Provident Financial Services, Inc. Announces Fourth Quarter and Full-Year Operating Results for 2009 and Declares Quarterly Cash Dividend
JERSEY CITY, N.J., Jan. 29 /PRNewswire-FirstCall/ -- Provident Financial Services, Inc. (NYSE: PFS) (the "Company") reported net income of $6.8 million, or $0.12 per basic and diluted share for the quarter ended December 31, 2009, compared to net income of $7.4 million, or $0.13 per basic and diluted share for the quarter ended December 31, 2008. The Company reported operating income, excluding a goodwill impairment charge recorded in the first quarter of 2009, of $30.7 million, or $0.55 per basic and diluted share for the year ended December 31, 2009, compared to net income of $41.6 million, or $0.74 per basic and diluted share for the year ended December 31, 2008.
The Company previously recognized a $152.5 million, or $2.71 per share goodwill impairment charge during the quarter ended March 31, 2009. This accounting charge resulted in a net loss of $121.8 million, or $2.16 per basic and diluted share for the year ended December 31, 2009. The goodwill impairment charge was a non-cash accounting adjustment to the Company's financial statements which did not affect cash flows, liquidity, or tangible capital. As goodwill is excluded from regulatory capital, the impairment charge did not impact the regulatory capital ratios of the Company or its wholly owned subsidiary, The Provident Bank, both of which remain "well-capitalized" under current regulatory requirements.
Compared with the three months and year ended December 31, 2008, earnings and per share data for the three months and year ended December 31, 2009 also reflect an increase in the provision for loan losses due to the following: an increase in non-performing loans; downgrades in credit risk ratings; an increase in commercial loans as a percentage of the total loan portfolio; and the impact of current macroeconomic conditions. The provision for loan losses was $12.2 million and $30.3 million for the three months and year ended December 31, 2009, respectively, compared with $8.5 million and $15.1 million, respectively, for the same periods in 2008. In addition, earnings and per share data for the year ended December 31, 2009 were impacted by a special assessment imposed on the banking industry by the FDIC as part of its plan to restore the deposit insurance fund. The cost of this special assessment to the Company was $3.1 million, which resulted in a charge of $1.9 million, or $0.03 per basic and diluted share, net of tax, recognized during the second quarter of 2009.
Christopher Martin, President and Chief Executive Officer, commented, "Despite the unsettled economic environment, our fourth quarter and annual results, excluding the first quarter goodwill impairment charge, were positive. However, with unemployment at a 33-year high, the New Jersey economy remains under duress. This continues to pressure our residential mortgage loan portfolio, where delinquencies on conventional mortgage loans continued to increase. With the prolonged recession and expectations of a modest recovery in the future, we remain cautious, as reflected in our loan loss provision for the fourth quarter."
Martin added, "It bears reiterating that we did not accept government assistance in the form of TARP funds, due in part to our strong capital position. We are encouraged by the sequential increase in our quarterly net interest income of over 7%, with expansion in our margin of 15 basis points during the quarter. Furthermore, we are taking steps to reduce costs through the consolidation and sale of several underperforming branch locations and Bank-owned real estate, which resulted in pre-tax charges of $1.3 million, or $0.01 per basic and diluted share, net of tax, during the quarter. These actions will result in improved efficiencies in the future."
Declaration of Quarterly Dividend
The Company's Board of Directors declared a quarterly cash dividend of $0.11 per common share payable on February 26, 2010, to stockholders of record as of the close of business on February 12, 2010.
Balance Sheet Summary
Total assets increased $287.4 million, or 4.4%, to $6.84 billion at December 31, 2009, from $6.55 billion at December 31, 2008, due primarily to increases in securities available for sale and cash and cash equivalents, partially offset by decreases in loans and intangible assets.
Cash and cash equivalents increased $55.2 million to $123.7 million at December 31, 2009, from $68.5 million at December 31, 2008, as a result of deposit inflows and proceeds from loan repayments and loan sales. The Company will continue to deploy these cash balances to fund loan originations, investment purchases and the repayment of maturing borrowings.
