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) - October 25, 2000
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Commission file number 0-24040
PENNFED FINANCIAL SERVICES, INC.
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(Exact name of Registrant as specified in its charter)
Delaware 22-3297339
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(State or other jurisdiction (I.R.S. Employer
incorporation of organization) Identification Number)
622 Eagle Rock Avenue, West Orange, New Jersey 07052-2989
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (973) 669-7366
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<PAGE>
Item 5. Other Events
On October 25, 2000, PennFed Financial Services, Inc. (the Company)
issued the press release attached hereto as Exhibit 99.1 announcing its first
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
S-K Exhibit
Number Document
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99.1 Press Release dated
October 25, 2000
Item 9. Regulation FD Disclosure
On October 25, 2000, PennFed Financial Services, Inc. (the Company)
held its Annual Meeting of Stockholders. The script of the financial
presentation at such meeting is set forth below.
<PAGE>
PennFed Financial Services, Inc.
2000 Annual Meeting
Wednesday, October 25, 2000
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Logo: PennFed Financial Services Inc.
Tag: Holding Company for Penn Federal Savings Bank
Annual Stockholder Meeting
October 25, 2000
Nasdaq: PFSB
www.pennfsb.com
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AT THIS TIME, IT'S MY PLEASURE TO PROFILE THE COMPANY AND DISCUSS THE
PROGRESS WE HAVE MADE IN FISCAL YEAR 2000.
FOLLOWING MY REMARKS, OUR PRESIDENT AND CHIEF EXECUTIVE OFFICER, JOSEPH
LaMONICA, WILL DISCUSS OUR RESULTS FOR THE FIRST QUARTER OF FISCAL YEAR 2001,
AND DETAIL THE COMPANY'S STRATEGIC PLANS FOR THE FUTURE.
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The forward-looking statements being made today are subject to risks and
uncertainties. PennFed Financial Services, Inc.'s actual results may differ
materially from those set forth in such forward-looking statements. Please refer
to PennFed Financial Services, Inc.'s reports filed with the Securities and
Exchange Commission for a discussion of factors that may cause such differences
to occur.
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BEFORE I BEGIN, HOWEVER, I AM REQUIRED TO REMIND YOU OF OUR DISCLAIMER ON
FORWARD LOOKING STATEMENTS - WHICH IS NOW ON THE SCREEN.
LET'S PROCEED WITH A PROFILE OF PENNFED...
<PAGE>
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Profile
o $1.7 billion in assets
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AT JUNE 30, 2000, ASSETS OF PENNFED FINANCIAL STOOD AT $1.7 BILLION.
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Profile
o $1.7 billion in assets
o 3rd largest publicly traded thrift headquartered in New Jersey
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BASED UPON THIS ASSET SIZE, PENNFED IS NOW THE THIRD LARGEST
PUBLICLY-TRADED THRIFT HEADQUARTERED IN THE STATE OF NEW JERSEY.
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Profile
o $1.7 billion in assets
o 3rd largest publicly traded thrift headquartered in New Jersey
o $1.1 billion in deposits in 21 NJ branches
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DEPOSITS TOTALED $1.1 BILLION, RESULTING IN AN AVERAGE BRANCH SIZE OF $54
MILLION AT THE END OF THE FISCAL YEAR.
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o Map of state with w/ branches
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<PAGE>
AS YOU SEE HERE, PENNFED'S BRANCH NETWORK IS DIVIDED INTO THREE REGIONS.
FIVE BRANCHES IN THE NEWARK AREA CURRENTLY CONTRIBUTE 34% OF DEPOSITS. 39% OF
DEPOSITS ARE HOUSED IN SUBURBAN ESSEX COUNTY, WHERE 9 PENN FEDERAL BRANCHES ARE
LOCATED. ANOTHER 27% OF DEPOSITS COMES FROM OUR 7 BRANCHES IN CENTRAL AND
SOUTHERN NEW JERSEY.
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Profile
o $1.7 billion in assets
o 3rd largest publicly traded thrift headquartered in New Jersey
o $1.1 billion in deposits in 21 NJ branches
o Experienced management team with significant insider ownership
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PENNFED'S EXPERIENCED MANAGEMENT TEAM IS COMMITTED TO MAINTAINING
PROFITABILITY AND ENHANCING SHAREHOLDER VALUE.
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Directors & Executive Officers
Name, Position, Age, Years in Company, Years in Banking, % Ownership of:
Anderson, Three Outside Directors, LaMonica, Tinker, McTernan & Carfora
Ownership of Outside Directors and Executive Officers as a Group 21%
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THIS CHART EXHIBITS THE DEPTH OF EXPERIENCE, AND HIGH OWNERSHIP LEVELS OF
OUR DIRECTORS AND EXECUTIVE OFFICERS. YOU'LL NOTE THAT PENNFED'S DIRECTORS AND
EXECUTIVE OFFICERS OWN 21% OF PENNFED'S STOCK. INSIDE OWNERSHIP INCREASES TO 28%
WHEN ALL SENIOR OFFICERS AND THE EMPLOYEE STOCK OWNERSHIP PLAN ARE INCLUDED.
