WEST ORANGE, N.J., July 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 fourth quarter and fiscal year ended June 30, 2006. Earnings for the current quarter were 21 cents per diluted share compared to earnings for the June 2005 quarter of 28 cents per diluted share. Reported earnings for the year ended June 30, 2006, were $1.00 per diluted share compared to $1.11 per diluted share for the prior fiscal year.
PennFed's net interest margin of 1.56% for the quarter ended June 30, 2006, reflected 18 basis points of compression from the March 2006 quarter. Joseph L. LaMonica, PennFed's President and Chief Executive Officer, stated that, "The extremely competitive New Jersey deposit market coupled with rising deposit and borrowing costs and a flat yield curve resulted in continued compression in net interest margin." With concerns about inflation and questionable economic growth, further increases in short-term rates are uncertain. Absent future rate hikes, net interest margin should stabilize, but actual improvement in the margin would probably not begin to occur until the yield curve steepens. "Notwithstanding this difficult and competitive operating environment, we continue to focus on asset quality and expense management," LaMonica stated.
Non-performing assets declined to $1.8 million and represented just 0.08% of total assets at June 30, 2006. A year earlier, non-performing assets were $2.6 million, or 0.13% of total assets and only three months ago, at March 31, 2006, nonperforming assets were $2.6 million, or 0.12% of total assets.
The Company's ratio of non-interest expense to average assets was 0.95% and 1.12% for the three months and year ended June 30, 2006, respectively, compared to 1.13% and 1.22%, respectively, for the same prior year periods. As noted earlier in the fiscal year, non-interest expense includes the effects of 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, the Company's non-interest expense ratio for the current fiscal year was at 1.02%, compared to 1.21% for fiscal 2005 after adjusting for increased regulatory compliance costs.
Asset growth of over 12% since June 30, 2005, resulted in total assets of $2.3 billion at June 30, 2006. With total loan production of $134 million and $515 million for the three months and full year ended June 30, 2006, respectively, net loans receivable grew more than 15% during the fiscal year 2006. "Focus on the origination of home equity loans and commercial real estate loans in addition to one- to four-family mortgage loans continues," said LaMonica. For the three months and year ended June 30, 2006, PennFed's consumer loan originations totaled $36.5 million and $131.7 million, respectively -- 24% and 45% increases for the quarter and year, respectively. Commercial and multi-family real estate loan production was strong at $12.4 million and $42.1 million for the current quarter and fiscal year, respectively.
Since June 30, 2005, total deposits have increased $75 million, or 5.6%. LaMonica noted that, "By pricing deposits appropriately, we were able to grow deposit balances. However, the shift in the mix of deposits continued as savings account customers move 'parked' funds to other higher yielding alternatives, including money market accounts, the balances of which have grown significantly over the year." In addition, throughout fiscal 2006, wholesale borrowings have been an alternate, lower costing source of funds when compared to the competition's pricing on retail deposits. Overall, the rate paid on deposits and borrowings increased 19 basis points over the linked quarter and 51 basis points year over year due to the continued rise in short term rates and the very strong competitive deposit pricing.
For the year ended June 30, 2006, fees and service charges included the effects of a $2.7 million prepayment premium on a commercial loan, resulting from the payoff of one of the Company's largest commercial loans.
The Company continued to employ stock repurchases as a means of utilizing capital. During fiscal 2006, 626,300 shares of the Company's outstanding stock were repurchased at prices ranging from $17.10 to $19.75, for a total cost of $11.6 million.
