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| 8-K - FORM 8-K (1 27 12) - PROVIDENT FINANCIAL SERVICES INC | form8k_012712.htm |
Provident Financial Services, Inc. Announces Increased Fourth Quarter and Full-Year Earnings for 2011 and Declares Quarterly Cash Dividend
JERSEY CITY, NJ, January 27, 2012 - Provident Financial Services, Inc. (NYSE:PFS) (the “Company”) reported net income of $14.9 million, or $0.26 per basic and diluted share for the quarter ended December 31, 2011, compared to net income of $12.1 million, or $0.21 per basic and diluted share for the quarter ended December 31, 2010.
For the year ended December 31, 2011, the Company reported net income of $57.3 million, or $1.01 per basic and diluted share, compared to net income of $49.7 million, or $0.88 per basic and diluted share for the same period last year.
The fourth quarter and full year results for the period ended December 31, 2011 reflect actions taken to reduce funding costs, with net interest income increasing $890,000 and $7.0 million, respectively, compared with the same periods in 2010. In addition, the provision for loan losses decreased $2.9 million and $6.6 million for the quarter and the year ended December 31, 2011, respectively, compared with the same periods in 2010. These improvements were partially offset by increases in non-interest expense of $235,000 and $3.7 million for the three months and year ended December 31, 2011, respectively, compared with the same
periods in 2010.
Christopher Martin, Chairman, President and Chief Executive Officer, commented: “Our record earnings for 2011 were attributable to improved asset generation, lower funding costs and an intense commitment from our officers and staff to attain new levels of efficiency, all while maintaining our already strong capital position. This was accomplished against the backdrop of a struggling economy, historically low interest rates pressuring our margin, and a challenging regulatory
environment.” Martin continued: “Improved revenues resulted from loan growth of 5.5% for the year, and continued expansion of our core deposits which now represent 78% of deposits. While asset quality stabilized over the last quarter, the resolution of troubled assets through the protracted New Jersey foreclosure process remains time-consuming.”
Declaration of Quarterly Dividend
The Company’s Board of Directors declared a quarterly cash dividend of $0.12 per common share payable on February 29, 2012, to stockholders of record as of the close of business on February 15, 2012.
Balance Sheet Summary
Total assets increased $272.9 million, or 4.0%, to $7.10 billion at December 31, 2011, from $6.82 billion at December 31, 2010, primarily due to an increase in net loans outstanding.
Cash and cash equivalents increased $17.4 million to $69.6 million at December 31, 2011, from $52.2 million at December 31, 2010. The Company expects to deploy these cash balances to fund loan originations and investment purchases and repay maturing borrowings.
The Company’s net loans increased $238.1 million, or 5.5%, to $4.58 billion at December 31, 2011, from $4.34 billion at December 31, 2010. Loan originations totaled $1.5 billion and loan purchases totaled $79.5 million for the year ended December 31, 2011. The loan portfolio had net increases of $177.0 million in multi-family mortgage loans, $93.5 million in commercial loans and $73.4 million in commercial mortgage loans, partially offset by net decreases of $77.7 million in residential mortgage loans, $10.4 million in construction loans and $8.6 million in consumer loans. Commercial real estate, commercial and construction loans represented 59.8% of the loan portfolio at
December 31, 2011, compared to 55.6% at December 31, 2010.
1
At December 31, 2011, the Company’s unfunded loan commitments totaled $770.4 million, including $288.5 million in commercial loan commitments, $112.2 million in construction loan commitments and $69.3 million in commercial mortgage commitments. Unfunded loan commitments at September 30, 2011 were $793.7 million.
Foreclosed assets increased $9.9 million, to $12.8 million at December 31, 2011, from $2.9 million at December 31, 2010. Foreclosed assets consisted of $5.5 million of residential real estate, $6.6 million of commercial real estate and $712,000 of marine vessels at December 31, 2011.
Total deposits increased $278.9 million, or 5.7%, during the year ended December 31, 2011 to $5.16 billion. Core deposits, consisting of savings and demand deposit accounts, increased $428.4 million, or 11.9%, to $4.03 billion at December 31, 2011. The majority of the core deposit increase was in commercial checking deposits, retail checking deposits and money market deposits, partially offset by a decline in savings deposits. Time deposits decreased $149.5 million, or 11.7%, to $1.13 billion at December 31, 2011, with the majority of the decrease occurring in the 15-month and shorter maturity categories. The Company remains focused on developing core deposit
relationships, while strategically permitting the run-off of higher-cost time deposits. Core deposits represented 78.1% of total deposits at December 31, 2011, compared to 73.8% at December 31, 2010.
Borrowed funds were reduced $49.5 million, or 5.1% during the year ended December 31, 2011, to $920.2 million, as wholesale funding was replaced with core deposit growth. Borrowed funds represented 13.0% of total assets at December 31, 2011, a reduction from 14.2% at December 31, 2010.
Stockholders’ equity increased $30.8 million, or 3.3% during the year ended December 31, 2011, to $952.5 million, primarily due to net income earned for the period, partially offset by dividends paid to stockholders and common stock repurchases. Common stock repurchases for the year ended December 31, 2011 totaled 348,000 shares at an average cost of $11.90 per share. At December 31, 2011, 1.8 million shares remained eligible for repurchase under the current authorization. At December 31, 2011, book value per share and tangible book value per share were $15.88 and $9.87, respectively, compared with $15.38 and $9.47, respectively, at December 31, 2010.