THIS HIGH OWNERSHIP LEVEL INDICATES THAT OUR INTERESTS ARE CLOSELY ALIGNED WITH
THOSE OF ALL STOCKHOLDERS.
<PAGE>
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Profile
o $1.7 billion in assets
o 3rd largest publicly traded thrift headquartered in New Jersey
o $1.1 billion in deposits in 21 NJ branches
o Experienced management team with significant insider ownership
o Low-risk, low-cost provider of diversified financial services
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WITH STRONG ASSET QUALITY RATIOS AND LOW EXPENSE RATIOS, PENNFED IS,
CLEARLY, A LOW-RISK, LOW-COST PROVIDER OF DIVERSIFIED FINANCIAL SERVICES THAT
MEET THE NEEDS OF THE INDIVIDUALS, FAMILIES, AND BUSINESSES WE SERVE.
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Profile
o $1.7 billion in assets
o 3rd largest publicly traded thrift headquartered in New Jersey
o $1.1 billion in deposits in 21 NJ branches
o Experienced management team with significant insider ownership
o Low-risk, low-cost provider of diversified financial services
o A community bank alternative to larger competitors
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AS WE HAVE GROWN, WE HAVE REMAINED THE NEW JERSEY COMMUNITY BANK
ALTERNATIVE TO THE LARGE BANKS WITH WHOM WE COMPETE IN THE MARKETPLACE.
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Profile
o $1.7 billion in assets
o 3rd largest publicly traded thrift headquartered in New Jersey
o $1.1 billion in deposits in 21 NJ branches
o Experienced management team with significant insider ownership
o Low-risk, low-cost provider of diversified financial services
o A community bank alternative to larger competitors
o Active management of capital to maximize shareholder value
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<PAGE>
PENNFED HAS A PROVEN TRACK RECORD OF ACTIVELY MANAGING CAPITAL TO MAXIMIZE
SHAREHOLDER VALUE. IN ADDITION TO UTILIZING CAPITAL TO SUPPORT GROWTH AND PAY
DIVIDENDS, WE HAVE - SINCE BECOMING A PUBLIC COMPANY - REPURCHASED 38% OF SHARES
ORIGINALLY ISSUED IN JULY 1994.
LET'S NOW MOVE TO A REVIEW OF OUR FISCAL YEAR 2000 HIGHLIGHTS.
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Fiscal Year 2000 Accomplishments and Results
Continued double digit growth in EPS
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DURING THE YEAR, THE COMPANY CONTINUED ITS DOUBLE DIGIT GROWTH IN EARNINGS
PER SHARE.
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Earning per Share - Bar Chart of 1995 - 2000
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IN FISCAL YEAR 2000, PENNFED'S EARNINGS PER SHARE OF $1.50 REFLECTS AN
INCREASE OF 16% COMPARED TO $1.29 PER SHARE FOR THE YEAR ENDED JUNE 30, 1999.
THIS CONTINUES UR DOUBLE DIGIT EARNINGS GROWTH.
DOUBLE DIGIT EARNINGS GROWTH HAS BECOME A TRADITION AT PENNFED...A
TRADITION NOT EASILY DUPLICATED BY OUR PEER INSTITUTIONS.
<PAGE>
SINCE BECOMING A PUBLIC COMPANY PENNFED'S COMPOUNDED ANNUAL GROWTH IN EPS
TOTALED 15.9%. THIS COMPARES TO A PEER GROUP AVERAGE OF ONLY 10.3%.
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Earning per Share Comparison - FY2000 - Diluted EPS, Cash EPS, and Difference
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CASH EARNINGS PER SHARE FOR FISCAL 2000 WERE $1.90, 40 CENTS GREATER THAN
REPORTED EPS.
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Fiscal Year 2000 Accomplishments and Results
Continued double digit growth in EPS
PennFed maintained status as a low-risk, low-cost provider of diversified
financial services
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PENNFED CONTINUED TO MAINTAIN ITS STATUS AS A LOW-RISK, LOW COST PROVIDER
OF DIVERSIFIED FINANCIAL SERVICES.
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Non-Performing Assets as a Percent of Total Assets Chart
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PENNFED HAS A REPUTATION AS A LOW-RISK PROVIDER. EXCEPTIONAL ASSET QUALITY
REMAINS A PRIMARY GOAL. AT THE END OF FISCAL YEAR 2000, THE COMPANY'S
NON-PERFORMING ASSETS AS A PERCENT OF TOTAL ASSETS DECLINED T0 0.18%. AT THE END
OF FISCAL 1999, IT WAS 0.30%, WHILE AT THE END OF FISCAL 1995, IT STOOD AT
0.78%.
