Total assets decreased $4.3 million, or 0.7%, to $597.0 million at December 31, 2014 from $601.3 million at September 30, 2014. Loans, net decreased $6.0 million, or 1.2%, during the fiscal first quarter ended December 31, 2014, as one-to four-family residential loans, commercial real estate loans, construction loans and consumer loans decreased, while multi-family residential loans and commercial loans increased. Cash and cash equivalents increased $4.3 million to $36.4 million at December 31, 2014 from $32.1 million at September 30, 2014. Securities available-for-sale and held-to-maturity decreased $1.6 million, or 3.5%, to $44.2 million at December 31, 2014, from $45.8 million at September 30, 2014. Borrowings was $53.0 million at December 31, 2014 and at September 30, 2014.

Deposits decreased $4.3 million to $430.2 million at December 31, 2014 from $434.5 million at September 30, 2014. The decrease resulted primarily from a decrease in term certificates to $117.1 million at December 31, 2014 from $122.0 million at September 30, 2014 and money market deposits to $150.6 million from $153.7 million for the comparable periods, offset by an increase in demand deposits to $64.5 million from $60.9 million for the comparable periods.

At December 31, 2014, total stockholders' equity was $104.5 million, an increase of $576,000 from $103.9 million at September 30, 2014, resulting primarily from stock-based compensation expense of $525,000 and common stock released by the ESOP of $152,000 and net income of $146,000. The increase was offset by dividends paid on common stock of $289,000.

During the quarters ended December 31, 2014 and 2013, the Company paid quarterly cash dividends of $0.05 and $0.29 per common share, respectively, totaling $289,000 and $1.7 million, respectively.

Non-performing assets totaled $2.9 million, or 0.5% of total assets, at December 31, 2014, compared to $2.1 million, or 0.4% of total assets, at September 30, 2014. Classified assets increased to $4.1 million at December 31, 2014, as compared to $3.5 million at September 30, 2014. The Company did not provide to the allowance for loan losses during the quarter ended December 31, 2014 reflecting improvements in loan delinquencies and the decrease the commercial real estate, construction and one-to four-family loan segments, offset by an increase in non-performing assets and classified assets.

On January 26, 2015, the Company filed with the Securities and Exchange Commission a joint press release with Independent Bank Corp. (Independent) reporting in connection with the previously announced merger of the Company with and into Independent that all regulatory approvals relating to the merger have been received, the deadline for the Company's shareholders to elect the form of merger consideration they wish to receive in connection with the merger is 5:00 p.m., Eastern Time on February 12, 2015, and the merger is anticipated to close on or about February 20, 2015.

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
December 31,
2014
September 30,
2014
(Unaudited)
(In thousands, except share data)
ASSETS
Cash and due from banks $ 4,446 $ 4,301
Interest-bearing demand deposits with other banks 30,357 25,945
Federal funds sold 123 364
Federal Home Loan Bank - overnight deposit 1,502 1,502
Total cash and cash equivalents 36,428 32,112
Securities available-for-sale 8,496 8,819
Securities held-to-maturity (fair values of $35,859 and $36,965) 35,654 37,010
Federal Home Loan Bank stock (at cost) 4,252 4,252
Loans 484,873 490,899
Allowance for loan losses (4,023) (4,026)
Loans, net 480,850 486,873
Premises and equipment, net 3,464 3,614
Cash surrender value of life insurance policies 20,800 20,639
Accrued interest receivable 1,390 1,486
Deferred income tax asset, net 4,883 5,238
Other assets 803 1,241
Total assets $ 597,020 $ 601,284
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing $ 64,522 $ 60,862
Interest-bearing 365,691 373,675
Total deposits 430,213 434,537
Short-term borrowings 2,000 2,000
Long-term debt 51,000 51,000
Accrued expenses and other liabilities 9,341 9,857
Total liabilities 492,554 497,394
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 shares issued and outstanding at December 31, 2014 and September 30, 2014 62 62
Additional paid-in capital 57,028 56,814
Retained earnings 53,867 54,010
Accumulated other comprehensive income (loss) 16 (26)
Unearned restricted shares; 139,359 and 162,866 shares at December 31, 2014 and September 30, 2014, respectively (2,222) (2,614)
Unearned compensation - ESOP (4,285) (4,356)
Total stockholders' equity 104,466 103,890
Total liabilities and stockholders' equity $ 597,020 $ 601,284
PEOPLES FEDERAL BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
December 31,
2014 2013
(Unaudited)
(Dollars in thousands, except
share data)
Interest and dividend income:
Interest and fees on loans $ 4,702 $ 4,673
Interest on debt securities:
Taxable 228 233
Other interest 17 15
Dividends on equity securities 16 4
Total interest and dividend income 4,963 4,925
Interest expense:
Interest on deposits 451 454
Interest on Federal Home Loan Bank advances 164 168
Total interest expense 615 622
Net interest and dividend income 4,348 4,303
Provision for loan losses -- --
Net interest and dividend income, after provision for loan losses 4,348 4,303
Non-interest income:
Customer service fees 198 196
Loan servicing fees, net -- 13
Net gain on sales of mortgage loans 20 --
Increase in cash surrender value of life insurance 161 168
Other income 19 22
Total non-interest income 398 399
Non-interest expense:
Salaries and employee benefits 2,492 2,610
Occupancy expense 286 228
Equipment expense 131 99
Professional fees 181 157
Advertising expense 146 133
Data processing expense 231 219
Deposit insurance expense 72 61
Merger expense 205 --
Other expense 275 253
Total non-interest expense 4,019 3,760
Income before income taxes 727 942
Provision for income taxes 581 388
Net income $ 146 $ 554
Weighted-average shares outstanding:
Basic 5,649,107 5,746,458
Diluted 5,817,934 5,810,294
Earnings per common share:
Basic $ 0.03 $ 0.09
Diluted $ 0.02 $ 0.09
PEOPLES FEDERAL BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
December 31,
2014
September 30,
2014
(Unaudited)
(Dollars in thousands, except
share data)
Interest and dividend income:
Interest and fees on loans $ 4,702 $ 4,798
Interest on debt securities:
Taxable 228 235
Other interest 17 14
Dividends on equity securities 16 15
Total interest and dividend income 4,963 5,062
Interest expense:
Interest on deposits 451 452
Interest on Federal Home Loan Bank advances 164 183
Total interest expense 615 635
Net interest and dividend income 4,348 4,427
Provision for loan losses -- --
Net interest and dividend income, after provision for loan losses 4,348 4,427
Non-interest income:
Customer service fees 198 198
Loan servicing fees, net -- 9
Net gain on sales of mortgage loans 20 13
Increase in cash surrender value of life insurance 161 153
Other income 19 18
Total non-interest income 398 391
Non-interest expense:
Salaries and employee benefits 2,492 2,474
Occupancy expense 286 274
Equipment expense 131 122
Professional fees 181 90
Advertising expense 146 144
Data processing expense 231 226
Deposit insurance expense 72 79
Merger expense 205 778
Other expense 275 347
Total non-interest expense 4,019 4,534
Income before income taxes 727 284
Provision for income taxes 581 432
Net income (loss) $ 146 $ (148)
Weighted-average shares outstanding:
Basic 5,649,107 5,639,461
Diluted 5,817,934 5,639,461
Earnings (loss) per common share:
Basic $ 0.03 $ (0.03)
Diluted $ 0.02 $ (0.03)