PennFed stockholders of record as of August 11, 2006, will be paid a cash dividend of 7 cents per share on August 25, 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 above and in the reconciliation tables 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)
June 30, March 31, June 30,
2006 2006 2005
---------- ---------- ---------
Selected Financial
Condition Data:
Cash and cash equivalents $ 16,614 $ 17,393 $ 15,220
Investments, net 445,296 445,332 410,509
Mortgage-backed
securities, net 62,963 65,749 78,201
Loans held for sale 217 520 4,826
Loans receivable:
One- to four-family
mortgag 1,302,230 1,256,817 1,143,663
Commercial and
multi-family real
estate loans 172,600 166,321 169,765
Consumer loans 204,446 186,124 144,423
Allowance for loan losses (5,888) (5,898) (6,050)
Other, net 10,619 9,972 8,853
---------- ---------- ---------
Loans receivable, net 1,684,007 1,613,336 1,460,654
FHLB stock 27,714 26,261 22,391
Other assets 68,014 68,755 58,750
---------- ---------- ---------
Total assets $ 2,304,825 $ 2,237,346 $ 2,050,551
=========== =========== ============
Deposits:
Checking and money market $ 312,489 $ 289,638 $ 227,031
Savings 300,247 318,834 385,360
Certificates of deposit and
accrued interest 801,852 763,687 727,100
---------- ---------- ---------
Total deposits 1,414,588 1,372,159 1,339,491
FHLB advances 465,465 465,465 415,465
Other borrowings 240,193 214,334 107,952
Junior subordinated
debentures 42,126 42,115 42,082
Other liabilities 19,032 19,688 21,507
Stockholders' equity 123,421 (a) 123,585 124,054
---------- ---------- ---------
Total liabilities and
stockholders' equity $ 2,304,825 $ 2,237,346 $ 2,050,551
=========== =========== ============
Book value per share $ 9.59 $ 9.59 $ 9.34
Equity to assets 5.35% 5.52% 6.05%
Asset Quality Data:
Non-performing loans $ 1,780 $ 2,611 $ 2,619
Real estate owned, net 0 0 0
---------- ---------- ---------
Total non-performing assets $ 1,780 $ 2,611 $ 2,619
========== ========== =========
Non-performing loans to
total loans 0.11% 0.16% 0.18%
Non-performing assets to
total assets 0.08% 0.12% 0.13%
Allowance for loan losses
to non-performing loans 330.79% 225.89% 231.00%
Allowance for loan losses
to total gross loans 0.35% 0.36% 0.41%
Regulatory Capital Ratios
(of the Bank):
Tangible capital ratio
(requirement - 1.50%) 7.33% 7.57% 8.28%
Core capital ratio
(requirement - 4.00%) 7.33% 7.57% 8.28%
Risk-based capital ratio
(requirement - 8.00%) 13.81% 14.39% 15.84%
(a) Common shares outstanding as of June 30, 2006,
totaled 12,864,047 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 For the
three months ended year ended
June 30, June 30,
----------------------- ----------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Selected Operating Data:
Interest and dividend
income $ 30,270 $ 26,751 $ 115,276 $ 104,722
Interest expense 21,814 16,290 77,782 61,384
-------- -------- --------- ---------
Net interest and
dividend income 8,456 10,461 37,494 43,338
Provision for loan
losses 0 0 0 0
-------- -------- --------- ---------
Net interest and
dividend income
after provision
for loan losses 8,456 10,461 37,494 43,338
Non-interest income:
Fees and service
charges 718 800 5,670 3,096
Net gain (loss)
from real estate
operations (2) (1) (6) 156
Net gain on sales
of loans 0 128 143 394
Income on Bank
Owned Life
Insurance 293 224 967 690
Other 204 146 739 660
-------- -------- --------- ---------
Total non-interest
income 1,213 1,297 7,513 4,996
Non-interest expenses
Compensation &
employee benefits 2,742 2,856 12,202 12,263
Net occupancy
expense 583 578 2,426 2,319
Equipment 534 546 2,573 2,140
Advertising 170 170 637 719
Amortization of
intangible assets 0 0 0 1,361
Federal deposit
insurance premium 43 44 175 172
Extinguishment of
debt 0 0 1,351 0
Other 1,325 1,534 4,834 5,197
-------- -------- --------- ---------
Total non-interest
expenses 5,397 5,728 24,198 24,171
-------- -------- --------- ---------
Income before income
taxes 4,272 6,030 20,809 24,163
Income tax expense 1,509 2,158 7,411 8,669
-------- -------- --------- ---------
Net income $ 2,763 $ 3,872 $ 13,398 $ 15,494
======== ======== ======== ========
Weighted avg. no. of
diluted common
shares 13,241,182 13,742,337 13,451,005 14,010,684
Diluted earnings
per common share $ 0.21 $ 0.28 $ 1.00 $ 1.11
Return on average
common equity (a) 8.97% 12.50% 10.78% 12.64%
Return on average
assets (a) 0.49% 0.76% 0.62% 0.78%
Average total
assets $2,267,507 $2,029,268 $2,169,145 $1,981,090
Average earning
assets $2,188,499 $1,959,481 $2,096,020 $1,913,717
Yield on average
interest-earning assets 5.53% 5.46% 5.50% 5.47%
Cost of average deposits
and borrowings 4.09% 3.44% 3.84% 3.33%
----------- ---------- --------- ----------
Net interest rate spread 1.44% 2.02% 1.66% 2.14%
=========== ========== ========= ==========
Net interest margin 1.56% 2.14% 1.79% 2.26%
Non-interest exp.
