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| 8-K - PRESS RELEASE RE FINANCIAL RESULTS - PROVIDENT FINANCIAL SERVICES INC | form8k_072911.htm |
Provident Financial Services, Inc. Announces Increased Quarterly Earnings and Declares Quarterly Cash Dividend
JERSEY CITY, NJ, July 29, 2011 - 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.
1
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.
2
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.
3
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.
4
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.
5
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PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
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||||||
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Consolidated Statements of Condition
|
||||||
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June 30, 2011 (Unaudited) and December 31, 2010
|
||||||
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(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
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||||
|
Foreclosed assets, net
|
6,803
|
2,858
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||||
|
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
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||||
|
Intangible assets
|
352,666
|
354,220
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||||
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Bank-owned life insurance
|
139,492
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136,768
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||||
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Other assets
|
73,976
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74,616
|
||||
|
Total assets
|
$
|
6,879,545
|
6,824,528
|
|||
|
Liabilities and Stockholders' Equity
|
||||||
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Deposits:
|
||||||
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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
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||||
|
Borrowed funds
|
891,128
|
969,683
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||||
|
Other liabilities
|
34,445
|
35,866
|
||||
|
Total liabilities
|
5,941,090
|
5,902,841
|
||||
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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
|
||||||
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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
|
||||
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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
|
|||
6
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PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
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|
Consolidated Statements of Income
|
||||||||||||||||||
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Three and six months ended June 30, 2011 and 2010 (Unaudited)
|
||||||||||||||||||
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(Dollars in Thousands, except per share data)
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||||||||||||||||||
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Three Months Ended
|
Six Months Ended
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|||||||||||||||||
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June 30,
|
June 30,
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2011
|
2010
|
2011
|
2010
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|
Interest income:
|
||||||||||||||||||
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Real estate secured loans
|
$ | 39,669 | $ | 40,220 | $ | 79,959 | $ | 79,934 | ||||||||||
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Commercial loans
|
10,775 | 10,170 | 20,857 | 20,507 | ||||||||||||||
|
Consumer loans
|
6,490 | 7,126 | 13,009 | 14,402 | ||||||||||||||
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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 | ||||||||||||||
7
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PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
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Consolidated Financial Highlights
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(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,
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|
2011
|
2010
|
2011
|
2010
|
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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 | % | ||||||||
8
|
(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 | % | ||||||||
9
|
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.
|
10
|
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
|
||||||
11
|
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
|
12
|
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
|
||||||||