Provident Financial Services, Inc. Announces Increased Quarterly Earnings and Declares Quarterly Cash Dividend

29 Jul, 2011, 07:45 ET from Provident Financial Services, Inc.

JERSEY CITY, N.J., July 29, 2011 /PRNewswire/ -- Provident Financial Services, Inc. (NYSE: PFS) (the "Company") reported net income of $14.0 million, or $0.25 per basic and diluted share for the quarter ended June 30, 2011, compared to net income of $12.9 million, or $0.23 per basic and diluted share for the quarter ended June 30, 2010.  

For the six months ended June 30, 2011, the Company reported net income of $26.9 million, or $0.47 per basic and diluted share, compared to net income of $24.1 million, or $0.43 per basic and diluted share for the same period last year.  

The second quarter and year-to-date results for the period ended June 30, 2011 continued to benefit from lower funding costs, with net interest income increasing $2.0 million and $4.7 million, respectively, compared with the same periods in 2010.  The provision for loan losses decreased $1.5 million and $2.6 million for the three and six months ended June 30, 2011, respectively, compared with the same periods in 2010.  These improvements were partially offset by increases in non-interest expense of $2.0 million and $2.6 million for the three and six month period ended June 30, 2011, respectively, compared with the same periods in 2010.

Christopher Martin, Chairman, President and Chief Executive Officer, commented: "The improvement in our current quarter's earnings of more than 8% reaffirms our belief that we can produce solid, consistent results in a challenging environment.  The increase in our earnings was driven primarily by lower funding costs and reduced loan loss provisions, as early stage delinquencies have declined."  Martin continued: "With unemployment in New Jersey hovering near 9.5%, any potential growth for small businesses will be constrained, and economic uncertainty will continue to pressure consumers.  One year after the passage of the Dodd-Frank legislation, the outlook for the banking industry remains clouded and complex, affecting customers and competitors alike.  On a more positive note, we look forward to completing the acquisition of Beacon Trust Company in the coming quarter to further expand our customer base, while continuing to diversify our earnings sources."

Declaration of Quarterly Dividend

The Company's Board of Directors declared a quarterly cash dividend of $0.12 per common share payable on August 31, 2011, to stockholders of record as of the close of business on August 15, 2011.

Balance Sheet Summary

Total assets increased $55.0 million, or 0.8%, to $6.88 billion at June 30, 2011, from $6.82 billion at December 31, 2010, due primarily to increases in cash and cash equivalents and net loans, partially offset by a decline in securities available for sale.  

Cash and cash equivalents increased $135.1 million to $187.3 million at June 30, 2011, from $52.2 million at December 31, 2010.  These cash balances will be deployed to fund loan originations and investment purchases.

Total investments decreased $125.5 million, or 7.1%, during the six months ended June 30, 2011.  The decrease was primarily due to principal repayments on mortgage-backed securities and maturities.  

The Company's net loans increased $40.5 million, or 0.9%, to $4.38 billion at June 30, 2011, from $4.34 billion at December 31, 2010.  Loan originations totaled $602.4 million and loan purchases totaled $59.0 million for the six months ended June 30, 2011.  The loan portfolio had net increases of $39.9 million in multi-family mortgage loans, $22.3 million in commercial mortgage loans and $42.2 million in commercial loans, partially offset by decreases of $34.4 million in construction loans, $14.0 million in consumer loans and $11.1 million in residential mortgage loans.  Commercial real estate, commercial and construction loans represented 56.6% of the loan portfolio at June 30, 2011, compared to 55.6% at December 31, 2010.

At June 30, 2011, the Company's unfunded loan commitments totaled $804.1 million, including $279.0 million in commercial loan commitments, $116.3 million in construction loan commitments and $97.0 million in commercial mortgage commitments.  Unfunded loan commitments at March 31, 2011 were $723.0 million.

Foreclosed assets increased $3.9 million, to $6.8 million at June 30, 2011, from $2.9 million at December 31, 2010. Foreclosed assets consisted of $4.4 million of residential properties, $1.2 million of commercial real estate and $1.2 million of marine vessels at June 30, 2011.