Total investments increased $491.9 million, or 40.6%, during the year ended December 31, 2009. The increase included $84.9 million of residential mortgage loan pools that were securitized by the Company in the first quarter of 2009, which are held as securities available for sale. The loan securitization was undertaken to enhance the liquidity and risk-based capital treatment of the underlying loans. Securities purchases for the year ended December 31, 2009 consisted primarily of U.S. Government Agency guaranteed mortgage-backed securities and obligations.
The Company's net loans decreased $155.6 million, or 3.5%, to $4.32 billion at December 31, 2009, from $4.48 billion at December 31, 2008. This decrease was partially attributable to the securitization of $84.9 million of residential mortgage loans during the first quarter of 2009. Loan originations totaled $1.14 billion and loan purchases totaled $55.1 million for the year ended December 31, 2009. Compared with December 31, 2008, residential mortgage loans decreased $301.8 million, consumer loans decreased $37.8 million, and construction loans decreased $37.8 million, while commercial mortgage and multi-family loans increased $205.1 million and commercial loans increased $32.6 million. In addition to the securitization of $84.9 million of loans, total residential mortgage loans decreased as a result of the sale of $98.7 million of primarily newly originated 30-year fixed-rate loans as part of the Company's interest rate risk management process. Commercial real estate, construction and commercial loans represented 52.5% of the loan portfolio at December 31, 2009, compared to 46.5% at December 31, 2008.
At December 31, 2009, the Company's unfunded loan commitments totaled $767.9 million, including $312.0 million in commercial loan commitments, $95.7 million in commercial mortgage commitments, and $69.7 million in construction loan commitments. Unfunded loan commitments at September 30, 2009 were $776.2 million.
Intangible assets decreased $156.6 million to $358.1 million at December 31, 2009, from $514.7 million at December 31, 2008, primarily due to a $152.5 million goodwill impairment charge recognized in the first quarter of 2009.
Total deposits increased $672.8 million, or 15.9%, during the year ended December 31, 2009, to $4.90 billion. Core deposits, consisting of savings and demand deposit accounts, increased $697.7 million, or 25.9%, to $3.39 billion at December 31, 2009. The majority of the core deposit increase was in municipal money market and retail checking deposits. Time deposits decreased $24.9 million, or 1.6%, to $1.51 billion at December 31, 2009, with the majority of the decrease occurring in the 9-month and shorter maturity categories. Core deposits represented 69.2% of total deposits at December 31, 2009, compared to 63.7% at December 31, 2008.
Borrowed funds were reduced by $248.4 million, or 19.9%, during the year ended December 31, 2009, to $999.2 million, as the Company deployed excess liquidity arising from the increase in core deposit funding. Borrowed funds represented 14.6% of total assets at December 31, 2009, a reduction from 19.1% at December 31, 2008.
Common stock repurchases for the year ended December 31, 2009 totaled 11,000 shares at an average cost of $10.67 per share. At December 31, 2009, 2.1 million shares remained eligible for repurchase under the current authorization. At December 31, 2009, book value per share and tangible book value per share were $14.79 and $8.80, respectively, compared with $17.09 and $8.45, respectively, at December 31, 2008. Tangible common equity as a percentage of tangible assets was 8.1% at December 31, 2009, compared with 8.4% at December 31, 2008.
