Exhibit 99.1
FOR IMMEDIATE RELEASE Contact: Claire M. Chadwick, CFO
973-669-7366, ext. 267
PENNFED FINANCIAL SERVICES, INC. REPORTS
----------------------------------------
FISCAL YEAR END EARNINGS
------------------------
RESULTS INCLUDE NON-RECURRING CHARGE
WEST ORANGE, NJ, July 30, 2003 - PennFed Financial Services, Inc.
(NASDQ:PFSB), the $1.8 billion holding company for New Jersey-based Penn Federal
Savings Bank, announced earnings for the fourth quarter ended June 30, 2003.
Adjusting for a non-recurring charge associated with the refinance of trust
preferred securities, earnings for the June 2003 quarter would have been 48
cents per diluted share. Actual reported earnings for the current quarter,
including the non-recurring charge, were 34 cents per diluted share. Earnings
for the quarter ended June 30, 2002 were 50 cents per diluted share.
As reported on June 2, 2003, PennFed Capital Trust III issued $30.0 million
of floating rate trust preferred securities. Proceeds were used to substantially
fund the redemption on June 3, 2003 of the $34.5 million of 8.90% cumulative
trust preferred securities issued by PennFed Capital Trust I. As a result of the
redemption, the Company recognized a non-recurring expense of approximately $1.5
million, or $0.14 per share, associated with the unamortized issuance costs
related to the PennFed Capital Trust I trust preferred securities. The Company
anticipates that this additional expense will be largely offset in the next
fiscal year by the savings realized due to the reduced interest cost on PennFed
Capital Trust III trust preferred securities as compared to the trust preferred
securities of PennFed Capital Trust I.
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PennFed 4Q-2003
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Joseph L. LaMonica, President and Chief Executive Officer of PennFed,
commented that "The past year was a challenge for financial institutions,
including PennFed. Significantly accelerated loan prepayments and net interest
margin compression were the result of the low interest rate environment
experienced throughout our fiscal year."
For the year ended June 30, 2003, earnings adjusted for the previously
mentioned non-recurring charge were $1.97 per diluted share, representing a 5%
increase when compared to $1.88 reported for the prior fiscal year.
Return on equity for the current fiscal year, adjusted for the
non-recurring charge, was 12.36% compared to 12.59% for the prior fiscal year.
Certain information provided in this press release excludes a non-recurring
expense which management believes should be excluded in order to have a clear
understanding of the Company's financial results. This item, which is included
in the GAAP financial results but which is excluded from adjusted results, is
described in the reconciliation tables following this press release.
One- to four-family mortgage loan production for the current year was
strong at $530 million. The one- to four-family mortgage portfolio declined
during the year due to the effects of accelerated prepayments on loans as well
as the sale of conforming, fixed rate, one- to four-family mortgage loans into
the secondary market.
As a result of the historically low interest rate levels and as a means of
managing interest rate risk and long-term profitability, the Company continued
to sell its conforming, fixed rate one- to four-family loan production. For the
year ended June 30, 2003 PennFed sold approximately $155 million of conforming,
fixed rate one- to four-family production, as part of its mortgage banking
activities, recording $1.3 million of gains.
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PennFed 4Q-2003
Page 3
Compared to June 30, 2002, total deposits showed a decline of $80 million,
primarily reflecting the Company's reduced reliance on certificates of deposit
as CDs declined $127 million. At June 30, 2003, core deposits (checking, money
market and savings accounts) represented 48% of total deposits compared to 41%
at June 30, 2002.
Continued growth was experienced in service charges and other non-interest
income and is attributable to loan activity and core deposit activity, as well
as earnings from the Investment Services at Penn Federal program. Service charge
income increased by 77% in fiscal 2003 over the prior fiscal year.
After adjusting for the non-recurring charge, the Company's non-interest
expense ratio remained strong at 1.50% for fiscal 2003 compared to 1.53% for
fiscal 2002.
Asset quality remained strong. Non-performing assets of $1.7 million
represented 0.09% of total assets at June 30, 2003.
During fiscal 2003, the Company repurchased 600,000 shares of its
outstanding stock at prices ranging from $25.35 to $28.30, for a total cost of
$16.1 million. PennFed continues to employ stock repurchases as a means of
utilizing capital.
PennFed stockholders of record as of August 15, 2003 will be paid a cash
dividend of $0.10 per share on August 29, 2003. The Company's dividend policy
will continue to be reviewed on a regular basis.
Penn Federal Savings Bank maintains 21 New Jersey branch offices. The
Bank's deposits are insured by the Federal Deposit Insurance Corporation.