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 December 31,
2014 2013
Average
Outstanding
Balance
Interest
Earned/
Paid
Average
Yield/
Rate (1)
Average
Outstanding
Balance
Interest
Earned/
Paid
Average
Yield/
Rate (1)
(Unaudited)
(Dollars in thousands)
Interest-earning assets:
Loans (2) $ 484,800 $ 4,702 3.88% $ 467,306 $ 4,673 4.00%
Taxable securities (3) 45,122 228 2.02 49,126 233 1.90
Other interest-earning assets 29,651 17 0.23 27,414 15 0.22
FHLB stock 4,252 16 1.51 3,775 4 0.42
Total interest-earning assets 563,825 4,963 3.52 547,621 4,925 3.60
Non-interest-earning assets 35,920 35,806
Total assets $ 599,745 $ 583,427
Interest-bearing liabilities:
Deposits:
Savings $ 55,742 14 0.10 $ 56,362 14 0.10
Money market accounts 152,794 168 0.44 150,495 155 0.41
NOW accounts 42,045 6 0.06 41,054 7 0.07
Term certificates 120,335 263 0.87 118,657 278 0.94
Total deposits 370,916 451 0.49 366,568 454 0.50
FHLB advances 53,000 164 1.24 44,326 168 1.52
Total interest-bearing liabilities 423,916 615 0.58 410,894 622 0.61
Demand deposits 61,955 56,014
Other non-interest-bearing liabilities 9,561 10,564
Total non-interest-bearing liabilities 71,516 66,578
Total liabilities 495,432 477,472
Stockholders' equity 104,313 105,955
Total liabilities and stockholders' equity $ 599,745 $ 583,427
Net interest income $ 4,348 $ 4,303
Net interest rate spread (4) 2.94% 2.99%
Net interest-earning assets (5) $ 139,909 $ 136,727
Net interest margin (6) 3.08% 3.14%
Ratio of interest-earning assets to total interest-bearing liabilities 1.33 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
December 31, 2014 September 30, 2014
Average
Outstanding
Balance
Interest
Earned/
Paid
Average
Yield/
Rate (1)
Average
Outstanding
Balance
Interest
Earned/
Paid
Average
Yield/
Rate (1)
(Unaudited)
(Dollars in thousands)
Interest-earning assets:
Loans (2) $ 484,800 $ 4,702 3.88% $ 491,507 $ 4,798 3.90%
Taxable securities (3) 45,122 228 2.02 47,000 235 2.00
Other interest-earning assets 29,651 17 0.23 28,938 14 0.19
FHLB stock 4,252 16 1.51 4,252 15 1.41
Total interest-earning assets 563,825 4,963 3.52 571,697 5,062 3.54
Non-interest-earning assets 35,920 36,258
Total assets $ 599,745 $ 607,955
Interest-bearing liabilities:
Deposits:
Savings $ 55,742 14 0.10 $ 55,764 15 0.11
Money market accounts 152,794 168 0.44 153,084 162 0.42
NOW accounts 42,045 6 0.06 43,165 6 0.06
Term certificates 120,335 263 0.87 124,355 269 0.87
Total deposits 370,916 451 0.49 376,368 452 0.48
FHLB advances 53,000 164 1.24 57,565 183 1.27
Total interest-bearing liabilities 423,916 615 0.58 433,933 635 0.59
Demand deposits 61,955 60,239
Other non-interest-bearing liabilities 9,561 9,689
Total non-interest-bearing liabilities 71,516 69,928
Total liabilities 495,432 503,861
Stockholders' equity 104,313 104,094
Total liabilities and stockholders' equity $ 599,745 $ 607,955
Net interest income $ 4,348 $ 4,427
Net interest rate spread (4) 2.94% 2.95%
Net interest-earning assets (5) $ 139,909 $ 137,764
Net interest margin (6) 3.08% 3.10%
Ratio of interest-earning assets
to total interest-bearing liabilities 1.33 x 1.32 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.