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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ANNOUNCES PLANS FOR 25th BRANCH AND
LAUNCHES NEW LOAN REFERRAL PROGRAMS
WEST ORANGE, NJ, January 26, 2005 - PennFed Financial Services, Inc.
(Nasdaq:PFSB), the nearly $2 billion holding company for New Jersey-based Penn
Federal Savings Bank, reported earnings for the second fiscal quarter ended
December 31, 2004 of 28 cents per diluted share. Earnings represented a 40%
increase over the 20 cents per diluted share reported for the comparable prior
year quarter.
For the first six months of fiscal 2005, PennFed reported earnings of 55
cents per diluted share, compared to 43 cents per diluted share for the
comparable six months ended December 31, 2003. Return on equity for the six
months ended December 31, 2004 was 12.80% compared to 10.55% for the comparable
prior year period.
At December 31, 2004 assets totaled $1.979 billion, reflecting growth from
$1.962 billion at September 30, 2004 and $1.902 billion at June 30, 2004. Growth
in net loans receivable since June 30, 2004 was nearly 7%, or 13% annualized.
Total loan production for the December 2004 quarter was $92 million and $239
million for the entire six month period. The slowdown in one- to four-family
mortgage loan production for the December 2004 quarter reflects the reduction in
refinance activity. Growth in the portfolio was aided by the slowdown in
accelerated prepayments on loans.
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PennFed 2Q-2005
Page 2
"Our focus on gathering deposits continues," indicated Joseph L. LaMonica,
PennFed's President and Chief Executive Officer. Core deposits, which include
checking, money market and savings accounts, increased $41 million, or 7.0%,
since June 30, 2004.
"Following the opening of new branches in February 2004 and June 2004, the
Bank will open a 25th branch - a supermarket branch located in Aberdeen. The
facility is a complement to existing Penn Federal branches in the area and is
scheduled to open in February 2005," stated LaMonica.
As seen for many other traditional thrifts, PennFed's net interest margin
reflected modest compression. For the current quarter, the margin was 2.33%,
representing an increase from 2.14% for the same period last year, but reflected
a 5 basis point contraction from the September 2004 quarter. "A slowdown in loan
prepayments, growth in the loan portfolio and the repricing of certain deposits
and other borrowings were offset by the effects of rising short term rates and
the flatter yield curve in the current environment," explained LaMonica.
For the three and six months ended December 31, 2004, PennFed reported $1.1
million and $2.2 million, respectively, of service charges and other
non-interest income, compared to $1.2 million and $2.9 million, respectively,
for the comparable prior year periods as fees associated with loan prepayments
and modifications decreased. Additional opportunities for increasing
non-interest income are continually being explored and implemented if
appropriate.
The Company is currently in the process of implementing two new loan
referral programs - one related to multi-family loans and one related to one- to
four-family loans. Under these programs, loan products that the Company does not
currently offer or loans that the Company cannot or does not want to put in
portfolio will be referred to a third party, with
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PennFed 2Q-2005
Page 3
the Company earning fee income on each referral. Currently, potential borrowers
requesting these types of loans must be turned away.
While net interest margin contracted slightly in this quarter, as noted
previously, LaMonica stated, "Our reputation as a low-risk, low-cost provider of
financial services is evident in our strong asset quality and our low expense
ratios." Non-performing assets totaled $1.8 million and represented only 0.09%
of total assets at December 31, 2004. In addition, the Company's non-interest
expense ratio was very strong at 1.26% for both the three and six months ended
December 31, 2004. While current expense levels reflect the end of costs
associated with funding the Company's Employee Stock Ownership Plan, expenses
include a replacement benefit plan for the ESOP as well as costs associated with
the three branches opened since September 2003. The Bank's intangible assets
will be fully amortized as of March 31, 2005, eliminating $454,000 of expense
quarterly. Nevertheless, costs associated with regulatory burden, especially
compliance with Sarbanes-Oxley Section 404, continue to require significant
additional expenditures.
