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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INCREASED FOURTH QUARTER AND
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FISCAL YEAR EARNINGS
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WEST ORANGE, NJ, July 27, 2005 - PennFed Financial Services, Inc.
(NASDQ:PFSB), the $2.1 billion holding company for New Jersey-based Penn Federal
Savings Bank, announced earnings for the fourth quarter and fiscal year ended
June 30, 2005. Actual reported earnings for the current quarter were 28 cents
per diluted share compared to actual reported earnings for the June 2004 quarter
of 20 cents per diluted share. Reported earnings for the year ended June 30,
2005 were $1.11 per diluted share, a 34% increase when compared to $0.83 of
reported earnings for the prior fiscal year.
Excluding the increased expense recorded in the current quarter associated
with Sarbanes Oxley Section 404 ("SOX") compliance, earnings for the June 2005
quarter would have been 29 cents per diluted share. Earnings for the quarter
ended June 30, 2004, excluding a non-recurring charge associated with an
environmental liability, would have been 21 cents per diluted share. Excluding
unusual items, the 29 cents per diluted share for the current quarter represents
a 38% increase over the prior year quarter.
Certain information provided in this press release excludes expenses which
management believes should be excluded in order to have a clear understanding of
the results of the Company's normal business operations. These items, which are
included in the financial results prepared in accordance with U.S. Generally
Accepted Accounting Principles (GAAP) but which are excluded from adjusted
results, are described in the reconciliation tables following this press
release.
As expected, costs associated with regulatory burden, especially
compliance with
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PennFed 4Q-2005
Page 2
SOX, have required significant additional expenditures. With a concentration of
activity in the fourth quarter of the fiscal year, the results for the quarter
ended June 30, 2005 include $208,000 of expense (pre-tax) greater than the March
31, 2005 quarter, representing approximately half of the total cost of SOX
implementation.
Return on equity for the year ended June 30, 2005 improved to 12.64%
compared to 10.20% for the prior year.
Total assets at June 30, 2005 of $2.051 billion represented growth of 7.8%
since June 30, 2004. During the fiscal year 2005, net loans receivable grew
nearly 14%. Total loan production was strong at $145 million and $480 million
for the three months and full year ended June 30, 2005, respectively. While
fiscal 2005 has seen a reduction in refinance activity and the resulting
slowdown in loan production when compared to fiscal 2004, the Company has also
benefited from a slowdown in accelerated prepayments on loans.
"The growth in loans has been principally funded by growth in deposits,"
commented Joseph L. LaMonica, President and Chief Executive Officer. Since June
30, 2004, total deposits have increased $151 million, or 12.7%. While the
Company did experience a decline in savings account balances as customers moved
"parked" funds to other higher yielding alternatives, checking and money market
balances increased by approximately 34%.
The Company continues to evaluate additional locations that would
complement or expand the franchise. Over the last two years, four branches have
been opened. LaMonica commented "at our newest branch, which opened in
mid-February 2005 in Aberdeen, New Jersey, deposits currently exceed $13
million."
PennFed's net interest margin of 2.14% for the quarter ended June 30, 2005
reflected 12 basis points of compression from the March 2005 quarter. LaMonica
noted, "As with other traditional thrifts like Penn Federal Savings Bank, the
flattening of the yield curve and aggressive deposit pricing by competitors has
contributed to the margin pressure."
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PennFed 4Q-2005
Page 3
"With non-performing assets of $2.6 million, or 0.13% of total assets at
June 30, 2005, our strong credit quality is clearly evident," LaMonica stated.
The Company's ratio of non-interest expense to average assets was 1.13%
for the three months ended June 30, 2005 and 1.22% for the full fiscal year.
This compares favorably to non-interest expense ratios of 1.48% and 1.41%,
respectively, for the equivalent prior year periods.
The Company continues to employ stock repurchases as a means of utilizing
capital. During fiscal 2005, 731,800 shares of the Company's outstanding stock
were repurchased at prices ranging from $13.30 to $17.25, for a total cost of
$11.3 million.
PennFed stockholders of record as of August 12, 2005 will be paid a cash
dividend of 7 cents per share on August 26, 2005. The Company's dividend policy
will continue to be reviewed on a regular basis.
