**UNITED STATES SECURITIES AND EXCHANGE COMMISSION**WASHINGTON, D.C. 20549

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FORM 10-QSB

(Mark One)

|        | QUARTERLY          REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT    OF 1934 |
|--------|-----------------------------------------------------------------------------------------------------|
|   |                                                                                                |

| For the quarterly period ended | July 31, 2004 |
|--------------------------------|---------------|
|                           |               |

|   |                                                                                        |
|--------|---------------------------------------------------------------------------------------------|
| OR     |
|   |                                                                                        |
|        | TRANSITION REPORT PURSUANT TO SECTION 13    OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

For the transition period from ________________________________________to _____________________________________________

| Commission file number   0-50684                       |
|--------------------------------------------------------|
|                                                   |
| **SE FINANCIAL CORP.**                                 |
|                                                        |
| (Exact name of registrant as specified in its charter) |

| Pennsylvania                                                   |   |   | 57-1199010                          |   |
|----------------------------------------------------------------|--------|--------|-------------------------------------|--------|
|                                                                |        |        |                                     |   |
| (State or other jurisdiction of incorporation or organization) |   |   | (I.R.S. employeridentification no.) |   |
|                                                           |   |   |                                |   |
| 1901-03 Passyunk Avenue, Philadelphia, Pennsylvania            |   |   | 19148                               |   |
|                                                                |        |        |                                     |   |
| (Address of principal executive offices)                       |   |   | (Zip Code)                          |   |

| Registrant’s telephone number, including area code   215-468-1700 |   |
|---------------------------------------------------------------------------------------|--------|

| N/A                                                                               |
|-----------------------------------------------------------------------------------|
|                                                                                   |
| Former name, former address and former fiscal year, if changed since last report. |
|                                                                              |

      Indicate by check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes     X        No _____

     Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date:   September 10, 2004

| Class                       | Outstanding       |
|-----------------------------|-------------------|
|                             |                   |
| $.10 par value common stock | 2,578,875  shares |

 

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**SE FINANCIAL CORP.**

**FORM 1O-QSB**

**FOR THE QUARTER ENDED JULY 31, 2004**

**INDEX**

|                                                 |   |   |    |   |   |                                                                           |   |   | PageNumber |   |
|------------------------------------------------------|--------|--------|---------|--------|--------|--------------------------------------------------------------------------------|--------|--------|------------|--------|
|                                                      |        |        |         |        |        |                                                                                |        |        |            |        |
|                                                 |   |   |    |   |   |                                                                           |   |   |       |   |
| **PART I – CONSOLIDATED FINANCIAL INFORMATION** |   |   |    |   |
|                                                 |   |   |    |   |   |                                                                           |   |   |       |   |
|                                                 |   |   | Item 1. |        |        | Consolidated Financial Statements (Unaudited)                                  |        |        | 1          |   |
|                                                 |   |   | Item 2. |        |        | Management’s Discussion and Analysis of Financial                         |        |        |       |   |
|                                                 |   |   |    |        |        | Condition and Results of Operations                                            |        |        | 9          |   |
|                                                 |   |   | Item 3. |        |        | Controls and Procedures                                                        |        |        | 13         |   |
|                                                 |   |   |    |   |   |                                                                           |   |   |       |   |
| **PART II- OTHER INFORMATION**                       |   |   |    |   |
|                                                 |   |   |    |   |   |                                                                           |   |   |       |   |
|                                                 |   |   | Item 1  |        |        | Legal Proceedings                                                              |        |        | 14         |   |
|                                                 |   |   | Item 2. |        |        | Changes in Securities and Small Business Issuer Purchases of Equity Securities |        |        | 14         |   |
|                                                 |   |   | Item 3. |        |        | Defaults Upon Senior Securities                                                |        |        | 14         |   |
|                                                 |   |   | Item 4. |        |        | Submission of Matters to a Vote of Security Holders                            |        |        | 14         |   |
|                                                 |   |   | Item 5. |        |        | Other Information                                                              |        |        | 14         |   |
|                                                 |   |   | Item 6. |        |        | Exhibits and Reports on Form 8-K                                               |        |        | 14         |   |
|                                                 |   |   |    |   |   |                                                                           |   |   |       |   |
|                                                 |   |   |    |   |   |                                                                           |   |   |       |   |
| **SIGNATURES**                                       |   |   |    |   |
|                                                 |   |   |    |   |   |                                                                           |   |   |       |   |
| **EXHIBITS**                                         |   |   |    |   |
|                                                 |   |   |    |   |   |                                                                           |   |   |       |   |
|                                                 |   |   | 31.1    |   |   | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002        |   |   |       |   |
|                                                 |   |   |    |   |   |                                                                           |   |   |       |   |
|                                                 |   |   | 31.2    |   |   | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002        |   |   |       |   |
|                                                 |   |   |    |   |   |                                                                           |   |   |       |   |
|                                                 |   |   | 32.     |   |   | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002        |   |   |       |   |
|                                                 |   |   |    |   |   |                                                                           |   |   |       |   |
|                                                 |   |   | 99.1    |   |   | Independent Accountant’s Report                                          |   |   |       |   |

I

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**SE FINANCIAL CORP.****CONSOLIDATED BALANCE SHEET**(Unaudited)

|                                      |                                                                               |   |   | **July 31,  2004** |   |   | **October 31,  2003** |   |
|-------------------------------------------|------------------------------------------------------------------------------------|--------|--------|--------------------|--------|--------|-----------------------|--------|
|                                      |                                                                               |   |   |               |   |   |
|                                      |                                                                               |   |        |                    |   |        |                       |   |
| ASSETS                                    |                                                                               |   |   |               |   |   |                  |
|                                      | Cash and due from banks                                                            |   | $      | 902,724            |   | $      | 675,001               |   |
|                                      | Interest-bearing deposits with other institutions                                  |   |   | 1,422,403          |   |   | 5,628,890             |   |
|                                      |                                                                               |   |        |                    |   |        |                       |   |
|                                      | Cash    and cash equivalents                                                       |   |   | 2,325,127          |   |   | 6,303,891             |   |
|                                      |                                                                               |   |   |               |   |   |                  |   |
|                                      | Certificates of deposit in other financial institutions                            |   |   | 187,201            |   |   | 183,483               |   |
|                                      | Investment securities available for sale                                           |   |   | 52,730,126         |   |   | 27,337,238            |   |
|                                      | Loans receivable (net of allowance    for loan losses of  $267,830 and $262,561)   |   |   | 57,753,221         |   |   | 50,729,660            |   |
|                                      | Accrued interest receivable                                                        |   |   | 581,258            |   |   | 482,538               |   |
|                                      | Federal Home Loan Bank Stock                                                       |   |   | 1,138,400          |   |   | 735,000               |   |
|                                      | Real estate owned                                                                  |   |   | 37,000             |   |   | 38,881                |   |
|                                      | Premises and equipment, net                                                        |   |   | 1,094,201          |   |   | 1,148,993             |   |
|                                      | Bank owned life insurance                                                          |   |   | 1,846,610          |   |   | —                |   |
|                                      | Other assets                                                                       |   |   | 550,495            |   |   | 407,622               |   |
|                                      |                                                                               |   |        |                    |   |        |                       |   |
|                                      | TOTAL    ASSETS                                                                    |   | $      | 118,243,639        |   | $      | 87,367,306            |   |
|                                      |                                                                               |   |        |                    |   |        |                       |   |
|                                      |                                                                               |   |   |               |   |   |                  |   |
|                                      |                                                                               |   |   |               |   |   |                  |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY |                                                                               |   |   |               |   |   |                  |
|                                      |                                                                               |   |   |               |   |   |                  |   |
| Liabilities                               |                                                                               |   |   |               |   |   |                  |
|                                      | Deposits                                                                           |   | $      | 69,523,547         |   | $      | 72,272,834            |   |
|                                      | Federal Home Loan Bank borrowings                                                  |   |   | 16,591,864         |   |   | 6,637,204             |   |
|                                      | Advances by borrowers for taxes and insurance                                      |   |   | 473,176            |   |   | 477,386               |   |
|                                      | Accrued interest payable                                                           |   |   | 46,184             |   |   | 49,703                |   |
|                                      | Other liabilities                                                                  |   |   | 654,860            |   |   | 258,521               |   |
|                                      |                                                                               |   |        |                    |   |        |                       |   |
|                                      | TOTAL    LIABILITIES                                                               |   |   | 87,289,631         |   |   | 79,695,648            |   |
|                                      |                                                                               |   |   |               |   |   |                  |   |
| Stockholders’ equity                 |                                                                               |   |   |               |   |   |                  |
|                                      | Preferred stock – no par value; 2,000,000 shares authorized; none issued      |   |   | —             |   |   | —                |   |
|                                      | Common stock – $0.10 par value; 8,000,000 shares authorized; 2,578,875 issued |   |   | 257,888            |   |   | —                |   |
|                                      | Additional paid-in-capital                                                         |   |   | 24,840,524         |   |   | —                |   |
|                                      | Unallocated shares held by Employee Stock Ownership Plan (“ESOP”)          |   |   | (2,035,438         | )      |   | —                |   |
|                                      | Retained earnings                                                                  |   |   | 8,195,967          |   |   | 7,755,558             |   |
|                                      | Accumulated other comprehensive loss                                               |   |   | (304,933           | )      |   | (83,900               | )      |
|                                      |                                                                               |   |        |                    |   |        |                       |   |
|                                      | TOTAL    STOCKHOLDERS’ EQUITY                                                 |   |   | 30,954,008         |   |   | 7,671,658             |   |
|                                      |                                                                               |   |        |                    |   |        |                       |   |
|                                      | TOTAL    LIABILITIES AND STOCKHOLDERS’ EQUITY                                 |   | $      | 118,243,639        |   | $      | 87,367,306            |   |
|                                      |                                                                               |   |        |                    |   |        |                       |   |