Results of Operations
Net Interest Income and Net Interest Margin
For the three months ended December 31, 2011, net interest income increased $890,000, to $53.9 million, from $53.0 million for the same period in 2010. For the year ended December 31, 2011, net interest income increased $7.0 million, to $216.0 million, from $209.0 million for 2010. For both periods, the favorable effects of an increase in average loans outstanding and reductions in funding costs outpaced the impact of the downward repricing of earning assets and accelerated premium amortization on mortgage-backed securities.
The Company’s net interest margin for the quarter ended December 31, 2011 was 3.39%, a decrease of 11 basis points from 3.50% for the quarter ended September 30, 2011, and a 5 basis point decrease from 3.44% for the same period last year. The weighted average yield on interest-earning assets was 4.24% for the three months ended December 31, 2011, compared with 4.45% for the trailing quarter, and 4.56% for the three months ended December 31, 2010. The weighted average cost of interest-bearing liabilities was 0.99% for the quarter ended December 31, 2011, compared with 1.10% for the trailing quarter and 1.29% for the fourth quarter of 2010. The average cost of interest-bearing
deposits for the three months ended December 31, 2011 was 0.72%, compared with 0.81% for the trailing quarter and 0.94% for the same period last year. Average non-interest bearing deposits totaled $680.1 million for the three months ended December 31, 2011, compared with $605.8 million for the trailing quarter and $555.3 million for the same period last year. The average cost of borrowings for the three months ended December 31, 2011 was 2.34%, compared with 2.50% for the trailing quarter, and 2.92% for the same period last year.
2
For the year ended December 31, 2011, the net interest margin increased 4 basis points to 3.49%, compared with 3.45% for the year ended December 31, 2010. The weighted average yield on interest-earning assets declined 27 basis points to 4.46% for the year ended December 31, 2011, compared with 4.73% for the year ended December 31, 2010, however, the weighted average cost of interest bearing liabilities declined 33 basis points to 1.13% for the year ended December 31, 2011, compared with 1.46% for the same period in 2010. The average cost of interest-bearing deposits for the year ended December 31, 2011 was 0.83%, compared with 1.09% for the same period last year. Average
non-interest bearing deposits totaled $605.8 million for the year ended December 31, 2011, compared with $528.1 million for the same period last year. The average cost of borrowings for the year ended December 31, 2011 was 2.55%, compared with 3.18% for the same period last year.
Non-Interest Income
Non-interest income totaled $8.7 million for the quarter ended December 31, 2011, an increase of $910,000 compared to the same period in 2010. Fee income for the quarter ended December 31, 2011 totaled $7.4 million, an increase of $1.3 million compared to the same period in 2010, largely due to an increase in wealth management fees attributable to the August 11, 2011 acquisition of Beacon Trust Company and Beacon Global Asset Management, Inc. (“Beacon”). This increase was offset by a $190,000 decrease in income related to Bank-owned life insurance for the three month period ended December 31, 2011, compared to the same period last year, due to a decline in investment
yields. In addition, other income declined $194,000 for the three months ended December 31, 2011, compared to the same period in 2010, primarily as a result of losses incurred on the November 2011 sales of the Company’s previously occupied administrative facilities, partially offset by net gains on the sale of foreclosed real estate.
For the year ended December 31, 2011, non-interest income totaled $32.5 million, an increase of $990,000, or 3.1%, compared to the same period in 2010. Fee income totaled $25.4 million for the year ended December 31, 2011, an increase of $1.7 million compared with the same period in 2010, largely due to increased wealth management fees related to the Beacon acquisition, an increase in revenue from loan related activity and increased revenue associated with annuity sales. These increases were partially offset by a reduction in overdraft fees. Other income increased $266,000 for the year ended December 31, 2011, compared with the same period in 2010, primarily as a result of net
gains recognized on the sale of foreclosed real estate and an increase in gains resulting from a larger number of loan sales, partially offset by the losses incurred on the sales of the Company’s previously occupied administrative facilities. Offsetting these increases, income related to Bank-owned life insurance decreased $706,000 for the year ended December 31, 2011, compared to the same period last year, primarily due to the receipt of policy claim proceeds in the second quarter of 2010. Additionally, net gains on securities transactions declined $177,000 for the year ended December 31, 2011, compared with the same period in 2010. These net gains on securities transactions totaled $708,000 for the year ended December 31, 2011, compared with net gains of $885,000 for the same period in 2010. The Company recognized net
other-than-temporary impairment charges of $302,000 and $170,000 for the years ended December 31, 2011 and December 31, 2010, respectively, related to an investment in a non-Agency mortgage-backed security.
Non-Interest Expense
For the three months ended December 31, 2011, non-interest expense increased $235,000, or 0.7%, to $36.2 million, compared to $36.0 million for the three months ended December 31, 2010. Compensation and benefits expense increased $1.2 million for the three months ended December 31, 2011, compared with the same period in 2010, as a result of higher salary expense and personnel added as a result of the Beacon acquisition, increased employee health and medical costs and increased incentive compensation. Net occupancy expense increased $485,000, to $5.3 million for the three months ended December 31, 2011, compared to $4.8 million for the same period in 2010, primarily due to expenses associated
with the Company’s consolidation of facilities into its newly leased administrative offices in April of this year and expenses related to the Beacon acquisition. Other operating expenses increased $398,000, to $6.5 million for the three months ended December 31, 2011, compared to same period in the prior year, due to increased loan collection and workout expenses and costs associated with the Beacon acquisition.
