Exhibit 99.1
FOR IMMEDIATE RELEASE Contact: Claire M. Chadwick, CFO
973-669-7366, ext. 267
PENNFED FINANCIAL SERVICES, INC. REPORTS
----------------------------------------
FIRST QUARTER EARNINGS
----------------------
WEST ORANGE, NJ, October 29, 2003 - PennFed Financial Services, Inc.
(NASDQ:PFSB), the $1.8 billion holding company for New Jersey-based Penn Federal
Savings Bank, announced earnings of 47 cents per diluted share for its first
fiscal quarter ended September 30, 2003. Earnings for the comparable prior year
quarter were 50 cents per diluted share.
Joseph L. LaMonica, President and Chief Executive Officer of PennFed, noted
that "the challenges that we experienced in Fiscal 2003 continued into our first
quarter of fiscal 2004."
Total assets at September 30, 2003 of $1.778 billion reflected a decline
from $1.812 billion at June 30, 2003. One- to four-family mortgage loan
production for the September 2003 quarter of $178 million represented the
highest quarterly level in PennFed's history. The balance in this portfolio,
however, continued to decline during the quarter due to the effects of continued
accelerated prepayments on loans as well as the sale of over $56 million of one-
to four-family mortgage loans.
As a result of the low interest rate environment and as a means of managing
interest rate risk and long-term profitability, the Company continues to sell
predominately conforming, fixed rate one- to four-family loan production. For
the quarter ended September 30, 2003, as part of its mortgage banking
activities, PennFed recorded $334,000 of gains from loan sales.
-more-
PennFed 4Q-2003
Page 2
Net interest margin for the three months ended September 30, 2003 was
reported as 2.11%, down from 2.28% for the three months ended June 30, 2003.
Approximately 0.15% of the total 0.17% margin compression is attributable to the
Company's adoption of Financial Accounting Standards Board Interpretation No.
46, "Consolidation of Variable Interest Entities" ("FIN 46"). Pursuant to FIN
46, the Company's trust preferred subsidiaries are no longer consolidated and
the costs associated with the related issuance of trust preferred securities are
now reflected as interest expense. Previously, these costs had been categorized
as non-interest expense. The decrease in net interest income is offset by a
decrease in non-interest expense resulting in no overall effect on net income.
PennFed's deposit composition continued to show reduced levels of
certificates of deposit and increased reliance on core deposits (checking, money
market and savings accounts). As of September 30, 2003, core deposits represent
50% of total deposits compared to 48% at June 30, 2003. During September, Penn
Federal Savings Bank opened its 22nd branch located on Chestnut Street in the
Ironbound section of Newark. Mr. LaMonica commented that, "After being open less
than two months, deposits at this community branch total over $8 million."
For the three months ended September 30, 2003 service charges and other
non-interest income, while greater than the prior year quarter, showed a modest
decline when compared to the June 2003 quarter. With a recent rise in interest
rates, income associated with loan prepayments and modifications slowed.
Asset quality remained exceptional. Non-performing assets totaled $2.2
million, or 0.12% of total assets at September 30, 2003. Furthermore, the
Company's current quarter expense ratio also remained strong at 1.28%. The
expense ratio for the three months ended September 30, 2002 was 1.51%, but
because this was prior to the adoption of FIN 46 this ratio included 0.23% of
expense associated with trust preferred securities.
-more-
PennFed 4Q-2003
Page 3
PennFed continues to employ stock repurchases as a means of utilizing
capital. During the September 2003 quarter, the Company repurchased 50,000
shares for a total cost of $1.4 million.
PennFed stockholders of record as of November 14, 2003 will be paid a cash
dividend of $0.10 per share on November 28, 2003. The Company's dividend policy
will continue to be reviewed on a regular basis.