Total deposits increased $115.2 million, or 2.4%, during the six months ended June 30, 2011 to $4.99 billion.  Core deposits, consisting of savings and demand deposit accounts, increased $170.8 million, or 4.7%, to $3.77 billion at June 30, 2011.  The majority of the core deposit increase was in commercial and retail checking deposits, money market and savings deposits.  Time deposits decreased $55.6 million, or 4.3%, to $1.22 billion at June 30, 2011, with the majority of the decrease occurring in the 15-month and shorter maturity categories.  The Company remains focused on cultivating core deposit relationships, while strategically permitting the run-off of certain higher-cost time deposits.  Core deposits represented 75.5% of total deposits at June 30, 2011, compared to 73.8% at December 31, 2010.    

Borrowed funds were reduced $78.6 million, or 8.1% during the six months ended June 30, 2011, to $891.1 million, as wholesale funding was replaced with core deposit growth.  Borrowed funds represented 13.0% of total assets at June 30, 2011, a reduction from 14.2% at December 31, 2010.

Stockholders' equity increased $16.8 million, or 1.8% during the six months ended June 30, 2011 to $938.5 million, primarily due to net income earned for the period, offset by dividends paid to stockholders.   At June 30, 2011, book value per share and tangible book value per share were $15.63 and $9.76, respectively, compared with $15.38 and $9.47, respectively, at December 31, 2010.  

Results of Operations

Net Interest Margin

The Company's net interest margin for the quarter ended June 30, 2011 was 3.53%, which reflects increases of 2 basis points from 3.51% for the quarter ended March 31, 2011, and 5 basis points from 3.48% for the quarter ended June 30, 2010.  The increase in the net interest margin for the three months ended June 30, 2011, compared to the trailing quarter and the quarter ended June 30, 2010, was primarily attributable to decreases in the cost of interest-bearing liabilities.  The weighted average yield on interest-earning assets was 4.56% for the three months ended June 30, 2011, compared with 4.58% for the trailing quarter, and 4.81% for the three months ended June 30, 2010.  The weighted average cost of interest-bearing liabilities was 1.19% for the quarter ended June 30, 2011, compared with 1.23% for the trailing quarter and 1.51% for the second quarter of 2010.  The average cost of deposits for the three months ended June 30, 2011 was 0.89%, compared with 0.92% for the trailing quarter and 1.13% for the same period last year.  The average cost of borrowings for the three months ended June 30, 2011 was 2.65%, compared with 2.70% for the trailing quarter, and 3.27% for the same period last year.  

For the six months ended June 30, 2011, the net interest margin increased 10 basis points to 3.52%, compared with 3.42% for the six months ended June 30, 2010.  The weighted average yield on interest-earning assets declined 23 basis points to 4.57% for the six months ended June 30, 2011, compared with 4.80% for the six months ended June 30, 2010, however the weighted average cost of interest-bearing liabilities declined 37 basis points to 1.21% for the six months ended June 30, 2011, compared with 1.58% for the same period in 2010.  The average cost of deposits for the six months ended June 30, 2011 was 0.90%, compared with 1.19% for the same period last year.  The average cost of borrowings for the six months ended June 30, 2011 was 2.67%, compared with 3.32% for the same period last year.

Non-Interest Income

Non-interest income totaled $8.0 million for the quarter ended June 30, 2011, an increase of $70,000 compared to the same period in 2010.  Other income for the quarter ended June 30, 2011 totaled $1.2 million, an increase of $759,000 compared to the same period in 2010, primarily due to gains realized from increased loan sales.  This increase was offset by a decrease in income related to Bank-owned life insurance of $512,000 for the three month period ended June 30, 2011, compared to the same period last year, as a result of policy claim proceeds received in 2010.  Additionally, the Company recognized net other-than-temporary impairment charges on investment securities of $302,000 and $170,000 in the second quarter of 2011 and 2010, respectively, related to an investment in a non-Agency mortgage-backed security.  

