Prudential Bancorp, Inc. of Pennsylvania (the "Company")
(Nasdaq:PBIP), the "mid-tier" holding company for Prudential Savings
Bank (the "Bank"), today reported net income of $955,000 for the
quarter ended March 31, 2006 as compared to $894,000 for the same
period in 2005. For the six months ended March 31, 2006, the Company
earned $2.0 million as compared to $1.6 million for the six months
ended March 31, 2005, an increase of 28.3%. Earnings per share on the
Company's outstanding common shares were $0.08 and $0.17 for the three
and six months periods ended March 31, 2006, respectively. Earnings
per share data was not applicable to the comparable periods in 2005
since the mutual holding company reorganization was not completed
until the end of March 2005.
Tom Vento, President and Chief Executive Officer, stated "We are pleased to report continued improvement in our operating results especially in light of the challenging interest rate environment and economic conditions existing today. We are committed to continued implementation of our business plan and believe that we are well positioned to continue to grow earnings long-term which will in turn bring value to our shareholders."
On March 29, 2005, the Bank completed its mutual holding company reorganization, including the related subscription offering to depositors for the shares of common stock of the Company. The Company sold 5,653,688 shares of common stock, representing 45% of the total shares issued by the Company in the reorganization, to the public at $10.00 per share for total proceeds of $56.5 million. The remaining 55% or 6,910,062 shares were issued to Prudential Mutual Holding Company, the Company's parent mutual holding company.
The Company's total assets increased by $4.1 million or 0.9% to $450.7 million at March 31, 2006 from September 30, 2005. The increase was primarily due to an increase in net loans receivable, partially offset by decreases in cash and cash equivalents. Our net loan portfolio experienced a $19.3 million or 11.0% increase to $194.4 million as we continued our emphasis on growing the loan portfolio. The majority of the growth in the loan portfolio was concentrated in single-family construction and residential mortgage loans. The decrease in cash and cash equivalents of $17.8 million to $9.0 million at March 31, 2006 reflected the systematic investment of funds received in the subscription offering in loans and other higher yielding investments. In addition, a portion of the decrease in cash and cash equivalents reflected the purchase of $5.0 million of bank owned life insurance ("BOLI"). The BOLI provides an attractive tax-exempt return to the Company and is being used by the Company to fund various employee benefit plans. The BOLI is included in other assets at its cash surrender value.
At March 31, 2006, total deposits increased $6.6 million or 2.0% to $343.0 million from $336.5 million as of September 30, 2005. The majority of the increase was due to a $10.4 million increase in certificates of deposits. This increase resulted primarily from a more aggressive deposit pricing strategy and increased customer demand for attractive short-term investments.
Stockholders' equity decreased by $634,000 to $90.2 million at March 31, 2006 as compared to $90.8 million at September 30, 2005 primarily due to the repurchase of shares of common stock at a total cost of $1.8 million and the payment of $957,000 in dividends, offset in part by $2.0 million in net income for the six months ended March 31, 2006.
The Company previously announced in April that the Board had approved the commencement of its second stock repurchase program of up to an additional 269,000 shares or approximately 5% of the Company's outstanding common stock held by other than Prudential Mutual Holding Company. The Company's second repurchase program will commence upon completion of its first repurchase program covering 277,000 shares. The average cost per share of the 201,000 shares which had been repurchased as of March 31, 2006 was $12.20 per share.
Net interest income increased $335,000 or 11.8% to $3.2 million for the three months ended March 31, 2006 as compared to $2.8 million for the same period in 2005. The increase was primarily due to a $798,000 or 15.6% increase in interest income partially offset by a $463,000 or 20.2% increase in interest expense. The increase in interest income resulted from an increase of $14.5 million or 3.5% in the average balance of interest-earning assets for the three months ended March 31, 2006, as compared to the same period in 2005. The weighted average yield earned on such assets increased by 58 basis points to 5.49% in the quarter ended March 31, 2006 from the comparable period in 2005. The increase in interest expense primarily resulted from a 55 basis point increase to 3.14% in the weighted average rate of interest paid on interest-bearing liabilities offset in part by a $2.9 million, or 0.8% decrease in the average balance of interest-bearing liabilities for the three months ended March 31, 2006 as compared to the same period in 2005. The increase in the weighted average cost of interest-bearing liabilities reflected the effect of the prevailing market rates of interest.
