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 FIRST QUARTER EARNINGS
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WEST ORANGE, NJ, October 28, 2005 - PennFed Financial Services, Inc.
(NASDQ:PFSB), the $2.1 billion holding company for New Jersey-based Penn Federal
Savings Bank, announced earnings for its first fiscal quarter ended September
30, 2005. Actual reported earnings for the quarter ended September 30, 2005 were
$0.30 per diluted share compared to $0.27 of reported earnings for the prior
fiscal year quarter.
Certain information provided in this press release excludes income and
expense items which management believes should be excluded in order to provide
investors with 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 below and in the
reconciliation tables following this press release.
The September 2005 quarter included the effects of a prepayment premium
received on a commercial loan, the payment of a penalty associated with the
prepayment of certain advances from the Federal Home Loan Bank (FHLB) of New
York, the acceleration of depreciation on branch automation software and an
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PennFed 1Q-2006
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increase in the Company's obligation under certain long-term benefit plans.
Excluding these items, earnings for the September 2005 quarter would have been
27 cents per diluted share.
For the current quarter, net interest margin was 2.05% compared to 2.14%
and 2.38% for the three months ended June 30, 2005 and September 30, 2004,
respectively. "PennFed, like most of the banking community, is experiencing
margin compression caused by a persistently flat yield curve and very strong
competitive pricing," said Joseph L. LaMonica, PennFed's President and Chief
Executive Officer.
Service charge income for the quarter ended September 30, 2005 amounted to
$3.5 million and included a $2.7 million prepayment premium on a commercial
loan, resulting from the payoff of one of the Company's largest commercial
loans.
During the quarter ended September 30, 2005, the Company incurred a $1.35
million penalty in connection with the prepayment of $35 million of FHLB
advances that had an average rate of 5.95% and an average remaining maturity of
28 months. These advances were replaced with $35 million of FHLB advances with
an average rate of 4.20% and an average maturity of 43 months.
"With the negative impact on earnings from a lower net interest margin,
asset quality and expense management will continue to be priorities," said
LaMonica. Asset quality during the quarter remained strong. Non-performing
assets totaled $2.5 million, or 0.12% of total assets at September 30, 2005.
Non-interest expense for the quarter was impacted by $372,000 of additional
depreciation expense related to branch automation software that is no longer
being
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PennFed 1Q-2006
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used and a $259,000 increase in the Company's obligation under certain long-term
benefit plans. Excluding these two items and the FHLB prepayment penalty, the
Company's current quarter non-interest expense ratio was strong at 1.11%,
compared to 1.26% for the three months ended September 30, 2004.
Total assets at September 30, 2005 of $2.124 billion reflected growth of
approximately 4%, or 14% annualized, from June 30, 2005. Growth in net loans
receivable was over 4%, or 17% annualized. Total loan production of $157 million
for the September 2005 quarter continued to be strong.
LaMonica noted that, "Despite experiencing strong competitive deposit
pricing pressure, deposit balances grew." Deposits totaled $1.364 billion at
September 30, 2005 compared to $1.339 billion at June 30, 2005. While the
Company continues to see declines in savings account balances as customers move
"parked" funds to other higher yielding alternatives, checking and money market
balances increased by over 7% since June 30, 2005.
During the three months ended September 30, 2005, the Company repurchased
70,600 shares of common stock for a total cost of $1.4 million. Stock
repurchases continue to be utilized as a means of managing capital.
PennFed stockholders of record as of November 11, 2005 will be paid a cash
dividend of $0.07 per share on November 25, 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.
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PennFed 1Q-2006
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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,
2005 2005 2004
----------- ----------- -----------
Selected Financial Condition Data:
Cash and cash equivalents $ 17,838 $ 15,220 $ 13,390
Investments, net 425,412 410,509 425,086
Mortgage-backed securities, net 73,270 78,201 93,025
Loans held for sale 937 4,826 0
Loans receivable:
One- to four-family mortgage loans 1,195,924 1,143,663 1,065,001
Commercial and multi-family real estate loans 165,882 169,765 170,566
Consumer loans 156,894 144,423 119,272
Allowance for loan losses (5,916) (6,050) (6,070)
Other, net 9,410 8,853 7,812
----------- ----------- -----------
Loans receivable, net 1,522,194 1,460,654 1,356,581
FHLB stock 24,586 22,391 22,123
Other intangible assets 0 0 907
Other assets 59,450 58,750 51,140
----------- ----------- -----------
Total assets $ 2,123,687 $ 2,050,551 $ 1,962,252
=========== =========== ===========
Deposits:
Checking and money market $ 243,457 $ 227,031 $ 167,624
Savings 360,488 385,360 433,382
Certificates of deposit and accrued interest 760,057 727,100 635,224
----------- ----------- -----------
Total deposits 1,364,002 1,339,491 1,236,230
FHLB advances 425,465 415,465 425,465
Other borrowings 148,134 107,952 121,747
Junior subordinated debentures 42,093 42,082 42,048
Other liabilities 18,123 21,507 13,914
Stockholders' equity 125,870 (a) 124,054 122,848
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Total liabilities and stockholders' equity $ 2,123,687 $ 2,050,551 $ 1,962,252
=========== =========== ===========
Book value per share $ 9.53 $ 9.34 $ 8.92
Equity to assets 5.93% 6.05% 6.26%
Asset Quality Data:
Non-performing loans $ 1,998 $ 2,619 $ 1,659
Real estate owned, net 477 0 473
----------- ----------- -----------
Total non-performing assets $ 2,475 $ 2,619 $ 2,132
=========== =========== ===========
Non-performing loans to total loans 0.13% 0.18% 0.12%
Non-performing assets to total assets 0.12% 0.13% 0.11%
Allowance for loan losses to non-performing loans 296.10% 231.00% 365.88%
Allowance for loan losses to total gross loans 0.39% 0.41% 0.45%
Regulatory Capital Ratios (of the Bank):
Tangible capital ratio (requirement - 1.50%) 8.02% 8.28% 8.58%
Core capital ratio (requirement - 4.00%) 8.02% 8.28% 8.58%
Risk-based capital ratio (requirement - 8.00%) 15.39% 15.84% 16.75%
(a) Common shares outstanding as of September 30, 2005 totaled 13,211,256
shares.