<PAGE>
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Non-Interest Expense to Average Assets Chart
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PENNFED ALSO HAS A REPUTATION AS A LOW-COST PROVIDER. THIS IS EVIDENT IN
OUR FISCAL 2000 NON-INTEREST EXPENSE RATIO OF 1.20% OF ASSETS. THIS IS ALMOST
HALF OF THE 2.31% REPORTED FOR FISCAL 1995.
OUR NON-INTEREST EXPENSE RATIO CONTINUES TO COMPARE FAVORABLY TO OUR PEERS.
CURRENTLY, THE NON-INTEREST EXPENSE RATIO FOR OUR PEER GROUP AVERAGES
APPROXIMATELY ONE AND A HALF PERCENT.
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Fiscal Year 2000 Accomplishments and Results
Continued double digit growth in EPS
PennFed maintained status as a low-risk, low-cost provider of diversified
financial services
Continued to prudently manage capital
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AS NOTED EARLIER, PENNFED HAS A PROVEN TRACK RECORD OF ACTIVELY MANAGING
CAPITAL TO MAXIMIZE SHAREHOLDER VALUE.
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Stock Repurchase Programs
o 4.5 million shares repurchased since IPO including:
492,000 shares during Fiscal Year 2000
317,500 since June 30, 2000 (Fiscal 2001)
o 38% of shares issued
o $10.00 per share average cost
o Internal Rate of Return is 20%
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<PAGE>
SINCE OUR IPO, WE HAVE REPURCHASED 4.5 MILLION SHARES, OR 38%, OF THE
SHARES ORIGINALLY ISSUED, AT AN AVERAGE PER SHARE COST OF $10. DURING FISCAL
YEAR 2000 WE REPURCHASED 492,000 SHARES AT AN AVERAGE PRICE OF APPROXIMATELY $14
PER SHARE.
WITH AN INTERNAL RATE OF RETURN OF 20% FOR FISCAL 2000, OUR STOCK
REPURCHASES HAVE PROVEN TO BE AN ATTRACTIVE AND PRUDENT INVESTMENT.
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Fiscal Year 2000 Accomplishments and Results
Continued double digit growth in EPS
PennFed maintained status as a low-risk, low-cost provider of diversified
financial services
Continued to prudently manage capital
Enhanced lending capabilities
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PENNFED'S ENHANCED RESIDENTIAL, CONSUMER, AND COMMERCIAL LENDING
CAPABILITIES RESULTED IN LOAN GROWTH OF 18% IN FISCAL 2000.
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Enhanced lending capabilities
Residential
o laptop originations
o core group of experienced originators
o focus on quality customer service
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<PAGE>
THE USE OF LAPTOP ORIGINATION TECHNOLOGY HAS LEAD TO A MORE EFFICIENT AND
EFFECTIVE PROCESSING OF 1-4 FAMILY MORTGAGE LOANS. AN EXPERIENCED TEAM OF
IN-HOUSE ORIGINATORS AND THE FOCUS OF THE ENTIRE RESIDENTIAL LENDING TEAM ON
QUALITY CUSTOMER SERVICE HAS ALSO CONTRIBUTED TO A MORE EFFICIENT AND EFFECTIVE
PROCESS. TOGETHER, THESE ENHANCEMENTS HAVE LEAD TO A REDUCTION IN THE COST TO
ORIGINATE A LOAN BY 20%.
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Fiscal Year 2000 Accomplishments and Results
PennFed enhanced lending capabilities
Residential
o laptop originations
o core group of experienced originators
o focus on quality customer service
Commercial
o expanded staff
o special targeted marketing promotions
o new Business Manager Program
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PENNFED'S COMMERCIAL LENDING CAPABILITIES WERE STRENGTHENED THROUGH STAFF
EXPANSION AND THE DEVELOPMENT OF SPECIAL TARGETED MARKETING PROMOTIONS -
INCLUDING DIRECT MAIL AND UNIQUE PRODUCT OFFERINGS.
OUR BUSINESS MANAGER PROGRAM - BASICALLY AN ACCOUNTS RECEIVABLE FINANCING
PROGRAM TO ENHANCE THE CASH FLOWS OF SMALL AND MID-SIZED BUSINESSES - WAS
INTRODUCED DURING MID-FISCAL 2000. BUSINESS MANAGER TRANSACTIONS NOT ONLY
PROVIDE AN ATTRACTIVE YIELD FOR THE COMPANY, BUT ALSO PROVIDE US WITH CORE
DEPOSIT RELATIONSHIPS. ALTHOUGH THIS PRODUCT MAY ONLY MEET THE NEEDS OF SELECT
BUSINESSES, THE PROGRAM PROVIDES THE "FOOT-IN-THE-DOOR" FOR INTRODUCTION OF OUR
OTHER BUSINESS PRODUCTS.