During the December 2004 quarter, the Company was successful in
repurchasing 181,600 shares of its outstanding stock at prices ranging from
$15.23 to $17.25, for a total cost of $3.0 million. PennFed continues to employ
stock repurchases as a means of utilizing capital.
PennFed stockholders of record as of February 11, 2005 will be paid a cash
dividend of $0.05 per share on February 25, 2005. The Company continues to
review its dividend policy on a regular basis.
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PennFed 2Q-2005
Page 4
Penn Federal Savings Bank maintains 24 New Jersey branch offices, with a
25th branch in Aberdeen, New Jersey opening in February 2005. 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)
December 31, September 30, June 30, December 31,
2004 2004 2004 2003
----------- ----------- ----------- -----------
Selected Financial Condition Data:
Cash and cash equivalents $ 14,829 $ 13,390 $ 14,859 $ 36,737
Investments, net 422,159 425,086 424,980 417,994
Mortgage-backed securities, net 87,879 93,025 100,079 104,856
Loans held for sale 2,580 0 0 3,364
Loans receivable:
One- to four-family mortgage loans 1,075,831 1,065,001 996,659 879,479
Commercial and multi-family real estate loans 168,092 170,566 172,244 160,926
Consumer loans 124,402 119,272 117,688 114,206
Allowance for loan losses (6,064) (6,070) (6,249) (6,271)
Other, net 7,931 7,812 7,131 6,251
----------- ----------- ----------- -----------
Loans receivable, net 1,370,192 1,356,581 1,287,473 1,154,591
FHLB stock 22,102 22,123 23,773 24,273
Other intangible assets 454 907 1,361 2,268
Other assets 59,293 51,140 49,761 47,903
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Total assets $ 1,979,488 $ 1,962,252 $ 1,902,286 $ 1,791,986
=========== =========== =========== ===========
Deposits:
Checking and money market $ 199,297 $ 167,624 $ 169,609 $ 168,113
Savings 430,203 433,382 418,678 388,229
Certificates of deposit and accrued interest 623,954 635,224 599,813 550,915
----------- ----------- ----------- -----------
Total deposits 1,253,454 1,236,230 1,188,100 1,107,257
FHLB advances 425,465 425,465 475,465 485,465
Other borrowings 122,624 121,747 59,346 23,118
Junior subordinated debentures 42,059 42,048 42,037 42,015
Other liabilities 12,551 13,914 18,939 13,367
Stockholders' equity 123,335(a) 122,848 118,399 120,764
----------- ----------- ----------- -----------
Total liabilities and stockholders' equity $ 1,979,488 $ 1,962,252 $ 1,902,286 $ 1,791,986
=========== =========== =========== ===========
Book value per share $ 9.04 $ 8.92 $ 8.72 $ 8.87
Tangible book value per share $ 9.00 $ 8.85 $ 8.62 $ 8.71
Equity to assets 6.23% 6.26% 6.22% 6.74%
Tangible equity to tangible assets 6.21% 6.22% 6.16% 6.62%
Asset Quality Data:
Non-performing loans $ 1,776 $ 1,659 $ 2,182 $ 3,116
Real estate owned, net 0 473 0 28
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Total non-performing assets $ 1,776 $ 2,132 $ 2,182 $ 3,144
=========== =========== =========== ===========
Non-performing loans to total loans 0.13% 0.12% 0.17% 0.27%
Non-performing assets to total assets 0.09% 0.11% 0.11% 0.18%
Allowance for loan losses to non-performing loans 341.44% 365.88% 286.39% 201.25%
Allowance for loan losses to total gross loans 0.44% 0.45% 0.48% 0.54%
Regulatory Capital Ratios (of the Bank):
Tangible capital ratio (requirement - 1.50%) 8.56% 8.58% 8.61% 8.91%
Core capital ratio (requirement - 4.00%) 8.56% 8.58% 8.61% 8.91%
Risk-based capital ratio (requirement - 8.00%) 16.58% 16.75% 16.86% 17.69%
(a) Common shares outstanding as of December 31, 2004 totaled 13,648,966 shares.