See accompanying notes to the unaudited consolidated financial statements.

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**S E FINANCIAL CORP.****CONSOLIDATED STATEMENT OF INCOME**(Unaudited)

|                                                 | **Three Months Ended July 31,** |      | **Nine Months Ended July 31,** |   |
|------------------------------------------------------|---------------------------------|-----------|--------------------------------|--------|
|                                                 |                                 |      |                                |   |
|                                                 | **2004**                        |      | **2003**                       |   | **2004** |   | **2003** |   |
|                                                 |                                 |      |                                |   |  |   |  |   |
| INTEREST AND DIVIDEND INCOME                         |                            |      |                           |   |   |   |   |   |   |   |   |   |
| Loans receivable                                     | $                               | 981,050   |                           | $      | 949,047 |   | $ | 2,800,895 |   | $ | 3,007,802 |   |
| Investment securities                                |                            |      |                           |   |   |   |   |   |   |   |   |   |
| Taxable                                              |                            | 359,515   |                           |   | 260,900 |   |   | 840,866 |   |   | 812,604 |   |
| Exempt from federal    income tax                    |                            | 33,907    |                           |   | 22,467 |   |   | 93,142 |   |   | 51,184 |   |
| Interest-bearing    deposits with other institutions |                            | 37,228    |                           |   | 11,817 |   |   | 63,157 |   |   | 42,523 |   |
| Other dividend    income                             |                            | 3,415     |                           |   | 3,548 |   |   | 8,186 |   |   | 14,229 |   |
|                                                 |                                 |           |                           |        |  |   |  |  |   |  |  |   |
| Total interest    and dividend income                |                            | 1,415,115 |                           |   | 1,247,779 |   |   | 3,806,246 |   |   | 3,928,342 |   |
|                                                 |                                 |           |                           |        |  |   |  |  |   |  |  |   |
|                                                 |                            |      |                           |   |   |   |   |   |   |   |   |   |
| INTEREST EXPENSE                                     |                            |      |                           |   |   |   |   |   |   |   |   |   |
| Deposits                                             |                            | 434,192   |                           |   | 534,927 |   |   | 1,351,094 |   |   | 1,717,107 |   |
| Federal Home    Loan Bank borrowings                 |                            | 121,819   |                           |   | 55,681 |   |   | 228,951 |   |   | 167,702 |   |
|                                                 |                                 |           |                           |        |  |   |  |  |   |  |  |   |
| Total interest    expense                            |                            | 556,011   |                           |   | 590,608 |   |   | 1,580,045 |   |   | 1,884,809 |   |
|                                                 |                                 |           |                           |        |  |   |  |  |   |  |  |   |
|                                                 |                            |      |                           |   |   |   |   |   |   |   |   |   |
| NET INTEREST INCOME                                  |                            | 859,104   |                           |   | 657,171 |   |   | 2,226,201 |   |   | 2,043,533 |   |
| Provision for    loan losses                         |                            | 9,000     |                           |   | 9,000 |   |   | 27,000 |   |   | 27,000 |   |
|                                                 |                                 |           |                           |        |  |   |  |  |   |  |  |   |
| NET INTEREST INCOME AFTER                            |                            |      |                           |   |   |   |   |   |   |   |   |   |
| PROVISION FOR    LOAN LOSSES                         |                            | 850,104   |                           |   | 648,171 |   |   | 2,199,201 |   |   | 2,016,533 |   |
|                                                 |                                 |           |                           |        |  |   |  |  |   |  |  |   |
|                                                 |                            |      |                           |   |   |   |   |   |   |   |   |   |
| NONINTEREST INCOME                                   |                            |      |                           |   |   |   |   |   |   |   |   |   |
| Service fees    on deposit accounts                  |                            | 63,864    |                           |   | 80,545 |   |   | 195,652 |   |   | 244,098 |   |
| Earnings on bank    owned life insurance             |                            | 20,079    |                           |   | - |   |   | 48,974 |   |   | - |   |
| Other                                                |                            | 8,795     |                           |   | 17,290 |   |   | 26,043 |   |   | 53,044 |   |
|                                                 |                                 |           |                           |        |  |   |  |  |   |  |  |   |
| Total noninterest    income                          |                            | 92,738    |                           |   | 97,835 |   |   | 270,669 |   |   | 297,142 |   |
|                                                 |                                 |           |                           |        |  |   |  |  |   |  |  |   |
|                                                 |                            |      |                           |   |   |   |   |   |   |   |   |   |
| NONINTEREST EXPENSE                                  |                            |      |                           |   |   |   |   |   |   |   |   |   |
| Compensation    and employee benefits                |                            | 343,981   |                           |   | 279,133 |   |   | 957,776 |   |   | 852,805 |   |
| Occupancy and    equipment                           |                            | 62,808    |                           |   | 62,524 |   |   | 177,137 |   |   | 203,891 |   |
| Real estate operation,    net                        |                            | 2,219     |                           |   | (1,313 | ) |   | 2,394 |   |   | 11,389 |   |
| Federal deposit    insurance premiums                |                            | 10,114    |                           |   | 9,859 |   |   | 30,011 |   |   | 35,158 |   |
| Data processing    expense                           |                            | 72,826    |                           |   | 72,479 |   |   | 216,088 |   |   | 219,398 |   |
| Professional    fees                                 |                            | 47,030    |                           |   | 32,717 |   |   | 116,981 |   |   | 72,536 |   |
| Other                                                |                            | 105,869   |                           |   | 83,713 |   |   | 286,756 |   |   | 259,859 |   |
|                                                 |                                 |           |                           |        |  |   |  |  |   |  |  |   |
| Total noninterest    expense                         |                            | 644,847   |                           |   | 539,112 |   |   | 1,787,143 |   |   | 1,655,036 |   |
|                                                 |                                 |           |                           |        |  |   |  |  |   |  |  |   |
|                                                 |                            |      |                           |   |   |   |   |   |   |   |   |   |
| INCOME BEFORE TAXES                                  |                            | 297,995   |                           |   | 206,894 |   |   | 682,727 |   |   | 658,639 |   |
|                                                 |                            |      |                           |   |   |   |   |   |   |   |   |   |
| INCOME TAXES                                         |                            | 106,256   |                           |   | 77,719 |   |   | 242,318 |   |   | 250,455 |   |
|                                                 |                                 |           |                           |        |  |   |  |  |   |  |  |   |
| NET INCOME                                           | $                               | 191,739   |                           | $      | 129,175 |   | $ | 440,409 |   | $ | 408,184 |   |
|                                                 |                                 |           |                           |        |  |   |  |  |   |  |  |   |
|                                                 |                            |      |                           |   |   |   |   |   |   |   |   |   |
|                                                 |                            |      |                           |   |   |   |   |   |   |   |   |   |
| PER SHARE DATA:                                      |                            |      |                           |   |   |   |   |   |   |   |   |   |
|                                                 |                            |      |                           |   |   |   |   |   |   |   |   |   |
| Earnings per    share 1                              | $                               | 0.08      |                           |   | NA |   | $ | 0.08 |   |   | NA |   |
|                                                 |                            |      |                           |   |   |   |   |   |   |   |   |   |
| Weighted average    number of shares outstanding     |                            | 2,374,450 |                           |   | NA |   |   | 2,374,450 |   |   | NA |   |

|   |   |                                                              |
|--------|--------|-------------------------------------------------------------------|
|   | 1.     | Reflects earnings since becoming a public company on May 5, 2004. |

See accompanying notes to the unaudited consolidated financial statements. 

