UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) - July 28, 1999
Commission file number 0-24040
PENNFED FINANCIAL SERVICES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 22-3297339
(State or other jurisdiction (I.R.S. Employer
incorporation of organization) Identification Number)
622 Eagle Rock Avenue, West Orange, New Jersey 07052-2989
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 973) 669-7366
----------------------------
<PAGE>
Item 5. Other Events
On July 28, 1999, PennFed Financial Services, Inc. (the Company)
issued the press release attached hereto as Exhibit 99.1 announcing its fourth
quarter results.
The foregoing information does not purport to be complete and is
qualified in its entirety by reference to the Exhibits to this Report.
Item 7. Financial Statements and Exhibits
(c) Exhibits
Regulation Sequential Page Number
S-K Exhibit Where Attached Exhibits Are
Number Document Located in this Form 8-K
------ -------- ------------------------
99.1 Press Release dated 4
July 28, 1999
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PENNFED FINANCIAL SERVICES, INC.
Date: July 29, 1999 By: /s/ Joseph L. LaMonica
----------------------
Joseph L. LaMonica
President and Chief
Executive Officer
Exhibit 99.1
FOR IMMEDIATE RELEASE Contact: Jeffrey J. Carfora, EVP, CFO
973-669-7366, ext. 202
PENNFED FINANCIAL SERVICES, INC. REPORTS
FOURTH QUARTER EARNINGS
WEST ORANGE, NJ, July 28, 1999 - PennFed Financial Services, Inc.
(NASDQ:PFSB), the holding company for the New Jersey-based Penn Federal Savings
Bank,today reported fourth quarter Fiscal Year 1999 results of $0.33 per diluted
share for the quarter ended June 30, 1999 versus $0.28 per share for the quarter
ended June 30, 1998,reflecting an increase of 18%.
Cash earnings per diluted share for the three months ended June 30,
1999 of $0.43 per share compared to $0.39 per share for the three months ended
June 30, 1998.
For the fiscal year ended June 30, 1999 (FY99), diluted earnings per
share were $1.29 per share versus $1.16 per share for FY98, reflecting an
increase of 11%. Cash earnings per diluted share for FY99 of $1.74 per share
compared to $1.59 per share for FY98.
Return on average common equity was 11.03% for the year ended June 30,
1999. Cash return on average common equity was 14.85% for FY99.
"PennFed continued to maintain superior asset quality during FY99,"
said Joseph L. LaMonica, President and Chief Executive Officer. "The Company's
non-performing assets declined to $4.6 million or 0.30% of total assets at June
30, 1999 - from $5.4 million or 0.35% at June 30, 1998."
Total assets at June 1999 of $1.6 billion were relatively unchanged
from June 1998 due primarily to the one- to four-family mortgage loan sale
strategy PennFed employed during FY99 to mitigate the effects of low interest
rates and a flat yield curve.
"This strategy allowed PennFed to maintain our origination capacity,
support improved net interest margin performance, improve our interest rate risk
position, and generate non-interest income," noted LaMonica. "No addition to
infrastructure was required in adopting this strategy."
<PAGE>
-more-
PennFed Q4 FY99
Page 2 of 3
During FY99 PennFed sold $150 million of low-coupon, longer duration
one- to four-family mortgage loans into the secondary market at net gains of
$860,000. Due to the current higher interest rate and steeper yield curve
environment,loan sale activity is expected to be reduced. According to LaMonica,
the level of such activity will continue to be evaluated with primary
consideration given to interest rate risk and long-term profitability
objectives.
Although down slightly from FY98, PennFed's total loan originations and
purchases remained strong at $402 million for the year ended June 30, 1999.
In line with the Company's strategic initiative, growth continued in the
consumer and commercial loan portfolios, increasing $27 million, or 23%,
from June 30, 1998. Fiscal 1999 originations for these portfolios increased 34%
compared to FY98.
LaMonica also reported PennFed's continued growth in checking account
balances. These balances increased $17 million, or 21%, in FY99.
The Company's net interest margin showed an improving trend during
FY99, compared to a declining trend during FY98. PennFed's net interest margin
improved to 2.33% for the June 1999 quarter, from 2.24% for the March 1999
quarter and 2.23% for the June 1998 quarter - despite continued heavy
prepayments on one- to four-family mortgages. The improved margin was a result
of a reduced cost of funds and growth in higher yielding consumer and commercial
loans.
