Provident Financial Services, Inc. Announces Increased Fourth Quarter and Full Year Earnings for 2012 and Declares Quarterly Cash Dividend

JERSEY CITY, N.J., Feb. 1, 2013 /PRNewswire/ -- Provident Financial Services, Inc. (NYSE: PFS) (the "Company") reported net income of $16.7 million, or $0.29 per basic and diluted share for the quarter ended December 31, 2012, compared to net income of $14.9 million, or $0.26 per basic and diluted share for the quarter ended December 31, 2011. 

For the year ended December 31, 2012, the Company reported net income of $67.3 million, or $1.18 per basic and diluted share, compared to net income of $57.3 million, or $1.01 per basic and diluted share for the same period last year. 

The increase in earnings for the fourth quarter and year ended December 31, 2012, was largely attributable to continued improvements in asset quality and related reductions in the provision for loan losses, inclusive of consideration for possible loan losses related to Superstorm Sandy, while growth in both average loans outstanding and average lower-costing core deposits more than offset the impact of compression in asset yields. 

Christopher Martin, Chairman, President and Chief Executive Officer, commented, "Our quarterly results were strong as loan growth eclipsed 7% annualized, while earnings per share of 29 cents continued our consistent trend of producing solid results.  We achieved record earnings in 2012, despite the challenging rate environment and a struggling, but improving regional economy.  The growth in our commercial lending and wealth management divisions produced excellent results, augmented by quality client relationships."  Martin continued: "We conservatively provided for the potential financial impact of Superstorm Sandy on customers with businesses and residences in parts of our market.  To help those communities that were the hardest hit, The Provident Bank Foundation has earmarked $250,000 to assist in their rebuilding efforts."

Declaration of Quarterly Dividend

The Company's Board of Directors declared a quarterly cash dividend of $0.13 per common share payable on February 28, 2013, to stockholders of record as of the close of business on February 15, 2013.

Balance Sheet Summary

Total assets increased $186.3 million to $7.28 billion at December 31, 2012, from $7.10 billion at December 31, 2011.  The increase was primarily due to increases in net loans and cash and cash equivalents, partially offset by a decline in total securities. 

Cash and cash equivalents increased $34.2 million to $103.8 million at December 31, 2012, from $69.6 million at December 31, 2011.  These cash balances are expected to be deployed to fund loan originations, the repayment of borrowings and investment purchases.

The Company's loans increased $251.2 million, or 5.4%, at December 31, 2012 to $4.90 billion from $4.65 billion at December 31, 2011.  Loan originations totaled $1.7 billion and loan purchases totaled $73.7 million for the year ended December 31, 2012.  The loan portfolio had net increases of $256.2 million in commercial and multi-family mortgage loans, $18.2 million in consumer loans, $17.4 million in commercial loans and $5.3 million in construction loans, which were partially offset by a decrease in residential mortgage loans of $43.6 million.  Commercial real estate, commercial and construction loans represented 62.4% of the loan portfolio at December 31, 2012, compared to 59.8% at December 31, 2011.

At December 31, 2012, the Company's unfunded loan commitments totaled $869.0 million, including $334.9 million in commercial loan commitments, $149.8 million in construction loan commitments and $97.2 million in commercial mortgage commitments.  Unfunded loan commitments at December 31, 2011 were $770.4 million.

Total investments decreased $102.4 million, or 5.8%, to $1.66 billion at December 31, 2012, from $1.76 billion at December 31, 2011.  The decrease was primarily due to principal repayments on mortgage-backed securities, maturities of municipal and agency bonds, and the sale of certain mortgage-backed securities which had a high risk of prepayment, partially offset by purchases of mortgage-backed and municipal securities.

Total deposits increased $271.7 million, or 5.3%, during the year ended December 31, 2012 to $5.43 billion from $5.16 billion at December 31, 2011.  Core deposits, consisting of savings and demand deposit accounts, increased $442.9 million, or 11.0%, to $4.47 billion at December 31, 2012.  Partially offsetting this increase, time deposits decreased $171.3 million, or 15.2%, to $957.5 million at December 31, 2012, with the majority of the decrease occurring in the 24-month and shorter maturity categories.  The Company continued to develop core deposit relationships, while strategically permitting the run-off of higher-costing time deposits.  Core deposits represented 82.4% of total deposits at December 31, 2012, compared to 78.1% at December 31, 2011.