Results of Operations
Net Interest Margin
The net interest margin increased 15 basis points to 3.16% for the quarter ended December 31, 2009, from 3.01% for the quarter ended September 30, 2009. The net interest margin for the quarter ended December 31, 2009 decreased 4 basis points from 3.20% for the quarter ended December 31, 2008. The increase in the net interest margin for the three months ended December 31, 2009 versus the trailing quarter was primarily attributable to an increase in average securities available for sale, and a decrease in the average rates paid on interest-bearing liabilities. The decrease in the net interest margin for the three months ended December 31, 2009 versus the same period in 2008 was primarily attributable to reductions in earning asset yields, an increase in the average balance of lower-yielding interest-bearing deposits and short-term investments, a decrease in average loans outstanding and an increase in the average balance of non-performing loans. The weighted average yield on interest-earning assets was 4.79% for the three months ended December 31, 2009, compared with 4.84% for the trailing quarter and 5.38% for the three months ended December 31, 2008. The weighted average cost of interest-bearing liabilities was 1.83% for the quarter ended December 31, 2009, compared with 2.07% for the trailing quarter and 2.47% for the fourth quarter of 2008. The average cost of interest-bearing deposits for the three months ended December 31, 2009 was 1.47%, compared with 1.73% for the trailing quarter and 2.14% for the same period last year. The average cost of borrowings for the three months ended December 31, 2009 was 3.43%, compared with 3.50% for the trailing quarter and 3.45% for the same period last year.
For the year ended December 31, 2009, the net interest margin decreased 5 basis points to 3.06%, compared with 3.11% for the year ended December 31, 2008. The decrease in the net interest margin for the year ended December 31, 2009 versus the same period in 2008 was primarily attributable to reductions in earning asset yields, an increase in the average balance of lower-yielding interest-bearing deposits and short-term investments, and an increase in the average balance of non-performing loans. The weighted average yield on interest-earning assets declined 55 basis points to 4.95% for the year ended December 31, 2009, compared with 5.50% for the year ended December 31, 2008. The weighted average cost of interest-bearing liabilities declined 59 basis points to 2.13% for the year ended December 31, 2009, compared with 2.72% for 2008. The average cost of interest-bearing deposits for the year ended December 31, 2009 was 1.79%, compared with 2.40% for 2008. The average cost of borrowings for the year ended December 31, 2009 was 3.50%, compared with 3.73% for 2008.
Non-Interest Income
Non-interest income totaled $7.0 million for the quarter ended December 31, 2009, an increase of $49,000 compared to the same period in 2008. Fee income increased $770,000 for the quarter ended December 31, 2009, compared with the same period in 2008, primarily due to a year-over-year increase in the value of equity fund holdings. In addition, income from the appreciation in the cash surrender value of Bank-owned life insurance increased $131,000 for the quarter ended December 31, 2009, compared with the same period in 2008. Largely offsetting these improvements, the Company recognized other-than-temporary impairment charges of $529,000 in the fourth quarter of 2009 related to investments in two private-label mortgage-backed securities. Other income also decreased $264,000 for the quarter ended December 31, 2009, compared with the same period in 2008. In addition, net gains on securities transactions totaled $24,000 for the quarter ended December 31, 2009, compared with net gains of $83,000 for the same quarter in 2008.
For the year ended December 31, 2009, non-interest income totaled $31.5 million, an increase of $1.2 million, or 4.1%, compared to the same period in 2008. Fee income increased $830,000 for the year ended December 31, 2009, compared with 2008, primarily due to an increase in the value of equity fund holdings. In addition, net gains on securities transactions increased $470,000 for the year ended December 31, 2009, compared with 2008. Other income increased $454,000 for the year ended December 31, 2009, compared with the same period in 2008, primarily due to an increase in gains on loan sales. Income from the appreciation in the cash surrender value of Bank-owned life insurance increased $108,000 for the year ended December 31, 2009, compared with 2008. Partially offsetting these improvements, the Company recognized other-than-temporary impairment charges on securities of $2.0 million during the year ended December 31, 2009, compared with other-than-temporary impairment charges of $1.4 million recognized in 2008.
Non-Interest Expense
For the three months ended December 31, 2009, non-interest expense increased $3.7 million, or 11.1%, to $37.1 million, compared to $33.4 million for the three months ended December 31, 2008. FDIC insurance expense increased $3.8 million for the three months ended December 31, 2009, compared with the same period in 2008, as a result of deposit growth and increased premium rates. In addition, other operating expenses increased $1.2 million for the quarter ended December 31, 2009, compared with the same period last year, as a result of $1.3 million in charges associated with the consolidation of two branch locations, the sale of deposits of a third leased branch location, and the pending sale of a Bank-owned building. Partially offsetting these increases, compensation and benefits expense decreased $782,000 for the three months ended December 31, 2009, compared with the same period in 2008, primarily due to reduced incentive compensation accruals. In addition, for the three months ended December 31, 2009, compared with the same period in 2008, the Company realized reductions in net occupancy expense totaling $283,000, and a $280,000 decrease in the amortization of intangibles as a result of scheduled reductions in core deposit amortization.