<PAGE>
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Fiscal Year 2000 Accomplishments and Results
PennFed enhanced lending capabilities
Residential
o laptop originations
o core group of experienced originators
o focus on quality customer service
Commercial
o expanded staff
o new Business Manager Program
o target special marketing promotions
Consumer
o direct mail
o market expansion
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PENNFED'S CONSUMER LENDING CAPABILITIES HAVE ALSO BEEN ENHANCED BY FOCUSED
DIRECT MAIL CAMPAIGNS AND MARKET EXPANSION INITIATIVES WHEREBY LOAN CLOSINGS CAN
BE CONDUCTED AT CONSUMERS' HOMES OR OFFICES.
PAUSE
PENNFED WILL CONTINUE TO EVALUATE AND ADJUST ALL OF ITS LOAN PRODUCTS,
SERVICES AND PROCESSES TO BETTER MEET THE NEEDS OF THE PUBLIC. CLEAR EXAMPLES OF
OUR FLEXIBILITY AND ABILITY TO MEET MARKET NEEDS INCLUDE THE INTRODUCTION IN
FISCAL YEAR 2000 OF A STATED INCOME LOAN PROGRAM; A 100% EQUITY PROGRAM; A ZERO
POINT COMMERCIAL LOAN OPTION; AND AN ENHANCED PROGRAM FOR BORROWERS WITH LOW TO
MODERATE INCOME LEVELS - A PROGRAM THAT CONTRIBUTES TO OUR OUTSTANDING RATING
UNDER THE COMMUNITY REINVESTMENT ACT.
<PAGE>
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Loan Portfolio Activity
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PENNFED'S MARKET RESPONSIVENESS AND ENHANCED LENDING CAPABILITES HAVE
ENABLED THE COMPANY TO MAKE SOLID GAINS - PARTICULARLY IN COMMERCIAL AND
CONSUMER LENDING. AS YOU CAN SEE FROM THIS CHART, PENNFED'S COMMERCIAL AND
CONSUMER LOAN ORIGINATIONS TOTALED $96 MILLION IN FISCAL YEAR 2000, A 28%
INCREASE FROM THE PREVIOUS YEAR. THIS ORIGINATION LEVEL HAS RESULTED IN 25%
GROWTH IN THE CONSUMER AND COMMERCIAL LOAN PORTFOLIO BALANCES FROM THE PRIOR
YEAR.
GROWTH IN CONSUMER AND COMMERCIAL LOANS ARE PART OF THE COMPANY'S
CONTINUING EFFORTS IN THE LONG PROCESS OF TRANSITIONING THE COMPOSITION OF OUR
LOAN PORTFOLIO.
AS YOU CAN ALSO SEE IN THE CHART, LOANS PURCHASED FROM CORRESPONENTS WERE
HIGHER IN FISCAL 1997 AND FISCAL 2000, A TIME WHEN ADJUSTABLE RATE MORTGAGES
DOMINATED PRODUCTION. THESE ADJUSTABLE RATE MORTGAGES PROVIDE THE COMPANY WITH
SHORTER DURATION ASSETS THAT REPRICE MORE QUICKLY IN PERIODS OF RISING INTEREST
RATES. CONVERSLY, LOANS SOLD WERE HIGHER IN FISCAL 1998 AND 1999 - A TIME WHEN
FIXED RATE MORTGAGES DOMINATED PRODUCTION.
<PAGE>
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Fiscal Year 2000 Accomplishments and Results
Continued double digit growth in EPS
PennFed maintained status as a low-risk, low-cost provider of diversified
financial services
Continued to prudently manage capital
Enhanced lending capabilities
Continued to make solid gains in market expansion
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AS I HAVE PREVIOUSLY NOTED, AN ESSENTIAL ELEMENT IN OUR ABILITY TO GROW
LENDING IS MARKET EXPANSION.
MARKET EXPANSION IS ALSO AN IMPORTANT ELEMENT IN DEPOSIT GATHERING.
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Recently opened branches
Toms River - # months open and deposits
Livingston - # months open and deposits
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IN FEBRUARY 1999, PENNFED OPENED OUR 19TH BRANCH IN TOMS RIVER, NEW JERSEY.
SINCE OPENING 19 MONTHS AGO, DEPOSITS AT TOMS RIVER TOTALED $37 MILLION AS OF
SEPTEMBER 30, 2000.
OUR 20TH BRANCH OPENED IN JUNE 1999 IN LIVINGSTON, NEW JERSEY. AFTER JUST
15 MONTHS, THE LIVINGSTON BRANCH DEPOSITS HAVE GROWN TO $17 MILLION AS OF
SEPTEMBER 30TH.
<PAGE>
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Favorable demographics of Roseland branch
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THE COMPANY CONTINUED TO BUILD ON THIS MARKET EXPANSION SUCCESS IN FISCAL
2001. IN JULY OF 2000, OUR 21ST BRANCH OPENED IN ROSELAND, NEW JERSEY. IN 1997
THE MEDIAN HOUSEHOLD INCOME IN ROSELAND WAS $73,000 AND MEDIAN HOME VALUE WAS
$294,000. THESE VALUES ARE PROJECTED TO INCREASE NEARLY 9% BY THE YEAR 2002.