For the six months ended June 30, 2011, non-interest income totaled $15.2 million, a decrease of $767,000, or 4.8%, compared to the same period in 2010.  Net gains on securities transactions declined $789,000 for the six months ended June 30, 2011, compared with the same period in 2010.  These net gains on securities transactions totaled $28,000 for the six months ended June 30, 2011, compared with net gains of $817,000 for the same period in 2010.  Current period activity was comprised of gains realized on the calls of securities, while the prior year period included gains realized on the sale of securities undertaken as part of the Company's interest rate risk management process.  Also, income related to Bank-owned life insurance decreased $502,000 for the six month period ended June 30, 2011, compared to the same period last year, due to the receipt of policy claim proceeds in the second quarter of 2010.  The Company recognized net other-than-temporary impairment charges of $302,000 and $170,000 during the six months ended June 30, 2011 and June 30, 2010, respectively.  Offsetting these declines, other income increased $855,000 for the six months ended June 30, 2011, compared with the same period in 2010, primarily as a result of an increase in gains resulting from a larger number of loan sales.

Non-Interest Expense

For the three months ended June 30, 2011, non-interest expense increased $2.0 million, or 5.9%, to $35.9 million, compared to $33.9 million for the three months ended June 30, 2010.  Compensation and benefits expense increased $1.5 million for the three months ended June 30, 2011, compared with the same period in 2010, as result of higher salary expense due to annual merit increases, an increased incentive compensation accrual, increased stock-based compensation expense resulting from the higher share price of the Company's common stock and increased employee health and medical costs.  In addition, other operating expenses increased $818,000 for the quarter ended June 30, 2011, compared with the same period last year, due to expenses associated with the resolution of non-performing assets.  Net occupancy expense increased $333,000, or 6.8%, to $5.3 million for the three months ended June 30, 2011, compared to $4.9 million for the same period in 2010, primarily due to expenses associated with the Company's consolidation of three facilities into its new administrative offices in April of this year.  Pending the sale of two of those facilities, certain carrying costs, including taxes and utilities, will continue to be incurred.  Partially offsetting these increases, FDIC insurance expense decreased $451,000, or 26.0% to $1.3 million for the three months ended June 30, 2011, compared with $1.7 million for the same period in 2010, due to the change in assessment methodology from deposit-based to one which is based upon assets.  Amortization of intangibles decreased $255,000 for the three months ended June 30, 2011, compared with the same period in 2010, as a result of scheduled reductions in core deposit intangible amortization.

Non-interest expense for the six months ended June 30, 2011 was $71.3 million.  Non-interest expense increased $2.6 million, or 3.8%, from $68.7 million for the six months ended June 30, 2010.  Compensation and benefits expense increased $2.4 million, or 7.0% to $37.3 million for the six months ended June 30, 2011 compared to $34.8 million for the six month period ended June 30, 2010, due to higher salary expense related to annual merit increases, increased stock-based compensation expense resulting from the higher share price of the Company's common stock and increased employee health and medical costs.  In addition, net occupancy expense increased $467,000, or 4.6% to $10.5 million, compared to $10.1 million for the same period in 2010, due to expenses associated with the relocation of the Company's administrative offices and carrying costs on previously occupied facilities owned by the Company, which are pending sale.  The Company also recognized an $807,000 impairment charge in the first quarter of 2011, related to the anticipated sale and relocation of its former loan center.  Partially offsetting these increases, FDIC insurance expense decreased $670,000 to $3.2 million for the six months ended June 30, 2011, compared with $3.8 million for the same period in 2010.  The decrease was primarily due to a lower assessment rate charged on deposits and a change in assessment methodology from a deposit-based to an asset-based assessment, effective in the second quarter of 2011.  Additionally, amortization of intangibles decreased $518,000 for the six months ended June 30, 2011, compared with the same period of 2010, as a result of scheduled reductions in core deposit intangible amortization.

Asset Quality

Total non-performing loans at June 30, 2011 were $121.3 million, or 2.72% of total loans, compared with $114.6 million, or 2.57% of total loans at March 31, 2011, $97.3 million, or 2.21% of total loans at December 31, 2010, and $93.2 million, or 2.15% of total loans at June 30, 2010.  The $6.8 million increase in non-performing loans at June 30, 2011, compared with the trailing quarter, consisted of a $16.4 million increase in commercial mortgages and a $4.3 million increase in commercial loans, offset by decreases of $9.1 million and $3.9 million in non-performing commercial construction loans and residential mortgage loans, respectively.  At June 30, 2011, impaired loans totaled $82.3 million with related specific reserves of $3.0 million, compared with impaired loans totaling $67.8 million with related specific reserves of $5.2 million at March 31, 2011.  At June 30, 2011, the Company's allowance for loan losses was 1.62% of total loans, compared with 1.63% of total loans at March 31, 2011, 1.56% of total loans at December 31, 2010 and 1.42% of total loans at June 30, 2010.  