This release contains forward-looking statements that are intended to
identify "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements
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PennFed 4Q-2003
Page 4
are subject to certain risks and uncertainties, including, among other things,
changes in economic conditions in the Company's market area, changes in policies
by regulatory agencies, fluctuations in interest rates and demand for loans in
the Company's market area, the relationship of short-term interest rates to
long-term interest rates, competition and terrorist acts that could cause actual
results to differ materially from historical earnings and those presently
anticipated or projected. The Company wishes to caution readers not to place
undue reliance on any forward-looking statements, which speak only as of the
date made. The Company wishes to advise readers that the factors listed above,
as well as other factors, could affect the Company's financial performance and
could cause the Company's actual results for future periods to differ materially
from any opinions or statements expressed with respect to future periods in any
current statements.
###
NOTE: SEE FINANCIAL TABLES
PennFed Financial Services, Inc.
(Holding Company for Penn Federal Savings Bank)
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
June 30, March 31, June 30,
2003 2003 2002
----------------- ----------------- -----------------
Selected Financial Condition Data:
Cash and cash equivalents $ 83,046 $ 90,714 $ 37,189
Investments, net and FHLB stock 369,462 286,057 209,441
Mortgage-backed securities, net 93,632 106,017 169,689
Loans held for sale 11,496 14,443 1,592
Loans receivable:
One- to four-family mortgage loans 935,064 1,021,697 1,170,553
Commercial and multi-family real estate loans 165,905 162,911 144,585
Consumer loans 116,658 110,014 120,866
Allowance for loan losses (6,284) (6,314) (5,821)
Other, net 6,079 6,887 9,485
----------------- ----------------- -----------------
Loans receivable, net 1,217,422 1,295,195 1,439,668
Goodwill and other intangible assets 3,176 3,636 5,043
Other assets 34,218 32,841 29,805
----------------- ----------------- -----------------
Total assets $1,812,452 $ 1,828,903 $ 1,892,427
================= ================= =================
Deposits:
Checking and money market $ 172,898 $ 172,340 $ 168,994
Savings 355,118 347,204 311,740
Certificates of deposit and accrued interest 566,650 586,492 693,773
----------------- ----------------- -----------------
Total deposits 1,094,666 1,106,036 1,174,507
FHLB advances 504,465 504,465 504,465
Other borrowings 26,644 26,456 23,314
Other liabilities 28,216 28,994 26,843
Preferred securities of Trust, net 41,626 44,594 44,537
Stockholders' equity 116,835 (a) 118,358 118,761
----------------- ----------------- -----------------
Total liabilities and stockholders' equity $1,812,452 $1,828,903 $1,892,427
================= ================= =================
Book value per share (b) $ 17.41 $ 17.36 $ 16.73
Tangible book value per share (b) $ 16.94 $ 16.82 $ 16.02
Equity to assets 6.45% 6.47% 6.28%
Tangible equity to tangible assets 6.28% 6.29% 6.03%
Asset Quality Data:
Non-performing loans $ 1,682 $ 1,752 $ 3,275
Real estate owned, net 28 28 28
----------------- ----------------- -----------------
Total non-performing assets $ 1,710 $ 1,780 $ 3,303
================= ================= =================
Non-performing loans to total loans 0.14% 0.13% 0.23%
Non-performing assets to total assets 0.09% 0.10% 0.17%
Allowance for loan losses to non-performing loans 373.60% 360.39% 177.74%
Allowance for loan losses to total gross loans 0.51% 0.48% 0.40%
Regulatory Capital Ratios (of the Bank):
Tangible capital ratio (requirement - 1.50%) 8.73% 8.94% 8.37%
Core capital ratio (requirement - 4.00%) 8.73% 8.94% 8.37%
Risk-based capital ratio (requirement - 8.00%) 17.21% 17.29% 15.93%
(a) Common shares outstanding as of June 30, 2003 totaled 6,838,029
shares.
(b) In accordance with SOP 93-6, the calculation of book value per share
only includes ESOP shares to the extent that they are released or
committed to be released during the fiscal year.
PennFed Financial Services, Inc.