IN JUST THREE MONTHS, DEPOSITS AT ROSELAND NOW STAND AT $11.3 MILLION - 42%
OF WHICH ARE CORE DEPOSITS.
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Deposit composition
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TOTAL DEPOSITS AT THE END OF OUR FISCAL YEAR WERE $1.1 BILLION. DURING
FISCAL 2000, CHECKING BALANCES GREW $17 MILLION, OR 18%. SINCE JUNE 1997,
CHECKING HAS GROWN 69%, FROM $67 MILLION TO $113 MILLION.
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Q1 Results
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I WILL NOW ASK JOSEPH LaMONICA TO COME FORWARD TO SHARE WITH YOU THE
COMPANY'S RESULTS FOR THE FIRST QUARTER OF FISCAL YEAR 2001 AND OUR STRATEGIC
INITIATIVES FOR CONTINUED SUCCESS.
THANK YOU BILL.
<PAGE>
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FIRST QUARTER 2001
Bar Chart: Earnings per Share
Include: bars for 1995 thru 2000, Q1-2000 and Q1 - 2001
Highlight on graph: Q1 of 2000 v. Q1 of 2001
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EARNINGS FOR THE 3 MONTHS ENDED SEPTEMBER 30, 2000 WERE 39 CENTS PER
DILUTED SHARE. THIS REFLECTS AN INCREASE OF 11% WHEN COMPARED TO THE 35 CENTS
REPORTED FOR THE QUARTER ENDED SEPTEMBER 30, 1999.
CASH EARNINGS PER SHARE FOR THE CURRENT QUARTER WERE 49 CENTS - 10 CENTS
HIGHER THAN REPORTED EPS.
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FIRST QUARTER 2001
Bar Chart: Asset Quality
Include: Non-performing assets as a Percent of Total
Assets for 1995, 1996, 1997, 1998, 1999, 2000
Highlight: Q1 of 2000 versus Q1 of 2001
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DURING THE FIRST QUARTER, PENNFED CONTINUED ITS TRADITION OF EXCEPTIONAL
ASSET QUALITY.
AS OF SEPTEMBER 30TH, NON-PERFORMING ASSETS TOTALED JUST $3 MILLION
REPRESENTING JUST 18 BASIS POINTS OF TOTAL ASSETS. THIS COMPARES TO 18 BASIS
POINTS AT JUNE 30, 2000 AND 30 BASIS POINTS AS OF JUNE 30, 1999. THIS RATIO
CONTINUES AS AN OUTSTANDING STRENGTH OF OUR COMPANY AND DISPLAYS OUR COMMITMENT
TO MAINTAINING
<PAGE>
SUPERIOR ASSET QUALITY. PRUDENT MANAGEMENT IN OUR COLLECTIONS DEPARTMENT
REFLECTS DELINQUENCY RATIOS WHICH ARE SUBSTANTIALLY BELOW PEER GROUPS ON BOTH A
LOCAL AND NATIONAL LEVEL. A SURVEY AT JUNE 30, 2000 BY THE MORTGAGE BANKERS
ASSOCIATION DISCLOSES THE PERCENTAGE OF ALL LOANS PAST DUE AND IN FORECLOSURE IN
NEW JERSEY TO BE 5.32%. OUR RATIO WAS 1.06%. THAT SAME 1.06% FOR PENN COMPARES
TO A NATIONAL AVERAGE OF 4.55%.
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FIRST QUARTER 2001
Chart: Loan Portfolio Activity
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COMMERCIAL AND CONSUMER LOAN ORIGINATIONS FOR THE QUARTER TOTALED $25
MILLION, AN INCREASE OF 25% FROM THE PRIOR YEAR'S QUARTER.
ON THE 1-4 FAMILY FRONT, THE COMPANY'S FISCAL 2001 STRATEGIES INCLUDE THE
SALE OF CONFORMING, FIXED-RATE, 1-4 FAMILY PRODUCTION. DURING THE QUARTER, LOANS
SOLD UNDER THIS STRATEGY TOTALED NEARLY $8 MILLION WITH GAINS TOTALING $107,000.
IN ADDITION, DURING THE QUARTER THE COMPANY SOLD $46 MILLION OF LONGER
DURATION 1-4 FAMILY MORTGAGE LOANS IN AN EFFORT TO IMPROVE FUNDING, LIQUIDITY,
INTEREST RATE RISK AND NET INTEREST MARGIN. THESE SALES RESULTED IN AN AFTER TAX
GAIN OF $134,000.
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FIRST QUARTER 2001
Chart: Loan Portfolio Composition
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<PAGE>
COMMERCIAL AND CONSUMER LOAN BALANCES TOTAL $196 MILLION AT SEPTEMBER 30,
2000, REFLECTING A 30% INCREASE FROM SEPTEMBER 30TH A YEAR AGO. THESE PORTFOLIOS
NOW COMPRISE 16% OF THE TOTAL LOAN PORTFOLIO COMPARED TO 14% ONE YEAR AGO -
REFLECTING THE CONTINUING GRADUAL SHIFT IN THE LOAN MIX TOWARD COMMERCIAL AND
CONSUMER LENDING.
