WEST ORANGE, N.J., Jan. 25, 2006 (PRIMEZONE) -- PennFed Financial Services, Inc. (Nasdaq:PFSB), the $2.2 billion holding company for New Jersey-based Penn Federal Savings Bank, announced earnings of 26 cents per diluted share for its second fiscal quarter ended December 31, 2005. Earnings for the comparable prior year quarter were 28 cents per diluted share.
For the first six months of fiscal 2006, PennFed reported earnings of 56 cents per diluted share, compared to 55 cents per diluted share for the comparable six months ended December 31, 2004.
"Earnings have been impacted by the challenging operating environment and the resulting pressure on net interest margin," said Joseph L. LaMonica, PennFed's President and Chief Executive Officer. As expected, as a result of the continuing rise in short term rates and the further flattening of the yield curve, net interest margin contracted to 1.89% for the current quarter from 2.05% last quarter and 2.33% a year ago. The expectation is that the yield curve will remain flat in the near term.
"Nevertheless," LaMonica stated, "PennFed will not relax underwriting standards for the sake of improving margin." "To counter some of the negative impact on earnings from a lower net interest margin, asset quality and expense management remain priorities," said LaMonica. While non-performing assets showed a slight increase in the quarter, the Company's actual charge-off experience continues to be minimal. Furthermore, the Company's current quarter non-interest expense ratio of just 1.01% was very strong, compared to 1.26% for the three months ended December 31, 2004.
Total assets at December 31, 2005 of $2.161 billion reflected growth of approximately 11% on an annualized basis from June 30, 2005. Loans receivable showed 14% growth annualized.
Total loan production was $115 million for the December 2005 quarter. "Given the difficult interest rate environment, we remain focused on the origination of home equity loans and commercial real estate loans in addition to one to four-family mortgage loans," said LaMonica. For the quarter just ended, PennFed's consumer loan originations totaled $28.0 million -- a 39% increase from the prior year quarter. The Company's commercial and multi-family real estate loan production of $14.4 million for the current quarter was strong compared to $8.3 million for the linked quarter and $16.2 million for the comparable prior year quarter.
Deposits grew to $1.386 billion at December 31, 2005 compared to $1.339 billion at June 30, 2005 -- equating to an annualized growth rate of 7%. The Company continues to see a shift in deposit mix as savings account customers move "parked" funds to other higher yielding alternatives. Checking and money market balances have increased by over 17% since June 30, 2005. Due to the continued rise in short term rates and very strong competitive deposit pricing, the rate paid on interest bearing liabilities increased 15 basis points over the linked quarter.
During the three months ended December 31, 2005, the Company repurchased 256,600 shares of common stock for a total cost of $4.8 million. Stock repurchases continue to be utilized as a means of managing capital.
The Company announced that that it completed all repurchases under its 5% Stock Repurchase Program previously authorized in February 2005 and that its Board of Directors authorized a new 5% Stock Repurchase Program.
LaMonica indicated that under the completed program, the Company had repurchased 675,000 shares from February 28, 2005 through January 24, 2006 at prices ranging from $13.30 to $19.75 per share. After completion of these repurchases, the Company had 12,989,650 shares of common stock outstanding.
Under the new program, the Company may repurchase up to 5% of its outstanding shares over the next 18 months, subject to market conditions and other factors.
PennFed stockholders of record as of February 10, 2006 will be paid a cash dividend of $0.07 per share on February 24, 2006. 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.