(Holding Company for Penn Federal Savings Bank)
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
For the three months ended For the year ended
June 30, June 30,
--------------------------- ---------------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
Selected Operating Data:
Interest and dividend income $ 24,433 $ 30,083 $ 106,371 $ 121,339
Interest expense 14,548 17,338 62,956 72,862
---------- ---------- ---------- ----------
Net interest and dividend income 9,885 12,745 43,415 48,477
Provision for loan losses 0 400 525 1,625
---------- ---------- ---------- ----------
Net interest and dividend income
after provision for loan losses 9,885 12,345 42,890 46,852
Non-interest income:
Service charges 1,585 787 5,232 2,961
Net gain from real estate operations 0 145 3 87
Net gain on sales of loans 571 85 1,863 194
Other 261 298 973 975
---------- ---------- ---------- ----------
Total non-interest income 2,417 1,315 8,071 4,217
Non-interest expenses:
Compensation & employee benefits 3,302 3,579 13,454 13,203
Net occupancy expense 384 400 1,692 1,603
Equipment 514 669 2,085 2,318
Advertising 56 123 210 484
Amortization of intangibles 459 478 1,866 1,940
Federal deposit insurance premium 45 49 192 203
Preferred securities expense 2,362 1,092 5,638 4,368
Other 1,045 1,259 3,983 4,331
---------- ---------- ---------- ----------
Total non-interest expenses 8,167 7,649 29,120 28,450
---------- ---------- ---------- ----------
Income before income taxes 4,135 6,011 21,841 22,619
Income tax expense 1,621 2,156 8,107 8,036
---------- ---------- ---------- ----------
Net income $ 2,514 $ 3,855 $ 13,734 $ 14,583
========== ========== ========== ==========
Weighted avg. no. of diluted common shares (c) 7,290,877 7,690,323 7,485,781 7,768,422
Diluted earnings per common share (c) $ 0.34 $ 0.50 $ 1.83 $ 1.88
Return on average common equity 8.54% 13.09% 11.53% 12.59%
Return on average assets 0.56% 0.83% 0.75% 0.79%
Average earning assets $1,741,302 $1,818,033 $1,777,397 $1,805,534
Yield on average interest-earning assets 5.61% 6.62% 5.98% 6.72%
Cost of average interest-bearing liabilities 3.55% 4.10% 3.79% 4.35%
---------- ---------- ---------- ----------
Net interest rate spread 2.06% 2.52% 2.19% 2.37%
========== ========== ========== ==========
Net interest margin 2.28% 2.81% 2.44% 2.68%
Non-interest exp. as a % of avg. assets 1.81% 1.64% 1.58% 1.53%
Efficiency ratio 62.66% 51.53% 52.94% 50.39%
Loan originations and purchases:
One- to four-family mortgage loans $ 113,411 $ 132,525 $ 529,545 $ 529,311
Commercial and multi-family real estate loans 11,039 17,063 49,049 64,131
Consumer loans 32,842 20,634 89,775 86,370
---------- ---------- ---------- ----------
Total loan originations and purchases $ 157,292 $ 170,222 $ 668,369 $ 679,812
========== ========== ========== ==========
(c) In accordance with SOP 93-6, the calculation of EPS only includes ESOP
shares to the extent that they are released or committed to be
released during the fiscal year.
PennFed Financial Services, Inc.
(Holding Company for Penn Federal Savings Bank)
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
CALCULATION OF NET INCOME ADJUSTED FOR NON-RECURRING CHARGE
-----------------------------------------------------------
For the three months ended For the year ended
June 30, June 30,
--------------------------- ---------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
Reported net income $ 2,514 $ 3,855 $ 13,734 $ 14,583
Non-recurring charges:
Accelerated amortization on PennFed
Capital Trust I issuance costs 1,514 0 1,514 0
Tax effect (530) 0 (530) 0
----------- ----------- ----------- -----------
Non-recurring charges, net of taxes 984 0 984 0
----------- ----------- ----------- -----------
"Adjusted" net income $ 3,498 $ 3,855 $ 14,718 $ 14,583
=========== =========== =========== ===========
Weighted avg. no. of diluted common shares (d) 7,290,877 7,690,323 7,485,781 7,768,422
Diluted earnings per common share (d) $ 0.48 $ 0.50 $ 1.97 $ 1.88
Return on average common equity 11.89% 13.09% 12.36% 12.59%
Return on average assets 0.78% 0.83% 0.80% 0.79%
Non-interest exp. as a % of avg. assets 1.47% 1.64% 1.50% 1.53%
Efficiency ratio 50.35% 51.53% 50.00% 50.39%
(d) In accordance with SOP 93-6, the calculation of EPS only includes ESOP
shares to the extent that they are released or committed to be
released during the fiscal year.
PennFed Financial Services, Inc.