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Q1 Results
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AS NOTED PREVIOUSLY, OUR ROSELAND BRANCH OPENED EARLIER IN THIS FISCAL
QUARTER. DEPOSITS CURRENTLY TOTAL OVER $11 MILLION, WITH 42% OF THAT AMOUNT IN
CORE DEPOSITS. THE NET COSTS ASSOCIATED WITH THIS BRANCH DURING THE QUARTER
AMOUNTED TO A PENNY PER SHARE. GIVEN OUR EARLY SUCCESS WITH DEPOSIT GATHERING,
WE ANTICIPATE THAT THIS BRANCH WILL HIT THE BREAKEVEN POINT BY THE END OF ITS
FIRST YEAR OF OPERATION.
DURING THE QUARTER ENDED, THE COMPANY CONTINUED TO FOCUS ON CAPITAL
MANAGEMENT BY REPURCHASING 317,000 SHARES OF STOCK, LEAVING ONLY 53,000 SHARES
TO BE REPURCHASED UNDER THE CURRENT PROGRAM AUTHORIZED IN APRIL 2000.
MORE DETAILS ABOUT OUR FIRST QUARTER PERFORMANCE ARE FEATURED IN OUR PRESS
RELEASE - AVAILABLE AT THE TABLE AS YOU LEAVE THE ROOM TODAY.
ALTHOUGH DILUTED EPS FOR THIS QUARTER REFLECTED 11% GROWTH FROM THE SAME
QUARTER LAST YEAR, WE WERE CERTAINLY NOT SATISFIED WITH OUR PERFORMANCE. WE HAVE
INTENSIFIED OUR EFFORTS ON SEVERAL FRONTS IN ORDER TO BETTER POSITION OURSELVES
FOR THE FUTURE.
<PAGE>
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Positioning for the Future: 2001 Strategic Initiatives
o Change in balance sheet composition - loan mix/core deposits
o Improve non-interest income
o Capital management
o Introduce Internet banking
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PENNFED'S STRATEGIC INITIATIVES FOR THE FUTURE CENTER ON FOUR KEY AREAS.
THESE INCLUDE:
- INCREASING OUR EFFORTS TO ADJUST OUR BALANCE SHEET COMPOSITION -
BOTH ON THE LOAN SIDE AND THE DEPOSIT SIDE,
- IMPROVING NON-INTEREST INCOME,
- CONTINUING OUR AGGRESSIVE CAPITAL MANAGEMENT, AND
- INTRODUCING INTERNET BANKING
OUR PLAN TO ACCOMPLISH THESE OBJECTIVES FEATURES SEVERAL KEY ELEMENTS:
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Positioning for the Future: 2001 Strategic Initiatives: How will we get
there
o Business Services
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<PAGE>
WE OFFER A FULL ARRAY OF TRADITIONAL BUSINESS PRODUCTS AND SERVICES, AS
WELL AS SOME UNIQUE BUSINESS PRODUCTS, SUCH AS BUSINESS OVERDRAFT PROTECTION AND
THE BUSINESS MANAGER PROGRAM.
PENNFED'S MIX OF DEPOSIT AND LENDING PRODUCTS FOR BUSINESSES IS
COMPETITIVELY PRICED, EASY TO USE AND CONVENIENT. WE WILL CONTINUE TO ADD TO AND
ENHANCE THESE PRODUCTS AND SERVICES AS NECESSARY - FOR EXAMPLE, A HIGH YIELDING
SWEEP ACCOUNT TO BE USED IN CONJUNCTION WITH COMMERCIAL CHECKING WILL BE
INTRODUCED DURING THE CURRENT QUARTER.
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Positioning for the Future: 2001 Strategic Initiatives: How will we get
there
o Business Services
o Business Development Officers/Sales Force
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IMPORTANT TO OUR SUCCESS WITH BUSINESS SERVICES IS A TALENTED,
RESULTS-ORIENTED STAFF THAT CAN CULTIVATE STRONG RELATIONSHIPS WITH THE BUSINESS
COMMUNITY. LATE IN OUR FIRST FISCAL QUARTER OF 2001, FOUR EXISTING EMPLOYEES
WERE SELECTED TO SERVE AS AN INTERIM BUSINESS DEVELOPMENT TEAM. THE
ESTABLISHMENT OF A PERMANENT TEAM IS UNDERWAY. THE GOAL OF OUR BUSINESS
DEVELOPMENT TEAM IS TO FOCUS SOLELY ON BUILDING BUSINESS RELATIONSHIPS. BY
AGGRESSIVELY PURSUING THESE RELATIONSHIPS WE WILL IMPROVE OUR BALANCE SHEET
COMPOSITION AND BENEFIT NON-INTEREST INCOME.
