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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FIRST QUARTER EARNINGS
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WEST ORANGE, NJ, October 26, 2006 - PennFed Financial Services, Inc.
(NASDQ:PFSB), the $2.3 billion holding company for New Jersey-based Penn Federal
Savings Bank, announced earnings for the first quarter ended September 30, 2006.
Earnings for the current quarter were 17 cents per diluted share compared to
earnings for the June 2006 quarter of 21 cents per diluted share.
"With the prolonged flat and, at times, inverted yield curve, the
Company, like many community banks, reported further net interest margin
compression," said Joseph L. LaMonica, PennFed's President and Chief Executive
Officer. The difficult interest rate environment and intense competition for
loans and deposits contributed to a reduction in net interest margin. PennFed's
net interest margin of 1.38% for the quarter ended September 30, 2006 reflected
18 basis points of compression from the June 2006 quarter. LaMonica stated that,
"while we anticipate the margin will continue to be modestly pressured in the
short term, stabilization of net interest margin should follow." LaMonica,
however, cautioned that, "actual improvement in the margin would probably not
begin to occur until the yield curve steepens."
"At PennFed, we continue to focus on asset quality and expense
management to somewhat mitigate the effects of a compressing margin," LaMonica
stated.
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PennFed 1Q-2007
Page 2
By adhering to high credit standards, credit quality has not
deteriorated. Non-performing assets of $2.1 million represented just 0.09% of
total assets at September 30, 2006. Chargeoffs for the current quarter were
insignificant.
In addition to being recognized as a low risk lender, the Company has
always been known as a low cost provider of financial services. For the fourth
quarter in a row, the Company has maintained a ratio of non-interest expenses to
average assets of approximately 1%.
With a slowdown in one- to four-family loan demand, assets at September
30, 2006 reflected growth during the quarter of just over 1%. The Company's
focus continues to emphasize the origination of home equity loans in addition to
one- to four-family mortgage loans and commercial real estate loans.
During the quarter ended September 30, 2006, total deposits increased
$87 million. The shift in the mix of deposits continued as savings account
customers moved funds to other higher yielding alternatives. LaMonica noted
that, "the New Jersey deposit market is highly competitive. We have seen growth
in CDs as customers seeking higher rates are moving their cash into higher
interest-bearing time deposits. Nevertheless, the Company continually analyzes
the alternative funding sources in the wholesale markets and is committed to
utilize such funding when appropriate."
PennFed stockholders of record as of November 10, 2006 will be paid a
cash dividend of 7 cents per share on November 24, 2006. The Company's dividend
policy will continue to be reviewed on a regular basis.
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
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PennFed 1Q-2007
Page 3
Accepted Accounting Principles (GAAP) but which are excluded from adjusted
results, are described in a reconciliation table following this press release.
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 words or phrases, such as "will," "expect,"
"anticipate," "continue" and similar expressions, 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 and
competitive 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,
2006 2006 2005
--------------- --------------- ---------------
Selected Financial Condition Data:
Cash and cash equivalents $ 18,645 $ 16,614 $ 17,838
Investments, net 445,442 445,296 425,412
Mortgage-backed securities, net 60,293 62,963 73,270
Loans held for sale 285 217 937
Loans receivable:
One- to four-family mortgage loans 1,317,415 1,302,230 1,195,924
Commercial and multi-family real estate loans 170,807 172,600 165,882
Consumer loans 219,840 204,446 156,894
Allowance for loan losses (5,865) (5,888) (5,916)
Other, net 10,804 10,619 9,410
--------------- --------------- ---------------
Loans receivable, net 1,713,001 1,684,007 1,522,194
FHLB stock 26,511 27,714 24,586
Other assets 70,085 69,699 59,450
--------------- --------------- ---------------
Total assets $ 2,334,262 $ 2,306,510 $ 2,123,687
=============== =============== ===============
Deposits:
Checking and money market $ 315,103 $ 312,489 $ 243,457
Savings 280,052 300,247 360,488
Certificates of deposit and accrued interest 906,651 801,852 760,057
--------------- --------------- ---------------
Total deposits 1,501,806 1,414,588 1,364,002
FHLB advances 465,000 465,465 425,465
Other borrowings 179,164 240,193 148,134
Junior subordinated debentures 42,138 42,126 42,093
Other liabilities 21,772 20,717 18,123
Stockholders' equity 124,382 (a) 123,421 125,870
--------------- --------------- ---------------
Total liabilities and stockholders' equity $ 2,334,262 $ 2,306,510 $ 2,123,687
=============== =============== ===============
Book value per share $ 9.69 $ 9.59 $ 9.53
Equity to assets 5.33% 5.35% 5.93%