Penn Federal Savings Bank maintains 25 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,
2005 2005 2004
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Selected Financial Condition Data:
Cash and cash equivalents $ 15,220 $ 12,757 $ 14,859
Investments, net 410,509 424,491 424,980
Mortgage-backed securities, net 78,201 83,079 100,079
Loans held for sale 4,826 0 0
Loans receivable:
One- to four-family mortgage loans 1,143,663 1,093,072 996,659
Commercial and multi-family real estate loans 169,765 167,783 172,244
Consumer loans 144,423 132,543 117,688
Allowance for loan losses (6,050) (6,054) (6,249)
Other, net 8,853 8,101 7,131
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Loans receivable, net 1,460,654 1,395,445 1,287,473
FHLB stock 22,391 21,733 23,773
Other intangible assets 0 0 1,361
Other assets 58,750 58,859 49,761
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Total assets $ 2,050,551 $ 1,996,364 $ 1,902,286
=========== =========== ===========
Deposits:
Checking and money market $ 227,031 $ 210,327 $ 169,609
Savings 385,360 419,112 418,678
Certificates of deposit and accrued interest 727,100 655,028 599,813
----------- ----------- -----------
Total deposits 1,339,491 1,284,467 1,188,100
FHLB advances 415,465 425,465 475,465
Other borrowings 107,952 103,059 59,346
Junior subordinated debentures 42,082 42,070 42,037
Other liabilities 21,507 17,074 18,939
Stockholders' equity 124,054 (a) 124,229 118,399
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Total liabilities and stockholders' equity $ 2,050,551 $ 1,996,364 $ 1,902,286
=========== =========== ===========
Book value per share $ 9.34 $ 9.20 $ 8.72
Equity to assets 6.05% 6.22% 6.22%
Asset Quality Data:
Non-performing loans $ 2,619 $ 1,611 $ 2,182
Real estate owned, net 0 0 0
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Total non-performing assets $ 2,619 $ 1,611 $ 2,182
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Non-performing loans to total loans 0.18% 0.11% 0.17%
Non-performing assets to total assets 0.13% 0.08% 0.11%
Allowance for loan losses to non-performing loans 231.00% 375.79% 286.39%
Allowance for loan losses to total gross loans 0.41% 0.43% 0.48%
Regulatory Capital Ratios (of the Bank):
Tangible capital ratio (requirement - 1.50%) 8.28% 8.51% 8.61%
Core capital ratio (requirement - 4.00%) 8.28% 8.51% 8.61%
Risk-based capital ratio (requirement - 8.00%) 15.84% 16.43% 16.86%
(a) Common shares outstanding as of June 30, 2005 totaled 13,280,038 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 year ended
June 30, June 30,
----------------------------- ----------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Selected Operating Data:
Interest and dividend income $ 26,751 $ 24,551 $ 104,722 $ 96,276
Interest expense 16,290 14,652 61,384 58,674
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Net interest and dividend income 10,461 9,899 43,338 37,602
Provision for loan losses 0 0 0 0
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Net interest and dividend income
after provision for loan losses 10,461 9,899 43,338 37,602
Non-interest income:
Service charges 800 1,044 3,096 4,175
Net gain (loss) from real estate operations (1) 57 156 58
Net gain on sales of loans 128 5 394 759
Other 370 375 1,350 1,437
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Total non-interest income 1,297 1,481 4,996 6,429
Non-interest expenses:
Compensation & employee benefits 2,856 3,752 12,263 14,593
Net occupancy expense 578 477 2,319 1,894
Equipment 546 537 2,140 2,057
Advertising 170 154 719 390
Amortization of intangibles 0 454 1,361 1,816
Federal deposit insurance premium 44 42 172 168
Other 1,534 1,421 5,197 4,512
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Total non-interest expenses 5,728 6,837 24,171 25,430
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Income before income taxes 6,030 4,543 24,163 18,601
Income tax expense 2,158 1,705 8,669 6,543
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Net income $ 3,872 $ 2,838 $ 15,494 $ 12,058
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Weighted avg. no. of diluted common shares 13,742,337 14,205,944 14,010,684 14,449,170
Diluted earnings per common share $ 0.28 $ 0.20 $ 1.11 $ 0.83
Return on average common equity 12.50% 9.69% 12.64% 10.20%
Return on average assets 0.76% 0.61% 0.78% 0.67%
Average earning assets $ 1,959,481 $ 1,782,562 $ 1,913,717 $ 1,738,814
Yield on average interest-earning assets 5.46% 5.51% 5.47% 5.54%
Cost of average interest-bearing liabilities 3.44% 3.41% 3.33% 3.52%
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Net interest rate spread 2.02% 2.10% 2.14% 2.02%
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Net interest margin 2.14% 2.23% 2.26% 2.16%
Non-interest exp. as a % of avg. assets 1.13% 1.48% 1.22% 1.41%
Efficiency ratio 48.71% 56.37% 47.35% 53.70%
