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Peoples Federal Bancshares, Inc. Announces Fourth Quarter and Fiscal 2012 Financial Results

BRIGHTON, Mass., Oct. 31, 2012 (GLOBE NEWSWIRE) -- Peoples Federal Bancshares, Inc. (the "Company") (Nasdaq:PEOP), the holding company for Peoples Federal Savings Bank (the "Bank"), announced fourth quarter loss and year to date earnings for the fiscal year ending September 30, 2012.

For the three months ended September 30, 2012, the Company reported a net loss of $323,000 or ($0.05) per share, basic, as compared to net income of $567,000, or $0.09 per share, basic and diluted, for the three months ended June 30, 2012 and as compared to $559,000, or $0.09 per share, basic and diluted, for the three months ended September 30, 2011. For the fiscal year ended September 30, 2012, the Company reported net income of $1.7 million, or $0.26 per share, basic and diluted, as compared to net income of $3.1 million or $0.47 per share, basic and diluted, for the same period last year.

The fiscal fourth quarter loss and reduced annual income versus fiscal 2011 resulted primarily from the Company establishing a valuation allowance of $991,000 during the quarter ended September 30, 2012, against a deferred tax asset which was created due to a charitable contribution made in conjunction with the Company's initial public offering 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.

Net interest and dividend income for the three months ended September 30, 2012 totaled $4.3 million as compared to $4.2 million for the three months ended September 30, 2011. For the three months ended September 30, 2012, the Company's net interest rate spread and net interest rate margin decreased to 3.06% and 3.26%, respectively, compared to 3.12% and 3.35%, respectively, for the same 2011 period. Decreases in both the Company's net interest rate spread and net interest margin reflect declining interest rates and the increase in average balances of total interest-bearing liabilities, offset by increases in average balances of total interest-earning assets. The Company's ratio of total interest-bearing assets to total interest-bearing liabilities improved to 1.32x from 1.30x for the three months ended September 30, 2012 compared to the same 2011 period.

Non-interest income totaled $562,000 for the three months ended September 30, 2012 as compared to $299,000 for the three months ended September 30, 2011. Non-interest expense totaled $3.7 million for the three months ended September 30, 2012 as compared to $3.4 million for the three months ended September 30, 2011, primarily due to increased expenses in salaries and employee benefits that increased to $2.5 million from $2.3 million. Included in salaries and employee benefits for the quarter ended September 30, 2012 were expenses of $333,000 related to the equity incentive plan adopted in February 2012. Other non-interest expense increases included professional fees, which increased to $133,000 from $130,000, occupancy expense, which increased to $238,000 from $231,000, data processing expense, which increased to $211,000 from $201,000, advertising expense, which increased to $110,000 from $94,000, and deposit insurance expense, which increased to $75,000 from $62,000. Equipment expense and other expense decreased slightly during the comparable three month periods ended September 30, 2012 and 2011.

Net interest and dividend income for the fiscal year ended September 30, 2012 totaled $17.0 million as compared to $16.4 million for the fiscal year ended September 30, 2011. For the fiscal year ended September 30, 2012, the Company's net interest rate spread and net interest rate margin increased to 3.12% and 3.32%, respectively, compared to 3.05% and 3.31%, respectively, for the same 2011 period. Increases in both the Company's net interest rate spread and net interest margin reflect the increase in average balances of total interest-earning assets, offset by declining interest rates and the increase in average balances of total interest-bearing liabilities. The Company's ratio of total interest-bearing assets to total interest-bearing liabilities decreased slightly to 1.31x from 1.32x for the fiscal year ended September 30, 2012 compared to the same 2011 period.

Non-interest income totaled $1.8 million for the fiscal year ended September 30, 2012 as compared to $1.7 million for the fiscal year ended September 30, 2011. Non-interest expense totaled $14.1 million for the fiscal year ended September 30, 2012 as compared to $12.8 million for the fiscal year ended September 30, 2011, primarily due to increased expenses in salaries and employee benefits that increased to $9.6 million from $8.3 million. Included in salaries and employee benefits for the fiscal year ended September 30, 2012 were expenses of $889,000 related to the equity incentive plan adopted in February 2012. Other non-interest expense increases include occupancy expense, which increased to $920,000 from $857,000, data processing expense, which increased to $811,000 from $749,000, advertising expense, which increased to $558,000 from $240,000, and equipment expense, which increased to $437,000 from $436,000. These increases were offset in part by decreases in deposit insurance expense, which decreased to $251,000 from $400,000, professional fees expense, which decreased to $488,000 from $574,000, and other expense, which decreased to $1.1 million from $1.2 million.