The Company recorded provisions for loan losses of $7.5 million and $15.4 million for the three and six months ended June 30, 2011, respectively, compared with provisions of $9.0 million and $18.0 million for the three and six months ended June 30, 2010, respectively.  For the three and six months ended June 30, 2011, the Company had net charge-offs of $7.9 million and $11.8 million, respectively, compared with net charge-offs of $6.5 million and $17.3 million, respectively, for the same periods in 2010.  The allowance for loan losses increased $3.6 million to $72.3 million at June 30, 2011, from $68.7 million at December 31, 2010.  At June 30, 2011, the Company held $6.8 million of foreclosed assets, compared with $2.9 million at December 31, 2010.      

Income Tax Expense

For the three months ended June 30, 2011, the Company's income tax expense was $4.8 million, compared with $4.2 million for the same period in 2010.  For the six months ended June 30, 2011, the Company's income tax expense was $9.2 million, compared with $8.1 million for the same period in 2010.  The increase in income tax expense was primarily attributable to higher pre-tax income. The Company's effective tax rates were 25.6% for both the three and six months ended June 30, 2011, compared with 24.7% and 25.1% for the three and six months ended June 30, 2010, respectively.  

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 82 full service branches throughout 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, July 29, 2011 regarding highlights of the Company's second quarter 2011 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 Condition

June 30, 2011 (Unaudited) and December 31, 2010

(Dollars in Thousands)

Assets

June 30,

2011

December 31,

2010

Cash and due from banks

$

185,550

51,345

Short-term investments

1,739

884

Total cash and cash equivalents

187,289

52,229

Securities available for sale, at fair value

1,250,346

1,378,927

Investment securities held to maturity (fair value of $359,547) at

June 30, 2011 (unaudited) and $351,680 at December 31, 2010)

348,794

346,022

Federal Home Loan Bank stock

38,575

38,283

Loans

4,453,892

4,409,813

Less allowance for loan losses

72,294

68,722

Net loans

4,381,598

4,341,091

Foreclosed assets, net

6,803

2,858

Banking premises and equipment held for sale

9,940

Banking premises and equipment, net

66,058

74,257

Accrued interest receivable

24,008

25,257

Intangible assets

352,666

354,220

Bank-owned life insurance

139,492

136,768

Other assets

73,976

74,616

Total assets

$

6,879,545

6,824,528

Liabilities and Stockholders' Equity

Deposits:

Demand deposits

$

2,835,453

2,706,204

Savings deposits

934,815

893,268

Certificates of deposit of $100,000 or more

411,620

412,155

Other time deposits

811,075

866,107

Total deposits

4,992,963

4,877,734

Mortgage escrow deposits

22,554

19,558

Borrowed funds

891,128

969,683

Other liabilities

34,445

35,866

Total liabilities

5,941,090

5,902,841

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 60,034,454 outstanding at June 30, 2011, and 59,921,065 outstanding at December 31, 2010

832

832

Additional paid-in capital

1,019,135

1,017,315

Retained earnings

345,475

332,472

Accumulated other comprehensive income

15,608

14,754

Treasury stock

(385,394)

(385,094)

Unallocated common stock held by the Employee Stock Ownership Plan

(57,201)

(58,592)

Common Stock acquired by the Directors' Deferred Fee Plan

(7,436)

(7,482)

Deferred Compensation - Directors' Deferred Fee Plan

7,436

7,482

Total stockholders' equity

938,455

921,687

Total liabilities and stockholders' equity

$

6,879,545

6,824,528

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Consolidated Statements of Income

Three and six months ended June 30, 2011 and 2010 (Unaudited)

(Dollars in Thousands, except per share data)

