WEST ORANGE, N.J., April 26, 2006 (PRIMEZONE) -- PennFed Financial Services, Inc. (Nasdaq:PFSB), the $2.2 billion holding company for New Jersey-based Penn Federal Savings Bank, reported earnings for its third fiscal quarter ended March 31, 2006 of 23 cents per diluted share compared to 28 cents per diluted share for the comparable prior year quarter.
For the first nine months ended March 31, 2006, PennFed reported earnings of 79 cents per diluted share, compared to 82 cents per diluted share for the comparable nine-month period of fiscal 2005.
Joseph L. LaMonica, PennFed's President and Chief Executive Officer commented, "We continue to experience net interest margin compression due to the flat yield curve and the extremely competitive New Jersey deposit market." Net interest margin contracted to 1.74% for the current quarter from 1.89% last quarter and 2.26% for the quarter a year ago as a result of the continuing rise in short term rates and the further flattening of the yield curve. While the challenging operating environment and flat yield curve will likely improve at some point in the future, the expectation is that the improvement will be slow and the current environment will remain for the near term.
"Given this difficult operating environment, PennFed is even more focused on productivity and efficiency," LaMonica stated.
Total assets at March 31, 2006 of $2.237 billion reflected growth of approximately 12% on an annualized basis from June 30, 2005. Loans receivable showed 14% growth annualized.
Total loan production was $108 million for the March 2006 quarter. "Focus continues to be placed on loan production, with a particular emphasis on the origination of home equity loans in addition to one- to four-family mortgage loans and commercial real estate loans," said LaMonica. Reaching a record level, consumer loan originations totaled $36.8 million for the current quarter -- a 55% increase from the prior year quarter.
The Company continues to experience strong competition for deposits. Furthermore, a shift in the mix of deposits continues as savings account customers move "parked" funds to other higher yielding alternatives. Checking and money market balances have increased by over 27% since June 30, 2005. With the pricing on retail deposits driven increasingly higher by competition, wholesale borrowings have been and will continue to be periodically used as a lower costing alternative source of funds. Nevertheless, the rate paid on interest bearing liabilities increased 20 basis points over the linked quarter due to the continued rise in short term rates and very strong competitive deposit pricing.
On February 27, 2006, the Company notified customers of its planned May 31, 2006 closing of its branch located at 493 Bloomfield Avenue in Montclair, New Jersey. The decision to close the branch was principally due to economies of scale. Deposits will be transferred to a branch located less than two miles from the branch to be closed.
Asset quality has been and continues to be a priority for PennFed. Underwriting standards are strong and the relaxing of such standards for the sake of improving margin is not an option. The Company closely monitors non-performing assets and charge-offs continue to be minimal.
The Company is recognized as an efficient and low cost provider of financial services. For the current quarter, the non-interest expense ratio of just 1.04% continued to be very strong and reflects an improvement from 1.24% for the three months ended March 31, 2005.
PennFed continues to employ stock repurchases as a means of managing capital. During the March 2006 quarter, the Company repurchased 163,100 shares for a total cost of $3.0 million.