For the six months ended March 31, 2006, net interest income increased $742,000 or 13.3% to $6.3 million as compared to $5.6 million for the same period in 2005. The increase was primarily due to a $1.6 million or 15.7% increase in interest income partially offset by an $849,000 or 18.8% increase in interest expense. The increase in interest income resulted from an increase of $26.8 million or 6.6% in the average balance of interest-earning assets for the six months ended March 31, 2006, as compared to the same period in 2005. The weighted average yield earned on such assets increased by 43 basis points to 5.41% in the six month period ended March 31, 2006 from the comparable period in 2005. The increase in interest expense primarily resulted from a 56 basis point increase to 3.08% in the weighted average rate of interest paid on interest-bearing liabilities offset in part by a $9.0 million, or 2.5% decrease in the average balance of interest-bearing liabilities for the six months ended March 31, 2006 as compared to the same period in 2005.
The net interest margin was 2.93% for both the quarter and six months ended March 31, 2006, as compared to 2.72% and 2.75%, respectively, for the comparable periods in 2005. The improvement in our net interest margin in the fiscal 2006 periods reflected in large part the increase in the balance of net interest-earning assets resulting from the net proceeds received in the subscription offering.
The Company did not make any provision for loan losses for the three or six month periods ended March 31, 2006 or 2005. No provision was made based on management's evaluation that the allowance for loan losses was adequate at such dates. At March 31, 2006, the Company's non-performing assets totaled $297,000, or .07% of total assets and consisted solely of non-performing residential mortgage loans. There were no REO properties as of March 31, 2006. The allowance for loan losses totaled $558,000 or 0.3% of total loans and 187.9% of non-performing loans.
Non-interest income increased $162,000 and $169,000 for the three and six months ended March 31, 2006, respectively, as compared to the same periods in 2005. The increases were primarily due to a pre-tax gain on the sale of a real estate owned property of $100,000 and income from BOLI of $51,000.
Non-interest expense increased $404,000 or 25.2% during the three months ended March 31, 2006 compared to the same period in 2005 and increased $369,000 or 10.6% for the six months ended March 31, 2006 as compared to the same period in 2005. The increase for the quarter was primarily due to increases in compensation and benefit expense of $177,000 resulting primarily from an increase in retirement plan expenses and normal merit pay rate increases as well as an $108,000 increase in professional services expense reflecting the increased costs associated with being a public company that were not applicable in the 2005 period. For the six months ended March 31, 2006, the increase reflected increased compensation and benefit expense of $281,000 due primarily to an increase in retirement plan expenses and normal merit pay rate increases, an increase in professional services of $142,000 reflecting the increased costs associated with being a public company that were not applicable in 2005, partially offset by a decrease in litigation expenses from $125,000 in the 2005 period which were not incurred in the 2006 period.
Income tax expense for the quarter and six months ended March 31, 2006 amounted to $507,000 and $929,000, respectively, compared to $475,000 and $838,000, respectively, for the quarter and six months ended March 31, 2005. Our effective income tax rate remained stable at 34.7% for the quarters ended March 31, 2006 and 2005. For the six month period ended March 31, 2006, the effective tax rate decreased to 31.3% from 34.4% from the comparable period in 2005. This decrease in the effective tax rate was primarily attributable to tax benefits the Company realized as a result of the adjustment of a valuation allowance during the first fiscal quarter of 2006 that had previously been established for accrued liabilities related to prior period tax accruals.
Prudential Bancorp, Inc. of Pennsylvania is the "mid-tier" holding company for Prudential Savings Bank. Prudential Savings Bank is a Pennsylvania-chartered, FDIC-insured savings bank that was originally organized in 1886. The Bank conducts business from its headquarters and main office in Philadelphia, Pennsylvania as well as five additional full-service branch offices, four of which are in Philadelphia and one of which is in Drexel Hill in Delaware County, Pennsylvania.
