BEL AIR, Md., May 15 /PRNewswire-FirstCall/ -- SFSB, Inc. (OTC Bulletin Board: SFBI) today reported a net loss of $163,000 for the quarter ended March 31, 2009, as compared to net income of $42,000 for the quarter ended March 31, 2008. The decrease in earnings was primarily due to a non-cash charge to earnings of $261,000 as a result of an other-than-temporary impairment (OTTI) in the value of the AMF Ultra Short Mortgage Fund held in our investment portfolio. This decline was partially offset by a decrease of $206,000 in interest expense for the three months ended March 31, 2009 as compared to the three months ended March 31, 2008, as a result of decreases in the interest rates we pay on deposit accounts.

President, Chairman and CEO, Phil Logan, stated: "We believe this 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 continues to carry investment grades and pay 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 $98,000 for the three months ended March 31, 2009 as compared to net income of $42,000 for the three months ended March 31, 2008.

"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 the quarter ended March 31, 2009, as both loans and deposits increased during the quarter, while our capital levels remained healthy."

As of March 31, 2009, the Bank had risk weighted capital of 13.75%, while the OTS requires a 10% ratio to be considered "well capitalized". Net interest margin was 2.56% at March 31, 2009 as compared to 2.17% at March 31, 2008, an increase of 39 basis points, or 17.97%. Our interest rate spread was 2.32% at March 31, 2009 as compared to 1.75% at March 31, 2008, an increase of 57 basis points, or 32.57%.

At March 31, 2009, SFSB, Inc. had total assets of $183.8 million as compared to $178.9 million at December 31, 2008. The increase in assets is primarily due to an increase in our loan portfolio, primarily attributable to an increase in commercial real estate loans, and an increase in cash and cash equivalents. These increases are part of a continued strategic effort to increase the number of and diversify the Bank's mix of commercial real estate loans to other types of loans in its portfolio to improve our net interest margin, and to increase our liquidity position.

At March 31, 2009, stockholders' equity amounted to $18.8 million compared to $19.1 million at December 31, 2008. This decrease was primarily the result of a net loss of $163,000 and the purchase of $174,000 in additional Treasury stock.

SFSB, Inc., headquartered in Bel Air, Maryland is the holding company of Slavie Federal Savings Bank. The bank is a 109 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.

                UNAUDITED CONDENSED STATEMENTS OF INCOME
                  (In thousands, except per share data)

                                           Three Months Ended
                                           ------------------
                                                 March 31
                                                 --------
                                              2009      2008
                                              ----      ----
    Interest income                         $2,412    $2,412
    Interest expense                         1,305     1,511
    Net interest income                      1,107       901
    Provision for loan losses                   51        36
    Net interest income after provision for
     loan losses                             1,056       865
    Non-interest (loss) income                (168)       83
    Non-interest expenses                      977       882
    (Loss) income before income taxes          (89)       66
    Income tax provision                        74        24
    Net (loss) income                         (163)       42
    Basic (loss) earnings per share          (0.06)     0.02
    Diluted (loss) earnings per share        (0.06)     0.02



                             SFSB, INC.
                  UNAUDITED SELECTED FINANCIAL DATA
                          (In thousands)

                                 March 31,              December  31,
                                 ---------              -------------
                                    2009                     2008
                                    ----                     ----

    Total assets                  $183,847                 $178,882
    Cash and cash equivalents        6,502                    3,856
    Investment securities            6,529                    7,040
    Loans receivable, net          160,369                  157,309
    Deposits                       128,358                  123,203
    Total borrowings                35,300                   35,300
    Total stockholders' equity      18,837                   19,137




                             SFSB, INC.
              RECONCILIATION of NON-GAAP FINANCIAL MEASURES
                           (In thousands)

                                      For the Quarter ended
                                          March 31, 2009
                                          --------------

    Net Loss                                   $(163)
    Adjustment for loss on investment            261
    Income after adjustment                       98

Forward-Looking Statements

The statements in this release with respect to our efforts to increase commercial real estate loans, improve our net interest margin and increase liquidity 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.