Borrowed funds were reduced $116.9 million, or 12.7% during the year ended December 31, 2012, to $803.3 million, as core deposit growth continued to replace wholesale funding.  Borrowed funds represented 11.0% of total assets at December 31, 2012, a reduction from 13.0% at December 31, 2011.

Stockholders' equity increased $28.8 million, or 3.0% during the year ended December 31, 2012, to $981.2 million, primarily due to net income earned for the period, partially offset by dividends paid to stockholders and common stock repurchases.  Common stock repurchases for the three months and year ended December 31, 2012, totaled 271,045 shares at an average cost of $14.00 per share and 678,750 shares at an average cost of $13.89 per share, respectively.  As of December 31, 2012, 4.1 million shares remained eligible for repurchase.  At December 31, 2012, book value per share and tangible book value per share were $16.37 and $10.40, respectively, compared with $15.88 and $9.87, respectively, at December 31, 2011. 

Results of Operations

Net Interest Income and Net Interest Margin

For the three months ended December 31, 2012, net interest income increased $296,000 from the same period in 2011, to $54.2 million.  Net interest income for the year ended December 31, 2012, increased $1.3 million compared to 2011, to $217.3 million.  The improvements in net interest income for the three months and year ended December 31, 2012, resulted from an increase in average interest-earning assets, primarily average loans outstanding, funded with growth in lower-costing core deposits.  This improvement in earning asset volume and funding mix was partially offset by compression in the net interest margin.

The Company's net interest margin for the quarter ended December 31, 2012 was 3.29%, a decrease of 2 basis points from 3.31% for the quarter ended September 30, 2012, and 10 basis points from 3.39% for the quarter ended December 31, 2011.  The decrease in the net interest margin was primarily attributable to the decline in yields on interest-earning assets, which outpaced the downward re-pricing of the Company's interest-bearing liabilities as longer-term market interest rates have declined and the yield curve has flattened.  The weighted average yield on interest-earning assets was 3.92% for the three months ended December 31, 2012, compared with 3.99% for the trailing quarter, and 4.24% for the three months ended December 31, 2011.  The weighted average cost of interest-bearing liabilities was 0.77% for the quarter ended December 31, 2012, compared with 0.82% for the trailing quarter, and 0.99% for the fourth quarter of 2011.  The average cost of interest bearing deposits for the three months ended December 31, 2012 was 0.50%, compared with 0.54% for the trailing quarter, and 0.72% for the same period last year.  Partially offsetting the effects of interest rate spread compression on the margin, average non-interest bearing demand deposits totaled $840.1 million for the quarter ended December 31, 2012, compared with $771.4 million for the trailing quarter, and $680.1 million for the quarter ended December 31, 2011.  The average cost of borrowings for the three months ended December 31, 2012 was 2.29%, compared with 2.32% for the trailing quarter, and 2.34% for the same period last year.

For the year ended December 31, 2012, the net interest margin decreased 11 basis points to 3.38%, compared with 3.49% for the year ended December 31, 2011.  The weighted average yield on interest-earning assets declined 38 basis points to 4.08% for the year ended December 31, 2012, compared with 4.46% for the year ended December 31, 2011, while the weighted average cost of interest-bearing liabilities declined 30 basis points to 0.83% for the year ended December 31, 2012, compared with 1.13% for the same period in 2011.  The average cost of interest bearing deposits for the year ended December 31, 2012 was 0.56%, compared with 0.83% for the same period last year.  Average non-interest bearing demand deposits totaled $743.1 million for the year ended December 31, 2012, compared with $605.8 million for the year ended December 31, 2011.  The average cost of borrowings for the year ended December 31, 2012 was 2.26%, compared with 2.55% for the same period last year.

Non-Interest Income

Non-interest income totaled $11.8 million for the quarter ended December 31, 2012, an increase of $3.1 million, or 35.4%, compared to the same period in 2011.  The improvement in non-interest income was largely due to increases in both net gains from securities transactions and other income.   Net gains on securities transactions for the quarter ended December 31, 2012, increased $2.0 million.  During the period, the Company identified and sold certain mortgage-backed securities which had a high risk of accelerated prepayment.  The proceeds from the sales were reinvested in similar securities with more stable projected cash flows.  Other income increased $993,000 for the quarter December 31, 2012, compared to the same period in 2011, due to a $525,000 net gain recognized on the sale of a vacant parcel of land in the current period and losses previously recorded in 2011 related to the sale of the Company's former administrative facilities.  Also contributing to the improvement in other income was an increase in net gains on the sale of foreclosed real estate and an increase in gains related to loan sales. 

