WEST ORANGE, N.J., Oct. 28, 2005 (PRIMEZONE) -- PennFed Financial Services, Inc. (Nasdaq: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 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 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.
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)
Sept. 30, June 30, Sept. 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
---------- ---------- ----------
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
------------------------------------
Sep. 30, Jun. 30, Mar. 31,
2005 2005 2005
Selected Operating Data: ---------- ---------- ----------
Interest and dividend income $ 27,683 $ 26,751 $ 26,167
Interest expense 17,491 16,290 15,300
---------- ---------- ----------
Net interest and dividend
income 10,192 10,461 10,867
Provision for loan losses 0 0 0
---------- ---------- ----------
Net interest and dividend
income after provision for
loan losses 10,192 10,461 10,867
Non-interest income:
Service charges 3,470 800 703
Net gain (loss) from real
estate operations (3) (1) 0
Net gain on sales of loans 122 128 172
Income on BOLI 216 224 217
Other 181 146 152
---------- ---------- ----------
Total non-interest income 3,986 1,297 1,244
Non-interest expenses:
Compensation & employee
benefits 3,259 2,856 3,135
Net occupancy expense 585 578 643
Equipment 971 546 516
Advertising 134 170 155
Amortization of intangible
assets 0 0 454
Federal deposit insurance
premium 42 44 44
Extinguishment of debt 1,351 0 0
Other 1,411 1,534 1,196
---------- ---------- ----------
Total non-interest expenses 7,753 5,728 6,143
---------- ---------- ----------
Income before income taxes 6,425 6,030 5,968
Income tax expense 2,293 2,158 2,114
---------- ---------- ----------
Net income $ 4,132 $ 3,872 $ 3,854
========== ========== ==========
Weighted avg. no. of diluted
common shares 13,700,349 13,742,337 13,959,738
Diluted earnings per
common share $ 0.30 $ 0.28 $ 0.28
Return on average common equity 13.12% 12.50% 12.44%
Return on average assets 0.79% 0.76% 0.78%
Average total assets $2,087,261 $2,029,268 $1,985,274
Average earning assets $2,017,484 $1,959,481 $1,913,274
Yield on average
interest-earning assets 5.47% 5.46% 5.48%
Cost of average interest-bearing
liabilities 3.55% 3.44% 3.34%
---------- ---------- ----------
Net interest rate spread 1.92% 2.02% 2.14%
========== ========== ==========
Net interest margin 2.05% 2.14% 2.26%
Non-interest exp. as a % of
avg. assets 1.49% 1.13% 1.24%
Efficiency ratio 54.67% 48.71% 46.97%
Loan originations and purchases:
One- to four-family mortgage
loans $ 118,229 $ 107,521 $ 63,610
Commercial and multi-family
real estate loans 8,315 8,470 8,110
Consumer loans 30,470 29,301 23,681
---------- ---------- ----------
Total loan originations
and purchases $ 157,014 $ 145,292 $ 95,401
========== ========== ==========
Dec. 31, Sep. 30,
2004 2004
---------- ----------
Interest and dividend income $ 25,999 $ 25,805
Interest expense 15,060 14,734
---------- ----------
Net interest and dividend income 10,939 11,071
Provision for loan losses 0 0
---------- ----------
Net interest and dividend income
after provision for loan losses 10,939 11,071
Non-interest income:
Service charges 867 726
Net gain (loss) from real estate operations 157 0
Net gain on sales of loans 70 24
Income on BOLI 121 128
Other 140 222
---------- ----------
Total non-interest income 1,355 1,100
Non-interest expenses:
Compensation & employee benefits 3,079 3,193
Net occupancy expense 559 539
Equipment 543 535
Advertising 227 167
Amortization of intangible assets 454 453
Federal deposit insurance premium 43 41
Extinguishment of debt 0 0
Other 1,276 1,191
---------- ----------
Total non-interest expenses 6,181 6,119
---------- ----------
Income before income taxes 6,113 6,052
Income tax expense 2,133 2,264
---------- ----------
Net income $ 3,980 $ 3,788
========== ==========
Weighted avg. no. of diluted common shares 14,114,728 14,195,722
Diluted earnings per common share $ 0.28 $ 0.27
Return on average common equity 12.97% 12.63%
Return on average assets 0.81% 0.78%
Average total assets $1,966,796 $1,943,022
Average earning assets $1,901,002 $1,881,110
Yield on average interest-earning assets 5.45% 5.47%
Cost of average interest-bearing liabilities 3.25% 3.22%
---------- ----------
Net interest rate spread 2.20% 2.25%
========== ==========
Net interest margin 2.33% 2.38%
Non-interest exp. as a % of avg. assets 1.26% 1.26%
Efficiency ratio 47.19% 46.55%
Loan originations and purchases:
One- to four-family mortgage loans $ 55,899 $ 123,244
Commercial and multi-family real estate loans 16,217 5,815
Consumer loans 20,121 17,705
---------- ----------
Total loan originations and purchases $ 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
------------------------------------
Sep. 30, Jun. 30, Mar. 31,
2005 2005 2005
---------- ---------- ----------
Reported net income $ 4,132 $ 3,872 $ 3,854
Adjustments:
Commercial loan prepayment
premium (2,688) 0 0
Prepayment penalty on
FHLB advances 1,351 0 0
Acceleration of depreciation
on branch automation system
software 372 0 0
Increase in obligation under
certain long-term benefit plans 259 0 0
Additional Sarbanes Oxley
compliance costs 0 208 0
Tax effect 247 (73) 0
---------- ---------- ----------
Adjustments, net of taxes (459) 135 0
---------- ---------- ----------
"Adjusted" net income $ 3,673 $ 4,007 $ 3,854
========== ========== ==========
Weighted avg no. of diluted
common shares 13,700,349 13,742,337 13,959,738
Diluted earnings per
common share $ 0.27 $ 0.29 $ 0.28
Return on average common equity 11.66% 12.93% 12.44%
Return on average assets 0.70% 0.79% 0.78%
Non-interest exp. as a
% of avg. assets 1.11% 1.09% 1.24%
Efficiency ratio 50.21% 46.94% 46.97%
Dec. 31, Sep. 30,
2004 2004
---------- ----------
Reported net income $ 3,980 $ 3,788
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
Tax effect 0 0
---------- ----------
Adjustments, net of taxes 0 0
---------- ----------
"Adjusted" net income $ 3,980 $ 3,788
========== ==========
Weighted avg
no. of diluted common shares 14,114,728 14,195,722
Diluted earnings per common share $ 0.28 $ 0.27
Return on average common equity 12.97% 12.63%
Return on average assets 0.81% 0.78%
Non-interest exp. as a % of avg. assets 1.26% 1.26%
Efficiency ratio 47.19% 46.55%