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.