For the year ended December 31, 2012, non-interest income totaled $43.6 million, an increase of $11.1 million, or 34.0%, compared to the same period in 2011.  Fee income totaled $30.3 million for the year ended December 31, 2012, an increase of $4.9 million compared with the same period in 2011, largely due to an increase in wealth management fees attributable to the August 2011 acquisition of Beacon Trust Company ("Beacon") and increased prepayment fees on commercial loans, which were partially offset by lower overdraft fee income.  Net gains on securities transactions totaled $4.5 million for the year ended December 31, 2012, compared to $708,000 for the same period in 2011.  During the year, the Company identified and sold certain mortgage-backed securities which had a high risk of accelerated prepayment.  The proceeds from the sales were reinvested in similar securities with more stable projected cash flows.  Also contributing to the increase in non-interest income, other income increased $2.0 million for the year ended December 31, 2012, compared with the same period in 2011, primarily due to a $525,000 net gain recognized on the sale of a vacant parcel of land, $568,000 in income associated with the termination of the Company's debit card rewards program, losses previously recorded in 2011 related to the sale of the Company's former administrative facilities, and an increase in gains resulting from a larger number of loan sales.  Other-than-temporary impairment charges on investment securities declined $302,000 for the year ended December 31, 2012, compared to last year, as the Company did not experience any other-than-temporary impairment on its securities portfolio in 2012.

Non-Interest Expense

For the three months ended December 31, 2012, non-interest expense increased $1.2 million, or 3.2%, to $37.4 million, compared to the three months ended December 31, 2011.  Compensation and benefits increased $1.4 million for the quarter ended December 31, 2012, to $19.8 million, compared to the quarter ended December 31, 2011.  This increase was due to higher salary expense associated with annual merit increases, increased severance costs and increased employee medical and retirement benefit costs, partially offset by a reduction in the incentive compensation accrual.  Other operating expenses increased $403,000, to $6.9 million for the quarter ended December 31, 2012, from the same period in 2011, mainly due to $545,000 of net expenses related to damages sustained at one of the Company's branches in Superstorm Sandy, partially offset by a reduction in other operating expenses attributable to prior year costs of $227,000 associated with Hurricane Irene incurred in the quarter ended December 31, 2011.  Partially offsetting these increases, amortization of intangibles decreased $218,000 for the three months ended December 31, 2012, compared with the same period in 2011, as a result of scheduled reductions in core deposit intangible amortization.  FDIC insurance expense decreased $202,000 to $1.2 million for the three months ended December 31, 2012, compared with the same period in 2011, primarily due to a lower assessment rate.  Net occupancy expense decreased $163,000, to $5.2 million for the three months ended December 31, 2012, compared to the same period in 2011, primarily due to reduced property taxes and lower utilities and maintenance expense.

The Company's annualized non-interest expense as a percentage of average assets was 2.05% for the quarter ended December 31, 2012, compared to 2.04% for the same period in 2011.  The efficiency ratio (non-interest expense divided by the sum of net interest income and non-interest income) was 56.68% for the quarter ended December 31, 2012, compared with 57.85% for the same period in 2011. 