Loan originations and purchases:
One- to four-family mortgage loans $ 107,521 $ 143,758 $ 350,274 $ 462,833
Commercial and multi-family real estate loans 8,470 15,863 38,612 43,222
Consumer loans 29,301 19,581 90,808 75,002
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Total loan originations and purchases $ 145,292 $ 179,202 $ 479,694 $ 581,057
============ ============ ============ ============
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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Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,
2005 2005 2004 2004 2004
------------ ------------ ------------ ------------ ------------
Selected Operating Data:
Interest and dividend income $ 26,751 $ 26,167 $ 25,999 $ 25,805 $ 24,551
Interest expense 16,290 15,300 15,060 14,734 14,652
------------ ------------ ------------ ------------ ------------
Net interest and dividend income 10,461 10,867 10,939 11,071 9,899
Provision for loan losses 0 0 0 0 0
------------ ------------ ------------ ------------ ------------
Net interest and dividend income
after provision for loan losses 10,461 10,867 10,939 11,071 9,899
Non-interest income:
Service charges 800 703 867 726 1,044
Net gain from real estate operations (1) 0 157 0 57
Net gain on sales of loans 128 172 70 24 5
Other 370 369 261 350 375
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Total non-interest income 1,297 1,244 1,355 1,100 1,481
Non-interest expenses:
Compensation & employee benefits 2,856 3,135 3,079 3,193 3,752
Net occupancy expense 578 643 559 539 477
Equipment 546 516 543 535 537
Advertising 170 155 227 167 154
Amortization of intangibles 0 454 454 453 454
Federal deposit insurance premium 44 44 43 41 42
Other 1,534 1,196 1,276 1,191 1,421
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Total non-interest expenses 5,728 6,143 6,181 6,119 6,837
------------ ------------ ------------ ------------ ------------
Income before income taxes 6,030 5,968 6,113 6,052 4,543
Income tax expense 2,158 2,114 2,133 2,264 1,705
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Net income $ 3,872 $ 3,854 $ 3,980 $ 3,788 $ 2,838
============ ============ ============ ============ ============
Weighted avg. no. of diluted common shares 13,742,337 13,959,738 14,114,728 14,195,722 14,205,944
Diluted earnings per common share $ 0.28 $ 0.28 $ 0.28 $ 0.27 $ 0.20
Return on average common equity 12.50% 12.44% 12.97% 12.63% 9.69%
Return on average assets 0.76% 0.78% 0.81% 0.78% 0.61%
Average earning assets $ 1,959,481 $ 1,913,274 $ 1,901,002 $ 1,881,110 $ 1,782,562
Yield on average interest-earning assets 5.46% 5.48% 5.45% 5.47% 5.51%
Cost of average interest-bearing liabilities 3.44% 3.34% 3.25% 3.22% 3.41%
------------ ------------ ------------ ------------ ------------
Net interest rate spread 2.02% 2.14% 2.20% 2.25% 2.10%
============ ============ ============ ============ ============
Net interest margin 2.14% 2.26% 2.33% 2.38% 2.23%
Non-interest exp. as a % of avg. assets 1.13% 1.24% 1.26% 1.26% 1.48%
Efficiency ratio 48.71% 46.97% 47.19% 46.55% 56.37%
Loan originations and purchases:
One- to four-family mortgage loans $ 107,521 $ 63,610 $ 55,899 $ 123,244 $ 143,758
Commercial and multi-family real
estate loans 8,470 8,110 16,217 5,815 15,863
Consumer loans 29,301 23,681 20,121 17,705 19,581
------------ ------------ ------------ ------------ ------------
Total loan originations and purchases $ 145,292 $ 95,401 $ 92,237 $ 146,764 $ 179,202
============ ============ ============ ============ ============
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 ADJUSTED NET INCOME
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For the three months ended
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Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,
2005 2005 2004 2004 2004
------------ ------------ ------------ ------------ ------------
Reported net income $ 3,872 $ 3,854 $ 3,980 $ 3,788 $ 2,838
Adjustments:
Additional Sarbanes Oxley
compliance costs 208 0 0 0 0
Additional environmental accrual 0 0 0 0 298
Tax effect (73) 0 0 0 (110)
------------ ------------ ------------ ------------ ------------
Adjustments, net of taxes 135 0 0 0 188
------------ ------------ ------------ ------------ ------------
"Adjusted" net income $ 4,007 $ 3,854 $ 3,980 $ 3,788 $ 3,026
============ ============ ============ ============ ============
Weighted avg. no. of diluted common shares 13,742,337 13,959,738 14,114,728 14,195,722 14,205,944
Diluted earnings per common share $ 0.29 $ 0.28 $ 0.28 $ 0.27 $ 0.21
Return on average common equity 12.93% 12.44% 12.97% 12.63% 10.33%
Return on average assets 0.79% 0.78% 0.81% 0.78% 0.66%
Non-interest exp. as a % of avg. assets 1.09% 1.24% 1.26% 1.26% 1.42%
Efficiency ratio 46.94% 46.97% 47.19% 46.55% 53.74%
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.