Excluding the $152.5 million goodwill impairment charge recorded in the first quarter of 2009, non-interest expense increased $13.9 million, or 10.7%, to $144.5 million for the year ended December 31, 2009, compared to $130.6 million for the year ended December 31, 2008. FDIC insurance expense increased $11.1 million for the year ended December 31, 2009, compared with 2008, as a result of deposit growth, increased premium rates and the FDIC special assessment imposed on the industry as part of its plan to restore the deposit insurance fund. The cost of the FDIC special assessment was $3.1 million. Other operating expenses increased $3.1 million for the year ended December 31, 2009, compared with 2008, due primarily to $1.3 million of charges related to the consolidation and divestiture of premises and costs associated with the dissolution of a real estate development joint venture. Compensation and benefits expense increased $968,000 for the year ended December 31, 2009, compared with 2008, primarily due to a $1.5 million increase in severance costs during the year ended December 31, 2009. Severance included costs associated with the retirements of two senior executives in the third quarter of 2009. These increases were partially offset by a $966,000 decrease in the amortization of intangibles as a result of scheduled reductions in core deposit amortization, and reductions in net occupancy expense totaling $639,000.
Asset Quality
Total non-performing loans at December 31, 2009 were $84.5 million, or 1.93% of total loans, compared with $78.2 million, or 1.81% of total loans at September 30, 2009, and $59.1 million, or 1.31% of total loans at December 31, 2008. At December 31, 2009, impaired loans totaled $41.1 million with related specific reserves of $12.5 million. The increase in non-performing loans at December 31, 2009, compared with the trailing quarter was due to a $6.7 million increase in non-performing commercial loans and a $6.0 million increase in non-performing residential mortgage loans, partially offset by reductions in non-performing construction and consumer loans. The increase in non-performing commercial loans was primarily attributable to the addition of a $4.8 million relationship with a consumer products distributor and a $1.3 million relationship with an industrial supplies distributor.
At December 31, 2009, the Company's allowance for loan losses was 1.39% of total loans, compared with 1.29% of total loans at September 30, 2009, and 1.05% of total loans at December 31, 2008. The Company recorded provisions for loan losses of $12.2 million and $30.3 million for the three months and year ended December 31, 2009, respectively, compared with provisions of $8.5 million and $15.1 million for the three months and year ended December 31, 2008, respectively. For the three months and year ended December 31, 2009, the Company had net charge-offs of $7.1 million and $17.2 million, respectively, compared with net charge-offs of $4.1 and $8.2 million, respectively, for the same periods in 2008. The allowance for loan losses increased $13.0 million to $60.7 million at December 31, 2009, from $47.7 million at December 31, 2008. The increase in the loan loss provision for the three months and year ended December 31, 2009, compared with the same periods in 2008, was attributable to an increase in non-performing loans, downgrades in credit risk ratings and an increase in commercial loans as a percentage of the total loan portfolio to 52.5% at December 31, 2009, from 46.5% at December 31, 2008. At December 31, 2009, the Company held $6.4 million of foreclosed assets, compared with $7.0 million at September 30, 2009 and $3.4 million at December 31, 2008.