Non-interest expense for the year ended December 31, 2012 was $148.8 million, an increase of $6.4 million, or 4.5%, from the year ended December 31, 2011.  Compensation and benefits expense increased $6.0 million, to $80.9 million for the year ended December 31, 2012 compared to the year ended December 31, 2011, due to higher salary expense associated with annual merit increases, personnel added as a result of the Beacon acquisition, an increased incentive compensation accrual and increased employee medical and retirement benefit costs.  In addition, other operating expense increased $2.2 million for the year ended December 31, 2012, compared to the same period in 2011, due primarily to increased non-performing asset related expenses, net expenses incurred due to damages sustained in Super- storm Sandy, a $213,000 charge related to the termination of a software contract in connection with the Beacon integration and $222,000 in charges related to the consolidation of underperforming branches.  Data processing expense increased $818,000 for the year ended December 31, 2012, compared to the same period in 2011, due to an increase in software maintenance expense, primarily associated with technology enhancements at Beacon, and increased core processing fees.  Partially offsetting these increases, impairment of premises and equipment declined $807,000 for the year ended December 31, 2012, compared to last year, due to an impairment charge incurred in the first quarter of 2011 related to the then planned sale and relocation of the Company's former loan center.  FDIC insurance expense decreased $788,000 to $5.1 million for the year ended December 31, 2012, compared with the same period in 2011.  The decrease was primarily due to a lower assessment rate and a change in assessment methodology from a deposit-based to an asset-based assessment, effective in the second quarter of 2011.  Net occupancy expense decreased $644,000 to $20.5 million, compared to the same period last year, due to the consolidation and relocation of the Company's administrative offices in April 2011 and the elimination of prior year carrying costs on previously occupied facilities owned by the Company that were sold in November 2011. Additionally, amortization of intangibles decreased $564,000 for the year ended December 31, 2012, compared with the same period of 2011, as a result of scheduled reductions in core deposit intangible amortization, partially offset by the amortization of the customer relationship intangible arising from the Beacon acquisition.

Asset Quality

The Company's total non-performing loans at December 31, 2012, improved to $99.0 million, or 2.02% of total loans, compared with $105.7 million, or 2.19% of total loans at September 30, 2012, and $122.5 million, or 2.63% of total loans at December 31, 2011.  The $6.7 million decrease in non-performing loans at December 31, 2012, compared with the trailing quarter, was largely due to a $2.4 million decrease in non-performing residential loans, a $1.8 million decrease in non-performing commercial mortgage loans, a $1.7 million decrease in non-performing construction loans and a $1.2 million decrease in non-performing commercial loans.  At December 31, 2012, impaired loans totaled $109.6 million with related specific reserves of $7.2 million, compared with impaired loans totaling $114.4 million with related specific reserves of $8.4 million at September 30, 2012.  At December 31, 2011, impaired loans totaled $103.2 million with related specific reserves of $9.3 million.

At December 31, 2012, the Company's allowance for loan losses was 1.43% of total loans, compared with 1.46% of total loans at September 30, 2012, and 1.60% of total loans at December 31, 2011.  The Company recorded provisions for loan losses of $4.0 million and $16.0 million for the three months and year ended December 31, 2012, respectively, compared with provisions of $6.0 million and $28.9 million for the three months and year ended December 31, 2011, respectively.  The provision for loan losses for the three months and year ended December 31, 2012, included $1.5 million for possible loan losses related to Superstorm Sandy.  The Company had net charge-offs of $3.9 million and $20.0 million for the three months and year ended December 31, 2012, respectively, compared with net charge-offs of $5.3 million and $23.3 million, respectively, for the same periods in 2011.  The allowance for loan losses decreased $4.0 million to $70.3 million at December 31, 2012, from $74.4 million at December 31, 2011, as the weighted average risk rating of the loan portfolio improved and net non-performing asset disposition increased. 

At December 31, 2012, the Company held $12.5 million of foreclosed assets, compared with $12.8 million at December 31, 2011.  Foreclosed assets at December 31, 2012 consisted primarily of $6.5 million of commercial real estate, $5.0 million of residential real estate and $583,000 of marine vessels.

Income Tax Expense

For the three months ended December 31, 2012, the Company's income tax expense was $7.9 million, compared with $5.5 million for the same period in 2011.  For the year ended December 31, 2012, the Company's income tax expense was $28.9 million, compared with $19.8 million for the same period in 2011.  The Company's effective tax rates were 32.1% and 30.0%, respectively, for the three months and year ended December 31, 2012, compared with 27.0% and 25.7% for the three months and year ended December 31, 2011, respectively.  The increase in effective tax rates and income tax expense was primarily a function of growth in pre-tax income from taxable sources.  

About the Company

Provident Financial Services, Inc. is the holding company for The Provident Bank, a community-oriented bank offering a full range of retail and commercial loan and deposit products.  The Bank currently operates a network of full service branches throughout 11 counties in northern and central New Jersey.