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**S E FINANCIAL CORP.****CONSOLIDATED STATEMENT OFCHANGES IN STOCKHOLDERS’ EQUITY**

|                                                                      |   |     |   | **Common    Stock    at Par** |    | **Additional      Paid-in-    Capital** |   | **Unallocated   shares held   by ESOP** |   | **Retained   Earnings** |       | **AccumulatedOther      Comprehensive      Income    (Loss)** |        | **Total    Stockholders’    Equity** |   | **Comprehensive   Income** |     |
|---------------------------------------------------------------------------|--------|----------|--------|-------------------------------|---------|-----------------------------------------|--------|-----------------------------------------|--------|-------------------------|------------|---------------------------------------------------------------|-------------|-------------------------------------------|--------|----------------------------|----------|
|                                                                      |   |     |   |                               |    |                                         |   |                                         |   |                         |       |                                                               |        |                                           |   |                            |     |
|                                                                      |   |     |   |                          |    |                                    |   |                                    |   |                    |       |                                                          | (Unaudited) |                                      |   |                       |     |   |   |   |   |   |   |
|                                                                      |   |     |   |                          |    |                                    |   |                                    |   |                    |       |                                                          |        |                                      |   |                       |     |   |   |   |   |   |   |   |
| Balance, October 31, 2002                                                 |   |     |   | $                             | -       |                                    | $      | -                                       |   | $                       | -          |                                                          | $           | 7,198,956                                 |   | $                          | 187,158  |   | $ | 7,386,114 |   |   |   |   |
|                                                                      |   |     |   |                          |    |                                    |   |                                    |   |                    |       |                                                          |        |                                      |   |                       |     |   |   |   |   |   |   |   |
| Net income                                                                |   |     |   |                          |    |                                    |   |                                    |   |                    |       |                                                          |        | 408,183                                   |   |                       |     |   |   | 408,183 |   | $ | 408,183 |   |
|                                                                      |   |     |   |                          |    |                                    |   |                                    |   |                    |       |                                                          |        |                                      |   |                       |     |   |   |   |   |   |   |   |
| Other comprehensive income:                                               |   |     |   |                          |    |                                    |   |                                    |   |                    |       |                                                          |        |                                      |   |                       |     |   |   |   |   |   |   |   |
| Unrealized gain on  available for sale  securities net of  taxes of       | $      | 54,710   |   |                          |    |                                    |   |                                    |   |                    |       |                                                          |        |                                      |   |                       | 111,286  |   |   | 111,286 |   |   | 111,286 |   |
|                                                                      |   |     |   |                          |    |                                    |   |                                    |   |                    |       |                                                          |        |                                      |   |                       |     |   |   |   |   |  |  |   |
|                                                                      |   |     |   |                          |    |                                    |   |                                    |   |                    |       |                                                          |        |                                      |   |                       |     |   |   |   |   |   |   |   |
|                                                                      |   |     |   |                          |    |                                    |   |                                    |   |                    |       |                                                          |        |                                      |   |                       |     |   |   |   |   |   |   |   |
| Comprehensive income                                                      |   |     |   |                          |    |                                    |   |                                    |   |                    |       |                                                          |        |                                      |   |                       |     |   |   |   |   | $ | 519,469 |   |
|                                                                      |   |     |   |                               |         |                                    |        |                                         |   |                         |            |                                                          |             |                                           |   |                            |          |   |  |  |   |  |  |   |
| Balance, July 31, 2003                                                    |   |     |   | $                             | -       |                                    | $      | -                                       |   | $                       | -          |                                                          | $           | 7,607,139                                 |   | $                          | 298,444  |   | $ | 7,905,583 |   |   |   |   |
|                                                                      |   |     |   |                               |         |                                    |        |                                         |   |                         |            |                                                          |             |                                           |   |                            |          |   |  |  |   |   |   |   |
|                                                                      |   |     |   |                          |    |                                    |   |                                    |   |                    |       |                                                          |        |                                      |   |                       |     |   |   |   |   |   |   |   |
|                                                                      |   |     |   |                          |    |                                    |   |                                    |   |                    |       |                                                          |        |                                      |   |                       |     |   |   |   |   |   |   |   |
|                                                                      |   |     |   |                          |    |                                    |   |                                    |   |                    |       |                                                          |        |                                      |   |                       |     |   |   |   |   |   |   |   |
|                                                                      |   |     |   |                          |    |                                    |   |                                    |   |                    |       |                                                          |        |                                      |   |                       |     |   |   |   |   |   |   |   |
| Balance, October 31, 2003                                                 |   |     |   | $                             | -       |                                    | $      | -                                       |   | $                       | -          |                                                          | $           | 7,755,558                                 |   | $                          | (83,900  | ) | $ | 7,671,658 |   |   |   |   |
|                                                                      |   |     |   |                          |    |                                    |   |                                    |   |                    |       |                                                          |        |                                      |   |                       |     |   |   |   |   |   |   |   |
| Issuance of Common Stock                                                  |   |     |   |                          | 257,888 |                                    |   | 24,841,658                              |   |                    | (2,063,100 | )                                                             |        | -                                         |   |                       | -        |   |   | 23,036,446 |   |   |   |   |
|                                                                      |   |     |   |                          |    |                                    |   |                                    |   |                    |       |                                                          |        |                                      |   |                       |     |   |   |   |   |   |   |   |
| ESOP shares released                                                      |   |     |   |                          |    |                                    |   | (1,134                                  | )      |                    | 27,662     |                                                          |        |                                      |   |                       |     |   |   | 26,528 |   |   |   |   |
|                                                                      |   |     |   |                          |    |                                    |   |                                    |   |                    |       |                                                          |        |                                      |   |                       |     |   |   |   |   |   |   |   |
| Net income                                                                |   |     |   |                          |    |                                    |   |                                    |   |                    |       |                                                          |        | 440,409                                   |   |                       |     |   |   | 440,409 |   | $ | 440,409 |   |
|                                                                      |   |     |   |                          |    |                                    |   |                                    |   |                    |       |                                                          |        |                                      |   |                       |     |   |   |   |   |   |   |   |
| Other comprehensive loss:                                                 |   |     |   |                          |    |                                    |   |                                    |   |                    |       |                                                          |        |                                      |   |                       |     |   |   |   |   |   |   |   |
| Unrealized loss on  available for sale  securities net of  tax benefit of | $      | (133,641 | )      |                          |    |                                    |   |                                    |   |                    |       |                                                          |        |                                      |   |                       | (221,033 | ) |   | (221,033 | ) |   | (221,033 | ) |
|                                                                      |   |     |   |                          |    |                                    |   |                                    |   |                    |       |                                                          |        |                                      |   |                       |     |   |   |   |   |   |   |   |
| Comprehensive income                                                      |   |     |   |                          |    |                                    |   |                                    |   |                    |       |                                                          |        |                                      |   |                       |     |   |   |   |   | $ | 219,376 |   |
|                                                                      |   |     |   |                               |         |                                    |        |                                         |   |                         |            |                                                          |             |                                           |   |                            |          |   |  |  |   |  |  |   |
| Balance, July 31, 2004                                                    |   |     |   | $                             | 257,888 |                                    | $      | 24,840,524                              |   | $                       | (2,035,438 | )                                                             | $           | 8,195,967                                 |   | $                          | (304,933 | ) | $ | 30,954,008 |   |   |   |   |
|                                                                      |   |     |   |                               |         |                                    |        |                                         |   |                         |            |                                                          |             |                                           |   |                            |          |   |  |  |   |   |   |   |

See accompanying notes to the unaudited consolidated financial statements. 

