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President, Chairman and CEO, Phil Logan, stated: "We believe this further impairment charge is related to the continuing uncertainty in spreads in the bond market of mortgage related securities. This uncertainty has negatively impacted the market value of the securities in the fund and thus the net asset value of the fund itself. While the majority of the underlying securities in the fund continue to carry investment grades and acceptable market yields, current accounting rules and related SEC guidance resulted in our requirement to continue to write-down the value of the fund after we determined in the third quarter of 2008 that the impairment was other-than-temporary."
Without the write-down of the AMF Ultra Short Mortgage Fund, SFSB, Inc. would have reported net income of $324,000 for the twelve months ended December 31, 2008 as compared to net income of $103,000 for the twelve months ended December 31, 2007.
"As you can see, we continue to improve core earnings with regard to our operating results," said Logan. "The stability of our core banking operations and being well capitalized, has enabled SFSB, Inc. to withstand the lower values recorded in our investment portfolio without having a material impact on the health of our bank. In the current environment, our top priority is to maintain the strength of our balance sheet. We were successful in this regard during 2008 as both loans and deposits increased over the prior year, while our capital levels remained healthy."
As of December 31, 2008, the Bank had risk weighted capital of 14.15%, while the OTS requires a 10% ratio to be considered "well capitalized". Net interest margin was 2.47% at December 31, 2008 as compared to 1.99% at December 31, 2007, an increase of 48 basis points, or 24.12%. Our interest rate spread was 2.10% at December 31, 2008 as compared to 1.51% at December 31, 2007, an increase of 59 basis points, or 39.07%.
At December 31, 2008, SFSB, Inc. had total assets of $178.9 million, compared to $172.2 million at December 31, 2007. The increase in assets is primarily due to an increase in our loan portfolio, primarily attributable to an increase in commercial real estate loans, which is part of a strategic effort to increase the percentage of commercial real estate loans to residential loans to improve our net interest margin.
At December 31, 2008, stockholders' equity amounted to $19.1 million compared to $21.8 million at December 31, 2007. This decrease was primarily the result of a net loss of $2,153,000 and the purchase of $798,000 in additional Treasury stock.
SFSB, Inc., headquartered in Bel Air, Maryland is the holding company of Slavie Federal Savings Bank. The bank is a 108 year old federally chartered, FDIC-insured thrift serving the Baltimore Metropolitan area and surrounding counties in Maryland. The bank offers a wide variety of financial services and products throughout its market area. The bank maintains a website at www.slavie.com.
SFSB, INC.
CONDENSED STATEMENTS OF INCOME
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
------------------ -------------------
December 31 December 31
----------- -----------
(Unaudited) (Audited)
2008 2007 2008 2007
---- ---- ---- ----
Interest income $2,511 $2,422 $9,858 $9,414
Interest expense 1,361 1,543 5,722 6,137
Net interest income 1,150 879 4,136 3,277
Provision for loan losses 50 36 180 244
Net interest income after
provision for loan losses 1,100 843 3,956 3,033
Non-interest (loss) income (693) 157 (2,034) 434
Non-interest expenses 1,147 804 3,845 3,286
(Loss) income before income
tax provision (740) 196 (1,923) 181
Income tax provision 23 72 230 78
Net (loss) income $(763) $124 $(2,153) $103
Basic (loss) earnings per
share (0.29) 0.04 (0.80) 0.04
Diluted (loss) earnings per
share (0.29) 0.04 (0.80) 0.04
SFSB, INC
AUDITED SELECTED FINANCIAL DATA
(In thousands)
December 31 December 31
----------- -----------
2008 2007
---- ----
Total assets $178,882 $172,244
Cash and cash equivalents 3,856 1,277
Investment securities 7,040 11,942
Loans receivable-net 157,309 147,744
Deposits 123,203 114,098
Total borrowings 35,300 34,000
Total stockholders' equity 19,137 21,769
Forward-Looking Statements
The statements in this release with respect to our efforts to increase commercial real estate loans and improve our net interest margin are "forward-looking" as defined by Federal securities laws. These statements are based on current beliefs, assumptions and available information and involve risks and uncertainties that could cause actual results to differ from those set forth in forward-looking statements. These risks and uncertainties include, among others: those discussed in SFSB, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2008 as filed with the Securities and Exchange Commission; the effect of changing interest rates on profits and asset values; risks related to our intended increased focus on commercial real estate and commercial business loans; further deterioration of economic conditions in our market area and nationally; our dependence on key personnel; competitive factors within our market area; the effect of developments in technology on our business; adequacy of the allowance for loan losses; and changes in regulatory requirements and/or restrictive banking legislation. Because of these risks and uncertainties, you should not put undue reliance on any forward-looking statements. All forward-looking statements speak only as of the date hereof, and we undertake no obligation to make any revisions to the forward-looking statements to reflect subsequent events or circumstances or the occurrence of unanticipated events.
SOURCE SFSB, Inc.
http://www.slavie.com
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