<PAGE>
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Positioning for the Future: 2001 Strategic Initiatives: How will we get
there
o Business Services
o Business Development Officers/Sales Force
o Expand core deposit products
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PENNFED WILL ALSO CONTINUE TO WORK DILIGENTLY TO EXPAND CORE DEPOSITS
THROUGH THE DEVELOPMENT AND PROMOTION OF PRODUCTS THAT MEET THE PUBLIC'S NEEDS.
EXAMPLES OF SOME OF THESE NEW PRODUCTS INCLUDE HIGHER YIELDING SAVINGS AND MONEY
MARKET ACCOUNTS FOR SELECT MARKETS, AS WELL AS THE INTRODUCTION OF THE
PREVIOUSLY MENTIONED SWEEP ACCOUNT FOR COMMERCIAL CHECKING ACCOUNTS.
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Positioning for the Future: 2001 Strategic Initiatives: How will we get
there
o Business Services
o Business Development Officers/Sales Force
o Expand core deposit products
o Commercial and consumer lending
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IN FISCAL YEAR 2001, WE WILL CONTINUE TO GROW OUR COMMERCIAL AND CONSUMER
LOAN PORTFOLIO. OUR INCREASED STAFF, NEW PRODUCTS AND SERVICES, TARGETED
MARKETING, AND BUSINESS DEVELOPMENT TEAM OF OFFICERS WILL SUPPORT THIS ENDEAVOR.
<PAGE>
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Positioning for the Future: 2001 Strategic Initiatives: How will we get
there
o Business Services
o Business Development Officers/Sales Force
o Expand core deposit products
o Commercial and consumer lending
o Targeted marketing
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TARGETED MARKETING EFFORTS, SUCCESSFUL IN THE PAST, WILL NARROW IN ON
CLEARLY DEFINED AREAS TO SUPPORT SALES. EFFORTS WILL INCLUDE ENHANCED DIRECT
MAIL PROGRAMS, SELECT PROMOTIONS AND SPECIAL OFFERINGS, AND THE DEVELOPMENT AND
MAINTENANCE OF MARKET-SPECIFIC PRODUCTS LIKE THE "SHORE SAVER" IN SOUTH JERSEY.
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Positioning for the Future: 2001 Strategic Initiatives: How will we get
there
o Business Services
o Business Development Officers/Sales Force
o Expand core deposit products
o Commercial and consumer lending
o Targeted Marketing
o Forward sales of fixed rate 1-4 family conforming loans
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AS A COMMUNITY BANK, WE WILL CONTINUE TO MAKE 1-4 FAMILY MORTGAGE LOANS. IN
AN EFFORT TO MANAGE FUNDING, LIQUIDITY, INTEREST RATE RISK AND MARGIN, AS WELL
AS GENERATE NON-INTEREST INCOME, CONFORMING BALANCE, FIXED RATE 1-4 FAMILY
MORTGAGE LOANS WILL BE REGISTERED FOR SALE. THE SALE OR RETENTION OF LOANS WILL
BE REGULARLY EVALUATED TO DETERMINE WHICH BETTER SERVES OUR RISK MANAGEMENT AND
LONG-TERM PROFITABILITY GOALS.
<PAGE>
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Positioning for the Future: 2001 Strategic Initiatives: How will we get
there
o Business Services
o Business Development Officers/Sales Force
o Expand core deposit products
o Commercial and consumer lending
o Targeted marketing
o Forward sales of fixed rate 1-4 family conforming loans
o Continue to evaluate stock repurchases
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PENNFED WILL ALSO CONTINUE TO AGRESSIVELY MANAGE CAPITAL. IN PARTICULAR,
STOCK REPURCHASE PROGRAMS, WILL CONTINUE TO BE EXAMINED AS A CAPITAL MANAGEMENT
TOOL.
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Positioning for the Future: 2001 Strategic Initiatives: How will we get
there
o Business Services
o Business Development Officers/Sales Force
o Expand core deposit products
o Commercial and consumer lending
o Targeted marketing
o Forward sales of fixed rate 1-4 family conforming loans
o Continue to evaluate stock repurchases
o Introduce Internet Banking
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FINALLY, IN THE THIRD QUARTER OF FISCAL YEAR 2001, PENNFED WILL INTRODUCE
INTERNET BANKING. THE PROGRAM FEATURES A FULL RANGE OF ON-LINE BANKING
OPPORTUNITIES, ENABLING CUSTOMERS TO CHECK BALANCES, TRANSFER FUNDS BETWEEN
ACCOUNTS, PAY BILLS, MANAGE CASH, AND APPLY FOR LOANS FROM THE COMFORT OF THEIR
HOME OR OFFICE.
<PAGE>
PAUSE
PENNFED CONTINUES TO ADAPT AND RE-ASSESS OUR DIRECTION, AS WE STRIVE TO
IMPROVE THE VALUE OF THE COMPANY.
I WOULD LIKE TO THANK YOU FOR YOUR ATTENTION. AND NOW, AT THIS TIME, I WILL
TURN THE MEETING BACK OVER TO OUR CHAIRMAN.