PennFed stockholders of record as of May 12, 2006 will be paid a cash dividend of $0.07 per share on May 26, 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 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)
March 31, December 31, June 30, March 31,
2006 2005 2005 2005
---------- ---------- ---------- ----------
Selected Financial
Condition Data:
Cash and cash
equivalents $ 17,393 $ 17,988 $ 15,220 $ 12,757
Investments, net 445,332 425,405 410,509 424,491
Mortgage-backed
securities, net 65,749 68,978 78,201 83,079
Loans held for sale 520 242 4,826 0
Loans receivable:
One- to four-family
mortgage loans 1,256,817 1,222,023 1,143,663 1,093,072
Commercial and
multi-family real
estate loans 166,321 170,653 169,765 167,783
Consumer loans 186,124 166,723 144,423 132,543
Allowance for
loan losses (5,898) (5,913) (6,050) (6,054)
Other, net 9,972 9,592 8,853 8,101
---------- ---------- ---------- ----------
Loans receivable,
net 1,613,336 1,563,078 1,460,654 1,395,445
FHLB stock 26,261 25,028 22,391 21,733
Other assets 68,755 60,546 58,750 58,859
---------- ---------- ---------- ----------
Total assets $2,237,346 $2,161,265 $2,050,551 $1,996,364
========== ========== ========== ==========
Deposits:
Checking and
money market $ 289,638 $ 266,674 $ 227,031 $ 210,327
Savings 318,834 335,367 385,360 419,112
Certificates of
deposit and
accrued interest 763,687 784,334 727,100 655,028
---------- ---------- ---------- ----------
Total deposits 1,372,159 1,386,375 1,339,491 1,284,467
FHLB advances 465,465 450,465 415,465 425,465
Other borrowings 214,334 141,770 107,952 103,059
Junior subordinated
debentures 42,115 42,104 42,082 42,070
Other liabilities 19,688 16,379 21,507 17,074
Stockholders'
equity 123,585(a) 124,172 124,054 124,229
---------- ---------- ---------- ----------
Total liabilities
and stockholders'
equity $2,237,346 $2,161,265 $2,050,551 $1,996,364
========== ========== ========== ==========
Book value per
share $ 9.59 $ 9.54 $ 9.34 $ 9.20
Equity to assets 5.52% 5.75% 6.05% 6.22%
Asset Quality Data:
Non-performing
loans $ 2,611 $ 2,718 $ 2,619 $ 1,611
Real estate owned,
net 0 502 0 0
---------- ---------- ---------- ----------
Total non-performing
assets $ 2,611 $ 3,220 $ 2,619 $ 1,611
========== ========== ========== ==========
Non-performing loans
to total loans 0.16% 0.17% 0.18% 0.11%
Non-performing assets
to total assets 0.12% 0.15% 0.13% 0.08%
Allowance for loan
losses to non-
performing loans 225.89% 217.55% 231.00% 375.79%
Allowance for loan
losses to total
gross loans 0.36% 0.38% 0.41% 0.43%
Regulatory Capital
Ratios (of the Bank):
Tangible capital
ratio (requirement
- 1.50%) 7.57% 7.80% 8.28% 8.51%
Core capital ratio
(requirement - 4.00%) 7.57% 7.80% 8.28% 8.51%
Risk-based capital
ratio (requirement
- 8.00%) 14.39% 14.89% 15.84% 16.43%
(a) Common shares outstanding as of March 31, 2006 totaled
12,891,478 shares.
For the For the
Three months ended Nine months ended
March 31, March 31,
Selected Operating ----------------------- -----------------------
Data: 2006 2005 2006 2005
---------- ---------- ---------- ----------
Interest and
dividend income $ 28,973 $ 26,167 $ 85,006 $ 77,971
Interest expense 19,762 15,300 55,968 45,094
---------- ---------- ---------- ----------
Net interest and
dividend income 9,211 10,867 29,038 32,877
Provision for
loan losses 0 0 0 0
---------- ---------- ---------- ----------
Net interest and
dividend income
after provision for
loan losses 9,211 10,867 29,038 32,877
Non-interest income:
Service charges 778 703 4,952 2,296
Net gain (loss) from
real estate
operations (3) 0 (4) 157
Net gain on sales
of loans 0 172 143 266
Income on BOLI 239 217 674 466
Other 201 152 535 514
---------- ---------- ---------- ----------
Total non-interest
income 1,215 1,244 6,300 3,699
Non-interest expenses:
Compensation &
employee benefits 3,134 3,135 9,460 9,407
Net occupancy expense 664 643 1,843 1,741
Equipment 530 516 2,039 1,594
Advertising 168 155 467 549
Amortization of
intangible assets 0 454 0 1,361
Federal deposit
insurance premium 45 44 132 128
Extinguishment
of debt 0 0 1,351 0
Other 1,119 1,196 3,509 3,663
---------- ---------- ---------- ----------