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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Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30,
2005 2005 2005 2004 2004
------------ ------------ ------------ ------------ ------------
Selected Operating Data:
Interest and dividend income $ 27,683 $ 26,751 $ 26,167 $ 25,999 $ 25,805
Interest expense 17,491 16,290 15,300 15,060 14,734
------------ ------------ ------------ ------------ ------------
Net interest and dividend income 10,192 10,461 10,867 10,939 11,071
Provision for loan losses 0 0 0 0 0
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Net interest and dividend income
after provision for loan losses 10,192 10,461 10,867 10,939 11,071
Non-interest income:
Service charges 3,470 800 703 867 726
Net gain (loss) from real estate operations (3) (1) 0 157 0
Net gain on sales of loans 122 128 172 70 24
Income on BOLI 216 224 217 121 128
Other 181 146 152 140 222
------------ ------------ ------------ ------------ ------------
Total non-interest income 3,986 1,297 1,244 1,355 1,100
Non-interest expenses:
Compensation & employee benefits 3,259 2,856 3,135 3,079 3,193
Net occupancy expense 585 578 643 559 539
Equipment 971 546 516 543 535
Advertising 134 170 155 227 167
Amortization of intangible assets 0 0 454 454 453
Federal deposit insurance premium 42 44 44 43 41
Extinguishment of debt 1,351 0 0 0 0
Other 1,411 1,534 1,196 1,276 1,191
------------ ------------ ------------ ------------ ------------
Total non-interest expenses 7,753 5,728 6,143 6,181 6,119
------------ ------------ ------------ ------------ ------------
Income before income taxes 6,425 6,030 5,968 6,113 6,052
Income tax expense 2,293 2,158 2,114 2,133 2,264
------------ ------------ ------------ ------------ ------------
Net income $ 4,132 $ 3,872 $ 3,854 $ 3,980 $ 3,788
============ ============ ============ ============ ============
Weighted avg. no. of diluted common shares 13,700,349 13,742,337 13,959,738 14,114,728 14,195,722
Diluted earnings per common share $ 0.30 $ 0.28 $ 0.28 $ 0.28 $ 0.27
Return on average common equity 13.12% 12.50% 12.44% 12.97% 12.63%
Return on average assets 0.79% 0.76% 0.78% 0.81% 0.78%
Average total assets $ 2,087,261 $ 2,029,268 $ 1,985,274 $ 1,966,796 $ 1,943,022
Average earning assets $ 2,017,484 $ 1,959,481 $ 1,913,274 $ 1,901,002 $ 1,881,110
Yield on average interest-earning assets 5.47% 5.46% 5.48% 5.45% 5.47%
Cost of average interest-bearing liabilities 3.55% 3.44% 3.34% 3.25% 3.22%
------------ ------------ ------------ ------------ ------------
Net interest rate spread 1.92% 2.02% 2.14% 2.20% 2.25%
============ ============ ============ ============ ============
Net interest margin 2.05% 2.14% 2.26% 2.33% 2.38%
Non-interest exp. as a % of avg. assets 1.49% 1.13% 1.24% 1.26% 1.26%
Efficiency ratio 54.67% 48.71% 46.97% 47.19% 46.55%
Loan originations and purchases:
One- to four-family mortgage loans $ 118,229 $ 107,521 $ 63,610 $ 55,899 $ 123,244
Commercial and multi-family real estate loans 8,315 8,470 8,110 16,217 5,815
Consumer loans 30,470 29,301 23,681 20,121 17,705
------------ ------------ ------------ ------------ ------------
Total loan originations and purchases $ 157,014 $ 145,292 $ 95,401 $ 92,237 $ 146,764
============ ============ ============ ============ ============
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
----------------------------------
For the three months ended
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Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30,
2005 2005 2005 2004 2004
------------ ------------ ------------ ------------ ------------
Reported net income $ 4,132 $ 3,872 $ 3,854 $ 3,980 $ 3,788
Adjustments:
Commercial loan prepayment premium (2,688) 0 0 0 0
Prepayment penalty on FHLB advances 1,351 0 0 0 0
Acceleration of depreciation on branch
automation system software 372 0 0 0 0
Increase in obligation under certain
long-term benefit plans 259 0 0 0 0
Additional Sarbanes Oxley compliance costs 0 208 0 0 0
Tax effect 247 (73) 0 0 0
------------ ------------ ------------ ------------ ------------
Adjustments, net of taxes (459) 135 0 0 0
------------ ------------ ------------ ------------ ------------
"Adjusted" net income $ 3,673 $ 4,007 $ 3,854 $ 3,980 $ 3,788
============ ============ ============ ============ ============
Weighted avg. no. of diluted common shares 13,700,349 13,742,337 13,959,738 14,114,728 14,195,722
Diluted earnings per common share $ 0.27 $ 0.29 $ 0.28 $ 0.28 $ 0.27
Return on average common equity 11.66% 12.93% 12.44% 12.97% 12.63%
Return on average assets 0.70% 0.79% 0.78% 0.81% 0.78%
Non-interest exp. as a % of avg. assets 1.11% 1.09% 1.24% 1.26% 1.26%
Efficiency ratio 50.21% 46.94% 46.97% 47.19% 46.55%