Income Tax Expense
For the three months ended December 31, 2009, the Company recorded an income tax benefit of $395,000, compared with an income tax expense of $2.6 million for the same period in 2008. For the year ended December 31, 2009, the Company's income tax expense was $7.0 million, compared with $14.9 million for the same period in 2008. The decrease in income tax expense was attributable to lower pre-tax income and a lower effective tax rate. Excluding the impact of the goodwill impairment charge recognized in the first quarter of 2009, which is not tax deductible, the Company's effective tax rates were (6.2%) and 18.6%, respectively, for the three months and year ended December 31, 2009, compared with 26.0% and 26.4% for the three months and year ended December 31, 2008, respectively. Fourth quarter and full-year 2009 pre-tax income was significantly lower than previously projected, primarily as a result of increased provisions for loan losses. As a result, the Company recorded a tax benefit in the fourth quarter to reduce its previously recorded estimate of income tax liability. The reduction in the effective tax rates was attributable to a larger proportion of the Company's income being derived from tax-exempt 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 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 January 29, 2010 regarding highlights of the Company's fourth quarter and full year 2009 financial results. The call may be accessed by dialing 1-800-860-2442 (Domestic) or 1-412-858-4600 (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 also 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
December 31, 2009 (Unaudited) and December 31, 2008
(Dollars in Thousands)
Assets December 31, 2009 December 31, 2008
Cash and due from banks $120,823 $66,315
Short-term investments 2,920 2,231
Total cash and cash
equivalents 123,743 68,546
Investment securities held to
maturity (market value of $344,385 at
December 31, 2009 (unaudited) and
$351,623 at December 31, 2008) 335,074 347,484
Securities available for sale, at
fair value 1,333,163 820,329
Federal Home Loan Bank stock 34,276 42,833
Loans 4,384,194 4,526,748
Less allowance for loan losses 60,744 47,712
Net loans 4,323,450 4,479,036
Foreclosed assets, net 6,384 3,439
Banking premises and equipment, net 76,280 75,750
Accrued interest receivable 25,797 23,866
Intangible assets 358,058 514,684
Bank-owned life insurance 132,346 126,956
Other assets 87,601 45,825
Total assets $6,836,172 $6,548,748
Liabilities and Stockholders' Equity
Deposits:
Demand deposits $2,522,732 $1,821,437
Savings deposits 868,835 872,388
Time deposits of $100,000 or
more 469,313 445,466
Other time deposits 1,038,297 1,087,045
Total deposits 4,899,177 4,226,336
Mortgage escrow deposits 18,713 20,074
Borrowed funds 999,233 1,247,681
Other liabilities 34,494 36,067
Total liabilities 5,951,617 5,530,158
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 59,821,850
shares outstanding at December 31, 2009,
and 59,610,623 shares outstanding at
December 31, 2008 832 832
Additional paid-in capital 1,014,856 1,013,293
Retained earnings 307,751 454,444
Accumulated other comprehensive
income (loss) 7,731 (485)
Treasury stock at cost (384,973) (384,854)
Unallocated common stock held by
Employee Stock Ownership Plan (61,642) (64,640)
Common Stock acquired by the Directors'
Deferred Fee Plan (7,575) (7,667)
Deferred compensation – Directors'
Deferred Fee Plan 7,575 7,667
Total stockholders'
equity 884,555 1,018,590
Total liabilities and
stockholders' equity $6,836,172 $6,548,748
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Operations