This news release contains certain forward-looking statements, including statements about the financial condition, results of operations and earnings outlook for Prudential Bancorp, Inc. of Pennsylvania. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as "believe," "expect," "anticipate," "estimate" and "intend" or future or conditional verbs such as "will," "would," "should," "could" or "may." Forward-looking statements, by their nature, are subject to risks and uncertainties. A number of factors, many of which are beyond the Company's control, could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. The Company's reports filed from time-to-time with the Securities and Exchange Commission, describe some of these factors, including general economic conditions, changes in interest rates, deposit flows, the cost of funds, changes in credit quality and interest rate risks associated with the Company's business and operations. Other factors described include changes in our loan portfolio, changes in competition, fiscal and monetary policies and legislation and regulatory changes. Investors are encouraged to access the Company's periodic reports filed with the Securities and Exchange Commission for financial and business information regarding the Company at www.prudentialsavingsbank.com under the Investor Relations menu. We undertake no obligation to update any forward-looking statements. -0- SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA (Unaudited) At March 31, At September 30, 2006 2005 -------------- ---------------- (Dollars in Thousands) Selected Financial and Other Data: Total assets $450,676 $446,592 Cash and cash equivalents 8,967 26,815 Investment securities: Held-to-maturity 135,074 129,840 Available-for-sale 38,495 38,584 Mortgage-backed securities held-to- maturity 60,485 66,828 Loans receivable, net 194,399 175,091 Deposits 343,037 336,468 FHLB advances 13,804 13,823 Stockholders' equity 90,191 90,825 Full service offices 6 6 Three Months Ended Six Months Ended March 31, March 31, ----------------- ----------------- 2006 2005 2006 2005 --------- ------- -------- -------- (Dollars in Thousands Except Per Share Data) Selected Operating Data: Total interest income $5,922 $5,124 $11,707 $10,117 Total interest expense 2,754 2,291 5,374 4,525 Net interest income 3,168 2,833 6,333 5,592 Provision for loan losses - - - - Net interest income after provision for loan losses 3,168 2,833 6,333 5,592 Total non-interest income 299 137 470 301 Total non-interest expense 2,005 1,601 3,833 3,464 Income before income taxes 1,462 1,369 2,970 2,429 Income taxes 507 475 929 838 Net income 955 894 2,041 1,591 Basic earnings per share(1) .08 N/A .17 N/A Selected Operating Ratios(2): Average yield on interest- earning assets 5.49% 4.91% 5.41% 4.98% Average rate on interest-bearing liabilities 3.14% 2.59% 3.08% 2.52% Average interest rate spread(3) 2.35% 2.32% 2.33% 2.46% Net interest margin(3) 2.93% 2.72% 2.93% 2.75% Average interest-earning assets to average interest-bearing liabilities 122.88% 117.75% 123.84% 113.23% Net interest income after provision for loan losses to non-interest expense 158.00% 176.95% 165.22% 161.43% Total non-interest expense to average assets 1.79% 1.49% 1.72% 1.66% Efficiency ratio(4) 57.83% 53.91% 56.34% 58.78% Return on average assets 0.85% 0.83% 0.91% 0.76% Return on average equity 4.21% 8.70% 4.47% 7.90% Average equity to average assets 20.28% 9.58% 20.43% 9.63% At or for the ------------------------------- Three Months Six Months Ended Ended March 31, March 31, --------------- --------------- 2006 2005 2006 2005 Asset Quality Ratios(5) Non-performing loans as a percent of loans receivable, net(6) 0.15% 0.08% 0.15% 0.08% Non-performing assets as a percent of total assets(6) 0.07% 0.12% 0.07% 0.12% Allowance for loan losses as a percent of non-performing loans 187.88% 410.29% 187.88% 410.29% Net charge-offs to average loans receivable - - - - Capital Ratio(5) Tier 1 leverage ratio Company 20.09% 20.88% 20.09% 20.88% Bank 14.95% 14.53% 14.95% 14.53% Tier 1 risk-based capital ratio Company 43.82% 52.73% 43.82% 52.73% Bank 32.62% 36.69% 32.62% 36.69% Total risk-based capital ratio Company 44.23% 53.34% 44.23% 53.34% Bank 33.03% 37.30% 33.03% 37.30% --------------------------------------- (1) Due to the timing of the Bank's reorganization into the mutual holding company form and the completion of the Company's subscription offering on March 29, 2005, earnings per share for the 2005 periods are not considered meaningful and are not shown. (2) With the exception of end of period ratios, all ratios are based on average monthly balances during the indicated periods and are annualized where appropriate. (3) Average interest rate spread represents the difference between the average yield on interest-earning assets and the average rate paid on interest-bearing liabilities, and net interest margin represents net interest income as a percentage of average interest- earning assets. (4) The efficiency ratio represents the ratio of non-interest expense divided by the sum of net interest income and non-interest income. (5) Asset quality ratios and capital ratios are end of period ratios, except for net charge-offs to average loans receivable. (6) Non-performing assets consist of non-performing loans and real estate owned. Non-performing loans consist of all loans 90 days or more past due. It is the Company's policy to cease accruing interest on all loans, other than single-family residential mortgage loans, 90 days or more past due. Real estate owned consists of real estate acquired through foreclosure, real estate acquired by acceptance of a deed-in-lieu of foreclosure. At March 31, 2006, the Company did not hold any real estate owned.