3
Additionally, data processing expense increased $221,000, to $2.5 million for the three months ended December 31, 2011, compared with the same period in 2010, because of increased software maintenance and core processing fees. Partially offsetting these increases, impairment of premises and equipment declined $1.5 million for the three months ended December 31, 2011, compared to the same period last year, due to the impairment charge incurred in the prior year quarter related to the then planned disposition of the Company’s former administrative office. Additionally, FDIC insurance expense decreased $564,000, to $1.4 million for the three months ended December 31, 2011, compared with
$2.0 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 $149,000 for the three months ended December 31, 2011, compared with the same period in 2010, as a result of scheduled reductions in core deposit intangible amortization, partially offset by the amortization of the customer relationship intangible arising from the Beacon acquisition.
Non-interest expense for the year ended December 31, 2011 was $142.4 million. Non-interest expense increased $3.7 million, or 2.7%, from $138.7 million for the year ended December 31, 2010. Compensation and benefits expense increased $5.0 million, to $74.9 million for the year ended December 31, 2011 compared to $69.9 million for the year ended December 31, 2010, due to higher salary expense related to annual merit increases and personnel added as a result of the Beacon acquisition, increased employee health and medical costs, and increased stock-based compensation expense resulting from shares granted in connection with the Company’s incentive compensation and Employee Stock Ownership
plans and the higher average share price of the Company’s common stock in 2011 compared with 2010. In addition, net occupancy expense increased $1.4 million, to $21.1 million, compared to $19.8 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 were sold in November 2011. In addition, approximately $227,000 in damages attributable to Hurricane Irene were also included in occupancy expense for the year ended December 31, 2011. Data processing expense totaled $9.5 million for the year ended December 31, 2011, compared to $9.0 million for the same period in 2010. The $516,000 increase was primarily due to higher software maintenance and core processing fees. Other
operating expenses increased $157,000 for the year ended December 31, 2011, compared with the same period last year, due to increased loan collection expense and costs associated with the Beacon acquisition. Partially offsetting these increases, FDIC insurance expense decreased $1.7 million to $5.9 million for the year ended December 31, 2011, compared with $7.6 million for the same period in 2010. The decrease was primarily due to a lower assessment rate charged on deposits in the first quarter of 2011 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 $801,000 for the year ended December 31, 2011, compared with the same period of 2010, as a result of scheduled reductions in core deposit intangible amortization, partially
offset by the amortization of the customer relationship intangible arising from the Beacon acquisition. Impairment of premises and equipment declined $721,000, for the year ended December 31, 2011, compared to the same period last year, as the Company recognized a $1.5 million impairment charge in the fourth quarter of 2010 related to the then anticipated sale and relocation of its administrative office, compared to an $807,000 impairment charge in the first quarter of 2011 related to the then anticipated sale and relocation of its former loan administration center. Advertising and promotions expense decreased $98,000 for the year ended December 31, 2011, compared with the same period last year.
Asset Quality
Total non-performing loans at December 31, 2011 were $122.5 million, or 2.63% of total loans, compared with $125.3 million, or 2.74% of total loans at September 30, 2011, and $97.3 million, or 2.21% of total loans at December 31, 2010. The $2.8 million decrease in non-performing loans at December 31, 2011, compared with the trailing quarter, consisted of a $6.4 million decrease in commercial mortgages and a $130,000 decrease in construction loans, partially offset by a $2.4 million increase in commercial loans, a $997,000 increase in multi-family mortgages, a $338,000 increase in
residential loans and a $95,000 increase in consumer loans. At December 31, 2011, impaired loans totaled $103.2 million with related specific reserves of $9.3 million, compared with impaired loans totaling $105.1 million with related specific reserves of $6.6 million at September 30, 2011. At December 31, 2010, impaired loans totaled
4
$47.7 million with related specific reserves of $2.3 million. At December 31, 2011, the Company’s allowance for loan losses was 1.60% of total loans, compared with 1.61% of total loans at September 30, 2011 and 1.56% of total loans at December 31, 2010.
The Company recorded provisions for loan losses of $6.0 million and $28.9 million for the three months and year ended December 31, 2011, respectively, compared with provisions of $8.9 million and $35.5 million for the three months and year ended December 31, 2010, respectively. For the three months and year ended December 31, 2011, the Company had net charge-offs of $5.3 million and $23.3 million, respectively, compared with net charge-offs of $8.9 million and $27.5 million, respectively, for the same periods in 2010. The allowance for loan losses increased $5.6 million to $74.4 million at December 31, 2011, from $68.7 million at December 31, 2010. At December 31, 2011, the Company
held $12.8 million of foreclosed assets, compared with $2.9 million at December 31, 2010.
Income Tax Expense
For the three months ended December 31, 2011, the Company’s income tax expense was $5.5 million, compared with $3.8 million for the same period in 2010. For the year ended December 31, 2011, the Company’s income tax expense was $19.8 million, compared with $16.6 million for the same period in 2010. The increase in income tax expense was primarily attributable to an increase in pre-tax income. The Company’s effective tax rates were 27.0% and 25.7%, respectively, for the three months and year ended December 31, 2011, compared with 23.9% and 25.0% for the three months and year ended December 31, 2010, respectively. The effective tax rates for the 2011 periods were
affected by an increase in the effective rate attributable to an increase in taxable income for the full year of 2011, partially offset by the reduction of a valuation allowance against subsidiary company New Jersey state net operating losses.