Total non-interest
expenses 5,660 6,143 18,801 18,443
---------- ---------- ---------- ----------
Income before
income taxes 4,766 5,968 16,537 18,133
Income tax expense 1,717 2,114 5,902 6,511
---------- ---------- ---------- ----------
Net income $ 3,049 $ 3,854 $ 10,635 $ 11,622
========== ========== ========== ==========
Weighted avg. no
of diluted common
shares 13,349,234 13,959,738 13,520,805 14,099,360
Diluted earnings per
common share $ 0.23 $ 0.28 $ 0.79 $ 0.82
Return on average
common equity 9.87% 12.44% 11.37% 12.68%
Return on average
assets 0.56% 0.78% 0.66% 0.79%
Average total
assets $2,184,365 $1,985,274 $2,136,358 $1,965,031
Average earning
assets $2,111,183 $1,913,274 $2,065,194 $1,898,462
Yield on average
interest-earning
assets 5.51% 5.48% 5.48% 5.47%
Cost of average
interest-bearing
liabilities 3.90% 3.34% 3.72% 3.27%
---------- ---------- ---------- ----------
Net interest
rate spread 1.61% 2.14% 1.76% 2.20%
========== ========== ========== ==========
Net interest margin 1.74% 2.26% 1.89% 2.32%
Non-interest exp. as
a % of avg. assets 1.04% 1.24% 1.17% 1.25%
Efficiency ratio 54.27% 46.97% 53.20% 46.90%
Loan originations
and purchases:
One- to four-
family mortgage
loans $ 64,637 $ 63,610 $ 255,927 $ 242,753
Commercial and
multi-family real
estate loans 7,005 8,110 29,707 30,142
Consumer loans 36,791 23,681 95,257 61,507
---------- ---------- ---------- ----------
Total loan
originations and
purchases $ 108,433 $ 95,401 $ 380,891 $ 334,402
========== ========== ========== ==========
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 Nine months ended
March 31, March 31,
---------------------- ----------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Reported net income $ 3,049 $ 3,854 $ 10,635 $ 11,622
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 $ 3,049 $ 3,854 $ 10,176 $ 11,622
========== ========== ========== ==========
Weighted avg. no
of diluted common
shares 13,349,234 13,959,738 13,520,805 14,099,360
Diluted earnings
per common share $ 0.23 $ 0.28 $ 0.75 $ 0.82
Return on average
common equity 9.87% 12.44% 10.88% 12.68%
Return on average
assets 0.56% 0.78% 0.64% 0.79%
Non-interest exp. as
a % of avg. assets 1.04% 1.24% 1.05% 1.25%
Efficiency ratio 54.27% 46.97% 51.51% 46.90%
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
------------------------------------
Mar. 31, Dec. 31, Sep. 30,
2006 2005 2005
---------- ---------- ----------
Selected Operating Data:
Interest and dividend income $ 28,973 $ 28,350 $ 27,683
Interest expense 19,762 18,715 17,491
---------- ---------- ----------
Net interest and dividend income 9,211 9,635 10,192
Provision for loan losses 0 0 0
---------- ---------- ----------
Net interest and dividend income
after provision for loan losses 9,211 9,635 10,192
Non-interest income:
Service charges 778 704 3,470
Net gain (loss) from real
estate operations (3) 2 (3)
Net gain on sales of loans 0 21 122
Income on BOLI 239 219 216
Other 201 153 181
---------- ---------- ----------
Total non-interest income 1,215 1,099 3,986
Non-interest expenses:
Compensation & employee benefits 3,134 3,067 3,259
Net occupancy expense 664 594 585
Equipment 530 538 971
Advertising 168 165 134
Amortization of intangible assets 0 0 0
Federal deposit insurance premium 45 45 42
Extinguishment of debt 0 0 1,351
Other 1,119 979 1,411
---------- ---------- ----------
Total non-interest expenses 5,660 5,388 7,753
---------- ---------- ----------
Income before income taxes 4,766 5,346 6,425
Income tax expense 1,717 1,892 2,293
---------- ---------- ----------
Net income $ 3,049 $ 3,454 $ 4,132
========== ========== ==========
Weighted avg. no. of diluted
common shares 13,349,234 13,509,140 13,700,349
Diluted earnings per
common share $ 0.23 $ 0.26 $ 0.30
Return on average common equity 9.87% 11.09% 13.12%
Return on average assets 0.56% 0.65% 0.79%
Average total assets $2,184,365 $2,137,449 $2,087,261
Average earning assets $2,111,183 $2,066,915 $2,017,484
Yield on average interest-
earning assets 5.51% 5.46% 5.47%
Cost of average interest-
bearing liabilities 3.90% 3.70% 3.55%
---------- ---------- ----------
Net interest rate spread 1.61% 1.76% 1.92%