(Holding Company for Penn Federal Savings Bank)
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
For the three months ended
--------------------------------------------------------------------
Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,
2003 2003 2002 2002 2002
---------- ---------- ---------- ---------- ----------
Selected Operating Data:
Interest and dividend income $ 24,433 $ 25,576 $ 27,361 $ 29,001 $ 30,083
Interest expense 14,548 14,787 16,410 17,211 17,338
---------- ---------- ---------- ---------- ----------
Net interest and dividend income 9,885 10,789 10,951 11,790 12,745
Provision for loan losses 0 100 200 225 400
---------- ---------- ---------- ---------- ----------
Net interest and dividend income
after provision for loan losses 9,885 10,689 10,751 11,565 12,345
Non-interest income:
Service charges 1,585 1,294 1,230 1,123 787
Net gain from real estate operations 0 1 0 2 145
Net gain on sales of loans 571 498 563 231 85
Other 261 220 266 226 298
---------- ---------- ---------- ---------- ----------
Total non-interest income 2,417 2,013 2,059 1,582 1,315
Non-interest expenses:
Compensation & employee benefits 3,302 3,358 3,313 3,481 3,579
Net occupancy expense 384 498 407 403 400
Equipment 514 544 510 517 669
Advertising 56 36 31 87 123
Amortization of intangibles 459 465 468 474 478
Federal deposit insurance premium 45 49 50 48 49
Preferred securities expense 2,362 1,092 1,092 1,092 1,092
Other 1,045 982 941 1,015 1,259
---------- ---------- ---------- ---------- ----------
Total non-interest expenses 8,167 7,024 6,812 7,117 7,649
---------- ---------- ---------- ---------- ----------
Income before income taxes 4,135 5,678 5,998 6,030 6,011
Income tax expense 1,621 2,106 2,174 2,206 2,156
---------- ---------- ---------- ---------- ----------
Net income $ 2,514 $ 3,572 $ 3,824 $ 3,824 $ 3,855
========== ========== ========== ========== ==========
Weighted avg. no. of diluted common shares (g) 7,290,877 7,464,791 7,526,698 7,655,481 7,690,323
Diluted earnings per common share (g) $ 0.34 $ 0.48 $ 0.51 $ 0.50 $ 0.50
Return on average common equity 8.54% 11.89% 12.84% 12.81% 13.09%
Return on average assets 0.56% 0.79% 0.82% 0.81% 0.83%
Average earning assets $1,741,302 $1,754,724 $1,791,775 $ 1,821,783 $1,818,033
Yield on average interest-earning assets 5.61% 5.85% 6.08% 6.34% 6.62%
Cost of average interest-bearing liabilities 3.55% 3.64% 3.86% 4.01% 4.10%
---------- ---------- ---------- ---------- ----------
Net interest rate spread 2.06% 2.21% 2.22% 2.33% 2.52%
========== ========== ========== ========== ==========
Net interest margin 2.28% 2.45% 2.47% 2.62% 2.81%
Non-interest exp. as a % of avg. assets 1.81% 1.55% 1.46% 1.51% 1.64%
Efficiency ratio 62.66% 51.24% 48.76% 49.69% 51.53%
Loan originations and purchases:
One- to four-family mortgage loans $ 113,411 $ 154,118 $ 172,637 $ 89,379 $ 132,525
Commercial and multi-family real estate loans 11,039 9,196 8,986 19,828 17,063
Consumer loans 32,842 19,939 18,807 18,187 20,634
---------- ---------- ---------- ---------- ----------
Total loan originations and purchases $ 157,292 $ 183,253 $ 200,430 $ 127,394 $ 170,222
========== ========== ========== ========== ==========
(e) In accordance with SOP 93-6, the calculation of EPS only includes ESOP
shares to the extent that they are released or committed to be
released during the fiscal year.
PennFed Financial Services, Inc.
(Holding Company for Penn Federal Savings Bank)
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
CALCULATION OF NET INCOME ADJUSTED FOR NON-RECURRING CHARGE
-----------------------------------------------------------
For the three months ended
------------------------------------------------------------------------
Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,
2003 2003 2002 2002 2002
----------- ----------- ----------- ----------- -----------
Reported net income $ 2,514 $ 3,572 $ 3,824 $ 3,824 $ 3,855
Non-recurring charges:
Accelerated amortization on PennFed
Capital Trust I issuance costs 1,514 0 0 0 0
Tax effect (530) 0 0 0 0
----------- ----------- ----------- ----------- -----------
Non-recurring charges, net of taxes 984 0 0 0 0
----------- ----------- ----------- ----------- -----------
"Adjusted" net income $ 3,498 $ 3,572 $ 3,824 $ 3,824 $ 3,855
=========== =========== =========== =========== ===========
Weighted avg. no. of diluted common shares (f) 7,290,877 7,464,791 7,526,698 7,655,481 7,690,323
Diluted earnings per common share (f) $ 0.48 $ 0.48 $ 0.51 $ 0.50 $ 0.50
Return on average common equity 11.89% 11.89% 12.84% 12.81% 13.09%
Return on average assets 0.78% 0.79% 0.82% 0.81% 0.83%
Non-interest exp. as a % of avg. assets 1.47% 1.55% 1.46% 1.51% 1.64%
Efficiency ratio 50.35% 51.24% 48.76% 49.69% 51.53%
(f) In accordance with SOP 93-6, the calculation of EPS only includes ESOP
shares to the extent that they are released or committed to be
released during the fiscal year.