Three Months and Year Ended December 31, 2009 and 2008 (Unaudited)
(Dollars in Thousands, Except Per Share Data)
Three Months Ended Year Ended
December 31, December 31,
2009 2008 2009 2008
Interest income:
Real estate secured loans $39,528 $42,657 $159,094 $167,063
Commercial loans 10,881 10,431 43,057 42,999
Consumer loans 7,643 8,795 31,462 36,727
Investment securities held
to maturity 3,300 3,571 13,419 14,431
Securities available for sale 12,310 10,218 45,186 42,590
Other short-term investments - 15 13 344
Deposits 89 - 304 -
Federal funds - 2 24 166
Total interest income 73,751 75,689 292,559 304,320
Interest expense:
Deposits 16,419 19,942 74,555 88,887
Borrowed funds 8,721 10,787 36,987 43,364
Total interest expense 25,140 30,729 111,542 132,251
Net interest income 48,611 44,960 181,017 172,069
Provision for loan losses 12,150 8,500 30,250 15,100
Net interest income
after provision for
loan losses 36,461 36,460 150,767 156,969
Non-interest income:
Fees 5,874 5,104 24,221 23,391
Bank-owned life insurance 1,433 1,302 5,390 5,282
Net gain on securities
transactions 24 83 1,398 928
Other-than-temporary impairment
losses on securities (4,876) - (11,043) (1,410)
Portion of loss recognized in
other comprehensive income
(before taxes) 4,347 - 9,012 -
Net impairment losses on
securities recognized in
earnings (529) - (2,031) (1,410)
Other income 231 495 2,474 2,020
Total non-interest
income 7,033 6,984 31,452 30,211
Non-interest expense:
Goodwill impairment - - 152,502 -
Compensation and employee
benefits 16,220 17,002 68,738 67,770
FDIC Insurance 3,968 176 11,778 634
Net occupancy expense 4,900 5,183 20,170 20,809
Data processing expense 2,315 2,291 9,325 9,194
Advertising and promotion 1,144 1,117 4,291 4,106
Amortization of intangibles 1,091 1,371 5,111 6,077
Other operating expenses 7,477 6,259 25,121 22,011
Total non-interest
expense 37,115 33,399 297,036 130,601
Income (loss) before
income tax expense 6,379 10,045 (114,817) 56,579
Income tax (benefit) expense (395) 2,612 7,007 14,937
Net income (loss) $6,774 $7,433 $(121,824) $41,642
Basic earnings (loss) per
share $0.12 $0.13 $(2.16) $0.74
Average basic shares
outstanding 56,380,653 56,106,027 56,275,694 56,031,273
Diluted earnings (loss) per
share $0.12 $0.13 $(2.16) $0.74
Average diluted shares
outstanding 56,380,653 56,106,027 56,275,694 56,031,318
PROVIDENT FINANCIAL SERVICES, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except share data) (Unaudited)
At or for the Three At or for the
Months Ended Year Ended
December 31, December 31,
2009 2008 2009 2008
OPERATING RESULTS:
Net interest income $48,611 $44,960 $181,017 $172,069
Provision for loan losses 12,150 8,500 30,250 15,100
Non-interest income 7,033 6,984 31,452 30,211
Non-interest expense (1) 37,115 33,399 144,534 130,601
Operating income before income
tax (benefit) expense (2) 6,379 10,045 37,685 56,579
Operating income (2) 6,774 7,433 30,678 41,642
Goodwill impairment charge - - 152,502 -
Net income (loss) 6,774 7,433 (121,824) 41,642
Operating basic and diluted
earnings per share (1) $0.12 $0.13 $0.55 $0.74
Per share impact of goodwill
impairment charge - - $(2.71) -
Basic and diluted earnings (loss)
per share $0.12 $0.13 $(2.16) $0.74
Interest rate spread 2.96% 2.91% 2.82% 2.78%
Net interest margin 3.16% 3.20% 3.06% 3.11%
PROFITABILITY:
Annualized return on average
assets (1) 0.39% 0.46% 0.46% 0.65%
Annualized return on average
equity (1) 3.03% 2.91% 3.36% 4.12%
Annualized non-interest expense
to average assets (1) 2.14% 2.05% 2.17% 2.04%
Efficiency ratio (1), (3) 66.70% 64.30% 68.03% 64.56%
ASSET QUALITY:
Non-accrual loans $84,477 $59,118