Penn Federal Savings Bank maintains 22 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 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)
September 30, June 30, September 30,
2003 2003 2002
---------------- ----------------- -----------------
Selected Financial Condition Data:
Cash and cash equivalents $ 80,655 $ 83,046 $ 52,427
Investments, net and FHLB stock 379,407 369,462 208,538
Mortgage-backed securities, net 82,548 93,632 155,889
Loans held for sale 11,530 11,496 4,437
Loans receivable:
One- to four-family mortgage loans 895,274 935,064 1,143,734
Commercial and multi-family real estate loans 164,269 165,905 161,021
Consumer loans 115,305 116,658 118,541
Allowance for loan losses (6,279) (6,284) (6,038)
Other, net 6,300 6,079 8,489
---------------- ----------------- -----------------
Loans receivable, net 1,174,869 1,217,422 1,425,747
Other intangible assets 2,721 3,175 4,535
Other assets 46,439 34,219 31,014
---------------- ----------------- -----------------
Total assets $ 1,778,169 $ 1,812,452 $ 1,882,587
================ ================= =================
Deposits:
Checking and money market $ 169,710 $ 172,898 $ 167,648
Savings 371,672 355,118 326,695
Certificates of deposit and accrued interest 539,472 566,650 672,461
---------------- ----------------- -----------------
Total deposits 1,080,854 1,094,666 1,166,804
FHLB advances 495,465 504,465 504,465
Other borrowings 24,390 26,644 25,420
Junior subordinated debentures 42,003 30,005 0
Other liabilities 15,902 28,216 22,104
Preferred securities of Trust, net 0 11,621 44,556
Stockholders' equity 119,555(a) 116,835 119,238
---------------- ----------------- -----------------
Total liabilities and stockholders' equity $ 1,778,169 $ 1,812,452 $ 1,882,587
================ ================= =================
Book value per share (b) $ 17.65 $ 17.41 $ 16.98
Tangible book value per share (b) $ 17.25 $ 16.94 $ 16.33
Equity to assets 6.72% 6.45% 6.33%
Tangible equity to tangible assets 6.58% 6.28% 6.11%
Asset Quality Data:
Non-performing loans $ 2,164 $ 1,682 $ 2,431
Real estate owned, net 28 28 28
---------------- ----------------- -----------------
Total non-performing assets $ 2,192 $ 1,710 $ 2,459
================ ================= =================
Non-performing loans to total loans 0.18% 0.14% 0.17%
Non-performing assets to total assets 0.12% 0.09% 0.13%
Allowance for loan losses to non-performing loans 290.16% 373.60% 248.38%
Allowance for loan losses to total gross loans 0.53% 0.51% 0.42%
Regulatory Capital Ratios (of the Bank):
Tangible capital ratio (requirement - 1.50%) 8.97% 8.73% 8.59%
Core capital ratio (requirement - 4.00%) 8.97% 8.73% 8.59%
Risk-based capital ratio (requirement - 8.00%) 17.57% 17.21% 16.29%
(a) Common shares outstanding as of September 30, 2003 totaled 6,870,178
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
September 30,
------------------------------
2003 2002
------------- ------------
Selected Operating Data:
Interest and dividend income $ 23,741 $ 29,001
Interest expense 14,804 17,211
------------- ------------
Net interest and dividend income 8,937 11,790
Provision for loan losses 0 225
------------- ------------
Net interest and dividend income
after provision for loan losses 8,937 11,565
Non-interest income:
Service charges 1,303 1,123
Net gain from real estate operations 0 2
Net gain on sales of loans 334 231
Other 373 226
------------- ------------
Total non-interest income 2,010 1,582
Non-interest expenses:
Compensation & employee benefits 3,324 3,481
Net occupancy expense 423 403
Equipment 486 517
Advertising 56 87
Amortization of intangibles 455 474
Federal deposit insurance premium 44 48
Preferred securities expense 0 1,092
Other 911 1,015
------------- ------------
Total non-interest expenses 5,699 7,117
------------- ------------
Income before income taxes 5,248 6,030
Income tax expense 1,875 2,206
------------- ------------
Net income $ 3,373 $ 3,824
============= ============
Weighted avg. no. of diluted common shares (c) 7,233,777 7,655,481
Diluted earnings per common share (c) $ 0.47 $ 0.50
Return on average common equity 11.47% 12.81%
Return on average assets 0.76% 0.81%
Average earning assets $ 1,715,887 $ 1,821,783
Yield on average interest-earning assets 5.51% 6.34%
Cost of average interest-bearing liabilities 3.55% 4.01%
------------- ------------
Net interest rate spread 1.96% 2.33%
============= ============
Net interest margin 2.11% 2.62%
Non-interest exp. as a % of avg. assets 1.28% 1.51%
Efficiency ratio 47.90% 49.69%
Loan originations and purchases:
One- to four-family mortgage loans $ 178,333 $ 89,379
Commercial and multi-family real estate loans 9,072 19,828
Consumer loans 22,732 18,187
