SE Financial Corp. Announces Third Quarter 2010 Results

SE Financial Corp. (trading symbol: SEFL) (the "Company”), the holding company for St. Edmond’s Federal Savings Bank, announced net income of $180.8 thousand for the three months ended July 31, 2010 as compared to $123.1 thousand for the same period last year. For the nine months ended July 31, 2010, the Company announced net income of $724.7 thousand compared to $159.2 thousand for the same period last year.

• Total deposits increased $11.0 million for the quarter to $277.5 million at July 31, 2010 from $266.5 million as of April 30, 2010, representing a 16.50% increase on an annualized basis. The increase was comprised of increases in savings, checking and money market accounts of $7.1 million, $4.3 million and $1.2 million respectively, offset by a decrease in certificate of deposit accounts of $1.7 million.

• Despite intense competition in the Greater Philadelphia market, the Bank continues to attract new deposit customers and expand existing relationships while adhering to prudent pricing strategy. At July 31, 2010, the Bank’s total cost of deposits was 1.61%. This pricing strategy includes aggressive re-pricing of maturing certificates of deposit at lower rates, a decrease in rates paid on certain core deposit products and a focus on the collection of lower costing, service-sensitive, deposit accounts.
• During the quarter, loans receivable decreased $2.6 million to $204.6 million at July 31, 2010, as compared to loans receivable of $207.2 million at April 30, 2010. The yield on loans for the quarter ended July 31, 2010 decreased 21 basis points to 5.78% as compared to 5.99% for the quarter ended April 30, 2010 which was attributable to an increase in non-performing assets.
• The net interest margin was 2.90% for the quarter ended July 31, 2010 versus 3.21% for the quarter ended April 30, 2010. The decrease is due to an increase in cash and cash equivalents.
• The ratio of total non-performing assets to total assets increased to 334 basis points from 277 basis points at April 30, 2010. Real estate owned at July 31, 2010 totaled $593.6 thousand due to the foreclosure of one loan secured by commercial real estate. The property is currently under agreement of sale. Nonaccrual loans as of July 31, 2010 were comprised primarily of 6 single-family mortgage loans totaling $825.5 thousand, 2 relationships secured by land totaling $3.9 million, 7 multi-family and commercial real estate mortgage loans totaling $1.8 million and 3 single family residential completed construction loans and 1 muti-family condo project totaling $3.6 million.
• The allowance for loan losses to total loans was 161 basis points at July 31, 2010. During the quarter ended July 31, 2010 additional provisions totaling $695.9 thousand were recorded due mainly to loan risk rating downgrades, trends in delinquency, charge-off history and other qualitative factors used to calculate the estimate of the allowance for loan losses. There were charge-offs during the quarter ended July 31, 2010 totaling $59.7 thousand. The allowance represents management's estimate of the amount necessary to cover known and inherent losses in the loan portfolio.
• On August 17, 2010 the Board of Directors declared a cash dividend of $.03 per share to stockholders of record as of August 31, 2010.

Comparison of the Results of Operations for the Three Months Ended July 31, 2010 and July 31, 2009

For the three-month periods ended July 31, 2010 and 2009, net interest income before provision for loan losses totaled $2.2 million and $2.0 million, respectively. The increase of $165 thousand was due to an increase in the average balance of interest-earning assets of $18.5 million to $300.3 million for the three months ended July 31, 2010 as compared to $281.8 million for the three months ended July 31, 2009 and an increase in the net interest margin of 5 basis points to 2.90% for the three months ended July 31, 2010 from 2.85% for the three months ended July 31, 2009.

The provision for loan losses increased $413.0 thousand to $695.9 thousand for the three months ended July 31, 2010 versus $282.9 thousand for the three months ended July 31, 2009 due to downgrades and additional reserves against specific loans in the portfolio.

Non-interest income was $645.8 thousand for the three months ended July 31, 2010 compared to $117.1 thousand for the three months ended July 31, 2009. The increase of $528.7 thousand was due mainly to increases of $481.5 thousand in gains on sale of investment securities and $29.2 thousand in service fees on deposit accounts.

Non-interest expense increased $200.2 thousand to $1.9 million for the three months ended July 31, 2010 compared to $1.7 million for the three months ended July 31, 2009. The increase in non-interest expense was due mainly to increases in professional fees and federal deposit insurance premiums offset by a decrease in occupancy and equipment. The $156.4 thousand increase in professional fees is a result of legal fees incurred in connection with loan workout. The $16.6 thousand increase in federal deposit insurance premiums is a result of the increased premiums.