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, January 27, 2012 regarding highlights of the Company’s quarter and year ended December 31, 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.
5
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.
6
|
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
|
||||||||
|
Consolidated Statements of Condition
|
||||||||
|
December 31, 2011 (Unaudited) and December 31, 2010
|
||||||||
|
(Dollars in Thousands)
|
||||||||
|
Assets
|
December 31, 2011
|
December 31, 2010
|
||||||
|
Cash and due from banks
|
$
|
68,553
|
$
|
51,345
|
||||
|
Short-term investments
|
1,079
|
884
|
||||||
|
Total cash and cash equivalents
|
69,632
|
52,229
|
||||||
|
Securities available for sale, at fair value
|
1,376,119
|
1,378,927
|
||||||
|
Investment securities held to maturity (fair value of $366,296 at
|
||||||||
|
December 31, 2011 (unaudited) and $351,680 at December 31, 2010)
|
348,318
|
346,022
|
||||||
|
Federal Home Loan Bank of New York ("FHLB-NY") stock
|
38,927
|
38,283
|
||||||
|
Loans
|
4,653,509
|
4,409,813
|
||||||
|
Less allowance for loan losses
|
74,351
|
68,722
|
||||||
|
Net loans
|
4,579,158
|
4,341,091
|
||||||
|
Foreclosed assets, net
|
12,802
|
2,858
|
||||||
|
Banking premises and equipment, net
|
66,260
|
74,257
|
||||||
|
Accrued interest receivable
|
24,653
|
25,257
|
||||||
|
Intangible assets
|
360,714
|
354,220
|
||||||
|
Bank-owned life insurance
|
142,010
|
136,768
|
||||||
|
Other assets
|
78,810
|
74,616
|
||||||
|
Total assets
|
$
|
7,097,403
|
$
|
6,824,528
|
||||
|
Liabilities and Stockholders' Equity
|
||||||||
|
Deposits:
|
||||||||
|
Demand deposits
|
$
|
3,136,129
|
$
|
2,706,204
|
||||
|
Savings deposits
|
891,742
|
893,268
|
||||||
|
Certificates of deposit of $100,000 or more
|
383,174
|
412,155
|
||||||
|
Other time deposits
|
745,552
|
866,107
|
||||||
|
Total deposits
|
5,156,597
|
4,877,734
|
||||||
|
Mortgage escrow deposits
|
20,955
|
19,558
|
||||||
|
Borrowed funds
|
920,180
|
969,683
|
||||||
|
Other liabilities
|
47,194
|
35,866
|
||||||
|
Total liabilities
|
6,144,926
|
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 59,968,195 outstanding at December 31, 2011, and 59,921,065
|
||||||||
|
outstanding at December 31, 2010
|
832
|
832
|
||||||
|
Additional paid-in capital
|
1,019,253
|
1,017,315
|
||||||
|
Retained earnings
|
363,011
|
332,472
|
||||||
|
Accumulated other comprehensive income
|
9,571
|
14,754
|
||||||
|
Treasury stock
|
(384,725)
|
(385,094)
|
||||||
|
Unallocated common stock held by the Employee Stock Ownership Plan ("ESOP")
|
(55,465)
|
(58,592)
|
||||||
|
Common Stock acquired by the Directors' Deferred Fee Plan ("DDFP")
|
(7,390)
|
(7,482)
|
||||||
|
Deferred Compensation - DDFP
|
7,390
|
7,482
|
||||||
|
Total stockholders' equity
|
952,477
|
921,687
|
||||||
|
Total liabilities and stockholders' equity
|
$
|
7,097,403
|
$
|
6,824,528
|
||||
7
|
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
|
|||||||||||
|
Consolidated Statements of Income
|
|||||||||||
|
Three Months and Year Ended December 31, 2011 and 2010
|
|||||||||||
|
(Dollars in Thousands, except per share data)
|
|||||||||||
|
Three Months Ended
|
Year Ended
|
||||||||||
|
December 31,
|
December 31,
|
||||||||||
|
2011
|
2010
|
2011
|
2010
|
||||||||
|
Interest income:
|
|||||||||||
|
Real estate secured loans
|
$
|
39,306
|
$
|
40,100
|
$
|
158,731
|
$
|
160,460
|
|||
|
Commercial loans
|
10,892
|
10,463
|
42,759
|
41,427
|
|||||||
|
Consumer loans
|
6,348
|
6,992
|
25,793
|
28,479
|
|||||||
|
Securities available for sale and FHLB-NY stock
|
7,689
|
9,494
|
36,157
|
43,143
|
|||||||
|
Investment securities
|
2,991
|
3,145
|
12,160
|
12,778
|
|||||||
|
Deposits, Federal funds sold and other short-term investments
|
38
|
25
|
119
|
247
|
|||||||
|
