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 28, 2004 - PennFed Financial Services, Inc.
(NASDQ:PFSB), the $1.9 billion holding company for New Jersey-based Penn Federal
Savings Bank, announced earnings for the fourth quarter ended June 30, 2004.
Adjusting for a non-recurring charge associated with an environmental liability,
earnings for the June 2004 quarter would have been 43 cents per diluted share.
Actual reported earnings for the current quarter, including the non-recurring
charge, were 40 cents per diluted share. Earnings for the quarter ended June 30,
2003 included a non-recurring charge associated with the refinance of trust
preferred securities. Excluding this charge in the June 2003 quarter, earnings
would have been 48 cents per diluted share. Actual reported earnings for the
June 2003 quarter, including the non-recurring charge, were 34 cents per diluted
share.
Certain information provided in this press release excludes non-recurring
expenses which management believes should be excluded in order to have a clear
understanding of the Company's financial results. These items, which are
included in the financial results prepared in accordance with Accounting
Principles Generally Accepted in the United States of America (GAAP) but which
are excluded from adjusted results, are described in the reconciliation tables
following this press release.
As disclosed in prior year Form 10-Ks and in accordance with a New Jersey
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PennFed 4Q-2004
Page 2
Department of Environmental Protection directive, the Bank is involved with
ExxonMobil in the development and implementation of a remedial action work plan
for environmental contamination at a branch site. Based upon the results of
recent testing conducted at the site, it appears that some degree of active
ground water remediation will more likely be required at the site than natural
remediation. The ExxonMobil cost estimate for active ground water remediation is
$595,000 and is to be shared 50% by ExxonMobil and 50% by the Bank under a cost
sharing arrangement. The Company has, therefore, recognized a non-recurring
expense of $298,000, or $0.03 per share net of income taxes, to cover the
environmental remediation liability.
As shown on the attached schedules, for the year ended June 30, 2004,
earnings adjusted for the previously mentioned non-recurring charge were $1.70
per diluted share compared to $1.97 of adjusted earnings for the prior fiscal
year.
Commenting on fiscal year 2004 results, Joseph L. LaMonica, President and
Chief Executive Officer of PennFed, noted that "the effects of the low interest
rate environment, increased expense from ESOP accounting rules as well as the
significantly reduced dividends on our required holdings of Federal Home Loan
Bank of New York stock, all contributed to a challenging year."
At June 30, 2004, assets totaled $1.902 billion, representing a 5% increase
from June 30, 2003. Despite significant loan prepayments during fiscal year
2004, loans increased 5% as loan origination levels remained strong.
Additionally, loan sales were reduced in the second half of fiscal 2004 until
the excess cash from prepayments was utilized. As a result, gains on sales of
loans were only $759,000 in fiscal year 2004 compared to $1.9 million in fiscal
2003, and were only $5,000 for the quarter ended June 30, 2004 compared to
$571,000 for the same prior year quarter. Subsequent to
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PennFed 4Q-2004
Page 3
the end of the fiscal year, the Company returned to its loan sale strategy as a
means of managing interest rate risk.
During the current fiscal year the Bank expanded its retail franchise by
opening three new branches. In September 2003, the Company opened its 22nd
branch - located in the Ironbound section of Newark. Deposits at this branch
total over $18 million. In February 2004, our 23rd branch was opened in Union,
New Jersey, where deposits now total over $14 million. Finally, in June 2004,
our newest branch was opened - a full-service branch located in West Caldwell.
Although opened less than two months ago, deposits at this branch already total
over $10 million. "It is encouraging to note that these branches have performed
so well in such a short period of time", stated LaMonica.
Service charges and other non-interest income showed a decline for the year
ended June 30, 2004, when compared to the prior year. Fee income associated with
loan prepayments and modifications during fiscal year 2004 reflected a
significant decrease when compared to the prior year.
"Our reputation as a low-risk, low-cost provider of financial services
continues to be validated," LaMonica remarked. Non-performing assets of $2.2
million represented just 0.11% of total assets at June 30, 2004. With respect to
expenses, after adjusting for the non-recurring charges, the Company's
non-interest expense ratio was 1.39% for fiscal 2004.