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**SE FINANCIAL CORP.CONSOLIDATED STATEMENT OF CASH FLOWS**(Unaudited)

|                                                                                                                                                  | **For the Nine Months Ended July 31,** |        |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------|-------------|
|                                                                                                                                                  |                                   | **2004**    |   |   | **2003** |   |
|                                                                                                                                                  |                                        |             |   |  |  |   |
| OPERATING ACTIVITIES                                                                                                                                  |                                   |        |   |   |   |   |
|    Net income                                                                                                                          | $                                      | 440,409     |   | $ | 408,184 |   |
|    Adjustments to reconcile net income to    net cash provided by operating activities:                  |                                   |        |   |   |   |   |
|             Provision for loan losses                                                     |                                   | 27,000      |   |   | 27,000 |   |
|             Depreciation, amortization, and accretion                                     |                                   | 115,177     |   |   | 113,007 |   |
|             Earnings on bank-owned life insurance                                         |                                   | (48,974     | ) |   | - |   |
|             Increase in       accrued interest receivable                                 |                                   | (98,720     | ) |   | (24,513 | ) |
|             Decrease in accrued interest payable                                          |                                   | (3,519      | ) |   | (21,609 | ) |
|             Increase (decrease) in principal and interest on loans sold payable           |                                   | 86,083      |   |   | (29,397 | ) |
|             Other, net                                                                    |                                   | 300,722     |   |   | (1,016 | ) |
|                                                                                                                                                  |                                        |             |   |  |  |   |
|                   Net cash provided by operating activities |                                   | 818,178     |   |   | 471,656 |   |
|                                                                                                                                                  |                                        |             |   |  |  |   |
|                                                                                                                                                  |                                   |        |   |   |   |   |
| INVESTING ACTIVITIES                                                                                                                                  |                                   |        |   |   |   |   |
|    Investment securities available for sale:                                                                                           |                                   |        |   |   |   |   |
|             Proceeds from principal repayments and maturities                             |                                   | 8,524,421   |   |   | 16,166,593 |   |
|             Purchases                                                                     |                                   | (34,351,781 | ) |   | (21,331,111 | ) |
|    Decrease (increase) in loans receivable, net                                                                                        |                                   | (7,017,340  | ) |   | 2,165,671 |   |
|    Proceeds from sales of real estate acquired    through foreclosure                                                                  |                                   | 57,122      |   |   | 101,573 |   |
|    Purchase of Federal Home Loan Bank stock                                                                                            |                                   | (403,400    | ) |   | (92,900 | ) |
|    Purchase of bank-owned life insurance                                                                                               |                                   | (1,797,636  | ) |   | - |   |
|    Purchase of premises and equipment                                                                                                  |                                   | (45,937     | ) |   | (141,774 | ) |
|                                                                                                                                                  |                                        |             |   |  |  |   |
|                Net cash used for investing activities                      |                                   | (35,034,551 | ) |   | (3,131,948 | ) |
|                                                                                                                                                  |                                        |             |   |  |  |   |
|                                                                                                                                                  |                                   |        |   |   |   |   |
| FINANCING ACTIVITIES                                                                                                                                  |                                   |        |   |   |   |   |
|    Increase (decrease) in deposits, net                                                                                                |                                   | (2,749,287  | ) |   | 620,722 |   |
|    Proceeds from Federal Home Loan Bank borrowings                                                                                     |                                   | 10,000,000  |   |   | - |   |
|    Repayment of Federal Home Loan Bank borrowings                                                                                      |                                   | (45,340     | ) |   | (42,506 | ) |
|    Net proceeds from issuance of common stock                                                                                          |                                   | 23,036,446  |   |   | - |   |
|    Decrease in advances by borrowers for taxes    and insurance, net                                                                   |                                   | (4,210      | ) |   | (138,379 | ) |
|                                                                                                                                                  |                                        |             |   |  |  |   |
|                   Net cash provided by financing activities |                                   | 30,237,609  |   |   | 439,837 |   |
|                                                                                                                                                  |                                        |             |   |  |  |   |
|                                                                                                                                                  |                                   |        |   |   |   |   |
|                   Decrease in cash and cash equivalents     |                                   | (3,978,764  | ) |   | (2,220,455 | ) |
|                                                                                                                                                  |                                   |        |   |   |   |   |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                                                                                        |                                   | 6,303,891   |   |   | 7,300,707 |   |
|                                                                                                                                                  |                                        |             |   |  |  |   |
|                                                                                                                                                  |                                   |        |   |   |   |   |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                                                                            | $                                      | 2,325,127   |   | $ | 5,080,252 |   |
|                                                                                                                                                  |                                        |             |   |  |  |   |
|                                                                                                                                                  |                                   |        |   |   |   |   |
| SUPPLEMENTAL CASH FLOW DISCLOSURES                                                                                                                    |                                   |        |   |   |   |   |
|    Cash paid:                                                                                                                          |                                   |        |   |   |   |   |
|             Interest                                                                      | $                                      | 1,583,564   |   | $ | 1,906,418 |   |
|             Income taxes                                                                  |                                   | 147,000     |   |   | 187,717 |   |
|    Noncash transactions:                                                                                                               |                                   |        |   |   |   |   |
|             Transfers from loans to real estate acquired through foreclosure              |                                   | 54,939      |   |   | 240,560 |   |

See accompanying notes to the unaudited consolidated financial statements.

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**SE FINANCIAL CORP.****NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**

NOTE 1 – BASIS OF PRESENTATION

     The    consolidated financial statements include the accounts of  SE Financial Corp.    (the “Company”) and St. Edmond’s Federal Savings Bank (the “Bank”).The Bank includes its wholly-owned subsidiary, SE Investment Services Corp. (“ServicesCorp.”).  All intercompanytransactions have been eliminated in consolidation.  

     The    accompanying unaudited consolidated financial statements have been prepared     in accordance with accounting principles generally accepted in the United    States    of America    for interim financial information and theinstructions for Form 10-QSB.  In management’s opinion, the financial statementsinclude all adjustments, consisting of normal recurring  adjustments, that theCompany considers necessary to fairly state the Company’s financial positionand the results of operations and cash flows. The balance sheet at October 31,2003, has been derived from the audited financial statements at that date butdoes not include all of the necessary informational disclosures and footnotesas required by accounting principles generally accepted in the United Statesof America. The results of the Company’s operations for any interim periodare not necessarilyindicative of the results of the Company’s operations for any other interimperiod or for a full fiscal year.

NOTE 2 – COMPREHENSIVE INCOME

     The components of comprehensive income consist exclusively ofunrealized gains and losses on available for sale securities.  For the nine months ended July 31, 2004 and 2003, this activity is shownunder the heading Comprehensive Income as presented in the Consolidated Statement of Changes in Stockholders’ Equity (Unaudited).For the three months ended July 31, 2004 and 2003, comprehensive income (loss) totaled ($44,389) and $217,994, respectively.  

NOTE 3 – COMPLETION OF INITIAL PUBLIC OFFERING

     On January 15, 2004, the Board of Directors of the Bank, subjectto regulatory approval, ratified a Plan of Conversion (the “Plan”) to convert from a federally chartered mutual savingsinstitution to a federally chartered stock savings institution.  Upon completion of the conversion, the Bank became a wholly-ownedsubsidiary of a concurrently formed holding company, SE Financial Corp.  Pursuant to the plan, nontransferable subscription rights topurchase common stock of the holding company were offered first to eligible account holders, the tax-qualified employee stock benefit plans,and other members.

     On May 5, 2004, the Company completed an initial public offeringand sold 2,578,875 shares of common stock at $10 per share and received proceeds of $23,036,446 net of conversion expenses of approximately$689,204 and a note receivable from the ESOP of $2,063,100.  The Company used 50% of the net proceeds from the offering to purchase all ofthe Bank’s stock.

     The Company had received stock subscriptions totaling $34,437,740at April 30, 2004 pending completion of the Company’s initial public offering.  At the time of the closing, gross proceeds of$23,725,650 became capital of the Company with the remainder returned on oversubsciptions.