Total interest income
|
67,264
|
70,219
|
275,719
|
286,534
|
|||||||
|
Interest expense:
|
|||||||||||
|
Deposits
|
8,113
|
10,364
|
36,552
|
47,705
|
|||||||
|
Borrowed funds
|
5,240
|
6,834
|
23,177
|
29,864
|
|||||||
|
Total interest expense
|
13,353
|
17,198
|
59,729
|
77,569
|
|||||||
|
Net interest income
|
53,911
|
53,021
|
215,990
|
208,965
|
|||||||
|
Provision for loan losses
|
6,000
|
8,900
|
28,900
|
35,500
|
|||||||
|
Net interest income after provision for loan losses
|
47,911
|
44,121
|
187,090
|
173,465
|
|||||||
|
Non-interest income:
|
|||||||||||
|
Fees
|
7,366
|
6,042
|
25,418
|
23,679
|
|||||||
|
Other-than-temporary impairment losses on securities
|
—
|
—
|
(1,661)
|
(3,116)
|
|||||||
|
Portion of loss recognized in OCI (before taxes)
|
—
|
—
|
1,359
|
2,946
|
|||||||
|
Net impairment losses recognized in earnings
|
—
|
—
|
(302)
|
(170)
|
|||||||
|
Bank owned life insurance
|
1,244
|
1,434
|
5,242
|
5,948
|
|||||||
|
Net gain on securities transactions
|
22
|
52
|
708
|
885
|
|||||||
|
Other income
|
45
|
239
|
1,476
|
1,210
|
|||||||
|
Total non-interest income
|
8,677
|
7,767
|
32,542
|
31,552
|
|||||||
|
Non-interest expense:
|
|||||||||||
|
Compensation and employee benefits
|
18,428
|
17,276
|
74,904
|
69,865
|
|||||||
|
Net occupancy expense
|
5,320
|
4,835
|
21,131
|
19,777
|
|||||||
|
Data processing expense
|
2,506
|
2,285
|
9,500
|
8,984
|
|||||||
|
FDIC Insurance
|
1,400
|
1,964
|
5,883
|
7,631
|
|||||||
|
Amortization of intangibles
|
716
|
865
|
3,030
|
3,831
|
|||||||
|
Impairment of premises and equipment
|
—
|
1,528
|
807
|
1,528
|
|||||||
|
Advertising and promotion expense
|
1,346
|
1,126
|
3,951
|
4,049
|
|||||||
|
Other operating expenses
|
6,493
|
6,095
|
23,240
|
23,083
|
|||||||
|
Total non-interest expenses
|
36,209
|
35,974
|
142,446
|
138,748
|
|||||||
|
Income before income tax expense
|
20,379
|
15,914
|
77,186
|
66,269
|
|||||||
|
Income tax expense
|
5,509
|
3,799
|
19,842
|
16,564
|
|||||||
|
Net income
|
$
|
14,870
|
$
|
12,115
|
$
|
57,344
|
$
|
49,705
|
|||
|
Basic earnings per share
|
$
|
0.26
|
$
|
0.21
|
$
|
1.01
|
$
|
0.88
|
|||
|
Average basic shares outstanding
|
56,898,336
|
56,687,652
|
56,856,083
|
56,572,040
|
|||||||
|
Diluted earnings per share
|
$
|
0.26
|
$
|
0.21
|
$
|
$1.01
|
$
|
0.88
|
|||
|
Average diluted shares outstanding
|
56,910,915
|
56,687,652
|
56,868,524
|
56,572,040
|
|||||||
8
|
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
|
||||||||||||||
|
Consolidated Financial Highlights
|
||||||||||||||
|
(Dollars in Thousands, except share data) (unaudited)
|
||||||||||||||
|
At or for the
|
At or for the
|
|||||||||||||
|
Three Months Ended
|
Year Ended
|
|||||||||||||
|
December 31,
|
December 31,
|
|||||||||||||
|
2011
|
2010
|
2011
|
2010
|
|||||||||||
|
STATEMENTS OF INCOME:
|
||||||||||||||
|
Net interest income
|
$
|
53,911
|
$
|
53,021
|
$
|
215,990
|
$
|
208,965
|
||||||
|
Provision for loan losses
|
6,000
|
8,900
|
28,900
|
35,500
|
||||||||||
|
Non-interest income
|
8,677
|
7,767
|
32,542
|
31,552
|
||||||||||
|
Non-interest expense
|
36,209
|
35,974
|
142,446
|
138,748
|
||||||||||
|
Income before income tax expense
|
20,379
|
15,914
|
77,186
|
66,269
|
||||||||||
|
Net income
|
$
|
14,870
|
$
|
12,115
|
$
|
57,344
|
$
|
49,705
|
||||||
|
Basic and diluted earnings per share
|
$0.26
|
$0.21
|
$1.01
|
$0.88
|
||||||||||
|
Interest rate spread
|
3.25%
|
3.27%
|
3.33%
|
3.27%
|
||||||||||
|
Net interest margin
|
3.39%
|
3.44%
|
3.49%
|
3.45%
|
||||||||||
|
PROFITABILITY:
|
||||||||||||||
|
Annualized return on average assets
|
0.84%
|
0.70%
|
0.83%
|
0.73%
|
||||||||||
|
Annualized return on average equity
|
6.18%
|
5.19%
|
6.09%
|
5.46%
|
||||||||||
|
Annualized non-interest expense to average assets
|
2.04%
|
2.09%
|
2.07%
|
2.05%
|
||||||||||
|
Efficiency ratio (1)