90+ and still accruing loans - -
Non-performing loans 84,477 59,118
Foreclosed assets 6,384 3,439
Non-performing loans to
total loans 1.93% 1.31%
Non-performing assets to
total assets 1.33% 0.96%
Allowance for loan losses $60,744 $47,712
Allowance for loan losses to
non-performing loans 71.91% 80.71%
Allowance for loan losses to
total loans 1.39% 1.05%
AVERAGE BALANCE SHEET DATA:
Assets $6,871,063 $6,469,192 $6,672,420 $6,391,549
Loans, net 4,288,440 4,386,439 4,303,808 4,280,478
Earning assets 6,135,321 5,612,630 5,915,259 5,529,445
Core deposits 3,366,514 2,654,797 3,024,362 2,622,268
Borrowings 1,008,844 1,243,879 1,056,723 1,163,531
Interest-bearing liabilities 5,440,707 4,948,704 5,232,850 4,865,441
Stockholders' equity 887,099 1,016,255 914,218 1,010,966
Average yield on interest-
earning assets 4.79% 5.38% 4.95% 5.50%
Average cost of interest-
bearing liabilities 1.83% 2.47% 2.13% 2.72%
Notes
(1) Excluding a $152.5 million goodwill impairment charge recorded in the
quarter ended March 31, 2009
(2) Operating Income Reconciliation
Three Months Ended Year Ended
December 31, December 31,
2009 2008 2009 2008
Net income (loss) $6,774 $7,433 $(121,824) $41,642
Goodwill impairment - - 152,502 -
Operating income $6,774 $7,433 $30,678 $41,642
(3) Efficiency Ratio Calculation
Three Months Ended Year Ended
December 31, December 31,
2009 2008 2009 2008
Net interest income $48,611 $44,960 $181,017 $172,069
Non-interest income 7,033 6,984 31,452 30,211
Total income $55,644 $51,944 $212,469 202,280
Non-interest expense (1) $37,115 $33,399 $144,534 $130,601
Expense/Income: 66.70% 64.30% 68.03% 64.56%
Average Quarterly Balance
NET INTEREST MARGIN ANALYSIS
(Unaudited) (Dollars in thousands)
December 31, 2009 September 30, 2009
Average Average Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost
Interest-Earning
Assets:
Deposits $140,996 $89 0.25% $156,046 $98 0.25%
Federal Funds
Sold and
Other Short-
Term Investments 3,630 - 0.01 6,724 1 0.07
Investment
Securities(1) 336,549 3,300 3.92 338,381 3,327 3.93
Securities
Available for
Sale 1,331,061 11,817 3.55 1,186,336 10,998 3.71
Federal Home
Loan Bank
Stock 34,645 493 5.64 34,897 499 5.67
Net Loans (2)
Total Mortgage
Loans 2,955,138 39,528 5.33 2,945,927 39,286 5.32
Total Commercial
Loans 742,443 10,881 5.81 746,535 11,108 5.90
Total Consumer
Loans 590,859 7,643 5.13 592,572 7,722 5.17
Total Interest-
Earning Assets 6,135,321 73,751 4.79 6,007,418 73,039 4.84
Non-Interest-
Earning Assets:
Cash and Due
from Banks 106,075 90,058
Other Assets 629,667 630,207
Total Assets $6,871,063 $6,727,683
Interest-Bearing
Liabilities:
Demand
Deposits $2,000,062 5,698 1.13% $1,765,127 5,883 1.32%
Savings
Deposits 870,041 1,165 0.53 878,130 1,557 0.70
Time Deposits 1,561,760 9,556 2.43 1,662,597 11,367 2.71
Total Deposits 4,431,863 16,419 1.47 4,305,854 18,807 1.73
Total Borrowings 1,008,844 8,721 3.43 1,012,184 8,922 3.50
Total Interest-
Bearing
Liabilities 5,440,707 25,140 1.83 5,318,038 27,729 2.07
Non-Interest-
Bearing
Liabilities 543,257 531,770
Total
Liabilities 5,983,964 5,849,808
Stockholders'
Equity 887,099 877,875
Total Liabilities
& Stockholders'
Equity $6,871,063 $6,727,683
Net interest
income $48,611 $45,310
Net interest rate
spread 2.96% 2.77%
Net interest-
earning assets $694,614 $689,380
Net interest
margin(3) 3.16% 3.01%
Ratio of
interest-earning
assets to
interest-bearing
liabilities 1.13 x 1.13 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 average yield, cost and net interest margin information for the previous five quarters.
12/31/09 9/30/09 6/30/09 3/31/09 12/31/08
4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr.