For the year ended June 30, 2004, the Company recorded compensation expense
related to the Employee Stock Ownership Plan (ESOP) of $4.0 million compared to
$3.1 million for the year ended June 30, 2003. The majority of the ESOP expense
represents a non-cash valuation adjustment to reflect the value of PennFed
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PennFed 4Q-2004
Page 4
stock. After June 30, 2004, when the ESOP shares became fully allocated, the
Company has ceased recognizing compensation expense related to the ESOP.
Modifications to the Bank's existing benefit plans after June 30, 2004 are
expected to cost less than 25% of the fiscal 2004 expense level of the ESOP.
During fiscal 2004, the Company repurchased 396,100 shares of its
outstanding stock at prices ranging from $27.68 to $36.06, for a total cost of
$12.9 million. PennFed continues to employ stock repurchases as a means of
utilizing capital.
PennFed stockholders of record as of August 13, 2004 will be paid a cash
dividend of $0.10 per share on August 27, 2004. The Company's dividend policy
will continue to be reviewed on a regular basis.
Penn Federal Savings Bank maintains 24 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)
June 30, March 31, June 30,
2004 2004 2003
--------------- --------------- --------------
Selected Financial Condition Data:
Cash and cash equivalents $ 14,859 $ 18,897 $ 83,046
Investments, net 424,980 425,103 344,239
Mortgage-backed securities, net 100,079 99,487 93,632
Loans held for sale 0 0 11,496
Loans receivable:
One- to four-family mortgage loans 996,659 917,375 935,064
Commercial and multi-family real estate loans 172,244 164,200 165,905
Consumer loans 117,688 115,874 116,658
Allowance for loan losses (6,249) (6,252) (6,284)
Other, net 7,131 6,533 6,079
--------------- --------------- --------------
Loans receivable, net 1,287,473 1,197,730 1,217,422
FHLB stock 23,773 24,273 25,223
Other intangible assets 1,361 1,814 3,175
Other assets 49,761 49,109 34,219
--------------- --------------- --------------
Total assets $1,902,286 $1,816,413 $1,812,452
=============== =============== ==============
Deposits:
Checking and money market $ 169,609 $ 163,893 $ 172,898
Savings 418,678 406,830 355,118
Certificates of deposit and accrued interest 599,813 558,814 566,650
--------------- --------------- --------------
Total deposits 1,188,100 1,129,537 1,094,666
FHLB advances 475,465 485,465 504,465
Other borrowings 59,346 27,046 26,644
Junior subordinated debentures 42,037 42,026 30,005
Other liabilities 18,939 14,759 28,216
Preferred securities of Trust, net 0 0 11,621
Stockholders' equity 118,399 (a) 117,580 116,835
--------------- --------------- --------------
Total liabilities and stockholders' equity $1,902,286 $1,816,413 $1,812,452
=============== =============== ==============
Book value per share $ 17.44 $ 17.63 (b) $ 17.41 (b)
Tangible book value per share $ 17.24 $ 17.35 (b) $ 16.94 (b)
Equity to assets 6.22% 6.47% 6.45%
Tangible equity to tangible assets 6.16% 6.38% 6.28%
Asset Quality Data:
Non-performing loans $ 2,182 $ 2,900 $ 1,682
Real estate owned, net 0 28 28
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Total non-performing assets $ 2,182 $ 2,928 $ 1,710
=============== =============== ==============
Non-performing loans to total loans 0.17% 0.24% 0.14%
Non-performing assets to total assets 0.11% 0.16% 0.09%
Allowance for loan losses to non-performing loans 286.39% 215.59% 373.60%
Allowance for loan losses to total gross loans 0.48% 0.52% 0.51%
Regulatory Capital Ratios (of the Bank):
Tangible capital ratio (requirement - 1.50%) 8.61% 8.86% 8.73%
Core capital ratio (requirement - 4.00%) 8.61% 8.86% 8.73%
Risk-based capital ratio (requirement - 8.00%) 16.86% 17.48% 17.21%
(a) Common shares outstanding as of June 30, 2004 totaled 6,788,030 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,
------------------------------ ------------------------------
2004 2003 2004 2003
------------- ------------- ------------- -------------
Selected Operating Data:
Interest and dividend income $ 24,551 $ 24,433 $ 96,276 $ 106,371
Interest expense 14,652 14,548 58,674 62,956