Tom Vento, President and Chief Executive Officer, stated "We are pleased to report continued improvement in our operating results especially in light of the challenging interest rate environment and economic conditions existing today. We are committed to continued implementation of our business plan and believe that we are well positioned to continue to grow earnings long-term which will in turn bring value to our shareholders."
On March 29, 2005, the Bank completed its mutual holding company reorganization, including the related subscription offering to depositors for the shares of common stock of the Company. The Company sold 5,653,688 shares of common stock, representing 45% of the total shares issued by the Company in the reorganization, to the public at $10.00 per share for total proceeds of $56.5 million. The remaining 55% or 6,910,062 shares were issued to Prudential Mutual Holding Company, the Company's parent mutual holding company.
The Company's total assets increased by $4.1 million or 0.9% to $450.7 million at March 31, 2006 from September 30, 2005. The increase was primarily due to an increase in net loans receivable, partially offset by decreases in cash and cash equivalents. Our net loan portfolio experienced a $19.3 million or 11.0% increase to $194.4 million as we continued our emphasis on growing the loan portfolio. The majority of the growth in the loan portfolio was concentrated in single-family construction and residential mortgage loans. The decrease in cash and cash equivalents of $17.8 million to $9.0 million at March 31, 2006 reflected the systematic investment of funds received in the subscription offering in loans and other higher yielding investments. In addition, a portion of the decrease in cash and cash equivalents reflected the purchase of $5.0 million of bank owned life insurance ("BOLI"). The BOLI provides an attractive tax-exempt return to the Company and is being used by the Company to fund various employee benefit plans. The BOLI is included in other assets at its cash surrender value.
At March 31, 2006, total deposits increased $6.6 million or 2.0% to $343.0 million from $336.5 million as of September 30, 2005. The majority of the increase was due to a $10.4 million increase in certificates of deposits. This increase resulted primarily from a more aggressive deposit pricing strategy and increased customer demand for attractive short-term investments.
Stockholders' equity decreased by $634,000 to $90.2 million at March 31, 2006 as compared to $90.8 million at September 30, 2005 primarily due to the repurchase of shares of common stock at a total cost of $1.8 million and the payment of $957,000 in dividends, offset in part by $2.0 million in net income for the six months ended March 31, 2006.
The Company previously announced in April that the Board had approved the commencement of its second stock repurchase program of up to an additional 269,000 shares or approximately 5% of the Company's outstanding common stock held by other than Prudential Mutual Holding Company. The Company's second repurchase program will commence upon completion of its first repurchase program covering 277,000 shares. The average cost per share of the 201,000 shares which had been repurchased as of March 31, 2006 was $12.20 per share.
Net interest income increased $335,000 or 11.8% to $3.2 million for the three months ended March 31, 2006 as compared to $2.8 million for the same period in 2005. The increase was primarily due to a $798,000 or 15.6% increase in interest income partially offset by a $463,000 or 20.2% increase in interest expense. The increase in interest income resulted from an increase of $14.5 million or 3.5% in the average balance of interest-earning assets for the three months ended March 31, 2006, as compared to the same period in 2005. The weighted average yield earned on such assets increased by 58 basis points to 5.49% in the quarter ended March 31, 2006 from the comparable period in 2005. The increase in interest expense primarily resulted from a 55 basis point increase to 3.14% in the weighted average rate of interest paid on interest-bearing liabilities offset in part by a $2.9 million, or 0.8% decrease in the average balance of interest-bearing liabilities for the three months ended March 31, 2006 as compared to the same period in 2005. The increase in the weighted average cost of interest-bearing liabilities reflected the effect of the prevailing market rates of interest.