NOTE 4 – INVESTMENTS

The amortized cost and the fair value of available-for-sale investment securities were as follows:

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|                                 |   |   |                            |   |                        | **July 31, 2004**    |                         |
|--------------------------------------|--------|--------|---------------------------------|--------|-----------------------------|----------------------|------------------------------|
|                                 |   |   |                            |   |                             |                      |                         |
|                       |   |   |                  |   | ** Amortized    Cost** |                 | **Gross  Unrealized  Gains** |   | **Gross  Unrealized  Losses** |   | **Estimated  MarketValue** |   |
|                                 |   |   |                            |   |                             |                      |                         |  |  |   |  |  |   |  |  |   |
| Mortgage-backed securities:          |   |   |                                 |   |                        |                      |                         |   |  |   |   |   |   |
|                                 |   |   | Fannie Mae                      |   | $                           | 24,831,529           |                         | $ | 56,612 |   | $ | (238,560 | ) | $ | 24,649,581 |   |
|                                 |   |   | Freddie Mac                     |   |                        | 2,831,340            |                         |   | 11,172 |   |   | (7,956 | ) |   | 2,834,556 |   |
|                                 |   |   | GNMA                            |   |                        | 3,300,504            |                         |   | 60,937 |   |   | (667 | ) |   | 3,360,774 |   |
|                                 |   |   |                            |   |                             |                      |                         |  |  |   |  |  |   |  |  |   |
|                                 |   |   | Total mortage-backed securities |   |                        | 30,963,373           |                         |   | 128,721 |   |   | (247,183 | ) |   | 30,844,911 |   |
| U.S. Government agency    securities |   |   | 17,958,561                      |   |                        | 18,659               |                         |   | (360,156 | ) |   | 17,617,064 |   |
| Municipal securities                 |   |   | 4,113,789                       |   |                        | 19,989               |                         |   | (48,864 | ) |   | 4,084,914 |   |
|                                 |   |   |                            |   |                             |                      |                         |  |  |   |  |  |   |  |  |   |
|                                 |   |   | Total debt securities           |   |                        | 53,035,723           |                         |   | 167,369 |   |   | (656,203 | ) |   | 52,546,889 |   |
| Mutual funds                         |   |   | 183,707                         |   |                        | —               |                         |   | (470 | ) |   | 183,237 |   |
|                                 |   |   |                            |   |                             |                      |                         |  |  |   |  |  |   |  |  |   |
|                                 |   |   | Total                           |   | $                           | 53,219,430           |                         | $ | 167,369 |   | $ | (656,673 | ) | $ | 52,730,126 |   |
|                                 |   |   |                            |   |                             |                      |                         |  |  |   |  |  |   |  |  |   |
|                                 |   |   |                            |   |                        |                 |                         |   |   |   |   |   |   |   |   |   |
|                                 |   |   |                            |   |                        | **October 31, 2003** |                         |
|                                 |   |   |                            |   |                             |                      |                         |
|                       |   |   |                  |   | ** Amortized  Cost**   |                 | **GrossUnrealizedGains**     |   | **Gross  Unrealized  Losses** |   | **Estimated  Market  Value** |   |
|                                 |   |   |                            |   |                             |                      |                         |  |  |   |  |  |   |  |  |   |
|                                 |   |   |                            |   |                        |                 |                         |   |   |   |   |   |   |   |   |   |
| Mortgage-backed securities:          |   |   |                            |   |                        |                 |                         |   |   |   |   |   |   |
|                                 |   |   | Fannie Mae                      |   | $                           | 7,964,812            |                         | $ | 73,561 |   | $ | (29,236 | ) | $ | 8,009,137 |   |
|                                 |   |   | Freddie Mac                     |   |                        | 1,647,127            |                         |   | 15,285 |   |   | (538 | ) |   | 1,661,874 |   |
|                                 |   |   | GNMA                            |   |                        | 1,229,528            |                         |   | 32,871 |   |   | — |   |   | 1,262,399 |   |
|                                 |   |   |                            |   |                             |                      |                         |  |  |   |  |  |   |  |  |   |
|                                 |   |   | Total mortage-backed securities |   |                        | 10,841,467           |                         |   | 121,717 |   |   | (29,774 | ) |   | 10,933,410 |   |
| U.S. Government agency    securities |   |   | 13,721,409                      |   |                        | 40,534               |                         |   | (279,773 | ) |   | 13,482,170 |   |
| Municipal securities                 |   |   | 2,728,283                       |   |                        | 32,596               |                         |   | (20,369 | ) |   | 2,740,510 |   |
|                                 |   |   |                            |   |                             |                      |                         |  |  |   |  |  |   |  |  |   |
|                                 |   |   | Total debt securities           |   |                        | 27,291,159           |                         |   | 194,847 |   |   | (329,916 | ) |   | 27,156,090 |   |
| Mutual funds                         |   |   | 180,706                         |   |                        | 442                  |                         |   | — |   |   | 181,148 |   |
|                                 |   |   |                            |   |                             |                      |                         |  |  |   |  |  |   |  |  |   |
|                                 |   |   | Total                           |   | $                           | 27,471,865           |                         | $ | 195,289 |   | $ | (329,916 | ) | $ | 27,337,238 |   |
|                                 |   |   |                            |   |                             |                      |                         |  |  |   |  |  |   |  |  |   |

The amortized cost and estimated    market value of debt securities at July 31, 2004, by contractual maturity,    are shown below. Mortgage-backed securities provide for periodic, generally    monthly, payments of principal and interest and have contractual maturities    ranging from one to thirty years. Expected maturities will differ from contractual    maturities because borrowers may have the right to call or repay obligationswith or without call or prepayment penalties.

|                                   |   |   | **Amortized Cost** |   |   | **Estimated  Market Value** |   |
|----------------------------------------|--------|--------|--------------------|--------|--------|-----------------------------|--------|
|                                   |   |        |               |        |   |
|                                   |   |   |               |   |   |                        |   |
| Due after one year through five years  |   | $      | 8,184,004          |   | $      | 8,017,785                   |   |
| Due after five years through ten years |   |   | 14,582,413         |   |   | 14,350,433                  |   |
| Due after ten years                    |   |   | 30,269,306         |   |   | 30,178,771                  |   |
|                                   |   |        |                    |   |        |                             |   |
|                                   |   | $      | 53,035,723         |   | $      | 2,546,989                   |   |
|                                   |   |        |                    |   |        |                             |   |

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NOTE 5 – BORROWINGS

The following table sets forth information concerning other borrowings with the FHLB:

| ** **            |   |   | ** **         |   |   | ** ** |   |   | **Weighted****average****interest rate** |              |     | **Stated interest****rate range** |                 |   | ** ** |   |   | ** ** |   |
|-----------------------|--------|--------|--------------------|--------|--------|------------|--------|--------|------------------------------------------|-------------------|----------|-----------------------------------|----------------------|--------|------------|--------|--------|------------|--------|
| ** **            |   |   | **Maturity range** |   |   |       |   |   |                                     | **July 31, 2004** |     |                              | **October 31, 2003** |   |
| **Description**       |   |   | **from**           |   |   | **to**     |   |   |                                     |              | **from** |                              |                 | **to** |       |   |   |       |   |
|                       |   |   |                    |   |   |            |   |   |                                          |              |     |                                   |                 |   |            |   |        |            |   |  |  |   |
|                  |   |   |               |   |   |       |   |   |                                     |              |     |                              |                 |   |       |   |   |       |   |   |   |   |
| Convertible           |   |   | 2/18/2010          |   |   | 2/18/2010  |   |   | 5.91                                     | %                 |     | 5.91                              | %                    |   | 5.91       | %      | $      | 1,000,000  |   | $ | 1,000,000 |   |
| Fixed rate            |   |   | 11/1/2004          |   |   | 8/20/2008  |   |   | 3.11                                     |              |     | 1.29                              |                 |   | 6.24       |   |   | 11,500,000 |   |   | 1,500,000 |   |
| Line                  |   |   | 10/31/2004         |   |   | 10/31/2004 |   |   | 1.57                                     |              |     | 1.57                              |                 |   | 1.57       |   |   | 4,000,000  |   |   | 4,000,000 |   |
| Fixed rate amortizing |   |   | 11/3/2005          |   |   | 11/3/2005  |   |   | 6.47                                     |              |     | 6.47                              |                 |   | 6.47       |   |   | 91,864     |   |   | 137,204 |   |
|                  |   |   |               |   |   |       |   |   |                                     |              |     |                              |                 |   |       |   |        |            |   |  |  |   |
|                  |   |   |               |   |   |       |   |   |                                     |              |     |                              |                 |   |       |   |   |       |   |   |   |   |
|                  |   |   |               |   |   |       |   |   |                                     |              |     |                              |                 |   |       |   | $      | 16,591,864 |   | $ | 6,637,204 |   |
|                  |   |   |               |   |   |       |   |   |                                     |              |     |                              |                 |   |       |   |        |            |   |  |  |   |

Maturities of other borrowings at July 31, 2004, are summarized as follows:

|   |                     |   | **2004**   |   |
|--------|--------------------------|--------|------------|--------|
|   |                     |        |            |   |
|   | Year Ending  October 31, |   | **Amount** |   |   | **Weighted-  Average Rate** |   |
|   |                     |        |            |   |  |  |   |
|   |                     |   |       |   |   |   |   |
|   | 2004                     | $      | 4,015,606  |   |   |    1.59% |   |
|   | 2005                     |   | 3,065,009  |   |   | 1.69 |   |
|   | 2006                     |   | 3,011,249  |   |   | 2.64 |   |
|   | 2007                     |   | 3,000,000  |   |   | 3.30 |   |
|   | 2008                     |   | 2,500,000  |   |   | 5.29 |   |
|   | 2010                     |   | 1,000,000  |   |   | 5.91 |   |
|   |                     |        |            |   |   |   |   |
|   |                     |   |       |   |   |   |   |
|   |                     | $      | 16,591,864 |   |   |    2.93% |   |
|   |                     |        |            |   |   |   |   |

The terms of the convertible borrowing allows the FHLB to convert the interest rate to an adjustable rate based on the three-month London Interbank Offered Rate (“LIBOR”) at a predetermined anniversary year of the borrowing’s origination, ranging from one to seven years.  Rates may be reset at the FHLB’s discretion on a quarterly basis based on three-month LIBOR.  At each rate change the Bank may exercise a put option and satisfy the obligation without penalty.  The fixed rate amortizing borrowing requires monthly payments of principal and interest of $5,670 through November 2005.

