Peoples Federal Bancshares, Inc. Announces Third Quarter and Year to Date Results for Fiscal Year 2013

BRIGHTON, Mass., July 26, 2013 (GLOBE NEWSWIRE) -- Peoples Federal Bancshares, Inc. (the "Company") (Nasdaq:PEOP), the holding company for Peoples Federal Savings Bank (the "Bank"), announced third quarter and year to date earnings for the fiscal year ending September 30, 2013. For the quarter ended June 30, 2013, the Company reported net income of $598,000 or $0.10 per share, basic and diluted, as compared to net income of $567,000 or $0.09 per share, basic and diluted, for the same period last year and net income of $545,000, or $0.09 per share, basic and diluted, for the quarter ended March 31, 2013. For the nine months ended June 30, 2013, the Company reported net income of $1.8 million or $0.30 per share, basic and diluted, as compared to net income of $2.0 million or $0.31 per share, basic and diluted, for the same period last year.

For both the quarters ended June 30, 2013 and 2012, net interest and dividend income totaled $4.2 million. Low market interest rates have continued to pressure net interest income as recently originated loans reflect current market conditions. Of note during the June 2013 quarter, a non-accruing commercial real estate loan, previously categorized as impaired and classified as substandard paid off. As a result, the Bank recognized $79,000 in interest and fees on loans and a total of $46,000 in other income and recovered expenses. Non-interest income totaled $472,000 for the quarter ended June 30, 2013, as compared to $443,000 for the quarter ended June 30, 2012. Non-interest expense totaled $3.6 million for the quarter ended June 30, 2013 as well as the quarter ended June 30, 2012.

For the nine month periods ended June 30, 2013 and 2012, net interest and dividend income totaled $12.5 million and $12.7 million, respectively. Low market interest rates have continued to pressure net interest income as recently originated loans reflect current market conditions. Non-interest income totaled $1.5 million for the nine months ended June 30, 2013, as compared to $1.3 million for the nine months ended June 30, 2012. Non-interest expense totaled $10.6 million for the nine months ended June 30, 2013, as compared to $10.5 million for the nine months ended June 30, 2012, reflecting higher salaries and employee benefits offset mainly by a decrease in advertising expense and other expense.

On a linked quarter basis, net interest and dividend income for the Company's 2013 third fiscal quarter increased $103,000, or 2.5%, to $4.2 million from $4.1 million for the second fiscal quarter ended March 31, 2013, reflecting the payoff of the loan noted above as well as continued efforts to maintain the net interest margin. Non-interest income for the third quarter of fiscal 2013 decreased to $472,000 from $488,000 for the second fiscal quarter ended March 31, 2013. Non-interest expense remained stable at $3.6 million for both the third fiscal quarter ended June 30, 2013 and the second fiscal quarter ended March 31, 2013.

Total assets increased $3.7 million, or 0.6%, to $574.5 million at June 30, 2013 from $570.8 million at September 30, 2012. Loans, net increased $2.3 million, or 0.5%, as residential real estate, construction and commercial loans all increased while commercial real estate and consumer loans declined. Cash and cash equivalents increased $7.1 million to $43.3 million at June 30, 2013 from $36.2 million at September 30, 2012. Securities available-for-sale and held-to-maturity decreased $5.3 million, or 11.2%, to $42.3 million at June 30, 2013 from $47.6 million at September 30, 2012. Borrowings remained at $33.0 million for both the June 30, 2013 and September 30, 2012 periods.

Deposits increased $6.9 million to $423.6 million at June 30, 2013 from $416.7 million at September 30, 2012. Savings accounts increased $5.5 million, demand deposits increased $5.3 million, and NOW accounts increased $1.5 million, while term certificates decreased $3.6 million and money market accounts decreased $1.8 million. At June 30, 2013, total stockholders' equity was $107.0 million, a decrease of $3.5 million from $110.5 million at September 30, 2012. The decrease in stockholders' equity during the nine-month period was primarily due to dividends paid of $2.1 million and the repurchase and retirement of 253,900 shares, or $4.5 million, of the Company's common stock pursuant to our stock repurchase plan, offset by net income of $1.8 million, stock based compensation expense of $1.0 million and common stock released and committed to be released by the ESOP of $380,000.

During the quarter ended June 30, 2013, the Company paid a quarterly cash dividend of $0.04 per common share. The dividends paid totaled $244,000 during the quarter. The Company did not pay any dividends during the quarter ended June 30, 2012.