For the six months ended March 31, 2006, net interest income increased $742,000 or 13.3% to $6.3 million as compared to $5.6 million for the same period in 2005. The increase was primarily due to a $1.6 million or 15.7% increase in interest income partially offset by an $849,000 or 18.8% increase in interest expense. The increase in interest income resulted from an increase of $26.8 million or 6.6% in the average balance of interest-earning assets for the six months ended March 31, 2006, as compared to the same period in 2005. The weighted average yield earned on such assets increased by 43 basis points to 5.41% in the six month period ended March 31, 2006 from the comparable period in 2005. The increase in interest expense primarily resulted from a 56 basis point increase to 3.08% in the weighted average rate of interest paid on interest-bearing liabilities offset in part by a $9.0 million, or 2.5% decrease in the average balance of interest-bearing liabilities for the six months ended March 31, 2006 as compared to the same period in 2005.
The net interest margin was 2.93% for both the quarter and six months ended March 31, 2006, as compared to 2.72% and 2.75%, respectively, for the comparable periods in 2005. The improvement in our net interest margin in the fiscal 2006 periods reflected in large part the increase in the balance of net interest-earning assets resulting from the net proceeds received in the subscription offering.
The Company did not make any provision for loan losses for the three or six month periods ended March 31, 2006 or 2005. No provision was made based on management's evaluation that the allowance for loan losses was adequate at such dates. At March 31, 2006, the Company's non-performing assets totaled $297,000, or .07% of total assets and consisted solely of non-performing residential mortgage loans. There were no REO properties as of March 31, 2006. The allowance for loan losses totaled $558,000 or 0.3% of total loans and 187.9% of non-performing loans.
Non-interest income increased $162,000 and $169,000 for the three and six months ended March 31, 2006, respectively, as compared to the same periods in 2005. The increases were primarily due to a pre-tax gain on the sale of a real estate owned property of $100,000 and income from BOLI of $51,000.
Non-interest expense increased $404,000 or 25.2% during the three months ended March 31, 2006 compared to the same period in 2005 and increased $369,000 or 10.6% for the six months ended March 31, 2006 as compared to the same period in 2005. The increase for the quarter was primarily due to increases in compensation and benefit expense of $177,000 resulting primarily from an increase in retirement plan expenses and normal merit pay rate increases as well as an $108,000 increase in professional services expense reflecting the increased costs associated with being a public company that were not applicable in the 2005 period. For the six months ended March 31, 2006, the increase reflected increased compensation and benefit expense of $281,000 due primarily to an increase in retirement plan expenses and normal merit pay rate increases, an increase in professional services of $142,000 reflecting the increased costs associated with being a public company that were not applicable in 2005, partially offset by a decrease in litigation expenses from $125,000 in the 2005 period which were not incurred in the 2006 period.
Income tax expense for the quarter and six months ended March 31, 2006 amounted to $507,000 and $929,000, respectively, compared to $475,000 and $838,000, respectively, for the quarter and six months ended March 31, 2005. Our effective income tax rate remained stable at 34.7% for the quarters ended March 31, 2006 and 2005. For the six month period ended March 31, 2006, the effective tax rate decreased to 31.3% from 34.4% from the comparable period in 2005. This decrease in the effective tax rate was primarily attributable to tax benefits the Company realized as a result of the adjustment of a valuation allowance during the first fiscal quarter of 2006 that had previously been established for accrued liabilities related to prior period tax accruals.
Prudential Bancorp, Inc. of Pennsylvania is the "mid-tier" holding company for Prudential Savings Bank. Prudential Savings Bank is a Pennsylvania-chartered, FDIC-insured savings bank that was originally organized in 1886. The Bank conducts business from its headquarters and main office in Philadelphia, Pennsylvania as well as five additional full-service branch offices, four of which are in Philadelphia and one of which is in Drexel Hill in Delaware County, Pennsylvania.