|
57.85%
|
59.18%
|
57.31%
|
57.69%
|
||||||||||
|
ASSET QUALITY:
|
||||||||||||||
|
Non-accrual loans
|
$
|
122,549
|
$
|
97,264
|
||||||||||
|
90+ and still accruing
|
—
|
—
|
||||||||||||
|
Non-performing loans
|
122,549
|
97,264
|
||||||||||||
|
Foreclosed assets
|
12,802
|
2,858
|
||||||||||||
|
Non-performing assets
|
135,351
|
100,122
|
||||||||||||
|
Non-performing loans to total loans
|
2.63%
|
2.21%
|
||||||||||||
|
Non-performing assets to total assets
|
1.91%
|
1.47%
|
||||||||||||
|
Allowance for loan losses
|
$
|
74,351
|
$
|
68,722
|
||||||||||
|
Allowance for loan losses to total non-performing loans
|
60.67%
|
70.66%
|
||||||||||||
|
Allowance for loan losses to total loans
|
1.60%
|
1.56%
|
||||||||||||
|
AVERAGE BALANCE SHEET DATA:
|
||||||||||||||
|
Assets
|
$
|
7,041,992
|
$
|
6,825,936
|
$
|
6,893,107
|
$
|
6,783,472
|
||||||
|
Loans, net
|
4,528,380
|
4,298,726
|
4,423,125
|
4,274,549
|
||||||||||
|
Earnings assets
|
6,289,331
|
6,107,423
|
6,158,329
|
6,057,358
|
||||||||||
|
Core deposits
|
3,992,536
|
3,638,660
|
3,777,647
|
3,511,324
|
||||||||||
|
Borrowings
|
888,027
|
927,209
|
909,531
|
939,311
|
||||||||||
|
Interest-bearing liabilities
|
5,352,132
|
5,301,793
|
5,294,623
|
5,299,718
|
||||||||||
|
Stockholders' equity
|
954,563
|
926,439
|
941,428
|
910,516
|
||||||||||
|
Average yield on interest-earning assets
|
4.24%
|
4.56%
|
4.46%
|
4.73%
|
||||||||||
|
Average cost on interest-bearing liabilities
|
0.99%
|
1.29%
|
1.13%
|
1.46%
|
||||||||||
|
LOAN DATA:
|
||||||||||||||
|
Mortgage loans:
|
||||||||||||||
|
Residential
|
$
|
1,308,635
|
$
|
1,386,326
|
||||||||||
|
Commercial
|
1,253,542
|
1,180,147
|
||||||||||||
|
Multi-family
|
564,147
|
387,189
|
||||||||||||
|
Construction
|
114,817
|
125,191
|
||||||||||||
|
Total mortgage loans
|
3,241,141
|
3,078,853
|
||||||||||||
|
Commercial loans
|
849,009
|
755,487
|
||||||||||||
|
Consumer loans
|
560,970
|
569,597
|
||||||||||||
|
Total gross loans
|
$
|
4,651,120
|
$
|
4,403,937
|
||||||||||
|
Premium on purchased loans
|
5,823
|
6,771
|
||||||||||||
|
Unearned discounts
|
(100)
|
(104)
|
||||||||||||
|
Net deferred
|
(3,334)
|
(791)
|
||||||||||||
|
Total loans
|
$
|
4,653,509
|
$
|
4,409,813
|
||||||||||
9
|
Notes
|
||||||||||||||
|
(1) Efficiency Ratio Calculation
|
||||||||||||||
|
Three Months Ended
|
Year Ended
|
|||||||||||||
|
December 31,
|
December 31,
|
|||||||||||||
|
2011
|
2010
|
2011
|
2010
|
|||||||||||
|
Net interest income
|
$
|
53,911
|
$
|
53,021
|
215,990
|
208,965
|
||||||||
|
Non-interest income
|
8,677
|
7,767
|
32,542
|
31,552
|
||||||||||
|
Total income:
|
$
|
62,588
|
$
|
60,788
|
248,532
|
240,517
|
||||||||
|
Non-interest expense:
|
$
|
36,209
|
$
|
35,974
|
142,446
|
138,748
|
||||||||
|
Expense/income:
|
$
|
57.85%
|
$
|
59.18%
|
57.31%
|
57.69%
|
||||||||
10
|
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
|
||||||||||||||||
|
Net Interest Margin Analysis
|
||||||||||||||||
|
Quarterly Average Balances
|
||||||||||||||||
|
(Unaudited) (Dollars in Thousands)
|
||||||||||||||||
|
December 31, 2011
|
September 30, 2011
|
|||||||||||||||
|
Average
|
Average
|
Average
|
Average
|
|||||||||||||
|
Balance
|
Interest
|
Yield
|
Balance
|
Interest
|
Yield
|
|||||||||||
|
Interest-Earning Assets:
|
||||||||||||||||
|
Deposits
|
$
|
60,052
|
$
|
38
|
0.25%
|
$
|
42,620
|
$
|
26
|
0.25%
|
||||||
|
Federal funds sold and
|
||||||||||||||||
|
other short-term investments
|
1,423
|
—
|
0.01%
|
1,243
|
—
|
0.01%
|
||||||||||
|
Investment securities (1)
|
348,128
|
2,991
|
3.45%
|
348,802
|
3,045
|
3.47%
|
||||||||||
|
Securities available for sale
|
1,313,249
|
7,295
|
2.22%
|
1,305,115
|
8,739
|
2.67%
|
||||||||||
|
Federal Home Loan Bank stock
|
38,099
|
394
|
4.11%
|
39,147
|
435
|
4.41%
|
||||||||||
|
Net loans (2)
|
.