Total service charges and other non-interest income, excluding results
of sales of loans and real estate operations, reflected a $386,000 - or 16.8%
- - increase for FY99 compared to FY98, due to growth in checking accounts and
earnings from the Bank's Investment Services at Penn Federal program. The
program gives customers convenient access to financial consulting/advisory
services and related non-deposit investment products at local branch offices.
PennFed's non-interest expense ratio remained at a strong 1.20% for the
year ended June 30, 1999. PennFed continues to advance key market expansion
opportunities. In February 1999, a
<PAGE>
- more-
PennFed Q4 FY99
Page 3 of 3
Penn Federal Savings Bank branch opened in Toms River, where deposits currently
total nearly $25 million. In June 1999, Penn Federal opened an office in
Livingston, where deposits now stand at approximately $5 million.
A relocation of the Bank's Sayreville office to a modern full-service facility
occurred on July 19, 1999. The move will increase the convenience of banking
with Penn Federal in central New Jersey.
PennFed stockholders of record as of August 13, 1999 will be paid a
cash dividend of $0.04 per share on August 27, 1999. PennFed's Annual Meeting
of Stockholders will be held at 10 a.m. on Wednesday, October 27, 1999 at the
Radisson Hotel in Fairfield, New Jersey. Stockholders of record on September 10,
1999 are entitled to vote at the meeting.
Penn Federal Savings Bank, headquartered in New Jersey, maintains 20
branch offices in Bayville, Brick, Caldwell, East Newark Fairfield,
Farmingdale, Harrison, Livingston, Marlboro, Montclair (2), Newark (3), Old
Bridge, Sayreville, Toms River, Upper Montclair, Verona, and West Orange. Penn
Federal has received all necessary approvals to open a branch in Roseland. Plans
for the Roseland office are proceeding, with an opening targeted for late in
Fiscal Year 2000. The Bank's deposits are insured by the Federa Deposit
Insurance Corporation.
This release contains forward-looking statements that are subject to
risk and uncertainties, including, but not limited to, changes in economic
conditions in the Company's market areas, changes in policies by regulatory
agencies, the impact of competitive loan products, loan demand risks,
fluctuations in interest rates and operating results and other risks detailed
from time to time in the Company's filings with the Securities and Exchange
Commission. The Company cautions readers not to place undue reliance on any
forward-looking statements. The Company does not undertake and specifically
disclaims any obligation, to revise any forward-looking statements to reflect
the occurrence of anticipated or unanticipated events or circumstances
after the date of such statements. These risks could cause the Company's future
to differ materially from those expressed in any forward-looking statements
by, or on behalf of, the Company.
###
NOTE: SEE FINANCIAL TABLES ATTACHED
<PAGE>
<TABLE>
<CAPTION>
PennFed Financial Services, Inc.
(Holding Company for Penn Federal Savings Bank)
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
June 30, June 30,
1999 1998
---------------- -----------------
<S> <C> <C>
Selected Financial Condition Data:
Cash and Federal funds sold $9,900 $10,960
Investments, net and FHLB stock 309,905 193,375
Mortgage-backed securities, net 127,983 204,452
Loans held for sale 5,180 565
Loans receivable:
One- to four-family mortgage loans 910,064 971,103
Commercial and multi-family real estate loans 74,613 65,833
Consumer loans 72,572 (a) 54,101 (a)
Allowance for loan losses (3,209) (2,776)
Other, net 7,391 7,026
---------------- -----------------
Loans receivable, net 1,061,431 1,095,287
Goodwill and other intangible assets 11,118 13,481
Other assets 33,246 33,818
---------------- -----------------
Total assets $1,558,763 $1,551,938
================ =================
Deposits $1,063,600 $1,028,100
FHLB advances 244,465 230,465
Other borrowings 88,738 131,500
Other liabilities 21,717 25,489
Preferred securities of Trust, net 32,743 32,681
Stockholders' equity 107,500 (b) 103,703
---------------- -----------------
Total liabilities and stockholders' equity $1,558,763 $1,551,938
================ =================
Book value per share (c) $13.03 $11.87
Tangible book value per share (c) $11.68 $10.33
Equity to assets 6.90 % 6.68 %
Tangible equity to tangible assets 6.23 % 5.86 %
Asset Quality Data:
Non-performing loans $3,670 $3,742
Real estate owned, net 936 1,643
---------------- -----------------
Total non-performing assets $4,606 $5,385
================ =================
Non-performing loans to total loans 0.34 % 0.34 %
Non-performing assets to total assets 0.30 % 0.35 %
Allowance for loan losses to non-performing loans 87.44 % 74.18 %
Regulatory Capital Ratios (of the Bank):
Tangible capital ratio (requirement - 1.50%) 7.88 % 7.09 %
Core capital ratio (requirement - 4.00%) 7.88 % 7.11 %
Risk-based capital ratio (requirement - 8.00%) 16.29 % 15.16 %
</TABLE>
(a) Consumer loans primarily include second mortgages and home equity
lines of credit.