NOTE 6 – EARNINGS PER SHARE

The Company currently maintains a simple capital structure; thus, there are no dilutive effects on earnings per share.  Earnings per share are calculated by dividing net income by the weighted-average number of shares outstanding for the period since inception, May 5, 2004.  Net income used in the earnings per share calculation was $179,960.

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NOTE 7 – EMPLOYEE STOCK OWNERSHIP PLAN

The Company has an ESOP for the benefit of employees who meet the eligibility requirements.  The ESOP trust purchased 206,310 shares of common stock in the initial public offering with proceeds from a loan with the Company.  The Bank makes cash contributions to the ESOP on an annual basis sufficient to enable the ESOP to make the required loan payments to the Company.  The loan bears an interest rate of 4.00% with principal and interest payable quarterly in equal installments over fourteen years.  The loan is secured by the shares of the stock purchased.

As the debt is repaid, shares are released from the collateral and allocated to qualified employees based on the proportion of debt service paid during the year.  Accordingly, the shares pledged as collateral are reported as unallocated ESOP shares in the Consolidated Balance Sheet.  As shares are released from collateral, the Company reports compensation expense equal to the current market price of the shares, and the shares become outstanding for earnings-per-share computations.  The Company’s contribution expense for the ESOP was $27,662 for the nine months ended July 31, 2004.

The following table presents the components of the ESOP shares:

|   |                            |   |   | **2004**  |   |
|--------|---------------------------------|--------|--------|-----------|--------|
|        |                                 |        |        |           |        |
|   | Shares released for allocation  |   |   | 2,766     |   |
|   |                            |   |   |      |   |
|   | Unreleased shares               |   |   | 203,544   |   |
|        |                                 |        |        |           |        |
|   |                            |   |   |      |   |
|   | Total ESOP shares               |   |   | 206,310   |   |
|        |                                 |        |        |           |        |
|   |                            |   |   |      |   |
|   |                            |   |   |      |   |
|   |                            |   |   |      |   |
|   | Fair value of unreleased shares |   | $      | 1,990,892 |   |
|        |                                 |        |        |           |        |

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**MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS**

**General**

     This document contains forward-looking statements, including statements about anticipated operating and financial performance, such as loan originations, operating efficiencies, loan sales, charge-offs and loan loss provisions, growth opportunities, interest rates, and deposit growth.  Words such as “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “project,” “plan,” and similar expressions are intended to identify these forward-looking statements.

     Forward-looking statements are necessarily subject to many risks and uncertainties.  A number of things could cause actual results to differ materially from those indicated by the forward-looking statements. Many of the risks and uncertainties are beyond our control.  Forward-looking statements are based on our beliefs, plans, objectives, goals, assumptions, expectations, estimates, and intentions as of the date the statements are made. There is no assurance that these beliefs, plans, objectives, goals, assumptions, expectations, estimates, and intentions will be realized.

**Comparison of the Results of Operations for the Nine Months Ended July 31, 2004 and July 31, 2003**

     The Company recorded net income of $440.4 thousand for the nine months ended July 31, 2004, which represents an increase of $32.2 thousand, or 7.9%, over the same period in 2003.  The increase in net income is primarily due to an increase in net interest income partially offset by a decrease in non-interest income and an increase in non-interest expense.

     **Net Interest Income.**  Net interest income for the nine months ended July 31, 2004 increased to $2.2 million from $2.0 million for the same period in 2003 as a result of a decrease in total interest expense.  Interest income for the nine months ended July 31, 2004 totaled $3.8 million as compared to $3.9 million for the nine months ended July 31, 2003.  This decrease of $122.1 thousand was attributed primarily to a decrease in the average yield on interest earning assets to 5.37% for the nine months ended July 31, 2004 from 6.38% for the nine months ended July 31, 2003.  This decrease was offset by an increase in the average balance of interest earning assets of $12.7 million.  The average balance of net loansreceivable, investment securities and other interest-earning assets increased by $3.0 million, $4.5 million and $5.3 million, respectively, while the average yields decreased by 1.01%, .22% and .57%, respectively.

     Interest expense decreased to $1.6 million, representing a 16.2% decrease, for the nine months ended July 31, 2004 from $1.9 million for the nine months ended July 31, 2003 and was primarily attributable to the current interest rate environment that resulted in a lowering of the average cost of funds to 2.70% for the nine months ended July 31, 2004 as compared to 3.35% for the same period in 2003.  The average balance of interest-bearing liabilities increased by $2.9 million.  The average balance of deposits decreased by $454 thousand and the average balance of FHLB advances increased by $3.3 million while the average cost of deposits decreased by .69% and the average cost of advances decreased by .32%.

     **Loan Loss Provision.**The provision for loan losses was $27 thousand for the nine months ended July 31, 2004 which is the same amount for the nine months ended July 31, 2003.  The loan loss provision is based upon management’s assessment of a variety of factors, including types and amounts of nonperforming loans, historical loss experience, collectibility of collateral values and guaranties, pending legal action for collection of loans and related guaranties, and current economic conditions.  The allowance represents management’s best estimate of known and inherent losses in the loan portfolio at the balance sheet date that are both probable and reasonable to estimate.  However, actual loan lossescould exceed the amounts that have been charged to operations. 

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     **Non-interest Income.**Total non-interest income decreased to $270.7 thousand for the nine months ended July 31, 2004 compared to $297.1 thousand for the nine months ended July 31, 2003.  The decrease is principally due to a reduction in service charges and fees on deposit account activity in both the transactional fees being charged and the volume of related transactions and a reduction in miscellaneous loan fees.  This decrease was offset by an increase in other non-interest income generated by the earnings on bank-owned life insurance.

     **Non-interest Expense.**Non-interest expense increased slightly to $1.8 million for the nine months ended July 31, 2004 from $1.7 million for the nine months ended July 31, 2003.  Compensation and employee benefit expense increased by approximately $105.0 thousand.  This increase was due to a normal increase in salaries, an increase in medical insurance costs, implementation of an incentive retirement plan and implementation of an employee stock ownership plan.  Occupancy and equipment expense decreased by approximately $26.8 thousand.  This decrease was attributable to a reduction in rental expense due to the closing of a branch office.  Professional fees increased by approximately $53.9 thousand.  Thisincrease was mainly due to an increase in accounting, auditing and legal fees that resulted from becoming a public reporting company.

     Additionally, the Bank currently plans to add seven full time employees to its staff over the next several years, including up to three new lending/business development officers, an assistant branch manager, and a support staff employee in each of the accounting, lending and customer service departments.

     **Income Taxes.**Income tax expense declined to $242.3 thousand for the nine months ended July 31, 2004 from $250.5 thousand for the same period in 2003.  This was due to an increase in tax-exempt investment securities as well as the purchase of bank-owned life insurance.

**Comparison of the Results of Operations for the Three Months Ended July 31, 2004 and July 31, 2003**

     The Company recorded net income of $191.7 thousand for the three months ended July 31, 2004, which represents an increase of $62.6 thousand over the same period in 2003.  The increase in net income is primarily due to an increase in net interest income, partially offset by a decrease in non-interest income and an increase in non-interest expense and an increase in taxes.

     **Net Interest Income.**  Net interest income for the three months ended July 31, 2004 increased to $859.1 thousand from $657.2 thousand for the same period in 2003 as a result of a decrease in total interest expense.  Interest income for the three months ended July 31, 2004 totaled $1.4 million as compared to $1.2 million for the three months ended July 31, 2003.  This increase of $167.3 thousand was attributed primarily to an increase in the average balance of interest earning assets as a result of the investment of the net proceeds from the Company’s stock offering offset by a decrease in the average yield on interest earning assets.

     Interest expense decreased to $556.0 thousand for the three months ended July 31, 2004 from $590.6 thousand for the three months ended July 31, 2003 and was primarily attributable to the current interest rate environment that resulted in a lowering of the average cost of funds to 2.64% for the three months ended July 31, 2004 as compared to 3.13% for the same period in 2003.