|
|||||||||||||||
|
Total mortgage loans
|
3,175,644
|
39,306
|
4.90%
|
3,088,464
|
39,466
|
5.06%
|
||||||||||
|
Total commercial loans
|
798,981
|
10,892
|
5.37%
|
773,807
|
11,010
|
5.60%
|
||||||||||
|
Total consumer loans
|
553,755
|
6,348
|
4.55%
|
552,061
|
6,436
|
4.63%
|
||||||||||
|
Total Net loans
|
4,528,380
|
56,546
|
4.94%
|
4,414,332
|
56,912
|
5.10%
|
||||||||||
|
Total Interest-Earning Assets
|
$
|
6,289,331
|
$
|
67,264
|
4.24%
|
$
|
6,151,259
|
$
|
69,157
|
4.45%
|
||||||
|
Non-Interest Earning Assets:
|
||||||||||||||||
|
Cash and due from banks
|
89,835
|
85,021
|
||||||||||||||
|
Other assets
|
662,826
|
660,250
|
||||||||||||||
|
Total Assets
|
$
|
7,041,992
|
$
|
6,896,530
|
||||||||||||
|
Interest-Bearing Liabilities:
|
||||||||||||||||
|
Demand deposits
|
$
|
2,430,323
|
$
|
3,341
|
0.55%
|
$
|
2,277,126
|
$
|
3,788
|
0.66%
|
||||||
|
Savings deposits
|
882,074
|
543
|
0.24%
|
906,601
|
687
|
0.30%
|
||||||||||
|
Time deposits
|
1,151,708
|
4,229
|
1.46%
|
1,199,128
|
4,509
|
1.49%
|
||||||||||
|
Total Deposits
|
4,464,105
|
8,113
|
0.72%
|
4,382,855
|
8,984
|
0.81%
|
||||||||||
|
Borrowed funds
|
888,027
|
5,240
|
2.34%
|
907,055
|
5,717
|
2.50%
|
||||||||||
|
Total Interest-Bearing Liabilities
|
$
|
5,352,132
|
$
|
13,353
|
0.99%
|
$
|
5,289,910
|
$
|
14,701
|
1.10%
|
||||||
|
Non-Interest Bearing Liabilities
|
735,297
|
659,226
|
||||||||||||||
|
Total Liabilities
|
6,087,429
|
5,949,136
|
||||||||||||||
|
Stockholders' equity
|
954,563
|
947,394
|
||||||||||||||
|
Total Liabilities and Stockholders' Equity
|
7,041,992
|
$
|
6,896,530
|
|||||||||||||
|
Net interest income
|
$
|
53,911
|
$
|
54,456
|
||||||||||||
|
Net interest rate spread
|
3.25%
|
3.35%
|
||||||||||||||
|
Net interest-earning assets
|
$
|
937,199
|
$
|
861,349
|
||||||||||||
|
Net interest margin (3)
|
3.39%
|
3.50%
|
||||||||||||||
|
Ratio of interest-earning assets to
|
||||||||||||||||
|
total interest-bearing liabilities
|
1.18
|
x
|
1.16
|
x
|
||||||||||||
|
(1) Average outstanding balance amounts shown are amortized cost.
|
|
(2) Average outstanding balances are net of the allowance for loan losses, deferred loan fees and expenses, loan premiums and discounts and include non-accrual loans.
|
|
(3) Annualized net interest income divided by average interest-earning assets.
|
11
|
The following table summarizes the quarterly net interest margin for the previous five quarters.
|
|||||||||||
|
12/31/11
|
9/30/11
|
6/30/11
|
3/31/11
|
12/31/10
|
|||||||
|
4th Qtr.
|
3rd Qtr.
|
2nd Qtr.
|
1st Qtr.
|
4th Qtr.
|
|||||||
|
Interest-Earning Assets:
|
|||||||||||
|
Securities
|
2.44%
|
2.81%
|
3.01%
|
2.91%
|
2.80%
|
||||||
|
Net Loans
|
4.94%
|
5.10%
|
5.16%
|
5.24%
|
5.30%
|
||||||
|
Total Interest-Earning Assets
|
4.24%
|
4.45%
|
4.56%
|
4.58%
|
4.56%
|
||||||
|
Interest-Bearing Liabilities:
|
|||||||||||
|
Total Deposits
|
0.72%
|
0.81%
|
0.89%
|
0.92%
|
0.94%
|
||||||
|
Total Borrowings
|
2.34%
|
2.50%
|
2.65%
|
2.70%
|
2.92%
|
||||||
|
Total Interest-Bearing Liabilities
|
0.99%
|
1.10%
|
1.19%
|
1.23%
|
1.29%
|
||||||
|
Interest Rate Spread
|
3.25%
|
3.35%
|
3.37%
|
3.35%
|
3.27%
|
||||||
|
Net Interest Margin
|
3.39%
|
3.50%
|
3.53%
|
3.51%
|
3.44%
|
||||||
|
Ratio of Interest-Earning Assets to Interest-Bearing Liabilities
|
1.18x
|
1.16x
|
1.15x
|
1.15x
|
1.15x
|
||||||
12
|
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
|
||||||||||||||
|
Net Interest Margin Analysis
|
||||||||||||||
|
Average Year to Date Balances
|
||||||||||||||
|
(Unaudited) (Dollars in Thousands)
|
||||||||||||||
|
December 31, 2011
|
December 31, 2010
|
|||||||||||||
|
Average
|
Average
|
Average
|
Average
|
|||||||||||
|
Balance
|
Interest
|
Yield
|
Balance
|
Interest
|
Yield
|
|||||||||
|
Interest-Earning Assets:
|
||||||||||||||
|
Deposits
|
$
|
47,727
|
$
|
119
|
0.25%
|
$
|
98,940
|
$
|
247
|
0.25%
|
||||
|
Federal funds sold and
|
||||||||||||||
|
other short-term investments
|
1,457
|
0
|
0.01%
|
1,951
|
—
|
0.01%
|
||||||||
|
Investment securities (1)
|
345,528
|
12,160
|
3.52%
|
335,080
|
12,778
|
3.81%
|
||||||||
|
Securities available for sale
|
1,302,233
|
34,393
|
2.64%
|
1,311,859
|
41,322
|
3.15%
|
||||||||
|
Federal Home Loan Bank stock
|
38,259
|
1,764
|
4.61%
|
34,979
|
1,821
|
5.21%
|
||||||||
|
Net loans (2)
|
.
