Exhibit 99.1
FOR IMMEDIATE RELEASE Contact: Claire M. Chadwick, CFO
973-669-7366, ext. 267
PENNFED FINANCIAL SERVICES, INC. REPORTS
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SECOND QUARTER EARNINGS
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WEST ORANGE, NJ, January 28, 2004 - PennFed Financial Services, Inc.
(NASDQ:PFSB), the $1.8 billion holding company for New Jersey-based Penn Federal
Savings Bank, reported earnings of 40 cents per diluted share for its second
fiscal quarter ended December 31, 2003. Earnings for the comparable prior year
quarter were 51 cents per diluted share.
For the first six months of fiscal 2004, PennFed reported earnings of 86
cents per diluted share, compared to $1.01 per diluted share for the comparable
six months ended December 31, 2002.
As disclosed on September 24, 2003, the Federal Home Loan Bank (FHLB) of
New York had informed the Company that the October dividend on FHLB of New York
stock would not be paid. The FHLB of New York is one of 12 regional Federal Home
Loan Banks that provides funding sources and correspondent services to its
members. As a member, Penn Federal is required to purchase and maintain stock in
the FHLB of New York. To satisfy this requirement, the Company owns
approximately $24.3 million of FHLB of New York stock. No dividend was paid on
this stock for the quarter ended December 31, 2003. For comparative purposes,
the Company recorded $318,000 in dividends from the FHLB of New York, or
approximately $0.03 per share (net of taxes), for the quarter ended September
30, 2003.
For the three months ended December 31, 2003, net interest margin was
reported
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PennFed 2Q-2004
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as 2.14%. Joseph L. LaMonica, President and Chief Executive Officer of PennFed,
stated "while this reflects an improvement from 2.11% for the three months ended
September 30, 2003, had the FHLB of New York paid a dividend this quarter
similar to the prior quarter, our margin would have improved an additional
0.07%."
At December 31, 2003 assets totaled $1.792 billion, down slightly from
$1.812 billion at June 30, 2003, but up slightly from $1.778 billion at
September 30, 2003.
Throughout much of the December 2003 quarter, the Company continued to sell
predominately conforming, fixed rate one- to four-family loan production as a
means of managing interest rate risk. During the quarter, loan portfolio
balances declined, reflecting the sale of over $24 million of one- to
four-family mortgage loans and accelerated prepayments early in the quarter. In
addition, during the current quarter, PennFed sold a $3 million commercial real
estate loan participation to reduce the Company's exposure on a large commercial
real estate loan relationship.
One- to four-family mortgage loan production for the December 2003 quarter
slowed significantly as applications for refinances slowed due to a rise in
interest rates. Due to this significant slowdown in mortgage loan applications
and as a means to invest available cash at higher yields, in late December 2003,
the Company discontinued its loan sale strategy and began to retain originated
one- to four-family loans for portfolio.
Deposits grew modestly from June 30, 2003. As of December 31, 2003, core
deposits (checking, money market and savings accounts) represent 50% of total
deposits. LaMonica commented "at our newest branch, which opened in September
2003 in the Ironbound section of Newark, deposits currently total over $12
million."
For the three months ended December 31, 2003 service charges and other
non-interest income showed a decline when compared to both the comparable
prior year
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PennFed 2Q-2004
Page 3
quarter and the September 2003 quarter. With a recent rise in interest rates,
fee income associated with loan prepayments and modifications slowed
significantly.
Asset quality remained strong. Non-performing assets totaled $3.1 million
and represented only 0.18% of total assets at December 31, 2003. The Company's
current quarter expense ratio also remained strong at 1.40%.
For the three and six months ended December 31, 2003, the Company recorded
compensation expense related to the Employee Stock Ownership Plan (ESOP) of $1.0
million and $1.9 million, respectively. This compares to $764,000 and $1.5
million for the three and six months ended December 31, 2002, respectively. The
majority of the ESOP expense represents a non-cash valuation adjustment to
reflect the increase in the average fair value of allocated shares for the
period from the time of purchase to the allocation date. The Company will cease
recognizing compensation expense related to the ESOP after June 2004, when the
ESOP shares will be fully allocated.