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     **Loan Loss Provision.**The provision for loan losses was $9,000 for the three months ended July 31, 2004 which is the same amount as for the three months ended July 31, 2003.  The loan loss provision is based upon management’s assessment of a variety of factors, including types and amounts of nonperforming loans, historical loss experience, collectibility of collateral values and guaranties, pending legal action for collection of loans and related guaranties, and current economic conditions.  The allowance represents management’s best estimate of known and inherent losses in the loan portfolio at the balance sheet date that are both probable and reasonable to estimate.  However, actual loan lossescould exceed the amounts that have been charged to operations. 

     **Non-interest Income.**Total non-interest income decreased to $92.7 thousand for the three months ended July 31, 2004 compared to $97.8 thousand for the three months ended July 31, 2003.  The decrease is principally due to a reduction in service fees on deposit accounts, a reduction in miscellaneous loan fee income offset by the income generated by the purchase of a bank-owned life insurance policy.

     **Non-interest Expense.**Non-interest expense increased to $644.8 thousand for the three months ended July 31, 2004 from $539.1 thousand for the three months ended July 31, 2003.  Compensation and employee benefit expense increased by approximately $64.8 thousand.  This increase was due to a normal increase in salaries, an increase in medical insurance costs, the implementation of an incentive retirement plan and the implementation of an employee stock ownership plan.  Miscellaneous operating expenses increased by approximately $40.6 thousand.  This increase was due to an increase in loan origination expenses and an increase in professional fees that resulted from becoming a public reporting company.

     **Income Taxes.**Income tax expense increased to $106.3 thousand for the three months ended July 31, 2004 from $77.7 thousand for the same period in 2003.  This was due to an increase in income before taxes.

**Comparison of Financial Condition at July 31, 2004 and October 31, 2003**

     **Assets      and Liabilities.**The Company’s total assets increased by $30.9      million to $118.2 million at July 31, 2004 from $87.4 million at October      31, 2003.  

     Cash and cash equivalents decreased to $2.3 million at July 31, 2004 from $6.3 million at October 31, 2003.  Cash and cash equivalents decreased during the period as funds were utilized to purchase securities and fund loan originations.

     Investment securities available for sale increased by $25.4 million to $52.7 million at July 31, 2004 from $27.3 million at October 31, 2003.  The increase is due to investment purchases primarily in U. S. government mortgage-backed securities which were partially offset by investment calls and maturities and principal repayment on mortgage-backed securities.  The Company funded this growth through an increase in borrowing from the Federal Home Loan Bank of Pittsburgh, along with the utilization of excess cash and cash equivalents and the reinvestment of called and matured securities during the nine months ended July 31, 2004.

     Net loans receivable increased $7.0 million, or 13.8%, to $57.8 million at July 31, 2004 from $50.7 million at October 31, 2003, as the Company continued to experience strong loan production and repayments were more moderate.  The increase in net loans receivable was the result of increases in single family 1-4 residential mortgages which includes owner and non-owner occupied properties, home equity loans and construction financing.

     The allowance for loan losses increased to $267.8 thousand at July 31, 2004 from $262.5 thousand at October 31, 2003 and represented 0.46% of the gross loan portfolio at July 31, 2004.  The Company had nonaccrual loans of $92.5 thousand and $369.8 thousand at July 31, 2004 and October 31, 2003, respectively.  Management does not believe the nonaccrual loans or any amounts classified as nonperforming will have a significant effect on operations or liquidity in 2004.  Furthermore, management is not aware of any trends or uncertainties related to any loans classified as doubtful or substandard that might have a material effect on earnings, liquidity or capital resources.

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     Total deposits decreased to $69.5 million at July 31, 2004 from $72.3 million at October 31, 2003.  This was primarily a result of a decrease in certificates of deposit offset by an increase in core accounts.  Although time deposits declined, they continued to account for 68.22% of the total deposit portfolio and remain a dominant source of funds.

     Federal Home Loan Bank borrowings increased to $16.6 million at July 31, 2004 from $6.6 million at October 31, 2003.  The Company borrowed funds from the FHLB to fund the purchase of U. S. government mortgage-backed securities.

     **Stockholders’ Equity.**Total stockholders’ equity increased $23.3 million to $31.0 million at July 31, 2004 from October 31, 2003.  This increase was attributable to net proceeds of $23.0 million in connection with the Company’s initial public offering, and net income of $440.4 thousand, offset by accumulated other comprehensive loss of $221.0 thousand.  Accumulated other comprehensive income decreased as a result of changes in the net unrealized loss on investment securities available for sale.  Because of interest rate volatility, accumulated other comprehensive income could materially fluctuate for each interim period and year end period depending on economic and interest rate conditions.

**Liquidity and Capital Resources**

     **Liquidity**.  Liquidity management for the Company is measured and monitored on both a short- and long-term basis, allowing management to better understand and react to emerging balance sheet trends.  After assessing actual and projected cash flow needs, management seeks to obtain funding at the most economical cost to the Company.  Both short- and long-term liquidity needs are addressed by maturities and sales of investments securities, and loan repayments and maturities.  The use of these resources, in conjunction with access to credit, provides the core ingredients for satisfying depositor, borrower, and creditor needs.

     The Company’s liquid assets consist of cash and cash equivalents, certificates of deposit in other financial institutions and investment securities classified as available for sale.  The level of these assets is dependent on the Company’s operating, investing, and financing activities during any given period.  At July 31, 2004, cash and cash equivalents totaled approximately $2.3 million, or 2.0% of total assets while investment securities classified as available for sale and certificates of deposit in other financial institutions totaled approximately $52.7 million, or 44.6% of total assets.  Management believes that the liquidity needs of the Company are satisfied by the current balance of cash and cashequivalents, readily available access to traditional funding sources, FHLB advances, and the portion of the investment and loan portfolios that mature within one year.

     Operating activities provided net cash of approximately $933.6 thousand and $483.5 thousand for the nine months ended July 31, 2004 and 2003, respectively. 

                  Investing activities consist primarily of loan originations and repayments and investment purchases and maturities.  For the nine months ended July 31, 2004, these cash usages primarily consisted of investment purchases of $34.4 million, an increase in net loan receivable of $7.0 million, the purchase of bank-owned life insurance in the amount of $1.8 million and the purchase of Federal Home Loan Bank stock in the amount of $403.4 thousand.  Partially offsetting the usage of investment activities is $8.5 million of proceeds from investment security maturities and repayments.  For the same period ended 2003, cash usages primarily consisted of investment purchases of $21.3 million and the purchase of Federal Home Loan Bank stock of$92.9 thousand. Partially offsetting the usage of investment activities were net repayment of loans in the amount of $2.2 million and proceeds from repayments and maturities of investment securities in the amount of $16.2 million.  For both periods, the lower interest rate environment has resulted in numerous securities being called and one-to-four family loans being refinanced.  

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     Financing activities consist of the solicitation and repayment of customer deposits, borrowings and repayments, and advances by borrowers for taxes and insurance and the issuance of common stock.  For the nine months ended July 31, 2004, net cash provided by financing activities totaled $30.2 million and was principally from the net proceeds derived from common stock sold in the Company’s initial public offering of $23.0 million and an increase in Federal Home Loan Bank advances in the amount of $10.0 million offset by a decrease in deposits of $2.7 million. For the same period in 2003, net cash provided by financing activities totaled $439.8 thousand and was primarily from an increase in deposits.

     Liquidity may be adversely affected by unexpected deposit outflows, interest rates paid by competitors, and similar matters.  Management monitors projected liquidity needs and determines the level desirable, based in part on the Company’s commitment to make loans, as well as management’s assessment of the Company’s ability to generate funds.  The Bank anticipates that it will have sufficient liquidity to satisfy expected short-term and long-term funding needs.

     **Capital**.  The Company’s primary source of capital has been retained earnings.  Historically, the Bank has generated net retained income to support normal growth and expansion.  The proceeds of the stock offering in connection with the Company’s recently completed mutual-to-stock conversion are part of management’s new capital planning policy to ensure compliance with regulations and to permit future expansion.  The infusion of this new capital significantly increased the Company’s capital resources by increasing equity.

     The Bank is subject to federal regulations imposing minimum capital requirements.  Management monitors the Bank’s total risk-based, Tier I risk-based, and Tier I leverage capital ratios to assess compliance with regulatory guidelines.  At July 31, 2004, the Bank exceeded the minimum capital ratio requirements.****

**ITEM 3.  CONTROLS AND PROCEDURES**

(a)  ****     **Evaluation of disclosure controls and procedures.**  Based on their evaluation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)), the Company’s principal executive officer and principal financial officer have concluded that as of the end of the period covered by this Quarterly Report on Form 10-QSB such disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules andforms.