Since September 30, 2011, total assets have increased by $16.6 million, or 3.0%, to $570.8 million. Net loans increased $43.6 million, or 10.7% during fiscal 2012. The increase in loans was due to an increase in residential real estate, commercial loans and consumer loans, offset by a decrease in commercial real estate loans and construction loans. Cash and cash equivalents decreased by $25.5 million, to $36.2 million at September 30, 2012 from $61.7 million at September 30, 2011, as we continue to deploy cash and cash equivalents into loans and investment securities. Federal Home Loan Bank borrowings increased by $15.0 million, or 83.3%, from September 30, 2011, as the Company took advantage of low interest rates. Deposits increased to $416.7 million at September 30, 2012 from $412.6 million at September 30, 2011. At September 30, 2012, total stockholders' equity was $110.5 million, a decrease of $5.2 million from $115.7 million at September 30, 2011. The decrease resulted primarily from the repurchase of 527,996 shares of the Company's common stock totaling $8.0 million, in the open market as part of the Company's previously announced stock repurchase plan, expense related to the Company grant of 281,700 shares of restricted stock awards to its Board of Directors and certain employees of the Company and aggregate payment of $181,000 in dividends paid during 2012. The decrease in stockholders' equity was offset primarily by net income of $1.7 million, equity incentive shares earned of $889,000 and ESOP stock released and committed to be released of $441,000, for the year ended September 30, 2012.

Non-performing assets totaled $5.2 million, or 0.92% of total assets, at September 30, 2012, as compared to $3.3 million, or 0.59% of total assets at September 30, 2011. Classified loans decreased to $9.6 million as of September 30, 2012 compared to $12.6 million at September 30, 2011. The Company recorded a $540,000 provision for loan losses during the year ended September 30, 2012, reflecting the overall increase in total loans along with the qualitative and quantitative changes within each loan portfolio segment.

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 SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
September 30,
2012 2011
(In thousands, except share data)
ASSETS
Cash and due from banks $ 6,713 $ 9,462
Interest-bearing demand deposits with other banks 27,378 44,255
Federal funds sold 48 9
Federal Home Loan Bank - overnight deposit 2,102 8,003
Total cash and cash equivalents 36,241 61,729
Securities available-for-sale 21,653 28,452
Securities held-to-maturity (fair values of $26,746 and $19,925) 25,921 19,713
Federal Home Loan Bank stock (at cost) 4,014 4,339
Loans 454,925 410,794
Allowance for loan losses (3,891) (3,371)
Loans, net 451,034 407,423
Premises and equipment, net 3,577 3,818
Cash surrender value of life insurance policies 19,364 18,713
Accrued interest receivable 1,589 1,527
Deferred income tax asset, net 5,116 5,739
Other assets 2,318 2,736
Total assets $ 570,827 $ 554,189
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing $ 49,165 $ 38,483
Interest-bearing 367,583 374,162
Total deposits 416,748 412,645
Short-term borrowings 8,000 --
Long-term debt 25,000 18,000
Accrued expenses and other liabilities 10,541 7,842
Total liabilities 460,289 438,487
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; 6,726,904 shares issued and outstanding at September 30, 2012 and 7,141,500 shares issued at September 30, 2011 67 71
Additional paid-in capital 63,909 69,437
Retained earnings 55,153 53,677
Accumulated other comprehensive income 113 56
Unearned restricted shares; 244,140 shares at September 30, 2012 (3,777) --
Unearned compensation - ESOP (4,927) (5,213)
Treasury stock, at cost; 168,300 shares at September 30, 2011 -- (2,326)
Total stockholders' equity 110,538 115,702
Total liabilities and stockholders' equity $ 570,827 $ 554,189
PEOPLES FEDERAL BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
September 30,
Years Ended
September 30,
2012 2011 2012 2011
(Unaudited)
(Dollars in thousands, except share data)
Interest and dividend income:
Interest and fees on loans $ 4,857 $ 4,932 $ 19,323 $ 20,048
Interest on debt securities:
Taxable 191 164 914 400
Other interest 14 33 73 132
Dividends on equity securities 5 3 19 10
Total interest and dividend income 5,067 5,132 20,329 20,590
Interest expense:
Interest on deposits 627 844 2,755 3,445
Interest on Federal Home Loan Bank advances 155 134 564 745
Total interest expense 782 978 3,319 4,190
Net interest and dividend income 4,285 4,154 17,010 16,400
Provision for loan losses 165 65 540 405
Net interest and dividend income, after provision for loan losses 4,120 4,089 16,470 15,995
Non-interest income:
Customer service fees 210 204 838 809
Loan servicing (costs) fees (5) (37) 2 40
Net gain on sales of mortgage loans 120 42 169 178
Increase in cash surrender value of life insurance 161 146 651 543
Other income (loss) 76 (56) 173 150
Total non-interest income 562 299 1,833 1,720
Non-interest expense:
Salaries and employee benefits 2,540 2,251 9,587 8,322
Occupancy expense 238 231 920 857
Equipment expense 104 116 437 436
Professional fees 133 130 488 574
Advertising expense 110 94 558 240
Data processing expense 211 201 811 749
Deposit insurance expense 75 62 251 400
Other expense 264 276 1,074 1,209
Total non-interest expense 3,675 3,361 14,126 12,787
Income before income taxes 1,007 1,027 4,177 4,928
Provision for income taxes 1,330 468 2,520 1,857
Net (loss) income $ (323) $ 559 $ 1,657 $ 3,071
Weighted-average shares outstanding:
Basic 5,982,123 6,576,421 6,175,042 6,579,784
Diluted 5,982,123 6,576,421 6,183,718 6,579,784
Earnings (loss) per common share:
Basic $ (0.05) $ 0.09 $ 0.26 $ 0.47
Diluted $ (0.05) $ 0.09 $ 0.26 $ 0.47