Non-performing assets totaled $1.9 million, or 0.3% of total assets, at June 30, 2013, compared to $3.4 million, or 0.6% of total assets, at September 30, 2012 and $2.0 million, or 0.4% of total assets, at March 31, 2013. Classified assets decreased to $3.5 million at June 30, 2013, as compared to $9.6 million at September 30, 2012 and $4.1 million at March 31, 2013. The Company did not provide a contribution to the allowance for loan losses during the quarter ended June 30, 2013 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,
2013 2012
(Unaudited)
(In thousands, except share data)
ASSETS
Cash and due from banks $ 3,766 $ 6,713
Interest-bearing demand deposits with other banks 37,335 27,378
Federal funds sold 131 48
Federal Home Loan Bank - overnight deposit 2,102 2,102
Total cash and cash equivalents 43,334 36,241
Securities available-for-sale 14,424 21,653
Securities held-to-maturity (fair values of $27,643 and $26,746) 27,825 25,921
Federal Home Loan Bank stock (at cost) 3,775 4,014
Loans 457,324 454,925
Allowance for loan losses (4,025) (3,891)
Loans, net 453,299 451,034
Premises and equipment, net 3,434 3,577
Cash surrender value of life insurance policies 19,850 19,364
Accrued interest receivable 1,453 1,589
Deferred income tax asset, net 5,406 5,116
Other assets 1,731 2,318
Total assets $ 574,531 $ 570,827
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing $ 54,471 $ 49,165
Interest-bearing 369,156 367,583
Total deposits 423,627 416,748
Short-term borrowings 6,000 8,000
Long-term debt 27,000 25,000
Accrued expenses and other liabilities 10,937 10,541
Total liabilities 467,564 460,289
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; 6,473,004 and 6,726,904 shares issued and outstanding at June 30, 2013 and September 30, 2012, respectively 65 67
Additional paid-in capital 59,915 63,909
Retained earnings 54,881 55,153
Accumulated other comprehensive (loss) income (58) 113
Unearned restricted shares; 201,885 and 244,140 shares at June 30, 2013 and September 30, 2012, respectively (3,123) (3,777)
Unearned compensation - ESOP (4,713) (4,927)
Total stockholders' equity 106,967 110,538
Total liabilities and stockholders' equity $ 574,531 $ 570,827
PEOPLES FEDERAL BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Nine Months Ended
June 30, June 30,
2013 2012 2013 2012
(Unaudited)
(Dollars in thousands, except share data)
Interest and dividend income:
Interest and fees on loans $ 4,644 $ 4,793 $ 14,116 $ 14,466
Interest on debt securities:
Taxable 147 210 417 723
Other interest 26 18 70 59
Dividends on equity securities 3 5 12 14
Total interest and dividend income 4,820 5,026 14,615 15,262
Interest expense:
Interest on deposits 501 673 1,668 2,128
Interest on Federal Home Loan Bank advances 152 147 452 409
Total interest expense 653 820 2,120 2,537
Net interest and dividend income 4,167 4,206 12,495 12,725
Provision for loan losses -- 125 200 375
Net interest and dividend income, after provision for loan losses 4,167 4,081 12,295 12,350
Non-interest income:
Customer service fees 213 213 616 628
Loan servicing fees 16 20 30 7
Net gain on sales of mortgage loans 42 42 189 49
Increase in cash surrender value of life insurance 143 161 486 490
Other income 58 7 131 97
Total non-interest income 472 443 1,452 1,271
Non-interest expense:
Salaries and employee benefits 2,444 2,440 7,173 7,047
Occupancy expense 241 222 719 682
Equipment expense 87 109 294 333
Professional fees 104 131 398 355
Advertising expense 142 140 379 448
Data processing expense 218 200 637 600
Deposit insurance expense 81 66 211 176
Other expense 254 284 768 810
Total non-interest expense 3,571 3,592 10,579 10,451
Income before income taxes 1,068 932 3,168 3,170
Provision for income taxes 470 365 1,344 1,190
Net income $ 598 $ 567 $ 1,824 $ 1,980
Weighted-average shares outstanding:
Basic 5,869,813 6,114,060 5,913,414 6,239,816
Diluted 5,905,052 6,144,309 5,950,470 6,251,384
Earnings per common share:
Basic $ 0.10 $ 0.09 $ 0.30 $ 0.31
Diluted $ 0.10 $ 0.09 $ 0.30 $ 0.31
PEOPLES FEDERAL BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
June 30, March 31,
2013 2013
(Unaudited)
(Dollars in thousands,
except share data)
Interest and dividend income:
Interest and fees on loans $ 4,644 $ 4,619
Interest on debt securities:
Taxable 147 120
Other interest 26 26
Dividends on equity securities 3 4
Total interest and dividend income 4,820 4,769
Interest expense:
Interest on deposits 501 555
Interest on Federal Home Loan Bank advances 152 150
Total interest expense 653 705
Net interest and dividend income 4,167 4,064
Provision for loan losses -- 80
Net interest and dividend income, after provision for loan losses 4,167 3,984
Non-interest income:
Customer service fees 213 193
Loan servicing fees 16 6
Net gain on sales of mortgage loans 42 46