------------- ------------- ------------- -------------
Net interest and dividend income 9,899 9,885 37,602 43,415
Provision for loan losses 0 0 0 525
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Net interest and dividend income
after provision for loan losses 9,899 9,885 37,602 42,890
Non-interest income:
Service charges 1,044 1,585 4,175 5,232
Net gain (loss) from real estate operations 57 0 58 3
Net gain on sales of loans 5 571 759 1,863
Other 375 261 1,437 973
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Total non-interest income 1,481 2,417 6,429 8,071
Non-interest expenses:
Compensation & employee benefits 3,752 3,302 14,593 13,454
Net occupancy expense 477 384 1,894 1,692
Equipment 537 514 2,057 2,085
Advertising 154 56 390 210
Amortization of intangibles 454 459 1,816 1,866
Federal deposit insurance premium 42 45 168 192
Preferred securities expense 0 2,362 0 5,638
Other 1,421 1,045 4,512 3,983
------------- ------------- ------------- -------------
Total non-interest expenses 6,837 8,167 25,430 29,120
------------- ------------- ------------- -------------
Income before income taxes 4,543 4,135 18,601 21,841
Income tax expense 1,705 1,621 6,543 8,107
------------- ------------- ------------- -------------
Net income $ 2,838 $ 2,514 $ 12,058 $ 13,734
============= ============= ============= =============
Weighted avg. no. of diluted common shares (c) 7,102,972 7,290,877 7,224,585 7,485,781
Diluted earnings per common share (c) $ 0.40 $ 0.34 $ 1.67 $ 1.83
Return on average common equity 9.69% 8.54% 10.20% 11.53%
Return on average assets 0.61% 0.56% 0.67% 0.75%
Average earning assets $1,782,562 $1,741,302 $1,738,814 $1,777,396
Yield on average interest-earning assets 5.51% 5.61% 5.54% 5.98%
Cost of average interest-bearing liabilities 3.41% 3.55% 3.52% 3.79%
------------- ------------- ------------- -------------
Net interest rate spread 2.10% 2.06% 2.02% 2.19%
============= ============= ============= =============
Net interest margin 2.23% 2.28% 2.16% 2.44%
Non-interest exp. as a % of avg. assets 1.48% 1.81% 1.41% 1.58%
Efficiency ratio 56.37% 62.66% 53.70% 52.94%
Loan originations and purchases:
One- to four-family mortgage loans $ 143,758 $ 113,411 $ 462,833 $ 529,545
Commercial and multi-family real estate loans 15,863 11,039 43,222 49,049
Consumer loans 19,581 32,842 75,002 89,775
------------- ------------- ------------- -------------
Total loan originations and purchases $ 179,202 $ 157,292 $ 581,057 $ 668,369
============= ============= ============= =============
(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 CHARGES
------------------------------------------------------------
For the three months ended For the year ended
June 30, June 30,
--------------------------------- --------------------------------
2004 2003 2004 2003
-------------- -------------- -------------- --------------
Reported net income $ 2,838 $ 2,514 $ 12,058 $ 13,734
Non-recurring charges:
Accelerated amortization on PennFed
Capital Trust I issuance costs 0 1,514 0 1,514
Additional environmental accrual 298 0 298 0
Tax effect (110) (530) (110) (530)
-------------- -------------- -------------- --------------
Non-recurring charges, net of taxes 188 984 188 984
-------------- -------------- -------------- --------------
"Adjusted" net income $ 3,026 $ 3,498 $ 12,246 $ 14,718
============== ============== ============== ==============
Weighted avg. no. of diluted common shares (d) 7,102,972 7,290,877 7,224,585 7,485,781
Diluted earnings per common share (d) $ 0.43 $ 0.48 $ 1.70 $ 1.97
Return on average common equity 10.33% 11.89% 10.35% 12.36%
Return on average assets 0.66% 0.78% 0.68% 0.80%
Non-interest exp. as a % of avg. assets 1.42% 1.47% 1.39% 1.50%
Efficiency ratio 53.74% 50.35% 53.02% 50.00%
(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,
2004 2004 2003 2003 2003
-------------- -------------- ------------- ------------- -------------
Selected Operating Data:
Interest and dividend income $ 24,551 $ 24,326 $ 23,658 $ 23,741 $ 24,433
Interest expense 14,652 14,598 14,620 14,804 14,548
-------------- -------------- ------------- ------------- -------------