Interest-Earning Assets:
Securities 3.40% 3.47% 3.64% 4.31% 4.50%
Net Loans 5.39% 5.40% 5.44% 5.48% 5.63%
Total Interest-Earning
Assets 4.79% 4.84% 4.96% 5.21% 5.38%
Interest-Bearing
Liabilities
Total Deposits 1.47% 1.73% 1.93% 2.06% 2.14%
Total Borrowings 3.43% 3.50% 3.60% 3.47% 3.45%
Total Interest-Bearing
Liabilities 1.83% 2.07% 2.27% 2.39% 2.47%
Interest Rate Spread 2.96% 2.77% 2.69% 2.82% 2.91%
Net Interest Margin 3.16% 3.01% 2.96% 3.10% 3.20%
Ratio of Interest-
Earning Assets to
Interest-Bearing
Liabilities 1.13x 1.13x 1.13x 1.13x 1.13x
Average YTD Balance
NET INTEREST MARGIN ANALYSIS
(Unaudited) (Dollars in thousands)
December 31, 2009 December 31, 2008
Average Average Average Average
Balance Interest Yield Balance Interest Yield
Interest-Earning
Assets:
Deposits $121,557 $304 0.25% $- $- -%
Federal Funds
Sold and Other
Short-Term
Investments 25,790 37 0.14 16,238 510 3.14
Investment
Securities(1) 339,154 13,419 3.96 354,079 14,431 4.08
Securities
Available
for Sale 1,089,032 43,338 3.98 839,226 40,158 4.79
Federal Home
Loan Bank Stock
Net Loans (2) 35,918 1,848 5.15 39,424 2,432 6.17
Total Mortgage
Loans 2,970,533 159,094 5.36 2,972,364 167,063 5.62
Total Commercial
Loans 732,585 43,057 5.88 680,966 42,999 6.31
Total Consumer
Loans 600,690 31,462 5.24 627,148 36,727 5.86
Total Interest-
Earning Assets 5,915,259 292,559 4.95 5,529,445 304,320 5.50
Non-Interest-
Earning Assets:
Cash and Due
from Banks 92,378 77,841
Other Assets 664,783 784,263
Total Assets $6,672,420 $6,391,549
Interest-
Bearing
Liabilities:
Demand
Deposits $1,672,379 22,710 1.36% $1,215,059 23,273 1.92%
Savings
Deposits 874,281 6,284 0.72 941,057 9,915 1.05
Time
Deposits 1,629,467 45,561 2.80 1,545,794 55,699 3.60
Total Deposits 4,176,127 74,555 1.79 3,701,910 88,887 2.40
Total
Borrowings 1,056,723 36,987 3.50 1,163,531 43,364 3.73
Total Interest-
Bearing
Liabilities 5,232,850 111,542 2.13 4,865,441 132,251 2.72
Non-Interest-
Bearing
Liabilities 525,352 515,142
Total
Liabilities 5,758,202 5,380,583
Stockholders'
Equity 914,218 1,010,966
Total
Liabilities &
Stockholders'
Equity $6,672,420 $6,391,549
Net interest
income $181,017 $172,069
Net interest
rate spread 2.82% 2.78%
Net interest-
earning assets $682,409 $664,004
Net interest
margin(3) 3.06% 3.11%
Ratio of
interest-
earning assets
to interest-
bearing
liabilities 1.13 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 average yield, cost and net interest margin information for the previous three years.
Year Ended
12/31/09 12/31/08 12/31/07
Interest-Earning Assets:
Securities 3.66% 4.61% 4.52%
Net Loans 5.43% 5.77% 6.16%
Total Interest-Earning Assets 4.95% 5.50% 5.79%
Interest-Bearing Liabilities:
Total Deposits 1.79% 2.40% 3.07%
Total Borrowings 3.50% 3.73% 4.17%
Total Interest-Bearing Liabilities 2.13% 2.72% 3.27%
Interest Rate Spread 2.82% 2.78% 2.52%
Net Interest Margin 3.06% 3.11% 2.96%
Ratio of Interest-Earning Assets to
Total Interest-Bearing Liabilities 1.13x 1.14x 1.16x
SOURCE Provident Financial Services, Inc.
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