This news release contains certain forward-looking statements, including statements about the financial condition, results of operations and earnings outlook for Prudential Bancorp, Inc. of Pennsylvania. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as "believe," "expect," "anticipate," "estimate" and "intend" or future or conditional verbs such as "will," "would," "should," "could" or "may." Forward-looking statements, by their nature, are subject to risks and uncertainties. A number of factors, many of which are beyond the Company's control, could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. The Company's reports filed from time-to-time with the Securities and Exchange Commission, describe some of these factors, including general economic conditions, changes in interest rates, deposit flows, the cost of funds, changes in credit quality and interest rate risks associated with the Company's business and operations. Other factors described include changes in our loan portfolio, changes in competition, fiscal and monetary policies and legislation and regulatory changes. Investors are encouraged to access the Company's periodic reports filed with the Securities and Exchange Commission for financial and business information regarding the Company at www.prudentialsavingsbank.com under the Investor Relations menu. We undertake no obligation to update any forward-looking statements. -0- SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA (Unaudited) At March 31, At September 30, 2006 2005 -------------- ---------------- (Dollars in Thousands) Selected Financial and Other Data: Total assets $450,676 $446,592 Cash and cash equivalents 8,967 26,815 Investment securities: Held-to-maturity 135,074 129,840 Available-for-sale 38,495 38,584 Mortgage-backed securities held-to- maturity 60,485 66,828 Loans receivable, net 194,399 175,091 Deposits 343,037 336,468 FHLB advances 13,804 13,823 Stockholders' equity 90,191 90,825 Full service offices 6 6 Three Months Ended Six Months Ended March 31, March 31, ----------------- ----------------- 2006 2005 2006 2005 --------- ------- -------- -------- (Dollars in Thousands Except Per Share Data) Selected Operating Data: Total interest income $5,922 $5,124 $11,707 $10,117 Total interest expense 2,754 2,291 5,374 4,525 Net interest income 3,168 2,833 6,333 5,592 Provision for loan losses - - - - Net interest income after provision for loan losses 3,168 2,833 6,333 5,592 Total non-interest income 299 137 470 301 Total non-interest expense 2,005 1,601 3,833 3,464 Income before income taxes 1,462 1,369 2,970 2,429 Income taxes 507 475 929 838 Net income 955 894 2,041 1,591 Basic earnings per share(1) .08 N/A .17 N/A Selected Operating Ratios(2): Average yield on interest- earning assets 5.49% 4.91% 5.41% 4.98% Average rate on interest-bearing liabilities 3.14% 2.59% 3.08% 2.52% Average interest rate spread(3) 2.35% 2.32% 2.33% 2.46% Net interest margin(3) 2.93% 2.72% 2.93% 2.75% Average interest-earning assets to average interest-bearing liabilities 122.88% 117.75% 123.84% 113.23% Net interest income after provision for loan losses to non-interest expense 158.00% 176.95% 165.22% 161.43% Total non-interest expense to average assets 1.79% 1.49% 1.72% 1.66% Efficiency ratio(4) 57.83% 53.91% 56.34% 58.78% Return on average assets 0.85% 0.83% 0.91% 0.76% Return on average equity 4.21% 8.70% 4.47% 7.90% Average equity to average assets 20.28% 9.58% 20.43% 9.63% At or for the ------------------------------- Three Months Six Months Ended Ended March 31, March 31, --------------- --------------- 2006 2005 2006 2005 Asset Quality Ratios(5) Non-performing loans as a percent of loans receivable, net(6) 0.15% 0.08% 0.15% 0.08% Non-performing assets as a percent of total assets(6) 0.07% 0.12% 0.07% 0.12% Allowance for loan losses as a percent of non-performing loans 187.88% 410.29% 187.88% 410.29% Net charge-offs to average loans receivable - - - - Capital Ratio(5) Tier 1 leverage ratio Company 20.09% 20.88% 20.09% 20.88% Bank 14.95% 14.53% 14.95% 14.53% Tier 1 risk-based capital ratio Company 43.82% 52.73% 43.82% 52.73% Bank 32.62% 36.69% 32.62% 36.69% Total risk-based capital ratio Company 44.23% 53.34% 44.23% 53.34% Bank 33.03% 37.30% 33.03% 37.30% --------------------------------------- (1) Due to the timing of the Bank's reorganization into the mutual holding company form and the completion of the Company's subscription offering on March 29, 2005, earnings per share for the 2005 periods are not considered meaningful and are not shown. (2) With the exception of end of period ratios, all ratios are based on average monthly balances during the indicated periods and are annualized where appropriate. (3) Average interest rate spread represents the difference between the average yield on interest-earning assets and the average rate paid on interest-bearing liabilities, and net interest margin represents net interest income as a percentage of average interest- earning assets. (4) The efficiency ratio represents the ratio of non-interest expense divided by the sum of net interest income and non-interest income. (5) Asset quality ratios and capital ratios are end of period ratios, except for net charge-offs to average loans receivable. (6) Non-performing assets consist of non-performing loans and real estate owned. Non-performing loans consist of all loans 90 days or more past due. It is the Company's policy to cease accruing interest on all loans, other than single-family residential mortgage loans, 90 days or more past due. Real estate owned consists of real estate acquired through foreclosure, real estate acquired by acceptance of a deed-in-lieu of foreclosure. At March 31, 2006, the Company did not hold any real estate owned.
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