Net interest and dividend income 9,899 9,728 9,038 8,937 9,885
Provision for loan losses 0 0 0 0 0
-------------- -------------- ------------- ------------- -------------
Net interest and dividend income
after provision for loan losses 9,899 9,728 9,038 8,937 9,885
Non-interest income:
Service charges 1,044 957 871 1,303 1,585
Net gain from real estate operations 57 0 1 0 0
Net gain on sales of loans 5 57 363 334 571
Other 375 360 329 373 261
-------------- -------------- ------------- ------------- -------------
Total non-interest income 1,481 1,374 1,564 2,010 2,417
Non-interest expenses:
Compensation & employee benefits 3,752 3,901 3,616 3,324 3,302
Net occupancy expense 477 514 480 423 384
Equipment 537 536 498 486 514
Advertising 154 102 78 56 56
Amortization of intangibles 454 453 454 455 459
Federal deposit insurance premium 42 41 41 44 45
Preferred securities expense 0 0 0 0 2,362
Other 1,421 1,090 1,090 911 1,045
-------------- -------------- ------------- ------------- -------------
Total non-interest expenses 6,837 6,637 6,257 5,699 8,167
-------------- -------------- ------------- ------------- -------------
Income before income taxes 4,543 4,465 4,345 5,248 4,135
Income tax expense 1,705 1,499 1,464 1,875 1,621
-------------- -------------- ------------- ------------- -------------
Net income $ 2,838 $ 2,966 $ 2,881 $ 3,373 $ 2,514
============== ============== ============= ============= =============
Weighted avg. no. of diluted common shares (e) 7,102,972 7,192,948 7,243,944 7,233,777 7,290,877
Diluted earnings per common share (e) $ 0.40 $ 0.41 $ 0.40 $ 0.47 $ 0.34
Return on average common equity 9.69% 9.98% 9.65% 11.47% 8.54%
Return on average assets 0.61% 0.66% 0.65% 0.76% 0.56%
Average earning assets $1,782,562 $1,741,017 $1,715,792 $1,715,887 $1,741,302
Yield on average interest-earning assets 5.51% 5.59% 5.50% 5.51% 5.61%
Cost of average interest-bearing liabilities 3.41% 3.48% 3.50% 3.55% 3.55%
-------------- -------------- ------------- ------------- -------------
Net interest rate spread 2.10% 2.11% 2.00% 1.96% 2.06%
============== ============== ============= ============= =============
Net interest margin 2.23% 2.24% 2.14% 2.11% 2.28%
Non-interest exp. as a % of avg. assets 1.48% 1.47% 1.40% 1.28% 1.81%
Efficiency ratio 56.37% 55.70% 54.74% 47.90% 62.66%
Loan originations and purchases:
One- to four-family mortgage loans $ 143,758 $ 79,438 $ 61,304 $ 178,333 $ 113,411
Commercial and multi-family real estate loans 15,863 10,143 8,144 9,072 11,039
Consumer loans 19,581 17,248 15,441 22,732 32,842
-------------- -------------- ------------- ------------- -------------
Total loan originations and purchases $ 179,202 $ 106,829 $ 84,889 $ 210,137 $ 157,292
============== ============== ============= ============= =============
(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 CHARGES
------------------------------------------------------------
For the three months ended
--------------------------------------------------------------------------------
Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,
2004 2004 2003 2003 2003
----------- ----------- ----------- ----------- -----------
Reported net income $ 2,838 $ 2,966 $ 2,881 $ 3,373 $ 2,514
Non-recurring charges:
Accelerated amortization on PennFed
Capital Trust I issuance costs 0 0 0 0 1,514
Additional environmental accrual 298 0 0 0 0
Tax effect (110) 0 0 0 (530)
----------- ----------- ----------- ----------- -----------
Non-recurring charges, net of taxes 188 0 0 0 984
----------- ----------- ----------- ----------- -----------
"Adjusted" net income $ 3,026 $ 2,966 $ 2,881 $ 3,373 $ 3,498
=========== =========== =========== =========== ===========
Weighted avg. no. of diluted common shares (f) 7,102,972 7,192,948 7,243,944 7,233,777 7,290,877
Diluted earnings per common share (f) $ 0.43 $ 0.41 $ 0.40 $ 0.47 $ 0.48
Return on average common equity 10.33% 9.98% 9.65% 11.47% 11.89%
Return on average assets 0.66% 0.66% 0.65% 0.76% 0.78%
Non-interest exp. as a % of avg. assets 1.42% 1.47% 1.40% 1.28% 1.47%
Efficiency ratio 53.74% 55.70% 54.74% 47.90% 50.35%
(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.