WEST ORANGE, N.J., Oct. 26, 2006 (PRIMEZONE) -- PennFed Financial Services, Inc. (Nasdaq: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.
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 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.
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 ---------------------------------------------------------- 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: Compen- sation & 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 Adver- tising 120 170 168 165 134 Federal deposit insurance premium 43 43 45 45 42 Extin- guish- ment 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 borrow- ings 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 origi- nations and purchases: One- to four- family mort- gage 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 origi- nations and pur- chases $ 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 ---------------------------------- For the three months ended ------------------------------------------------------- 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 pre- payment 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.