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,
2012 2011
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) $ 441,232 $ 4,857 4.40% $ 402,587 $ 4,932 4.90%
Taxable securities (3) 51,701 191 1.48 37,601 164 1.74
Other interest-earning assets 29,321 14 0.19 51,061 33 0.26
FHLB stock 4,014 5 0.50 4,339 3 0.28
Total interest-earning assets 526,268 5,067 3.85 495,588 5,132 4.14
Non-interest-earning assets 36,992 49,819
Total assets $ 563,260 $ 545,407
Interest-bearing liabilities:
Deposits:
Savings $ 49,616 18 0.15 $ 47,602 35 0.29
Money market accounts 153,091 236 0.62 148,388 325 0.88
NOW accounts 37,447 7 0.07 35,278 17 0.19
Term certificates 128,186 366 1.14 132,255 467 1.41
Total deposits 368,340 627 0.68 363,523 844 0.93
FHLB advances 28,979 155 2.14 19,141 134 2.80
Total interest-bearing liabilities 397,319 782 0.79 382,664 978 1.02
Demand deposits 45,791 37,911
Other non-interest-bearing liabilities 9,017 7,957
Total non-interest-bearing liabilities 54,808 45,868
Total liabilities 452,127 428,532
Stockholders' equity 111,133 116,875
Total liabilities and stockholders' equity $ 563,260 $ 545,407
Net interest income $ 4,285 $ 4,154
Net interest rate spread (4) 3.06% 3.12%
Net interest-earning assets (5) $ 128,949 $ 112,924
Net interest margin (6) 3.26% 3.35%
Ratio of total interest-earning assets to total interest-bearing liabilities 1.32 x 1.30 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,
2012 2011
Average
Outstanding
Balance
Interest
Earned/
Paid
Average
Yield/
Rate
Average
Outstanding
Balance
Interest
Earned/
Paid
Average
Yield/
Rate
(Dollars in thousands)
Interest-earning assets:
Loans (1) $ 422,198 $ 19,323 4.58% $ 394,920 $ 20,048 5.08%
Taxable securities (2) 56,856 914 1.61 30,175 400 1.33
Other interest-earning assets 28,864 73 0.25 65,629 132 0.20
FHLB stock 4,155 19 0.46 4,339 10 0.23
Total interest-earning assets 512,073 20,329 3.97 495,063 20,590 4.16
Non-interest-earning assets 44,030 41,521
Total assets $ 556,103 $ 536,584
Interest-bearing liabilities:
Deposits:
Savings $ 48,675 90 0.18 $ 46,944 213 0.45
Money market accounts 153,789 1,066 0.69 145,228 1,292 0.89
NOW accounts 36,724 40 0.11 34,165 64 0.19
Term certificates 130,326 1,559 1.20 126,111 1,876 1.49
Total deposits 369,514 2,755 0.75 352,448 3,445 0.98
FHLB advances 22,716 564 2.48 24,016 745 3.10
Total interest-bearing liabilities 392,230 3,319 0.85 376,464 4,190 1.11
Demand deposits 41,816 35,837
Other non-interest-bearing liabilities 8,762 8,003
Total non-interest-bearing liabilities 50,578 43,840
Total liabilities 442,808 420,304
Stockholders' equity 113,295 116,280
Total liabilities and stockholders' equity $ 556,103 $ 536,584
Net interest income $ 17,010 $ 16,400
Net interest rate spread (3) 3.12% 3.05%
Net interest-earning assets (4) $ 119,843 $ 118,599
Net interest margin (5) 3.32% 3.31%
Ratio of total interest-earning assets to total interest-bearing liabilities 1.31 x 1.32 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.
CONTACT: Maurice H. Sullivan, Jr. Chairman and Chief Executive Officer (617) 254-0707Source:Peoples Federal Bancshares, Inc.