------------- ------------
Total loan originations and purchases $ 210,137 $ 127,394
============= ============
(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)
For the three months ended
---------------------------------------------------------------------------
Sep. 30, Jun. 30, Mar.31, Dec. 31, Sep. 30,
2003 2003 2003 2002 2002
------------ ----------- ------------ ------------ -----------
Selected Operating Data:
Interest and dividend income $ 23,741 $ 24,433 $ 25,576 $ 27,361 $ 29,001
Interest expense 14,804 14,548 14,787 16,410 17,211
------------ ----------- ------------ ------------ -----------
Net interest and dividend income 8,937 9,885 10,789 10,951 11,790
Provision for loan losses 0 0 100 200 225
------------ ----------- ------------ ------------ -----------
Net interest and dividend income
after provision for loan losses 8,937 9,885 10,689 10,751 11,565
Non-interest income:
Service charges 1,303 1,585 1,294 1,230 1,123
Net gain from real estate operations 0 0 1 0 2
Net gain on sales of loans 334 571 498 563 231
Other 373 261 220 266 226
------------ ----------- ------------ ------------ -----------
Total non-interest income 2,010 2,417 2,013 2,059 1,582
Non-interest expenses:
Compensation & employee benefits 3,324 3,302 3,358 3,313 3,481
Net occupancy expense 423 384 498 407 403
Equipment 486 514 544 510 517
Advertising 56 56 36 31 87
Amortization of intangibles 455 459 465 468 474
Federal deposit insurance premium 44 45 49 50 48
Preferred securities expense 0 2,362 1,092 1,092 1,092
Other 911 1,045 982 941 1,015
------------ ----------- ------------ ------------ -------------
Total non-interest expenses 5,699 8,167 7,024 6,812 7,117
------------ ----------- ------------ ------------ -----------
Income before income taxes 5,248 4,135 5,678 5,998 6,030
Income tax expense 1,875 1,621 2,106 2,174 2,206
------------ ----------- ------------ ------------ -----------
Net income $ 3,373 $ 2,514 $ 3,572 $ 3,824 $ 3,824
============ =========== ============ ============ ===========
Weighted avg. no. of diluted common shares (d) 7,233,777 7,290,877 7,464,791 7,526,698 7,655,481
Diluted earnings per common share (d) $ 0.47 $ 0.34 $ 0.48 $ 0.51 $ 0.50
Return on average common equity 11.47% 8.54% 11.89% 12.84% 12.81%
Return on average assets 0.76% 0.56% 0.79% 0.82% 0.81%
Average earning assets $ 1,715,887 $ 1,741,302 $ 1,754,724 $ 1,791,775 $ 1,821,783
Yield on average interest-earning assets 5.51% 5.61% 5.85% 6.08% 6.34%
Cost of average interest-bearing liabilities 3.55% 3.55% 3.64% 3.86% 4.01%
------------ ----------- ------------ ------------ -----------
Net interest rate spread 1.96% 2.06% 2.21% 2.22% 2.33%
============ =========== ============ ============ ===========
Net interest margin 2.11% 2.28% 2.45% 2.47% 2.62%
Non-interest exp. as a % of avg. assets 1.28% 1.81% 1.55% 1.46% 1.51%
Efficiency ratio 47.90% 62.66% 51.24% 48.76% 49.69%
Loan originations and purchases:
One- to four-family mortgage loans $ 178,333 $ 113,411 $ 154,118 $ 172,637 $ 89,379
Commercial and multi-family real estate loans 9,072 11,039 9,196 8,986 19,828
Consumer loans 22,732 32,842 19,939 18,807 18,187
------------ ----------- ----------- ----------- -----------
Total loan originations and purchases $ 210,137 $ 157,292 $ 183,253 $ 200,430 $ 127,394
============ =========== =========== =========== ===========
(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)
CALCULATION OF NET INCOME ADJUSTED FOR NON-RECURRING CHARGE
-----------------------------------------------------------
For the three months ended
---------------------------------------------------------------------------
Sep. 30, Jun. 30, Mar.31, Dec. 31, Sep. 30,
2003 2003 2003 2002 2002
------------ ------------ ------------ ------------ ------------
Reported net income $ 3,373 $ 2,514 $ 3,572 $ 3,824 $ 3,824
Non-recurring charges:
Accelerated amortization on PennFed
Capital Trust I issuance costs 0 1,514 0 0 0
Tax effect 0 (530) 0 0 0
------------ ------------ ------------ ------------ -------------
Non-recurring charges, net of taxes 0 984 0 0 0
------------ ------------ ------------ ------------ -------------
"Adjusted" net income $ 3,373 $ 3,498 $ 3,572 $ 3,824 $ 3,824
============ ============ ============ ============ =============
Weighted avg. no. of diluted common shares (e) 7,233,777 7,290,877 7,464,791 7,526,698 7,655,481
Diluted earnings per common share (e) $ 0.47 $ 0.48 $ 0.48 $ 0.51 $ 0.50
Return on average common equity 11.47% 11.89% 11.89% 12.84% 12.81%
Return on average assets 0.76% 0.78% 0.79% 0.82% 0.81%
Non-interest exp. as a % of avg. assets 1.28% 1.47% 1.55% 1.46% 1.51%
Efficiency ratio 47.90% 50.35% 51.24% 48.76% 49.69%
(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.