(b)           **Changes in internal control over financial reporting.**  During the quarter under report, the Company made a change in the firm that performs the internal audit function for the Bank.  The Company still believes there was no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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**PART II**

| **ITEM 1.** | **LEGAL PROCEEDINGS**                            |
|-------------|--------------------------------------------------|
|        |      Not    applicable. |
|        |                                             |

| **ITEM 2.** | **CHANGES IN SECURITIES AND SMALL    BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES** |
|-------------|---------------------------------------------------------------------------------------|

|   |   | (d) | Use of Proceeds |
|--------|--------|-----|-----------------|

|   |   |   | (1) | The effective date of the Form SB-2 was March 11, 2004 and the Commission file number was 333-112153. |
|--------|--------|--------|-----|-------------------------------------------------------------------------------------------------------|

|   |   |   | (2) | The Offering commenced on May 5, 2004. |
|--------|--------|--------|-----|----------------------------------------|

|   |   |   | (3) | Not Applicable |
|--------|--------|--------|-----|----------------|

|   |   |   | (4) | (i) | The offering has terminated with the sale of all securities registered; |
|--------|--------|--------|-----|-----|-------------------------------------------------------------------------|

|   |   |   |   | (ii) | The name of the managing underwriter:  Sandler O’Neill & Partners, L.P. |
|--------|--------|--------|--------|------|-----------------------------------------------------------------------------------|

|   |   |   |   | (iii) | Common stock, par value $.10 per share was registered; |
|--------|--------|--------|--------|-------|--------------------------------------------------------|

|   |   |   |   | (iv) | Amount registered – 2,578,875 shares; |
|--------|--------|--------|--------|------|--------------------------------------------|

|   |   |   |   |   | Aggregate price of offering amount registered – $25,788,750; |
|--------|--------|--------|--------|--------|-------------------------------------------------------------------|

|  |   |   |   | (v) | Expenses of the offering which were direct or indirect payments to others; |
|--|--------|--------|--------|-----|----------------------------------------------------------------------------|

|   |   |   |   |   | Expense paid to and for underwriters – $317,888; |
|--------|--------|--------|--------|--------|-------------------------------------------------------|

|   |   |   |   |   | Other expenses – $371,316; |
|--------|--------|--------|--------|--------|---------------------------------|

|   |   |   |   |   | Total expenses – $689,204; |
|--------|--------|--------|--------|--------|---------------------------------|

|  |   |   |   | (vi) | Net offering proceeds – $25,099,546; |
|--|--------|--------|--------|------|-------------------------------------------|

|  |   |   |   | (vii) | Direct or indirect payments to affiliates: |
|--|--------|--------|--------|-------|--------------------------------------------|

|   |   |   |   |   | Loan to ESOP of subsidiary bank – $2,063,100; |
|--------|--------|--------|--------|--------|----------------------------------------------------|

|   |   |   |   |   | Purchase outstanding stock of subsidiary bank – $12,549,773; |
|--------|--------|--------|--------|--------|-------------------------------------------------------------------|

|   |   |   |   |   | Non interest checking account with subsidiary bank – $10,486,672 |
|--------|--------|--------|--------|--------|-----------------------------------------------------------------------|

|  |   |   |   | (viii) | Not applicable |
|--|--------|--------|--------|--------|----------------|

|           |                                |
|----------------|-------------------------------------|
| **ITEM    3.** | **DEFAULTS UPON SENIOR SECURITIES** |

|   |      Not applicable. |
|--------|-----------------------------------------------|

|           |                                                       |
|----------------|------------------------------------------------------------|
| **ITEM    4.** | **SUBMISSION OF MATTERS TO A VOTE    OF SECURITY HOLDERS** |

|   |      None. |
|--------|-------------------------------------|

|           |                  |
|----------------|-----------------------|
| **ITEM    5.** | **OTHER INFORMATION** |

|   |      None. |
|--------|-------------------------------------|

|           |                                    |
|----------------|-----------------------------------------|
| **ITEM    6.** | **EXHIBITS AND REPORTS ON FORM    8-K** |

|   |   |   |     |
|--------|--------|--------|----------|
|   |   | (a)    | Exhibits |

|   |   |   |                                              |
|--------|--------|--------|---------------------------------------------------|
|   |   | 3(i)   | Articles of Incorporation of SE Financial Corp. * |

|   |   |   |                           |
|--------|--------|--------|--------------------------------|
|   |   | 3(ii)  | Bylaws of SE Financial Corp. * |

|   |   |   |                                              |
|--------|--------|--------|---------------------------------------------------|
|   |   | 4      | Specimen Stock Certificate of SE Financial Corp.* |

|   |   |   |                             |
|--------|--------|--------|----------------------------------|
|   |   | 10.1   | Executive Life Insurance Plan ** |

|   |   |   |                                          |
|--------|--------|--------|-----------------------------------------------|
|   |   | 10.2   | Directors’ Incentive Retirement Plan ** |

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|   |   | 10.3 | Executive Officers’ Incentive Retirement Plan ** |
|--------|--------|------|--------------------------------------------------------|

|   |   |   |                                                                                            |
|--------|--------|--------|-------------------------------------------------------------------------------------------------|
|   |   | 31.1   | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – Frank S. DePaolo |

|   |   |   |                                                                                             |
|--------|--------|--------|--------------------------------------------------------------------------------------------------|
|   |   | 31.2   | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – Joseph Sidebotham |

|   |   |   |                                                                       |
|--------|--------|--------|----------------------------------------------------------------------------|
|   |   | 32     | Certification pursuant to Section    906 of the Sarbanes-Oxley Act of 2002 |

|   |   |   |                                  |
|--------|--------|--------|---------------------------------------|
|   |   | 99.1   | Independent Accountant’s Report |

|  |  |   |                |
|--|--|--------|---------------------|
|  |  | (b)    | Reports on Form 8-K |

|   |   |   |   |
|--------|--------|--------|--------|

|   |   |   | A current report on Form 8-K, dated May 5,      2004, was filed by the Company on May 5, 2004 with respect to the Company’s      press release announcing the receipt of regulatory and member approval      on its plan to convert to stock ownership, under Item 5. |
|--------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |                                                                                                                                                                                                                                                                        |
|   |   |   | A current report on Form 8-K, dated June 1,      2004, was filed by the Company on June 1, 2004 with respect to the Company’s      press release announcing earnings results for the period ended April 30,      2004, under Item 7.                                  |
|   |   |   |                                                                                                                                                                                                                                                                        |
|   |   |   | A current report on Form 8-K,      dated August 18, 2004, was filed by the Company on August 18, 2004 with      respect to the Company’s press release announcing a declaration of      a cash dividend, under Item 5.                                                |
|   |   |   |                                                                                                                                                                                                                                                                        |
|   |   |   | A current report on Form 8-K, dated August 25, 2004, was filed by the Company on August 25, 2004 with respect to the Company’s press release announcing earnings results for the period ended July 31, 2004, under Item 2.02.                                         |

|   |   |                                                                                                                                                                                   |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                   |
|   | *      | Incorporated by reference to the identically numbered exhibit to the Company’s registration statement on Form SB-2 (File No. 333-112153) filed with the SEC on January 23, 2004. |

|   | ** | Incorporated by reference to the identically numbered exhibit to the Company’s registration statement on Form SB-2 (File No. 333-112153) filed with the SEC on March 1, 2004. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

|                      |   | **SE FINANCIAL CORP.**                                                                                                |
|---------------------------|--------|-----------------------------------------------------------------------------------------------------------------------|
|                      |   |                                                                                                                  |
|                      |   |                                                                                                                  |
|                      |   |                                                                                                                  |
| Date: September  10, 2004 |   | /s/ Frank S. DePaolo                  |
|                      |   | Frank S. DePaolo                                                                                                      |
|                      |   | President and CEO                                                                                                     |
|                      |   | (Principal Executive Officer)                                                                                         |
|                      |   |                                                                                                                  |
|                      |   |                                                                                                                  |
|                      |   |                                                                                                                  |
| Date: September 10, 2004  |   | /s/ Joseph Sidebotham                 |
|                      |   | Joseph Sidebotham                                                                                                     |
|                      |   | Executive Vice President, Chief Financial                                                                             |
|                      |   | Officer and Controller                                                                                                |
|                      |   | (Principal Financial & Accounting Officer)                                                                        |

 

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