Post Earnings Conference Call

Representatives of the Company will hold a conference call for investors at 10:00 a.m. Eastern Time on Friday, February 1, 2013 regarding highlights of the Company's quarter and year ended December 31, 2012 financial results.  The call may be accessed by dialing 1-877-317-6789 (Domestic) or 1-412-317-6789 (International).  Internet access to the call is also available (listen only) at www.providentnj.com by going to Investor Relations and clicking on Webcast.

Forward Looking Statements

Certain statements contained herein are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "estimate," "anticipate," "continue," or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those related to the economic environment, particularly in the market areas in which the Company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity.

The Company cautions readers not to place undue reliance on any such forward-looking statements which speak only as of the date made. The Company advises readers that the factors listed above 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. The Company does not undertake and specifically declines any obligation to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.


PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Consolidated Statements of Financial Condition

December 31, 2012 (Unaudited) and December 31, 2011

(Dollars in Thousands)










Assets



December 31,
2012

December 31,
2011










Cash and due from banks


$

101,850

$

68,553

Short-term investments



1,973


1,079




Total cash and cash equivalents



103,823


69,632










Securities available for sale, at fair value



1,264,002


1,376,119

Investment securities held to maturity (fair value of $374,916 at






    December 31, 2012 and $366,296 at December 31, 2011)



359,464


348,318

Federal Home Loan Bank of New York ("FHLB-NY") stock



37,543


38,927










Loans





4,904,699


4,653,509


Less allowance for loan losses



70,348


74,351




Net loans



4,834,351


4,579,158










Foreclosed assets, net



12,473


12,802

Banking premises and equipment, net



66,120


66,260

Accrued interest receivable



24,002


24,653

Intangible assets




357,907


360,714

Bank-owned life insurance



147,286


142,010

Other assets





76,724


78,810




Total assets


$

7,283,695

$

7,097,403










Liabilities and Stockholders' Equity















Deposits:









Demand deposits


$

3,556,011

$

3,136,129


Savings deposits



914,787


891,742


Certificates of deposit of $100,000 or more



324,901


383,174


Other time deposits



632,572


745,552




Total deposits



5,428,271


5,156,597










Mortgage escrow deposits



21,238


20,955

Borrowed funds



803,264


920,180

Other liabilities



49,676


47,194




Total liabilities



6,302,449


6,144,926










Stockholders' Equity:






Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued




Common stock, $0.01 par value, 200,000,000 shares authorized, 83,209,293 shares






    issued and 59,937,955 outstanding at December 31, 2012, and 59,968,195






    outstanding at December 31, 2011



832


832

Additional paid-in capital



1,021,507


1,019,253

Retained earnings



389,549


363,011

Accumulated other comprehensive income



7,716


9,571

Treasury stock





(386,270)


(384,725)

Unallocated common stock held by the Employee Stock Ownership Plan ("ESOP")



(52,088)


(55,465)

Common Stock acquired by the Directors' Deferred Fee Plan ("DDFP")



(7,298)


(7,390)

Deferred Compensation - DDFP



7,298


7,390




Total stockholders' equity



981,246


952,477




Total liabilities and stockholders' equity


$

7,283,695

$

7,097,403

 


PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Consolidated Statements of Income

Three Months and Year Ended December 31, 2012 (Unaudited) and 2011

(Dollars in Thousands, except per share data)


















Three Months Ended


Year Ended






December 31,


December 31,






2012


2011


2012


2011

Interest income:











Real estate secured loans

$

38,903

$

39,306

$

155,078

$

158,731


Commercial loans


10,125


10,892


40,942


42,759


Consumer loans


6,241


6,348


25,208


25,793


Securities available for sale and FHLB-NY stock


6,398


7,689


29,141


36,157


Investment securities


2,912


2,991


11,808


12,160


Deposits, Federal funds sold and other short-term investments


24


38


82


119



Total interest income


64,603


67,264


262,259


275,719













Interest expense:











Deposits




5,688


8,113


25,348


36,552


Borrowed funds


4,708


5,240


19,574


23,177



Total interest expense


10,396


13,353


44,922


59,729



Net interest income


54,207


53,911


217,337


215,990













Provision for loan losses


4,000


6,000


16,000


28,900



Net interest income after provision for loan losses


50,207


47,911


201,337


187,090













Non-interest income:










Fees




7,318


7,366


30,336


25,418


Bank owned life insurance


1,381


1,244


5,276


5,242


Other-than-temporary impairment losses on securities





(1,661)


Portion of loss recognized in OCI (before taxes)





1,359


Net impairment losses recognized in earnings





(302)


Net gain on securities transactions


2,015


22


4,497


708


Other income


1,038


45


3,504


1,476



Total non-interest income


11,752


8,677


43,613


32,542













Non-interest expense:










Compensation and employee benefits


19,790


18,428


80,874


74,904


Net occupancy expense


5,157


5,320


20,487


21,131


Data processing expense


2,556


2,506


10,318


9,500


FDIC Insurance


1,198


1,400


5,095


5,883


Amortization of intangibles


498


716


2,466


3,030


Impairment of premises and equipment





807


Advertising and promotion expense


1,290


1,346


4,139


3,951


Other operating expenses


6,896


6,493


25,449


23,240



Total non-interest expenses


37,385


36,209


148,828


142,446



Income before income tax expense


24,574


20,379


96,122


77,186

Income tax expense


7,892


5,509


28,855


19,842



Net income

$

16,682

$

14,870

$

67,267

$

57,344













Basic earnings per share

$

0.29

$

0.26

$

1.18

$

1.01

Average basic shares outstanding


57,183,704


56,898,336


57,145,868


56,856,083













Diluted earnings per share

$

0.29

$

0.26

$

1.18

$

1.01

Average diluted shares outstanding


57,235,473


56,910,915


57,199,804


56,868,524

 

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Consolidated Financial Highlights

(Dollars in Thousands, except share data) (Unaudited)





















At or for the



At or for the






Three Months Ended



Year Ended






December 31,



December 31,






2012



2011



2012



2011

STATEMENTS OF INCOME:












Net interest income


$

54,207


$

53,911


$

217,337


$

215,990

Provision for loan losses



4,000



6,000



16,000



28,900

Non-interest income



11,752



8,677



43,613



32,542

Non-interest expense



37,385



36,209



148,828



142,446

Income before income tax expense


24,574



20,379



96,122



77,186

Net income




16,682



14,870



67,267



57,344

Diluted earnings per share



$0.29



$0.26



$1.18



$1.01

Interest rate spread



3.15%



3.25%



3.25%



3.33%

Net interest margin



3.29%



3.39%



3.38%



3.49%
















PROFITABILITY:













Annualized return on average assets


0.91%



0.84%



0.94%



0.83%

Annualized return on average equity


6.69%



6.18%



6.88%



6.09%

Annualized non-interest expense to average assets


2.05%



2.04%



2.08%



2.07%

Efficiency ratio (1)



56.68%



57.85%



57.03%



57.31%
















ASSET QUALITY:













Non-accrual loans








$

98,990


$

122,549

90+ and still accruing











Non-performing loans









98,990



122,549

Foreclosed assets









12,473



12,802

Non-performing assets









111,463



135,351

Non-performing loans to total loans








2.02%



2.63%

Non-performing assets to total assets








1.53%



1.91%

Allowance for loan losses








$

70,348


$

74,351

Allowance for loan losses to total non-performing loans








71.07%



60.67%

Allowance for loan losses to total loans








1.43%



1.60%
















AVERAGE BALANCE SHEET DATA:












Assets



$

7,269,482


$

7,041,992


$

7,170,941


$

6,893,107

Loans, net




4,772,099



4,528,380



4,658,422



4,423,125

Earning assets


6,525,784



6,289,331



6,431,555



6,158,329

Core deposits


4,419,871



3,992,536



4,226,283



3,777,647

Borrowings




818,122



888,027



864,728



909,531

Interest-bearing liabilities



5,378,558



5,352,132



5,389,461



5,294,623

Stockholders' equity



992,375



954,563



977,758



941,428

Average yield on interest-earning assets


3.92%



4.24%



4.08%



4.46%

Average cost of interest-bearing liabilities


0.77%



0.99%



0.83%



1.13%
















LOAN DATA:












Mortgage loans:














Residential







$

1,265,015


$

1,308,635


Commercial








1,349,950



1,253,542


Multi-family









723,958



564,147


Construction









120,133



114,817

Total mortgage loans









3,459,056



3,241,141


Commercial loans









866,395



849,009


Consumer loans









579,166



560,970

Total gross loans









4,904,617



4,651,120


Premium on purchased loans








4,964



5,823


Unearned discounts









(78)