During the December 2003 quarter, the Company repurchased 70,000 shares of
its outstanding stock at prices ranging from $29.09 to $32.05, for a total cost
of $2.1 million. PennFed continues to employ stock repurchases as a means of
utilizing capital.
PennFed stockholders of record as of February 13, 2004 will be paid a cash
dividend of $0.10 per share on February 27, 2004. The Company continues to
review its dividend policy on a regular basis.
Penn Federal Savings Bank maintains 22 New Jersey branch offices, with a
23rd branch in Union, New Jersey opening in early February 2004. 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 2Q-2004
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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)
December 31, September 30, June 30, December 31,
2003 2003 2003 2002
----------- ----------- ----------- -----------
Selected Financial Condition Data:
Cash and cash equivalents $ 36,737 $ 80,655 $ 83,046 $ 60,470
Investments, net 417,994 354,184 344,239 204,279
Mortgage-backed securities, net 104,856 82,548 93,632 130,140
Loans held for sale 3,364 11,530 11,496 9,660
Loans receivable:
One- to four-family mortgage loans 879,479 895,274 935,064 1,097,251
Commercial and multi-family real estate loans 160,926 164,269 165,905 159,445
Consumer loans 114,206 115,305 116,658 113,343
Allowance for loan losses (6,271) (6,279) (6,284) (6,226)
Other, net 6,251 6,300 6,079 7,671
----------- ----------- ----------- -----------
Loans receivable, net 1,154,591 1,174,869 1,217,422 1,371,484
FHLB stock 24,273 25,223 25,223 25,223
Other intangible assets 2,268 2,721 3,175 4,100
Other assets 47,903 46,439 34,219 32,541
----------- ----------- ----------- -----------
Total assets $ 1,791,986 $ 1,778,169 $ 1,812,452 $ 1,837,897
=========== =========== =========== ===========
Deposits:
Checking and money market $ 168,113 $ 169,710 $ 172,898 $ 174,947
Savings 388,229 371,672 355,118 340,277
Certificates of deposit and accrued interest 550,915 539,472 566,650 611,208
----------- ----------- ----------- -----------
Total deposits 1,107,257 1,080,854 1,094,666 1,126,432
FHLB advances 485,465 495,465 504,465 504,465
Other borrowings 23,118 24,390 26,644 24,651
Junior subordinated debentures 42,015 42,003 30,005 0
Other liabilities 13,367 15,902 28,216 17,773
Preferred securities of Trust, net 0 0 11,621 44,574
Stockholders' equity 120,764(a) 119,555 116,835 120,002
----------- ----------- ----------- -----------
Total liabilities and stockholders' equity $ 1,791,986 $ 1,778,169 $ 1,812,452 $ 1,837,897
=========== =========== =========== ===========
Book value per share (b) $ 17.74 $ 17.65 $ 17.41 $ 17.27
Tangible book value per share (b) $ 17.41 $ 17.25 $ 16.94 $ 16.68
Equity to assets 6.74% 6.72% 6.45% 6.53%
Tangible equity to tangible assets 6.62% 6.58% 6.28% 6.32%
Asset Quality Data:
Non-performing loans $ 3,116 $ 2,164 $ 1,682 $ 1,678
Real estate owned, net 28 28 28 28
----------- ----------- ----------- -----------
Total non-performing assets $ 3,144 $ 2,192 $ 1,710 $ 1,706
=========== =========== =========== ===========
Non-performing loans to total loans 0.27% 0.18% 0.14% 0.12%
Non-performing assets to total assets 0.18% 0.12% 0.09% 0.09%
Allowance for loan losses to non-performing loans 201.25% 290.16% 373.60% 371.04%
Allowance for loan losses to total gross loans 0.54% 0.53% 0.51% 0.45%
Regulatory Capital Ratios (of the Bank):
Tangible capital ratio (requirement - 1.50%) 8.91% 8.97% 8.73% 8.86%
Core capital ratio (requirement - 4.00%) 8.91% 8.97% 8.73% 8.86%