PennFed Financial Services, Inc. (Holding Company for Penn Federal Savings Bank) Selected Consolidated Financial Information (dollars in thousands, except per share amounts) Dec. 31, Sept. 30, June 30, Dec. 31, 2005 2005 2005 2004 ---------- ---------- ---------- ---------- Selected Financial Condition Data: Cash and cash equivalents $ 17,988 $ 17,838 $ 15,220 $ 14,829 Investments, net 425,405 425,412 410,509 422,159 Mortgage-backed securities, net 68,978 73,270 78,201 87,879 Loans held for sale 242 937 4,826 2,580 Loans receivable: One- to four- family mortgage loans 1,222,023 1,195,924 1,143,663 1,075,831 Commercial and multi-family real estate loans 170,653 165,882 169,765 168,092 Consumer loans 166,723 156,894 144,423 124,402 Allowance for loan losses (5,913) (5,916) (6,050) (6,064) Other, net 9,592 9,410 8,853 7,931 ---------- ---------- ---------- ---------- Loans receivable, net 1,563,078 1,522,194 1,460,654 1,370,192 FHLB stock 25,028 24,586 22,391 22,102 Other intangible assets 0 0 0 454 Other assets 60,546 59,450 58,750 59,293 ---------- ---------- ---------- ---------- Total assets $2,161,265 $2,123,687 $2,050,551 $1,979,488 ========== ========== ========== ========== Deposits: Checking and money market $ 266,674 $ 243,457 $ 227,031 $ 199,297 Savings 335,367 360,488 385,360 430,203 Certificates of deposit and accrued interest 784,334 760,057 727,100 623,954 ---------- ---------- ---------- ---------- Total deposits 1,386,375 1,364,002 1,339,491 1,253,454 FHLB advances 450,465 425,465 415,465 425,465 Other borrowings 141,770 148,134 107,952 122,624 Junior subordinated debentures 42,104 42,093 42,082 42,059 Other liabilities 16,379 18,123 21,507 12,551 Stockholders' equity 124,172(a) 125,870 124,054 123,335 ---------- ---------- ---------- ---------- Total liabilities and stockholders' equity $2,161,265 $2,123,687 $2,050,551 $1,979,488 ========== ========== ========== ========== Book value per share $ 9.54 $ 9.53 $ 9.34 $ 9.04 Equity to assets 5.75% 5.93% 6.05% 6.23% Asset Quality Data: Non-performing loans $ 2,718 $ 1,998 $ 2,619 $ 1,776 Real estate owned, net 502 477 0 0 ---------- ---------- ---------- ---------- Total non- performing assets $ 3,220 $ 2,475 $ 2,619 $ 1,776 ========== ========== ========== ========== Non-performing loans to total loans 0.17% 0.13% 0.18% 0.13% Non-performing assets to total assets 0.15% 0.12% 0.13% 0.09% Allowance for loan losses to non-performing loans 217.55% 296.10% 231.00% 341.44% Allowance for loan losses to total gross loans 0.38% 0.39% 0.41% 0.44% Regulatory Capital Ratios (of the Bank): Tangible capital ratio (requirement - 1.50%) 7.80% 8.02% 8.28% 8.56% Core capital ratio (requirement - 4.00%) 7.80% 8.02% 8.28% 8.56% Risk-based capital ratio (requirement - 8.00%) 14.89% 15.39% 15.84% 16.58% (a) Common shares outstanding as of December 31, 2005 totaled 13,015,782 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 For the six months ended months ended December 31, December 31, ---------------------- ---------------------- 2005 2004 2005 2004 ---------- ---------- ---------- ---------- Selected Operating Data: Interest and dividend income $ 28,350 $ 25,999 $ 56,033 $ 51,804 Interest expense 18,715 15,060 36,206 29,794 ---------- ---------- ---------- ---------- Net interest and dividend income 9,635 10,939 19,827 22,010 Provision for loan losses 0 0 0 0 ---------- ---------- ---------- ---------- Net interest and dividend income after provision for loan losses 9,635 10,939 19,827 22,010 Non-interest income: Service charges 704 867 4,174 1,593 Net gain (loss) from real estate operations 2 157 (1) 157 Net gain on sales of loans 21 70 143 94 Income on BOLI 219 121 435 249 Other 153 140 334 362 ---------- ---------- ---------- ---------- Total non- interest income 1,099 1,355 5,085 2,455 Non-interest expenses: Compensation & employee benefits 3,067 3,079 6,326 6,272 Net occupancy expense 594 559 1,179 1,098 Equipment 538 543 1,509 1,078 Advertising 165 227 299 394 Amortization of intangible assets 0 454 0 907 Federal deposit insurance premium 45 43 87 84 Extinguishment of debt 0 0 1,351 0 Other 979 1,276 2,390 2,467 ---------- ---------- ---------- ---------- Total non- interest expenses 5,388 6,181 13,141 12,300 ---------- ---------- ---------- ---------- Income before income taxes 5,346 6,113 11,771 12,165 Income tax expense 1,892 2,133 4,185 4,397 ---------- ---------- ---------- ---------- Net income $ 3,454 $ 3,980 $ 7,586 $ 7,768 ========== ========== ========== ========== Weighted avg. no. of diluted common shares 13,509,140 14,114,728 13,604,862 14,187,618 Diluted earnings per common share $ 0.26 $ 0.28 $ 0.56 $ 0.55 Return on average common equity 11.09% 12.97% 12.11% 12.80% Return on average assets 0.65% 0.81% 0.72% 0.79% Average total assets $2,137,449 $1,966,796 $2,112,355 $1,954,909 Average earning assets $2,066,915 $1,901,002 $2,042,199 $1,891,056 Yield on average interest-earning assets 5.46% 5.45% 5.47% 5.46% Cost of average interest-bearing liabilities 3.70% 3.25% 3.63% 3.23% ---------- ---------- ---------- ---------- Net interest rate spread 1.76% 2.20% 1.84% 2.23% ========== ========== ========== ========== Net interest margin 1.89% 2.33% 1.97% 2.35% Non-interest exp. as a % of avg. assets 1.01% 1.26% 1.24% 1.26% Efficiency ratio 50.20% 47.19% 52.75% 46.87% Loan originations and purchases: One- to four- family mortgage loans $ 73,061 $ 55,899 $ 191,290 $ 179,143 Commercial and multi-family real estate loans 14,387 16,217 22,702 22,032 Consumer loans 27,996 20,121 58,466 37,826 ---------- ---------- ---------- ---------- Total loan originations and purchases $ 115,444 $ 92,237 $ 272,458 $ 239,001 ========== ========== ========== ========== 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 For the Three months ended Six months ended December 31, December 31, ----------------------- ----------------------- 2005 2004 2005 2004 ---------- ---------- ---------- ---------- Reported net income $ 3,454 $ 3,980 $ 7,586 $ 7,768 Adjustments: Commercial loan prepayment premium 0 0 (2,688) 0 Prepayment penalty on FHLB advances 0 0 1,351 0 Acceleration of depreciation on branch automation system software 0 0 372 0 Increase in obligation under certain long-term benefit plans 0 0 259 0 Net tax effect 0 0 247 0 ---------- ---------- ---------- ---------- Adjustments, net of taxes 0 0 (459) 0 ---------- ---------- ---------- ---------- "Adjusted" net income $ 3,454 $ 3,980 $ 7,127 $ 7,768 ========== ========== ========== ========== Weighted avg. no of diluted common shares 13,509,140 14,114,728 13,604,862 14,187,618 Diluted earnings per common share $ 0.26 $ 0.28 $ 0.52 $ 0.55 Return on average common equity 11.09% 12.97% 11.38% 12.80% Return on average assets 0.65% 0.81% 0.67% 0.79% Non-interest exp as a % of avg assets 1.01% 1.26% 1.06% 1.26% Efficiency ratio 50.20% 47.19% 50.21% 46.87% 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 --------------------------------------- Dec. 31, Sep. 30, Jun. 30, 2005 2005 2005 ---------- ---------- ---------- Selected Operating Data: Interest and dividend income $ 28,350 $ 27,683 $ 26,751 Interest expense 18,715 17,491 16,290 ---------- ---------- ---------- Net interest and dividend income 9,635 10,192 10,461 Provision for loan losses 0 0 0 ---------- ---------- ---------- Net interest and dividend income after provision for loan losses 9,635 10,192 10,461 Non-interest income: Service charges 704 3,470 800 Net gain (loss) from real estate operations 2 (3) (1) Net gain on sales of loans 21 122 128 Income on BOLI 219 216 224 Other 153 181 146 ---------- ---------- ---------- Total non- interest income 1,099 3,986 1,297 Non-interest expenses: Compensation & employee benefits 3,067 3,259 2,856 Net occupancy expense 594 585 578 Equipment 538 971 546 Advertising 165 134 170 Amortization of intangible assets 0 0 0 Federal deposit insurance premium 45 42 44 Extinguishment of debt 0 1,351 0 Other 979 1,411 1,534 ---------- ---------- ---------- Total non- interest expenses 5,388 7,753 5,728 ---------- ---------- ---------- Income before income taxes 5,346 6,425 6,030 Income tax expense 1,892 2,293 2,158 ---------- ---------- ---------- Net income $ 3,454 $ 4,132 $ 3,872 ========== ========== ========== Weighted avg. no of diluted common shares 13,509,140 13,700,349 13,742,337 Diluted earnings per common share $ 0.26 $ 0.30 $ 0.28 Return on average common equity 11.09% 13.12% 12.50% Return on average assets 0.65% 0.79% 0.76% Average total assets $2,137,449 $2,087,261 $2,029,268 Average earning assets $2,066,915 $2,017,484 $1,959,481 Yield on average interest-earning assets 5.46% 5.47% 5.46% Cost of average interest-bearing liabilities 3.70% 3.55% 3.44% ---------- ---------- ---------- Net interest rate spread 1.76% 1.92% 