Amounts have been restated for the effects of a 2 for 1 stock split in the
form of a 100% stock dividend paid on October 29, 2004.
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,
-------------------------- --------------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
Selected Operating Data:
Interest and dividend income $ 25,999 $ 23,658 $ 51,804 $ 47,399
Interest expense 15,060 14,620 29,794 29,424
----------- ----------- ----------- -----------
Net interest and dividend income 10,939 9,038 22,010 17,975
Provision for loan losses 0 0 0 0
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Net interest and dividend income
after provision for loan losses 10,939 9,038 22,010 17,975
Non-interest income:
Service charges 867 871 1,593 2,174
Net gain (loss) from real estate operations 157 1 157 1
Net gain on sales of loans 70 363 94 697
Other 261 329 611 702
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Total non-interest income 1,355 1,564 2,455 3,574
Non-interest expenses:
Compensation & employee benefits 3,079 3,616 6,272 6,940
Net occupancy expense 559 480 1,098 903
Equipment 543 498 1,078 984
Advertising 227 78 394 134
Amortization of intangibles 454 454 907 909
Federal deposit insurance premium 43 41 84 85
Other 1,276 1,090 2,467 2,001
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Total non-interest expenses 6,181 6,257 12,300 11,956
----------- ----------- ----------- -----------
Income before income taxes 6,113 4,345 12,165 9,593
Income tax expense 2,133 1,464 4,397 3,339
----------- ----------- ----------- -----------
Net income $ 3,980 $ 2,881 $ 7,768 $ 6,254
=========== =========== =========== ===========
Weighted avg. no. of diluted common shares 14,114,728 14,487,888 14,187,618 14,479,658
Diluted earnings per common share $ 0.28 $ 0.20 $ 0.55 $ 0.43
Return on average common equity 12.97% 9.65% 12.80% 10.55%
Return on average assets 0.81% 0.65% 0.79% 0.70%
Average earning assets $ 1,901,002 $ 1,715,792 $ 1,891,056 $ 1,715,839
Yield on average interest-earning assets 5.45% 5.50% 5.46% 5.50%
Cost of average interest-bearing liabilities 3.25% 3.50% 3.23% 3.53%
----------- ----------- ----------- -----------
Net interest rate spread 2.20% 2.00% 2.23% 1.97%
=========== =========== =========== ===========
Net interest margin 2.33% 2.14% 2.35% 2.12%
Non-interest exp. as a % of avg. assets 1.26% 1.40% 1.26% 1.34%
Efficiency ratio 47.19% 54.74% 46.87% 51.27%
Loan originations and purchases:
One- to four-family mortgage loans $ 55,899 $ 61,304 $ 179,143 $ 239,637
Commercial and multi-family real estate
loans 16,217 8,144 22,032 17,216
Consumer loans 20,121 15,441 37,826 38,173
----------- ----------- ----------- -----------
Total loan originations and purchases $ 92,237 $ 84,889 $ 239,001 $ 295,026
=========== =========== =========== ===========
Amounts have been restated for the effects of a 2 for 1 stock split in the
form of a 100% stock dividend paid on October 29, 2004.