(100)


Net deferred









(4,804)



(3,334)

Total loans









$

4,904,699


$

4,653,509

















 


Notes





























(1) Efficiency Ratio Calculation

















Three Months Ended



Year Ended






December 31,



December 31,






2012



2011



2012



2011


Net interest income


$

54,207


$

53,911


$

217,337


$

215,990


Non-interest income



11,752



8,677



43,613



32,542


Total income:


$

65,959


$

62,588


$

260,950


$

248,532

















Non-interest expense:


$

37,385


$

36,209


$

148,828


$

142,446

















Expense/income:



56.68%



57.85%



57.03%



57.31%

 

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Net Interest Margin Analysis

Quarterly Average Balances

(Unaudited) (Dollars in Thousands)






































December 31, 2012


September 30, 2012






Average




Average


Average




Average






Balance


Interest


Yield


Balance


Interest


Yield


Interest-Earning Assets:















Deposits


$

37,442

$

24


0.25%

$

66,040

$

42


0.25%



Federal funds sold and















     other short-term investments     


1,738



0.14%


1,461



0.02%



Investment securities  (1)


350,890


2,912


3.32%


356,052


2,987


3.36%



Securities available for sale


1,325,804


5,963


1.80%


1,315,366


6,138


1.87%



Federal Home Loan Bank stock


37,811


435


4.58%


38,489


461


4.77%



Net loans:   (2)















     Total mortgage loans


3,380,309


38,903


4.55%


3,260,435


38,544


4.68%



     Total commercial loans


812,727


10,125


4.91%


822,093


10,242


4.94%



     Total consumer loans


579,063


6,241


4.29%


575,680


6,343


4.38%



  Total net loans


4,772,099


55,269


4.58%


4,658,208


55,129


4.68%



  Total Interest-Earning Assets

$

6,525,784

$

64,603


3.92%

$

6,435,616

$

64,757


3.99%


















Non-Interest Earning Assets:















Cash and due from banks      


80,974






82,849







Other assets


662,724






660,647







Total Assets

$

7,269,482





$

7,179,112






















Interest-Bearing Liabilities:















Demand deposits

$

2,675,980

$

2,293


0.34%

$

2,601,626

$

2,543


0.39%



Savings deposits


903,774


339


0.15%


902,458


365


0.16%



Time deposits


980,682


3,056


1.24%


1,018,517


3,247


1.27%



Total Deposits


4,560,436


5,688


0.50%


4,522,601


6,155


0.54%



Borrowed funds


818,122


4,708


2.29%


837,728


4,887


2.32%



  Total Interest-Bearing Liabilities


5,378,558


10,396


0.77%


5,360,329


11,042


0.82%


















Non-Interest Bearing Liabilities


898,549






835,051







Total Liabilities


6,277,107






6,195,380







Stockholders' equity


992,375






983,732







Total Liabilities and Stockholders' Equity

7,269,482





$

7,179,112






















Net interest income



$

54,207





$

53,715


















3.17%


Net interest rate spread






3.15%








Net interest-earning assets

$

1,147,226





$

1,075,287






















Net interest margin (3)






3.29%






3.31%


Ratio of interest-earning assets to














  total interest-bearing liabilities


1.21

x





1.20

x


















 


(1)     Average outstanding balance amounts shown are amortized cost.

(2)     Average outstanding balances are net of the allowance for loan losses, deferred loan fees and 
                 expenses, loan premiums and discounts and include non-accrual loans.

(3)     Annualized net interest income divided by average interest-earning assets.

 


The following table summarizes the quarterly net interest margin for the previous five quarters.
















12/31/12


9/30/12


6/30/12


3/31/12


12/31/11




4th Qtr.


3rd Qtr.


2nd Qtr.


1st Qtr.


4th Qtr.