as a % of avg. assets 0.95% 1.13% 1.12% 1.22%
Efficiency ratio 55.81% 48.71% 53.76% 47.35%
Loan originations and purchases:
One- to four-family
mortgage loans $ 84,925 $ 107,521 $ 340,852 $ 350,274
Commercial and multi-
family real estate
loans 12,353 8,470 42,060 38,612
Consumer loans 36,472 29,301 131,729 90,808
----------- -------- --------- --------
Total loan originations
and purchases $ 133,750 $ 145,292 $ 514,641 $ 479,694
=========== ========= ========= =========
(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 For the year ended
June 30, June 30,
---------------------- ----------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Reported net income $ 2,763 $ 3,872 $ 13,398 $ 15,494
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
Additional
Sarbanes Oxley
compliance
costs 0 208 0 208
Net tax effect 0 (73) 247 (73)
---------- ---------- ---------- ----------
Adjustments,
net of taxes 0 135 (459) 135
---------- ---------- ---------- ----------
"Adjusted" net
income $ 2,763 $ 4,007 $ 12,939 $ 15,629
========== ========== ========== ==========
Weighted avg. no.
of diluted
common shares 13,241,182 13,742,337 13,451,005 14,010,684
Diluted earnings
per common share $ 0.21 $ 0.29 $ 0.96 $ 1.12
Return on average
common equity(a) 8.97% 12.93% 10.41% 12.75%
Return on average
assets(a) 0.49% 0.79% 0.60% 0.79%
Non-interest exp.
as a % of avg.
assets 0.95% 1.09% 1.02% 1.21%
Efficiency ratio 55.81% 46.94% 52.49% 46.91%
(a) - Annualized
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
----------------------------------------------------------
Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,
2006 2006 2005 2005 2005
---------- ---------- ---------- ---------- ----------
Selected
Operating Data:
Interest
and
dividend
income $ 30,270 $ 28,973 $ 28,350 $ 27,683 $ 26,751
Interest
expense 21,814 19,762 18,715 17,491 16,290
---------- ---------- ---------- ---------- ----------
Net
interest
and
dividend
income 8,456 9,211 9,635 10,192 10,461
Provision
for loan
losses 0 0 0 0 0
---------- ---------- ---------- ---------- ----------
Net
interest
and
dividend
income
after
provision
for loan
losses 8,456 9,211 9,635 10,192 10,461
Non-
interest
income:
Fees and
service
charges 718 778 704 3,470 800
Net gain
(loss)
from
real
estate
opera-
tions (2) (3) 2 (3) (1)
Net gain
on sales
of loans 0 0 21 122 128
Income on
Bank
Owned
Life
Insurance 293 239 219 216 224
Other 204 201 153 181 146
---------- ---------- ---------- ---------- ----------
Total
non-
interest
income 1,213 1,215 1,099 3,986 1,297
Non-
interest
expenses:
Compen-
sation &
employee
benefits 2,742 3,134 3,067 3,259 2,856
Net
occupancy
expense 583 664 594 585 578
Equipment 534 530 538 971 546
Adver-
tising 170 168 165 134 170
Amorti-
zation
of
intangible
assets 0 0 0 0 0
Federal
deposit
insurance
premium 43 45 45 42 44
Extin-
guishment
of debt 0 0 0 1,351 0
Other 1,325 1,119 979 1,411 1,534
---------- ---------- ---------- ---------- ----------
Total
non-
interest
expenses 5,397 5,660 5,388 7,753 5,728
---------- ---------- ---------- ---------- ----------
Income
before
income
taxes 4,272 4,766 5,346 6,425 6,030
Income
tax
expense 1,509 1,717 1,892 2,293 2,158
---------- ---------- ---------- ---------- ----------
Net
income $ 2,763 $ 3,049 $ 3,454 $ 4,132 $ 3,872
========== ========== ========== ========== ==========
Weighted
avg. no.