|
.
|
||||||||||||
|
Total mortgage loans
|
3,102,662
|
158,731
|
5.08%
|
2,984,736
|
160,460
|
5.38%
|
||||||||
|
Total commercial loans
|
765,228
|
42,759
|
5.56%
|
719,722
|
41,427
|
5.76%
|
||||||||
|
Total consumer loans
|
555,235
|
25,793
|
4.64%
|
570,091
|
28,479
|
5.00%
|
||||||||
|
Total Net loans
|
4,423,125
|
227,283
|
5.11%
|
4,274,549
|
230,366
|
5.39%
|
||||||||
|
Total Interest-Earning Assets
|
$
|
6,158,329
|
$
|
275,719
|
4.46%
|
$
|
6,057,358
|
$
|
286,534
|
4.73%
|
||||
|
Non-Interest Earning Assets:
|
||||||||||||||
|
Cash and due from banks
|
77,823
|
79,024
|
||||||||||||
|
Other assets
|
656,955
|
647,090
|
||||||||||||
|
Total Assets
|
$
|
6,893,107
|
$
|
6,783,472
|
||||||||||
|
Interest-Bearing Liabilities:
|
||||||||||||||
|
Demand deposits
|
$
|
2,272,780
|
$
|
15,168
|
0.67%
|
$
|
2,096,259
|
$
|
18,369
|
0.88%
|
||||
|
Savings deposits
|
899,020
|
2,971
|
0.33%
|
886,963
|
4,061
|
0.46%
|
||||||||
|
Time deposits
|
1,213,292
|
18,413
|
1.52%
|
1,377,185
|
25,275
|
1.84%
|
||||||||
|
Total Deposits
|
4,385,092
|
36,552
|
0.83%
|
4,360,407
|
47,705
|
1.09%
|
||||||||
|
Borrowed funds
|
909,531
|
23,177
|
2.55%
|
939,311
|
29,864
|
3.18%
|
||||||||
|
Total Interest-Bearing Liabilities
|
$
|
5,294,623
|
$
|
59,729
|
1.13%
|
$
|
5,299,718
|
$
|
77,569
|
1.46%
|
||||
|
Non-Interest Bearing Liabilities
|
657,056
|
573,238
|
||||||||||||
|
Total Liabilities
|
5,951,679
|
5,872,956
|
||||||||||||
|
Stockholders' equity
|
941,428
|
910,516
|
||||||||||||
|
Total Liabilities and Stockholders' Equity
|
6,893,107
|
$
|
6,783,472
|
|||||||||||
|
Net interest income
|
$
|
215,990
|
$
|
208,965
|
||||||||||
|
Net interest rate spread
|
3.33%
|
3.27%
|
||||||||||||
|
Net interest-earning assets
|
$
|
863,706
|
$
|
757,640
|
||||||||||
|
Net interest margin (3)
|
3.49%
|
3.45%
|
||||||||||||
|
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
|
13
|
The following table summarizes the year ended net interest margin for the previous three years.
|
|||||||||||||||
|
Year Ended
|
|||||||||||||||
|
12/31/11
|
12/31/10
|
12/31/09
|
|||||||||||||
|
Interest-Earning Assets:
|
|||||||||||||||
|
Securities
|
2.79%
|
3.15%
|
3.66%
|
||||||||||||
|
Net Loans
|
5.11%
|
5.39%
|
5.43%
|
||||||||||||
|
Total Interest-Earning Assets
|
4.46%
|
4.73%
|
4.95%
|
||||||||||||
|
Interest-Bearing Liabilities:
|
|||||||||||||||
|
Total Deposits
|
0.83%
|
1.09%
|
1.79%
|
||||||||||||
|
Total Borrowings
|
2.55%
|
3.18%
|
3.50%
|
||||||||||||
|
Total Interest-Bearing Liabilities
|
1.13%
|
1.46%
|
2.13%
|
||||||||||||
|
Interest Rate Spread
|
3.33%
|
3.27%
|
2.82%
|
||||||||||||
|
Net Interest Margin
|
3.49%
|
3.45%
|
3.06%
|
||||||||||||
|
Ratio of Interest-Earning Assets to Interest-Bearing Liabilities
|
1.16x
|
1.14x
|
1.13x
|
||||||||||||
14