Risk-based capital ratio (requirement - 8.00%) 17.69% 17.57% 17.21% 16.83%
(a) Common shares outstanding as of December 31, 2003 totaled 6,872,601 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 six months ended
December 31, December 31,
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2003 2002 2003 2002
---------- ----------- ---------- ----------
Selected Operating Data:
Interest and dividend income $ 23,658 $ 27,361 $ 47,399 $ 56,362
Interest expense 14,620 16,410 29,424 33,621
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Net interest and dividend income 9,038 10,951 17,975 22,741
Provision for loan losses 0 200 0 425
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Net interest and dividend income
after provision for loan losses 9,038 10,751 17,975 22,316
Non-interest income:
Service charges 871 1,230 2,174 2,353
Net gain (loss) from real estate operations 1 0 1 2
Net gain on sales of loans 363 563 697 794
Other 329 266 702 492
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Total non-interest income 1,564 2,059 3,574 3,641
Non-interest expenses:
Compensation & employee benefits 3,616 3,313 6,940 6,794
Net occupancy expense 480 407 903 810
Equipment 498 510 984 1,027
Advertising 78 31 134 118
Amortization of intangibles 454 468 909 942
Federal deposit insurance premium 41 50 85 98
Preferred securities expense 0 1,092 0 2,184
Other 1,090 941 2,001 1,956
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Total non-interest expenses 6,257 6,812 11,956 13,929
---------- ---------- ---------- ----------
Income before income taxes 4,345 5,998 9,593 12,028
Income tax expense 1,464 2,174 3,339 4,380
---------- ---------- ---------- ----------
Net income $ 2,881 $ 3,824 $ 6,254 $ 7,648
========== ========== ========== ==========
Weighted avg. no. of diluted common shares (c) 7,243,944 7,526,698 7,239,829 7,589,741
Diluted earnings per common share (c) $ 0.40 $ 0.51 $ 0.86 $ 1.01
Return on average common equity 9.65% 12.84% 10.55% 12.82%
Return on average assets 0.65% 0.82% 0.70% 0.82%
Average earning assets $1,715,792 $1,791,775 $1,715,839 $1,806,779
Yield on average interest-earning assets 5.50% 6.08% 5.50% 6.22%
Cost of average interest-bearing liabilities 3.50% 3.86% 3.53% 3.93%
---------- ---------- ---------- ----------
Net interest rate spread 2.00% 2.22% 1.97% 2.29%
========== ========== ========== ==========
Net interest margin 2.14% 2.47% 2.12% 2.54%
Non-interest exp. as a % of avg. assets 1.40% 1.46% 1.34% 1.49%
Efficiency ratio 54.74% 48.76% 51.27% 49.23%
Loan originations and purchases:
One- to four-family mortgage loans $ 61,286 $ 172,637 $ 239,619 $ 221,904
Commercial and multi-family real estate loans 8,144 8,986 17,216 36,891
Consumer loans 15,441 18,807 38,173 38,821
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Total loan originations and purchases $ 84,871 $ 200,430 $ 295,008 $ 297,616
========== ========== ========== ==========
(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
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Dec. 31, Sep. 30, June 30, Mar. 31, Dec. 31,
2003 2003 2003 2003 2002
---------- ---------- ---------- ---------- ----------
Selected Operating Data:
Interest and dividend income $ 23,658 $ 23,741 $ 24,433 $ 25,576 $ 27,361
Interest expense 14,620 14,804 14,548 14,787 16,410
---------- ---------- ---------- ---------- ----------
Net interest and dividend income 9,038 8,937 9,885 10,789 10,951
Provision for loan losses 0 0 0 100 200
---------- ---------- ---------- ---------- ----------
Net interest and dividend income
after provision for loan losses 9,038 8,937 9,885 10,689 10,751