Asset Quality Data:
Non-performing loans $ 2,140 $ 1,780 $ 1,998
Real estate owned, net 0 0 477
--------------- --------------- ---------------
Total non-performing assets $ 2,140 $ 1,780 $ 2,475
=============== =============== ===============
Non-performing loans to total loans 0.12% 0.11% 0.13%
Non-performing assets to total assets 0.09% 0.08% 0.12%
Allowance for loan losses to non-performing loans 274.07% 330.79% 296.10%
Allowance for loan losses to total gross loans 0.34% 0.35% 0.39%
Regulatory Capital Ratios (of the Bank):
Tangible capital ratio (requirement - 1.50%) 7.17% 7.33% 8.02%
Core capital ratio (requirement - 4.00%) 7.17% 7.33% 8.02%
Risk-based capital ratio (requirement - 8.00%) 13.43% 13.81% 15.39%
(a) Common shares outstanding as of September 30, 2006 totaled 12,836,722
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,
2006 2006 2006 2005 2005
----------- ----------- ----------- ----------- -----------
Selected Operating Data:
Interest and dividend income $ 31,243 $ 30,270 $ 28,973 $ 28,350 $ 27,683
Interest expense 23,715 21,814 19,762 18,715 17,491
----------- ----------- ----------- ----------- -----------
Net interest and dividend income 7,528 8,456 9,211 9,635 10,192
Provision for loan losses 0 0 0 0 0
----------- ----------- ----------- ----------- -----------
Net interest and dividend income
after provision for loan losses 7,528 8,456 9,211 9,635 10,192
Non-interest income:
Fees and service charges 725 718 778 704 3,470
Net gain (loss) from real estate owned 22 (2) (3) 2 (3)
Net gain on sales of loans 9 0 0 21 122
Income on Bank Owned Life Insurance 298 293 239 219 216
Other 418 204 201 153 181
----------- ----------- ----------- ----------- -----------
Total non-interest income 1,472 1,213 1,215 1,099 3,986
Non-interest expenses:
Compensation & employee benefits 2,990 2,742 3,134 3,067 3,259
Net occupancy expense 587 583 664 594 585
Equipment 593 534 530 538 971
Advertising 120 170 168 165 134
Federal deposit insurance premium 43 43 45 45 42
Extinguishment of debt 0 0 0 0 1,351
Other 1,252 1,325 1,119 979 1,411
----------- ----------- ----------- ----------- -----------
Total non-interest expenses 5,585 5,397 5,660 5,388 7,753
----------- ----------- ----------- ----------- -----------
Income before income taxes 3,415 4,272 4,766 5,346 6,425
Income tax expense 1,151 1,509 1,717 1,892 2,293
----------- ----------- ----------- ----------- -----------
Net income $ 2,264 $ 2,763 $ 3,049 $ 3,454 $ 4,132
=========== =========== =========== =========== ===========
Weighted avg. no. of diluted common shares 13,177,415 13,241,182 13,349,234 13,509,140 13,700,349
Diluted earnings per common share $ 0.17 $ 0.21 $ 0.23 $ 0.26 $ 0.30
Return on average common equity (a) 7.32% 8.97% 9.87% 11.09% 13.12%
Return on average assets (a) 0.39% 0.49% 0.56% 0.65% 0.79%
Average total assets $ 2,316,308 $ 2,267,507 $ 2,184,365 $ 2,137,449 $ 2,087,261
Average earning assets $ 2,237,635 $ 2,188,499 $ 2,111,183 $ 2,066,915 $ 2,017,484
Yield on average interest-earning assets 5.56% 5.53% 5.51% 5.46% 5.47%
Cost of average deposits and borrowings 4.31% 4.09% 3.90% 3.70% 3.55%
----------- ----------- ----------- ----------- -----------
Net interest rate spread 1.25% 1.44% 1.61% 1.76% 1.92%
=========== =========== =========== =========== ===========
Net interest margin 1.38% 1.56% 1.74% 1.89% 2.05%
Non-interest exp. as a % of avg. assets (a) 0.96% 0.95% 1.04% 1.01% 1.49%
Efficiency ratio 62.21% 55.81% 54.27% 50.20% 54.67%
Loan originations and purchases:
One- to four-family mortgage loans $ 53,628 $ 84,925 $ 64,637 $ 73,061 $ 118,229
Commercial and multi-family real estate loans 3,188 12,353 7,005 14,387 8,315
Consumer loans 33,271 36,472 36,791 27,996 30,470
----------- ----------- ----------- ----------- -----------
Total loan originations and purchases $ 90,087 $ 133,750 $ 108,433 $ 115,444 $ 157,014
=========== =========== =========== =========== ===========
(a) - Annualized.
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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Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30,
2006 2006 2006 2005 2005
------------ ------------ ------------ ------------ ------------
Reported net income $ 2,264 $ 2,763 $ 3,049 $ 3,454 $ 4,132
Adjustments:
Commercial loan prepayment
premium 0 0 0 0 (2,688)
Prepayment penalty on FHLB
advances 0 0 0 0 1,351
Acceleration of depreciation on branch
automation system software 0 0 0 0 372
Increase in obligation under certain
long-term benefit plans 0 0 0 0 259
Net tax effect 0 0 0 0 247
------------ ------------ ------------ ------------ ------------
Adjustments, net of taxes 0 0 0 0 (459)
------------ ------------ ------------ ------------ ------------
"Adjusted" net income $ 2,264 $ 2,763 $ 3,049 $ 3,454 $ 3,673
============ ============ ============ ============ ============
Weighted avg. no. of diluted common shares 13,177,415 13,241,182 13,349,234 13,509,140 13,700,349
Diluted earnings per common share $ 0.17 $ 0.21 $ 0.23 $ 0.26 $ 0.27
Return on average common equity (a) 7.32% 8.97% 9.87% 11.09% 11.66%
Return on average assets (a) 0.39% 0.49% 0.56% 0.65% 0.70%
Non-interest exp. as a % of avg. assets (a) 0.96% 0.95% 1.04% 1.01% 1.11%
Efficiency ratio 62.21% 55.81% 54.27% 50.20% 50.21%
(a) - Annualized.