2.02% ========== ========== ========== Net interest margin 1.89% 2.05% 2.14% Non-interest exp as a % of avg assets 1.01% 1.49% 1.13% Efficiency ratio 50.20% 54.67% 48.71% Loan originations and purchases: One- to four-family mortgage loans $ 73,061 $ 118,229 $ 107,521 Commercial and multi-family real estate loans 14,387 8,315 8,470 Consumer loans 27,996 30,470 29,301 ---------- ---------- ---------- Total loan originations and purchases $ 115,444 $ 157,014 $ 145,292 ========== ========== ========== For the three months ended -------------------------- Mar. 31, Dec. 31, 2005 2004 ---------- ---------- Selected Operating Data: Interest and dividend income $ 26,167 $ 25,999 Interest expense 15,300 15,060 ---------- ---------- Net interest and dividend income 10,867 10,939 Provision for loan losses 0 0 ---------- ---------- Net interest and dividend income after provision for loan losses 10,867 10,939 Non-interest income: Service charges 703 867 Net gain (loss) from real estate operations 0 157 Net gain on sales of loans 172 70 Income on BOLI 217 121 Other 152 140 ---------- ---------- Total non-interest income 1,244 1,355 Non-interest expenses: Compensation & employee benefits 3,135 3,079 Net occupancy expense 643 559 Equipment 516 543 Advertising 155 227 Amortization of intangible assets 454 454 Federal deposit insurance premium 44 43 Extinguishment of debt 0 0 Other 1,196 1,276 ---------- ---------- Total non-interest expenses 6,143 6,181 ---------- ---------- Income before income taxes 5,968 6,113 Income tax expense 2,114 2,133 ---------- ---------- Net income $ 3,854 $ 3,980 ========== ========== Weighted avg. no of diluted common shares 13,959,738 14,114,728 Diluted earnings per common share $ 0.28 $ 0.28 Return on average common equity 12.44% 12.97% Return on average assets 0.78% 0.81% Average total assets $1,985,274 $1,966,796 Average earning assets $1,913,274 $1,901,002 Yield on average interest-earning assets 5.48% 5.45% Cost of average interest-bearing liabilities 3.34% 3.25% ---------- ---------- Net interest rate spread 2.14% 2.20% ========== ========== Net interest margin 2.26% 2.33% Non-interest exp. as a % of avg assets 1.24% 1.26% Efficiency ratio 46.97% 47.19% Loan originations and purchases: One- to four-family mortgage loans $ 63,610 $ 55,899 Commercial and multi-family real estate loans 8,110 16,217 Consumer loans 23,681 20,121 ---------- ---------- Total loan originations and purchases $ 95,401 $ 92,237 ========== ========== 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 -------------------------------------- Dec. 31, Sep. 30, Jun. 30, 2005 2005 2005 ---------- ---------- ---------- Reported net income $ 3,454 $ 4,132 $ 3,872 Adjustments: Commercial loan prepayment premium 0 (2,688) 0 Prepayment penalty on FHLB advances 0 1,351 0 Acceleration of depreciation on branch automation system software 0 372 0 Increase in obligation under certain long-term benefit plans 0 259 0 Additional Sarbanes Oxley compliance costs 0 0 208 Net tax effect 0 247 (73) ---------- ---------- ---------- Adjustments, net of taxes 0 (459) 135 ---------- ---------- ---------- "Adjusted" net income $ 3,454 $ 3,673 $ 4,007 ========== ========== ========== Weighted avg no. of diluted common shares 13,509,140 13,700,349 13,742,337 Diluted earnings per common share $ 0.26 $ 0.27 $ 0.29 Return on average common equity 11.09% 11.66% 12.93% Return on average assets 0.65% 0.70% 0.79% Non-interest exp. as a % of avg. assets 1.01% 1.11% 1.09% Efficiency ratio 50.20% 50.21% 46.94% For the three months ended ---------------------------- Mar. 31, Dec. 31, 2005 2004 ------------ ------------ Reported net income $ 3,854 $ 3,980 Adjustments: Commercial loan prepayment premium 0 0 Prepayment penalty on FHLB advances 0 0 Acceleration of depreciation on branch automation system software 0 0 Increase in obligation under certain long-term benefit plans 0 0 Additional Sarbanes Oxley compliance costs 0 0 Net tax effect 0 0 ------------ ------------ Adjustments, net of taxes 0 0 ------------ ------------ "Adjusted" net income $ 3,854 $ 3,980 ============ ============ Weighted avg no. of diluted common shares 13,959,738 14,114,728 Diluted earnings per common share $ 0.28 $ 0.28 Return on average common equity 12.44% 12.97% Return on average assets 0.78% 0.81% Non-interest exp. as a % of avg. assets 1.24% 1.26% Efficiency ratio 46.97% 47.19%