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, Jun. 30, Mar. 31, Dec. 31,
2004 2004 2004 2004 2003
----------- ----------- ----------- ----------- -----------
Selected Operating Data:
Interest and dividend income $ 25,999 $ 25,805 $ 24,551 $ 24,326 $ 23,658
Interest expense 15,060 14,734 14,652 14,598 14,620
----------- ----------- ----------- ----------- -----------
Net interest and dividend income 10,939 11,071 9,899 9,728 9,038
Provision for loan losses 0 0 0 0 0
----------- ----------- ----------- ----------- -----------
Net interest and dividend income
after provision for loan losses 10,939 11,071 9,899 9,728 9,038
Non-interest income:
Service charges 867 726 1,044 957 871
Net gain from real estate operations 157 0 57 0 1
Net gain on sales of loans 70 24 5 57 363
Other 261 350 375 360 329
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Total non-interest income 1,355 1,100 1,481 1,374 1,564
Non-interest expenses:
Compensation & employee benefits 3,079 3,193 3,752 3,901 3,616
Net occupancy expense 559 539 477 514 480
Equipment 543 535 537 536 498
Advertising 227 167 154 102 78
Amortization of intangibles 454 453 454 453 454
Federal deposit insurance premium 43 41 42 41 41
Other 1,276 1,191 1,421 1,090 1,090
----------- ----------- ----------- ----------- -----------
Total non-interest expenses 6,181 6,119 6,837 6,637 6,257
----------- ----------- ----------- ----------- -----------
Income before income taxes 6,113 6,052 4,543 4,465 4,345
Income tax expense 2,133 2,264 1,705 1,499 1,464
----------- ----------- ----------- ----------- -----------
Net income $ 3,980 $ 3,788 $ 2,838 $ 2,966 $ 2,881
=========== =========== =========== =========== ===========
Weighted avg. no. of diluted common shares 14,114,728 14,195,722 14,205,944 14,385,896 14,487,888
Diluted earnings per common share $ 0.28 $ 0.27 $ 0.20 $ 0.21 $ 0.20
Return on average common equity 12.97% 12.63% 9.69% 9.98% 9.65%
Return on average assets 0.81% 0.78% 0.61% 0.66% 0.65%
Average earning assets $ 1,901,002 $ 1,881,110 $ 1,782,562 $ 1,741,017 $ 1,715,792
Yield on average interest-earning assets 5.45% 5.47% 5.51% 5.59% 5.50%
Cost of average interest-bearing liabilities 3.25% 3.22% 3.41% 3.48% 3.50%
----------- ----------- ----------- ----------- -----------
Net interest rate spread 2.20% 2.25% 2.10% 2.11% 2.00%
=========== =========== =========== =========== ===========
Net interest margin 2.33% 2.38% 2.23% 2.24% 2.14%
Non-interest exp. as a % of avg. assets 1.26% 1.26% 1.48% 1.47% 1.40%
Efficiency ratio 47.19% 46.55% 56.37% 55.70% 54.74%
Loan originations and purchases:
One- to four-family mortgage loans $ 55,899 $ 123,244 $ 143,758 $ 79,438 $ 61,304
Commercial and multi-family real estate
loans 16,217 5,815 15,863 10,143 8,144
Consumer loans 20,121 17,705 19,581 17,248 15,441
----------- ----------- ----------- ----------- -----------
Total loan originations and purchases $ 92,237 $ 146,764 $ 179,202 $ 106,829 $ 84,889
=========== =========== =========== =========== ===========
Amounts have been restated for the effects of a 2 for 1 stock split in the
form of a 100% stock dividend paid on October 29, 2004.
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
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For the three months ended
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Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31,
2004 2004 2004 2004 2003
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Reported net income $ 3,980 $ 3,788 $ 2,838 $ 2,966 $ 2,881
Non-recurring charges:
Additional environmental accrual 0 0 298 0 0
Tax effect 0 0 (110) 0 0
------------ ------------ ------------ ------------ ------------
Non-recurring charges, net of taxes 0 0 188 0 0
------------ ------------ ------------ ------------ ------------
"Adjusted" net income $ 3,980 $ 3,788 $ 3,026 $ 2,966 $ 2,881
============ ============ ============ ============ ============
Weighted avg. no. of diluted common shares 14,114,728 14,195,722 14,205,944 14,385,896 14,487,888
Diluted earnings per common share $ 0.28 $ 0.27 $ 0.21 $ 0.21 $ 0.20
Return on average common equity 12.97% 12.63% 10.33% 9.98% 9.65%
Return on average assets 0.81% 0.78% 0.66% 0.66% 0.65%
Non-interest exp. as a % of avg. assets 1.26% 1.26% 1.42% 1.47% 1.40%
Efficiency ratio 47.19% 46.55% 53.74% 55.70% 54.74%
Amounts have been restated for the effects of a 2 for 1 stock split in the
form of a 100% stock dividend paid on October 29, 2004.