========== ========== ==========
Net interest margin 1.74% 1.89% 2.05%
Non-interest exp. as a % of
avg. assets 1.04% 1.01% 1.49%
Efficiency ratio 54.27% 50.20% 54.67%
Loan originations and purchases:
One- to four-family mortgage
loans $ 64,637 $ 73,061 $ 118,229
Commercial and multi-family
real estate loans 7,005 14,387 8,315
Consumer loans 36,791 27,996 30,470
---------- ---------- ----------
Total loan originations
and purchases $ 108,433 $ 115,444 $ 157,014
========== ========== ==========
For the three months ended
------------------------
Jun. 30, Mar. 31,
2005 2005
---------- ----------
Selected Operating Data:
Interest and dividend income $ 26,751 $ 26,167
Interest expense 16,290 15,300
---------- ----------
Net interest and dividend income 10,461 10,867
Provision for loan losses 0 0
---------- ----------
Net interest and dividend income after
provision for loan losses 10,461 10,867
Non-interest income:
Service charges 800 703
Net gain (loss) from real estate operations (1) 0
Net gain on sales of loans 128 172
Income on BOLI 224 217
Other 146 152
---------- ----------
Total non-interest income 1,297 1,244
Non-interest expenses:
Compensation & employee benefits 2,856 3,135
Net occupancy expense 578 643
Equipment 546 516
Advertising 170 155
Amortization of intangible assets 0 454
Federal deposit insurance premium 44 44
Extinguishment of debt 0 0
Other 1,534 1,196
---------- ----------
Total non-interest expenses 5,728 6,143
---------- ----------
Income before income taxes 6,030 5,968
Income tax expense 2,158 2,114
---------- ----------
Net income $ 3,872 $ 3,854
========== ==========
Weighted avg. no. of diluted common shares 13,742,337 13,959,738
Diluted earnings per common share $ 0.28 $ 0.28
Return on average common equity 12.50% 12.44%
Return on average assets 0.76% 0.78%
Average total assets $2,029,268 $1,985,274
Average earning assets $1,959,481 $1,913,274
Yield on average interest-earning assets 5.46% 5.48%
Cost of average interest-bearing liabilities 3.44% 3.34%
---------- ----------
Net interest rate spread 2.02% 2.14%
========== ==========
Net interest margin 2.14% 2.26%
Non-interest exp. as a % of avg. assets 1.13% 1.24%
Efficiency ratio 48.71% 46.97%
Loan originations and purchases:
One- to four-family mortgage loans $ 107,521 $ 63,610
Commercial and multi-family real
estate loans 8,470 8,110
Consumer loans 29,301 23,681
---------- ----------
Total loan originations and purchases $ 145,292 $ 95,401
========== ==========
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
------------------------------------
Mar. 31, Dec. 31, Sep. 30,
2006 2005 2005
---------- ---------- ----------
Reported net income $ 3,049 $ 3,454 $ 4,132
Adjustments:
Commercial loan prepayment
premium 0 0 (2,688)
Prepayment penalty on FHLB
advances 0 0 1,351
Acceleration of depreciation on
branch automation system software 0 0 372
Increase in obligation under
certain long-term benefit plans 0 0 259
Additional Sarbanes Oxley
compliance costs 0 0 0
Net tax effect 0 0 247
---------- ---------- ----------
Adjustments, net of taxes 0 0 (459)
---------- ---------- ----------
"Adjusted" net income $ 3,049 $ 3,454 $ 3,673
========== ========== ==========
Weighted avg. no. of diluted
common shares 13,349,234 13,509,140 13,700,349
Diluted earnings per
common share $ 0.23 $ 0.26 $ 0.27
Return on average common equity 9.87% 11.09% 11.66%
Return on average assets 0.56% 0.65% 0.70%
Non-interest exp. as a % of
avg. assets 1.04% 1.01% 1.11%
Efficiency ratio 54.27% 50.20% 50.21%
For the three months ended
--------------------------
Jun. 30, Mar. 31,
2005 2005
---------- ----------
Reported net income $ 3,872 $ 3,854
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 208 0
Net tax effect (73) 0
---------- ----------
Adjustments, net of taxes 135 0
---------- ----------
"Adjusted" net income $ 4,007 $ 3,854
========== ==========
Weighted avg. no. of diluted
common shares 13,742,337 13,959,738
Diluted earnings per common share $ 0.29 $ 0.28
Return on average common equity 12.93% 12.44%
Return on average assets 0.79% 0.78%
Non-interest exp. as a % of avg. assets 1.09% 1.24%
Efficiency ratio 46.94% 46.97%