of
diluted
common
shares 13,241,182 13,349,234 13,509,140 13,700,349 13,742,337
Diluted
earnings
per
common
share $ 0.21 $ 0.23 $ 0.26 $ 0.30 $ 0.28
Return on
average
common
equity(a) 8.97% 9.87% 11.09% 13.12% 12.50%
Return on
average
assets(a) 0.49% 0.56% 0.65% 0.79% 0.76%
Average
total
assets $2,267,507 $2,184,365 $2,137,449 $2,087,261 $2,029,268
Average
earning
assets $2,188,499 $2,111,183 $2,066,915 $2,017,484 $1,959,481
Yield on
average
interest-
earning
assets 5.53% 5.51% 5.46% 5.47% 5.46%
Cost of
average
deposits
and
borrow-
ings 4.09% 3.90% 3.70% 3.55% 3.44%
---------- ---------- ---------- ---------- ----------
Net
interest
rate
spread 1.44% 1.61% 1.76% 1.92% 2.02%
========== ========== ========== ========== ==========
Net
interest
margin 1.56% 1.74% 1.89% 2.05% 2.14%
Non-
interest
exp. as
a % of
avg.
assets 0.95% 1.04% 1.01% 1.49% 1.13%
Efficiency
ratio 55.81% 54.27% 50.20% 54.67% 48.71%
Loan
origina-
tions
and
purchases:
One- to
four-
family
mortgage
loans $ 84,925 $ 64,637 $ 73,061 $ 118,229 $ 107,521
Commer-
cial
and
multi-
family
real
estate
loans 12,353 7,005 14,387 8,315 8,470
Consumer
loans 36,472 36,791 27,996 30,470 29,301
---------- ---------- ---------- ---------- ----------
Total
loan
origina-
tions
and
pur-
chases $ 133,750 $ 108,433 $ 115,444 $ 157,014 $ 145,292
========== ========== ========== ========== ==========
(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
----------------------------------------------------------
Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,
2006 2006 2005 2005 2005
---------- ---------- ---------- ---------- ----------
Reported
net
income $ 2,763 $ 3,049 $ 3,454 $ 4,132 $ 3,872
Adjustments:
Commercial
loan pre-
payment
premium 0 0 0 (2,688) 0
Prepayment
penalty
on FHLB
advances 0 0 0 1,351 0
Accelera-
tion of
deprecia-
tion on
branch
auto-
mation
system
software 0 0 0 372 0
Increase
in
obliga-
tion
under
certain
long-
term
benefit
plans 0 0 0 259 0
Additional
Sarbanes
Oxley
compliance
costs 0 0 0 0 208
Net tax
effect 0 0 0 247 (73)
---------- ---------- ---------- ---------- ----------
Adjust-
ments,
net of
taxes 0 0 0 (459) 135
---------- ---------- ---------- ---------- ----------
"Adjusted"
net
income $ 2,763 $ 3,049 $ 3,454 $ 3,673 $ 4,007
========== ========== ========== ========== ==========
Weighted
avg. no.
of
diluted
common
shares 13,241,182 13,349,234 13,509,140 13,700,349 13,742,337
Diluted
earnings
per
common
share $ 0.21 $ 0.23 $ 0.26 $ 0.27 $ 0.29
Return on
average
common
equity(a) 8.97% 9.87% 11.09% 11.66% 12.93%
Return on
average
assets(a) 0.49% 0.56% 0.65% 0.70% 0.79%
Non-
interest
exp. as
a % of
avg.
assets 0.95% 1.04% 1.01% 1.11% 1.09%
Efficiency
ratio 55.81% 54.27% 50.20% 50.21% 46.94%
(a) - Annualized