Increase in cash surrender value of life insurance 143 181
Other income 58 62
Total non-interest income 472 488
Non-interest expense:
Salaries and employee benefits 2,444 2,403
Occupancy expense 241 249
Equipment expense 87 101
Professional fees 104 177
Advertising expense 142 108
Data processing expense 218 211
Deposit insurance expense 81 61
Other expense 254 257
Total non-interest expense 3,571 3,567
Income before income taxes 1,068 905
Provision for income taxes 470 360
Net income $ 598 $ 545
Weighted-average shares outstanding:
Basic 5,869,813 5,894,114
Diluted 5,905,052 5,914,177
Earnings per common share:
Basic $ 0.10 $ 0.09
Diluted $ 0.10 $ 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,
2013 2012
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) $ 450,486 $ 4,644 4.12% $ 424,263 $ 4,793 4.52%
Taxable securities (3) 39,533 147 1.49 57,234 210 1.47
Other interest-earning assets 44,511 26 0.23 25,552 18 0.28
FHLB stock 3,775 3 0.32 4,014 5 0.50
Total interest-earning assets 538,305 4,820 3.58 511,063 5,026 3.93
Non-interest-earning assets 35,920 47,065
Total assets $ 574,225 $ 558,128
Interest-bearing liabilities:
Deposits:
Savings $ 54,572 17 0.12 $ 49,299 23 0.19
Money market accounts 152,231 173 0.45 154,959 266 0.69
NOW accounts 39,035 6 0.06 37,441 11 0.12
Term certificates 125,434 305 0.97 128,314 373 1.16
Total deposits 371,272 501 0.54 370,013 673 0.73
FHLB advances 33,000 152 1.84 24,000 147 2.45
Total interest-bearing liabilities 404,272 653 0.65 394,013 820 0.83
Demand deposits 52,647 42,577
Other non-interest-bearing liabilities 9,089 8,766
Total non-interest-bearing liabilities 61,736 51,343
Total liabilities 466,008 445,356
Stockholders' equity 108,217 112,772
Total liabilities and stockholders' equity $ 574,225 $ 558,128
Net interest income $ 4,167 $ 4,206
Net interest rate spread (4) 2.93% 3.10%
Net interest-earning assets (5) $ 134,033 $ 117,050
Net interest margin (6) 3.10% 3.29%
Ratio of interest-earning assets to total interest-bearing liabilities 1.33x 1.30x
(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,
2013 2012
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) $ 450,874 $ 14,116 4.17% $ 415,807 $ 14,466 4.64%
Taxable securities (3) 39,077 417 1.42 58,586 723 1.65
Other interest-earning assets 44,168 70 0.21 28,738 59 0.27
FHLB stock 3,916 12 0.41 4,202 14 0.44
Total interest-earning assets 538,035 14,615 3.62 507,333 15,262 4.01
Non-interest-earning assets 35,963 46,360
Total assets $ 573,998 $ 553,693
Interest-bearing liabilities:
Deposits:
Savings $ 52,964 56 0.14 $ 48,359 72 0.20
Money market accounts 153,624 609 0.53 154,023 830 0.72
NOW accounts 37,932 18 0.06 36,481 33 0.12
Term certificates 127,429 985 1.03 131,045 1,193 1.21
Total deposits 371,949 1,668 0.60 369,908 2,128 0.77
FHLB advances 32,788 452 1.84 20,613 409 2.65
Total interest-bearing liabilities 404,737 2,120 0.70 390,521 2,537 0.87
Demand deposits 51,081 40,481
Other non-interest-bearing liabilities 9,274 8,670
Total non-interest-bearing liabilities 60,355 49,151
Total liabilities 465,092 439,672
Stockholders' equity 108,906 114,021
Total liabilities and stockholders' equity $ 573,998 $ 553,693
Net interest income $ 12,495 $ 12,725
Net interest rate spread (4) 2.92% 3.14%
Net interest-earning assets (5) $ 133,298 $ 116,812
Net interest margin (6) 3.10% 3.34%
Ratio of interest-earning assets to total interest-bearing liabilities 1.33x 1.30x
(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, 2013 March 31, 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) $ 450,486 $ 4,644 4.12% $ 449,549 $ 4,619 4.11%
Taxable securities (3) 39,533 147 1.49 35,566 120 1.35
Other interest-earning assets 44,511 26 0.23 50,678 26 0.21
FHLB stock 3,775 3 0.32 3,958 4 0.40
Total interest-earning assets 538,305 4,820 3.58 539,751 4,769 3.53
Non-interest-earning assets 35,920 36,427
Total assets $ 574,225 $ 576,178
Interest-bearing liabilities:
Deposits:
Savings $ 54,572 17 0.12 $ 53,538 20 0.15
Money market accounts 152,231 173 0.45 155,630 200 0.51
NOW accounts 39,035 6 0.06 37,683 6 0.06
Term certificates 125,434 305 0.97 129,105 329 1.02
Total deposits 371,272 501 0.54 375,956 555 0.59
FHLB advances 33,000 152 1.84 32,911 150 1.82
Total interest-bearing liabilities 404,272 653 0.65 408,867 705 0.69
Demand deposits 52,647 49,945
Other non-interest-bearing liabilities 9,089 9,088
Total non-interest-bearing liabilities 61,736 59,033
Total liabilities 466,008 467,900
Stockholders' equity 108,217 108,278
Total liabilities and stockholders' equity $ 574,225 $ 576,178
Net interest income $ 4,167 $ 4,064
Net interest rate spread (4) 2.93% 2.84%
Net interest-earning assets (5) $ 134,033 $ 130,884
Net interest margin (6) 3.10% 3.01%
Ratio of interest-earning assets to total interest-bearing liabilities 1.33x 1.32x
(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.