Three Months Ended

Six Months Ended

June 30,

June 30,

2011

2010

2011

2010

Interest income:

Real estate secured loans

$

39,669

$

40,220

$

79,959

$

79,934

Commercial loans

10,775

10,170

20,857

20,507

Consumer loans

6,490

7,126

13,009

14,402

Securities available for sale and Federal Home Loan Bank stock

9,800

11,205

19,294

22,966

Investment securities

3,031

3,218

6,124

6,467

Deposits, Federal funds sold and other short-term investments

46

72

55

142

Total interest income

69,811

72,011

139,298

144,418

Interest expense:

Deposits

9,625

12,264

19,455

25,770

Borrowed funds

6,010

7,606

12,220

15,739

Total interest expense

15,635

19,870

31,675

41,509

Net interest income

54,176

52,141

107,623

102,909

Provision for loan losses

7,500

9,000

15,400

18,000

Net interest income after provision for loan losses

46,676

43,141

92,223

84,909

Non-interest income:

Fees

5,859

5,918

11,421

11,620

Other-than-temporary impairment losses on securities

(1,661)

(3,116)

(1,661)

(3,116)

Portion of loss recognized in OCI (before taxes)

1,359

2,946

1,359

2,946

Net impairment losses recognized in earnings

(302)

(170)

(302)

(170)

Bank owned life insurance

1,316

1,828

2,724

3,226

Net gain on securities transactions

14

28

817

Other income

1,156

397

1,344

489

Total non-interest income

8,043

7,973

15,215

15,982

Non-interest expense:

Compensation and employee benefits

18,767

17,286

37,250

34,825

Net occupancy expense

5,251

4,918

10,525

10,058

Data processing expense

2,349

2,241

4,613

4,525

FDIC Insurance

1,284

1,735

3,164

3,834

Amortization of intangibles

766

1,021

1,606

2,124

Impairment of premises and equipment

807

Advertising and promotion expense

1,184

1,216

1,782

1,886

Other operating expenses

6,332

5,514

11,537

11,441

Total non-interest expenses

35,933

33,931

71,284

68,693

Income before income tax expense

18,786

17,183

36,154

32,198

Income tax expense

4,809

4,243

9,246

8,071

Net income

$

13,977

$

12,940

$

26,908

$

24,127

Basic earnings per share

$

0.25

$

0.23

$

0.47

$

0.43

Average basic shares outstanding

56,846,186

56,531,596

56,808,747

56,494,570

Diluted earnings per share

$

0.25

$

0.23

$

$0.47

$

0.43

Average diluted shares outstanding

56,867,788

56,531,596

56,819,547

56,494,570

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

Six Months Ended

June 30,

June 30,

2011

2010

2011

2010

STATEMENTS OF INCOME:

Net interest income

$

54,176

$

52,141

$

107,623

$

102,909

Provision for loan losses

7,500

9,000

15,400

18,000

Non-interest income

8,043

7,973

15,215

15,982

Non-interest expense

35,933

33,931

71,284

68,693

Income before income tax expense

18,786

17,183

36,154

32,198

Net income

$

13,977

$

12,940

$

26,908

$

24,127

Basic and diluted earnings per share

$0.25

$0.23

$0.47

$0.43

Interest rate spread

3.37%

3.30%

3.36%

3.22%

Net interest margin

3.53%

3.48%

3.52%

3.42%

PROFITABILITY:

Annualized return on average assets

0.82%

0.77%

0.80%

0.72%

Annualized return on average equity

6.00%

5.75%

5.82%

5.42%

Annualized non-interest expense to average assets

2.11%

2.02%

2.11%

2.05%

Efficiency ratio (1)

57.75%

56.44%

58.03%

57.78%

ASSET QUALITY:

Non-accrual loans

$

121,347

$

93,188

90+ and still accruing

Non-performing loans

121,347

93,188

Foreclosed assets

6,803

4,725

Non-performing assets

128,150

97,913

Non-performing loans to total loans

2.72%

2.15%

Non-performing assets to total assets

1.86%

1.43%

Allowance for loan losses

$

72,294

$

61,490

Allowance for loan losses to total non-performing loans

59.58%

65.98%

Allowance for loan losses to total loans

1.62%

1.42%

AVERAGE BALANCE SHEET DATA:

Assets

$

6,832,077

$

6,744,427

$

6,815,692

$

6,769,403

Loans, net

4,394,446

4,261,290

4,374,096

4,273,621

Earnings assets

6,107,184

5,997,711

6,095,336

6,038,343

Core deposits

3,691,972

3,472,784

3,662,376

3,441,904

Borrowings

909,916

931,795

921,719

956,765

Interest-bearing liabilities

5,267,409

5,279,672

5,267,789

5,312,788

Stockholders'  equity

935,121

902,223

931,719

898,071

Average yield on interest-earning assets

4.56%

4.81%

4.57%

4.80%

Average cost on interest-bearing liabilities

1.19%

1.51%

1.21%

1.58%

(1) Efficiency Ratio Calculation

Three Months Ended

Six Months Ended

June 30,

June 30,

2011

2010

2011

2010

Net interest income

$

54,176

$

52,141

$

107,623

$

102,909

Non-interest income

8,043

7,973

15,215

15,982

Total income:

$

62,219

$

60,114

$

122,838

$

118,891

Non-interest expense:

$

35,933

$

33,931

$

71,284

$

68,693

Expense/income:

57.75%

56.44%

58.03%

57.78%

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Net Interest Margin Analysis

Quarterly Average Balances

(Unaudited) (Dollars in Thousands)

June 30, 2011

March 31, 2011

Average

Average

Average

Average

Balance

Interest

Yield

Balance

Interest

Yield

Interest-Earning Assets:

Deposits

$

73,158

$

46

0.25%

$

14,633

$

9

0.25%

Federal funds sold and

  other short-term investments

1,822

0.01%

1,341

0.01%

Investment securities (1)

342,397

3,031

3.54%

342,689

3,093

3.61%

Securities available for sale

1,256,565

9,390

2.99%

1,334,201

8,970

2.69%

Federal Home Loan Bank stock

38,796

410

4.24%

36,973

524

5.75%

Net loans (2)

Total mortgage loans

3,069,062

39,669

5.14%

3,076,548

40,290

5.24%

Total commercial loans

770,523

10,775

5.57%

716,603

10,082

5.66%

Total consumer loans

554,861

6,490

4.69%

560,369

6,519

4.72%

Total net loans

4,394,446

56,934

5.16 %

4,353,520

56,891

5.24%

Total Interest-Earning Assets

$

6,107,184

$

69,811

4.56%

$

6,083,357

$

69,487

4.58%

Non-Interest Earning Assets:

Cash and due from banks

70,737

65,351

Other assets

654,156

650,416

Total Assets

$

6,832,077

$

6,799,124

Interest-Bearing Liabilities:

Demand deposits

$

2,212,531

$

4,041

0.73%

$

2,168,211

$

3,998

0.75%

Savings deposits

911,340

870

0.38%

896,138

866

0.39%

Time deposits

1,233,622

4,714

1.53%

1,270,169

4,966

1.59%

Total Deposits

4,357,493

9,625

0.89%

4,334,518

9,830

0.92%

Borrowed funds

909,916

6,010

2.65%

933,654

6,210

2.70%

Total Interest-Bearing Liabilities

$

5,267,409

$

15,635

1.19%

$

5,268,172

$

16,040

1.23%

Non-Interest Bearing Liabilities

629,547

602,673

Total Liabilities

5,896,956

5,870,845

Stockholders' equity

935,121

928,279

Total Liabilities and Stockholders'

  Equity

6,832,077

$

6,799,124

Net interest income

$

54,176

$

53,447

Net interest rate spread

3.37%

3.35%

Net interest-earning assets

$

839,775

$

815,185

Net interest margin (3)

3.53%

3.51%

Ratio of interest-earning assets to

  total interest-bearing liabilities

1.16

x

1.15

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.

6/30/11

3/31/11

12/31/10

9/30/10

6/30/10

2nd Qtr.

1st Qtr.

4th Qtr.

3rd Qtr.

2nd Qtr.