THANK YOU JOE. AT THIS POINT, I WOULD LIKE TO DISCUSS OUR COMPANY'S STOCK
PERFORMANCE.
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Graph: Stock Performance
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AS YOU CAN SEE FROM THIS CHART, THE MARKET PRICE OF OUR COMPANY'S STOCK
OVER THE LAST YEAR CONTINUED TO TRACK THE PERFORMANCE OF THE NASDAQ BANK INDEX
AND THE COMPANY'S PEER GROUP.
WITH RECENT MARKET VOLATILITY, PARTICULARLY IN TECHNOLOGY STOCKS, WE HAVE
SEEN INVESTORS' INTEREST RE-EMERGE IN BANK STOCKS. WE BELIEVE THAT GREATER
INTEREST AND HIGHER VALUATIONS ARE WARRANTED, PARTICULARLY WITH RESPECT TO
PENNFED STOCK.
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Chart: Pricing Multiple
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<PAGE>
PENNFED'S PRICING MULTIPLES ARE CURRENTLY BELOW THE MEAN AND MEDIAN OF ITS
PEER GROUP. PENNFED'S PRICE TO TANGIBLE BOOK VALUE RATIO OF 108% IS BELOW THE
MEDIAN OF 130% FOR ITS PEER GROUP. THE COMPANY'S STOCK IS TRADING AT 9.5 TIMES
EARNINGS, ALSO BELOW THE MEDIAN OF 10.5 TIMES EARNINGS FOR THE PEER GROUP. BASED
UPON OUR HISTORICAL EARNINGS GROWTH, OUR STRONG ASSET QUALITY AND OUR PLANS FOR
THE FUTURE, WE BELIEVE OUR LOWER VALUATION IS INAPPROPRIATE. SOME INVESTORS AND
ANALYSTS HAVE INDICATED THAT OUR LOWER TRADING MULTIPLES MAY BE PARTIALLY
REFLECTIVE OF OPINIONS THAT PENNFED WOULD NEVER CONSIDER A STRATEGIC MERGER.
MANAGEMENT AND THE BOARD TAKE THEIR FIDUCIARY RESPONSIBILITY SERIOUSLY AND
CONSTANTLY REVIEW WHAT WE FEEL ARE THE MOST APPROPRIATE STRATEGIC OPTIONS FOR
LONG TERM SHAREHOLDER VALUE. IN SUMMARY, AT CURRENT TRADING LEVELS, WE VIEW
PENNFED STOCK AS A VERY ATTRACTIVE INVESTMENT OPPORTUNITY.
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The Value of an Investment in Penn Fed
o Stock trading at a discount to peers
o Consistent double digit growth in EPS
o Experienced management team
o Significant insider ownership
o Well thought out strategic plan in place
o Transitioning business lines and will remain a low-risk, low-cost
provider of diversified financial service
o Actively manages capital and reviews strategic alternatives to
maximize shareholder value
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<PAGE>
AS YOU HAVE SEEN IN THIS PRESENTATION AND IN PREVIOUS COMMUNICATIONS FROM
THE COMPANY, PENNFED IS A VALUED INVESTMENT.
- WE ARE TRADING AT A DISCOUNT TO OUR PEERS.
- WE HAVE CONSISTENTLY SHOWN DOUBLE DIGIT GROWTH IN EPS.
- WE HAVE AN EXPERIENCED MANAGEMENT TEAM WITH SIGNIFICANT INSIDER
OWNERSHIP.
- WE HAVE A COMPREHENSIVE STRATEGIC PLAN IN PLACE.
- WE ARE TRANSITIONING BUSINESS LINES AND WILL REMAIN A LOW-RISK,
LOW-COST PROVIDER OF DIVERSIFIED FINANCIAL SERVICES.
- AND, WE CONTINUE TO ACTIVELY MANAGE CAPITAL AND CONSTANTLY REVIEW
STRATEGIC ALTERNATIVES IN ORDER TO MAXIMIZE SHAREHOLDER VALUE.
PAUSE
AT THIS TIME, I WISH TO ANNOUNCE THAT PENNFED FINANCIAL HAS DECLARED A
QUARTERLY CASH DIVIDEND IN THE AMOUNT OF 4 CENTS PER SHARE FOR OWNERS OF RECORD
ON NOVEMBER 10, 2000. THE DIVIDEND PAYMENT DATE HAS BEEN ESTABLISHED AS NOVEMBER
24, 2000. FURTHERMORE, I AM PLEASED TO ANNOUNCE THAT THE BOARD OF DIRECTORS HAS
AUTHORIZED ANOTHER 5% STOCK REPURCHASE PROGRAM TO BE IN EFFECT FOR THE NEXT 18
MONTHS.
(ANSWER QUESTIONS.)
<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: October 25, 2000 By: /s/ Joseph L. LaMonica
-----------------------------------
Joseph L. LaMonica
President and Chief
Executive Officer