Non-interest income:
Service charges 871 1,303 1,585 1,294 1,230
Net gain from real estate operations 1 0 0 1 0
Net gain on sales of loans 363 334 571 498 563
Other 329 373 261 220 266
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Total non-interest income 1,564 2,010 2,417 2,013 2,059
Non-interest expenses:
Compensation & employee benefits 3,616 3,324 3,302 3,358 3,313
Net occupancy expense 480 423 384 498 407
Equipment 498 486 514 544 510
Advertising 78 56 56 36 31
Amortization of intangibles 454 455 459 465 468
Federal deposit insurance premium 41 44 45 49 50
Preferred securities expense 0 0 2,362 1,092 1,092
Other 1,090 911 1,045 982 941
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Total non-interest expenses 6,257 5,699 8,167 7,024 6,812
---------- ---------- ---------- ---------- ----------
Income before income taxes 4,345 5,248 4,135 5,678 5,998
Income tax expense 1,464 1,875 1,621 2,106 2,174
---------- ---------- ---------- ---------- ----------
Net income $ 2,881 $ 3,373 $ 2,514 $ 3,572 $ 3,824
========== ========== ========== ========== ==========
Weighted avg. no. of diluted common shares (d) 7,243,944 7,233,777 7,290,877 7,464,791 7,526,698
Diluted earnings per common share (d) $ 0.40 $ 0.47 $ 0.34 $ 0.48 $ 0.51
Return on average common equity 9.65% 11.47% 8.54% 11.89% 12.84%
Return on average assets 0.65% 0.76% 0.56% 0.79% 0.82%
Average earning assets $1,715,792 $1,715,887 $1,741,302 $1,754,724 $1,791,775
Yield on average interest-earning assets 5.50% 5.51% 5.61% 5.85% 6.08%
Cost of average interest-bearing liabilities 3.50% 3.55% 3.55% 3.64% 3.86%
---------- ---------- ---------- ---------- ----------
Net interest rate spread 2.00% 1.96% 2.06% 2.21% 2.22%
========== ========== ========== ========== ==========
Net interest margin 2.14% 2.11% 2.28% 2.45% 2.47%
Non-interest exp. as a % of avg. assets 1.40% 1.28% 1.81% 1.55% 1.46%
Efficiency ratio 54.74% 47.90% 62.66% 51.24% 48.76%
Loan originations and purchases:
One- to four-family mortgage loans $ 61,286 $ 178,333 $ 113,411 $ 154,118 $ 172,637
Commercial and multi-family real estate loans 8,144 9,072 11,039 9,196 8,986
Consumer loans 15,441 22,732 32,842 19,939 18,807
---------- ---------- ---------- ---------- ----------
Total loan originations and purchases $ 84,871 $ 210,137 $ 157,292 $ 183,253 $ 200,430
========== ========== ========== ========== ==========
(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
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Dec. 31, Sep. 30, June 30, Mar. 31, Dec. 31,
2003 2003 2003 2003 2002
----------- ----------- ----------- ----------- ------------
Reported net income $ 2,881 $ 3,373 $ 2,514 $ 3,572 $ 3,824
Non-recurring charges:
Accelerated amortization on PennFed
Capital Trust I issuance costs 0 0 1,514 0 0
Tax effect 0 0 (530) 0 0
----------- ----------- ----------- ----------- -----------
Non-recurring charges, net of taxes 0 0 984 0 0
----------- ----------- ----------- ----------- -----------
"Adjusted" net income $ 2,881 $ 3,373 $ 3,498 $ 3,572 $ 3,824
=========== =========== =========== =========== ===========
Weighted avg. no. of diluted common shares (e) 7,243,944 7,233,777 7,290,877 7,464,791 7,526,698
Diluted earnings per common share (e) $ 0.40 $ 0.47 $ 0.48 $ 0.48 $ 0.51
Return on average common equity 9.65% 11.47% 11.89% 11.89% 12.84%
Return on average assets 0.65% 0.76% 0.78% 0.79% 0.82%
Non-interest exp. as a % of avg. assets 1.40% 1.28% 1.47% 1.55% 1.46%
Efficiency ratio 54.74% 47.90% 50.35% 51.24% 48.76%
(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.