Interest-Earning Assets:

Securities

3.01%

2.91%

2.80%

3.11%

3.34%

Net Loans

5.16%

5.24%

5.30%

5.42%

5.41%

Total Interest-Earning Assets

4.56%

4.58%

4.56%

4.74%

4.81%

Interest-Bearing Liabilities:

Total Deposits

0.89%

0.92%

0.94%

1.05%

1.13%

Total Borrowings

2.65%

2.70%

2.92%

3.15%

3.27%

Total Interest-Bearing Liabilities

1.19%

1.23%

1.29%

1.42%

1.51%

Interest Rate Spread

3.37%

3.35%

3.27%

3.32%

3.30%

Net Interest Margin

3.53%

3.51%

3.44%

3.50%

3.48%

Ratio of Interest-Earning Assets to  

  Interest-Bearing Liabilities

1.16x

1.15x

1.15x

1.15x

1.14x

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Net Interest Margin Analysis

Average Year to Date Balances

(Unaudited) (Dollars in Thousands)

June 30, 2011

June 30, 2010

Average

Average

Average

Average

Balance

Interest

Yield

Balance

Interest

Yield

Interest-Earning Assets:

Deposits

$

44,057

$

55

0.25%

$

114,171

$

142

0.25%

Federal funds sold and

  other short-term investments

1,582

0

0.01%

2,696

0.01%

Investment securities(1)

342,542

6,124

3.58%

333,610

6,467

3.88 %

Securities available for sale

1,295,169

18,359

2.83%

1,279,827

22,115

3.46%

Federal Home Loan Bank stock

37,890

935

4.97%

34,418

851

4.98%

Net loans (2)

.

.

Total mortgage loans

3,072,784

79,959

5.19%

2,977,167

79,934

5.39%

Total commercial loans

743,712

20,857

5.61%

722,080

20,507

5.73%

Total consumer loans

557,600

13,009

4.70%

574,374

14,402

5.06%

Total net loans

4,374,096

113,825

5.20 %

4,273,621

114,843

5.40%

Total Interest-Earning Assets

$

6,095,336

$

139,298

4.57%

$

6,038,343

$

144,418

4.80%

Non-Interest Earning Assets:

Cash and due from banks

68,059

74,016

Other assets

652,297

657,044

Total Assets

$

6,815,692

$

6,769,403

Interest-Bearing Liabilities:

Demand deposits

$

2,190,494

$

8,039

0.74%

$

2,047,472

$

9,696

0.95%

Savings deposits

903,781

1,736

0.39%

880,925

2,159

0.49%

Time deposits

1,251,795

9,680

1.56%

1,427,626

13,915

1.97%

Total Deposits

4,346,070

19,455

0.90%

4,356,023

25,770

1.19%

Borrowed funds

921,719

12,220

2.67%

956,765

15,739

3.32%

Total Interest-Bearing Liabilities

$

5,267,789

$

31,675

1.21%

$

5,312,788

$

41,509

1.58%

Non-Interest Bearing Liabilities

616,184

558,544

Total Liabilities

5,883,973

5,871,332

Stockholders' equity

931,719

898,071

Total Liabilities and Stockholders'

  Equity

6,815,692

$

6,769,403

Net interest income

$

107,623

$

102,909

Net interest rate spread

3.36%

3.22%

Net interest-earning assets

$

827,547

$

725,555

Net interest margin(3)

3.52%

3.42%

Ratio of interest-earning assets to

  total interest-bearing liabilities

1.16

x

1.14

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.

Six Months Ended

6/30/11

6/30/10

6/30/09

Interest-Earning Assets:

Securities

2.96%

3.35%

3.95%

Net Loans

5.20%

5.40%

5.46%

Total Interest-Earning Assets

4.57%

4.80%

5.08%

Interest-Bearing Liabilities:

Total Deposits

0.90%

1.19%

1.99%

Total Borrowings

2.67%

3.32%

3.53%

Total Interest-Bearing Liabilities

1.21%

1.58%

2.33%

Interest Rate Spread

3.36%

3.22%

2.75%

Net Interest Margin

3.52%

3.42%

3.03%

Ratio of Interest-Earning Assets to

  Interest-Bearing Liabilities

1.16x

1.14x

1.13x

SOURCE Provident Financial Services, Inc.



RELATED LINKS

http://www.providentnj.com