Interest-Earning Assets:












Securities



2.13%


2.17%


2.42%


2.54%


2.44%

Net loans



4.58%


4.68%


4.76%


4.83%


4.94%

    Total interest-earning assets



3.92%


3.99%


4.11%


4.19%


4.24%













Interest-Bearing Liabilities:












Total deposits



0.50%


0.54%


0.58%


0.62%


0.72%

Total borrowings



2.29%


2.32%


2.20%


2.25%


2.34%

    Total interest-bearing liabilities



0.77%


0.82%


0.85%


0.90%


0.99%













Interest rate spread



3.15%


3.17%


3.26%


3.29%


3.25%

Net interest margin



3.29%


3.31%


3.39%


3.42%


3.39%













Ratio of interest-earning assets to interest-bearing liabilities



1.21x


1.20x


1.18x


1.18x


1.18x

 

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Net Interest Margin Analysis

Average Year to Date Balances

(Unaudited) (Dollars in Thousands)



































December 31, 2012




December 31, 2011





Average



Average




Average



Average





Balance


Interest

Yield




Balance


Interest

Yield

Interest-Earning Assets:














Deposits

$

32,200

$

81

0.25%



$

47,727

$

119

0.25%


Federal funds sold and














     other short-term investments     


1,439


1

0.09%




1,457


0.01%


Investment securities  (1)


351,981


11,808

3.35%




345,528


12,160

3.52%


Securities available for sale


1,348,376


27,327

2.03%




1,302,233


34,393

2.64%


Federal Home Loan Bank stock


39,137


1,814

4.63%




38,259


1,764

4.61%


Net loans:  (2)









.





     Total mortgage loans


3,273,458


155,078

4.74%




3,102,662


158,731

5.08%


     Total commercial loans


812,575


40,942

5.04%




765,228


42,759

5.56%


     Total consumer loans


572,389


25,208

4.40%




555,235


25,793

4.64%


  Total net loans


4,658,422


221,228

4.75%




4,423,125


227,283

5.11%


  Total Interest-Earning Assets

$

6,431,555

$

262,259

4.08%



$

6,158,329

$

275,719

4.46%
















Non-Interest Earning Assets:














Cash and due from banks      


77,489







77,823





Other assets


661,897







656,955





Total Assets

$

7,170,941






$

6,893,107



















Interest-Bearing Liabilities:














Demand deposits

$

2,581,802

$

10,292

0.40%



$

2,272,780

$

15,168

0.67%


Savings deposits


901,398


1,449

0.16%




899,020


2,971

0.33%


Time deposits


1,041,533


13,607

1.31%




1,213,292


18,413

1.52%


Total Deposits


4,524,733


25,348

0.56%




4,385,092


36,552

0.83%

















Borrowed funds


864,728


19,574

2.26%




909,531


23,177

2.55%


   Total Interest-Bearing Liabilities


5,389,461


44,922

0.83%




5,294,623


59,729

1.13%
















Non-Interest Bearing Liabilities


803,722







657,056





Total Liabilities


6,193,183







5,951,679





Stockholders' equity


977,758







941,428





Total Liabilities and Stockholders' Equity

7,170,941






$

6,893,107



















Net interest income



$

217,337






$

215,990

















Net interest rate spread





3.25%







3.33%

Net interest-earning assets

$

1,042,094






$

863,706



















Net interest margin    (3)





3.38%







3.49%

Ratio of interest-earning assets to













      total interest-bearing liabilities


1.19

x






1.16

x



 



(1)     Average outstanding balance amounts shown are amortized cost.

(2)     Average outstanding balances are net of the allowance for loan losses, deferred loan fees and
                 expenses, loan premiums and discounts and include non-accrual loans.

(3)     Annualized net interest income divided by average interest-earning assets.

 


The following table summarizes the year-to-date net interest margin for the previous three years.



















Year Ended









12/31/12


12/31/11


12/31/10






Interest-Earning Assets:













Securities



2.32%


2.79%


3.15%






Net loans



4.75%


5.11%


5.39%






    Total interest-earning assets



4.08%


4.46%


4.73%



















Interest-Bearing Liabilities:













Total deposits



0.56%


0.83%


1.09%






Total borrowings



2.26%


2.55%


3.18%






    Total interest-bearing liabilities



0.83%


1.13%


1.46%



















Interest rate spread



3.25%


3.33%


3.27%






Net interest margin



3.38%


3.49%


3.45%



















Ratio of interest-earning assets to interest-bearing liabilities

1.19x


1.16x


1.14x


















 

SOURCE Provident Financial Services, Inc.



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