(b) Common shares outstanding as of June 30, 1999 totaled 8,813,416 shares.
(c) In accordance with SOP 93-6, the calculation of book value per share only
includes ESOP shares to the extent that they are released or committed to be
released during the fiscal year.
<PAGE>
<TABLE>
<CAPTION>
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 For the year ended
June 30, June 30,
----------------------------- ------------------------------
1999 1998 1999 1998
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Selected Operating Data:
Interest and dividend income $25,695 $26,019 $105,557 $100,805
Interest expense 17,080 17,925 71,918 68,043
---------- ---------- ----------- ----------
Net interest and dividend income 8,615 8,094 33,639 32,762
Provision for loan losses 210 150 780 600
---------- ---------- ----------- ----------
Net interest and dividend income
after provision for loan losses 8,405 7,944 32,859 32,162
Non-interest income:
Service charges 554 553 2,113 1,974
Other 194 93 568 321
---------- ---------- ----------- ----------
Total service charges and other 748 646 2,681 2,295
Net gain (loss) from real estate (21) (18) 31 (156)
operations
Net gain (loss) on sales of loans (103) 1 860 528
Loss on disposition of equipment --- --- (26) ---
---------- ---------- ----------- ----------
Total non-interest income 624 629 3,546 2,667
Non-interest expenses:
Compensation & employee benefits 2,252 1,918 8,961 8,109
Net occupancy expense 343 334 1,333 1,275
Equipment 398 412 1,642 1,542
Advertising 117 122 359 380
Amortization of intangibles 584 602 2,363 2,437
Federal deposit insurance premium 150 153 627 591
Other 794 859 3,359 3,055
---------- ---------- ----------- ----------
Total non-interest expenses 4,638 4,400 18,644 17,389
---------- ---------- ----------- ----------
Income before income taxes 4,391 4,173 17,761 17,440
Income tax expense 1,511 1,451 6,304 6,242
---------- ---------- ----------- ----------
Net income $2,880 $2,722 $11,457 $11,198
========== ========== =========== ==========
Earnings per common share (d):
Basic $0.35 $0.30 $1.36 $1.25
Diluted $0.33 $0.28 $1.29 $1.16
Cash earnings per common share (d) (e):
Basic $0.46 $0.42 $1.83 $1.73
Diluted $0.43 $0.39 $1.74 $1.59
Return on average common equity 10.89 % 10.28 % 11.03 % 10.96 %
Cash return on average common equity 14.37 % 14.34 % 14.85 % 15.12 %
Return on average assets 0.75 % 0.72 % 0.74 % 0.78 %
Yield on average interest-earning assets 6.96 % 7.19 % 7.03 % 7.32 %
Cost of average interest-bearing liabilities 4.88 % 5.21 % 5.02 % 5.20 %
---------- ---------- ----------- ----------
Net interest rate spread 2.08 % 1.98 % 2.01 % 2.12 %
========== ========== =========== ==========
Net interest margin 2.33 % 2.23 % 2.24 % 2.38 %
Non-interest exp. as a % of avg. assets 1.21 % 1.17 % 1.20 % 1.22 %
Efficiency ratio (f) 43.78 % 43.45 % 43.79 % 42.02 %
</TABLE>
(d) In accordance with SOP 93-6, the calculation of EPS only includes ESOP
shares to the extent that they are released or committed to be released
during the fiscal year.
(e) Cash earnings are reported earnings excluding the non-cash expenses
associated with the amortization of intangibles and employee stock plans.
(f) The efficiency ratio includes the benefit from the net gains on sales
of loans since this has become a recurring activity for PennFed.
Excluding the net gains on sales of loans, the efficiency ratio would have
been 43.30%, 43.46%, 44.83% and 42.65%, respectively.