Comparison of the Results of Operations for the Nine Months Ended July 31, 2010 and July 31, 2009

For the nine month periods ended July 31, 2010 and 2009, net interest income before provision for loan losses totaled $6.8 million and $5.8 million, respectively. The increase of $1.0 million was due to an increase in the average balance of interest-earning assets of $19.4 million to $294.7 million for the nine months ended July 31, 2010 as compared to $275.3 million for the nine months ended July 31, 2009 and an increase in the net interest margin of 31 basis points to 3.13% for the nine months ended July 31, 2010 from 2.82% for the nine months ended July 31, 2009.

The provision for loan losses increased $808.9 thousand to $1.6 million for the nine months ended July 31, 2010 versus $752.4 thousand for the nine months ended July 31, 2009 due to downgrades and additional reserves against specific loans in the portfolio.

Non-interest income was $1.4 million for the nine months ended July 31, 2010 compared to $216.8 thousand for the nine months ended July 31, 2009. The increase of $1.1 million was due to increases in gains on sale of investment securities available for sale and service fees on deposit accounts in the amount of $653.9 thousand and $69.5 thousand respectively in the current year and other than temporary impairment charges on pooled trust preferred securities posted in the prior year of $382.1 thousand.

Non-interest expense increased $526.3 thousand to $5.6 million for the nine months ended July 31, 2010 compared to $5.1 million for the nine months ended July 31, 2009. The increase in non-interest expense was due mainly to increases in professional fees and federal deposit insurance premiums. The $325.4 thousand increase in professional fees is a result of legal fees incurred in connection with loan workout. The $135.0 thousand increase in federal deposit insurance premiums is a result of the increased premiums.

The increase in income tax expense of approximately $292.4 thousand for the nine months ended July 31, 2010 compared to the same period last year is due to the increase in pretaxable income.

Comparison of Financial Condition at July 31, 2010 and October 31, 2009

Total assets increased $8.9 million to $320.6 million at July 31, 2010 as compared to $311.7 million at October 31, 2009. Cash and cash equivalents increased $27.4 million to $52.3 million at July 31, 2010 from $24.8 million at October 31, 2009. Loans receivable decreased $2.8 million to $204.6 million at July 31, 2010 from $207.4 million at October 31, 2009. Deposits increased $20.6 million to $277.5 million at July 31, 2010 from $256.9 million at October 31, 2009. Borrowed money decreased $12.1 million to $16.8 million at July 31, 2010 from $28.9 million at October 31, 2009 due to maturities of Federal Home Loan Bank Advances. Stockholders’ equity increased $704.3 thousand to $25.4 million at July 31, 2010 from $24.7 million at October 31, 2009 due mainly to net income of $724.7 offset by dividends paid and a change in accumulated other comprehensive income (loss).

Company Information

SE Financial Corp. is the holding company for St. Edmond’s Federal Savings Bank, a federally chartered stock savings institution with six Neighborhood Banking Offices serving South Philadelphia, Roxborough, Ardmore and Drexel Hill, Pennsylvania and Deptford and Sewell, New Jersey. SE Financial Corp. is incorporated under the laws of the Commonwealth of Pennsylvania and its executive offices are located at 1901-03 East Passyunk Avenue, Philadelphia, Pennsylvania 19148. As of July 31, 2010, there were issued and outstanding 2,179,814 shares of common stock, par value $0.10 per share of SE Financial Corp. Registrar and Transfer Company serves as the transfer agent for SE Financial Corp. and its address is 10 Commerce Drive, Cranford, New Jersey 07016.

Senior Management: Pamela M. Cyr, President and CEO, J. Christopher Jacobsen, EVP and Chief Operating Officer, Charles F. Miller, EVP and Chief Lending and Credit Officer, and Caroline H. Doyle, Chief Financial Officer.

Board of Directors: Marcy C. Panzer (Chairman), Samuel Barsky (Secretary), Charles M. Cahn, Andrew A. Hines, Megan L. Mahoney, J. W. Parker, Jr., CPA, William F. Saldutti, III, Susanne Spinell Shuster, CPA.

Forward-Looking Statements Disclaimer

This news release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Any statement that is not a historical fact is a forward-looking statement. Such forward-looking statements are subject to risk and uncertainties, which could cause actual results to differ materially from those currently anticipated due to a number of factors.