Sterling Bancorp (STL) 8-K Results of Operations and Financial Condition

Exhibit 99

	Provident New York Bancorp
	400 Rella Boulevard
	Montebello, NY 10901-4243
	T 845.369.8040
News Release	F 845.369.8255
	www.providentbanking.com

FOR IMMEDIATE RELEASE

October 29, 2012

PROVIDENT BANK CONTACT:

Stephen Masterson, EVP & Chief Financial Officer

845.369.8040

Provident New York Bancorp Announces

Fourth Quarter 2012 Earnings of $0.17 per Diluted Share excluding merger related charges¹, or $0.06 per Diluted Share in GAAP Earnings²

Fiscal 2012 Earnings of $0.64 per Diluted Share excluding merger related charges, or $0.52 per diluted Share in GAAP Earnings

MONTEBELLO, N.Y. – October 29, 2012 – Provident New York Bancorp (NYSE: PBNY), the parent company of Provident Bank, today announced fiscal fourth quarter results for the period ending September 30, 2012, as well as for the fiscal year ending September 30, 2012. Net income for the quarter was $6.9 million, or $0.17 per diluted share excluding merger related charges related to the acquisition of Gotham Bank of New York (“Gotham”), compared to a net loss of $493,000, or $(0.01) per diluted share for same quarter last year; and $6.2 million, or $0.17 per diluted share for the linked quarter ended June 30, 2012. For the fiscal year ending September 30, 2012, net income for the year was $24.4 million, or $0.64 per diluted share excluding merger related charges, as compared to net income of $11.7 million or $0.31³ per diluted share for the year ending September 30, 2011.

¹  Earnings excluding merger charges are calculated using the effective tax rate. See table on pages 10 and 11 for reconciliation of GAAP earnings to earnings excluding merger related charges.

²  GAAP earnings include merger related charges for Gotham, and include securities’ gains.

³  Includes $5 million pre-tax related to restructuring charges and defined benefit settlement charges.

President’s Comments

Jack Kopnisky, President and CEO, commented: “The fiscal fourth quarter of 2012 continued to produce strong earnings for our Bank, yielding $0.17 per diluted share, excluding merger related charges for Gotham. This is a continuation of the solid earnings that we put forth for the third fiscal quarter ending June 30, 2012.

We had earnings of $0.64 (excluding merger related charges) per diluted share for the fiscal year 2012 as compared to $0.31 per diluted share in the fiscal year 2011. This represents a 106 percent increase in earnings per share year over year. We have been able to grow earnings for our Bank based on strong commercial loan and deposit growth, expense controls, and improvement in credit quality. We implemented a team based approach in commercial banking that facilitated the significant growth in loans and deposits for the year. We reduced approximately $10 million in noninterest core expenses by reducing back office and retail costs and redeployed approximately $5 million to customer facing opportunities. The completion of the Gotham acquisition accelerated our entry into the New York City market, which is strategically beneficial for our Bank. We also raised $46.0 million in capital, which resulted in a Tier 1 Leverage Ratio of 8.9⁴ percent based on average assets for the fourth quarter. We were able to significantly reduce our non-performing loans during the fourth quarter to $39.8 million, representing a 10 percent decrease in non-performing loans quarter over quarter. Net charge offs as a percentage of average loans stood at 57 basis points compared to 55 basis points last quarter, and 241 basis points for the fourth quarter last year.

In terms of the balance sheet, we saw net loan growth of $415.3 million for 2012, a 24.8 percent increase over last year. We funded this loan growth with deposit base expansion, excluding more volatile municipal deposits of $527.5 million, or a 31.4 percent increase year over year.”

Key items for the quarter

• Total loan originations were $205.7 million compared to $206.2 million in the linked quarter, and $180.6 million for the fourth fiscal quarter of 2011.

• Non-performing loans were reduced from $44.5 million at June 30, 2012, to $39.8 million at September 30, 2012.

• Our allowance for loan losses increased $695,000 significantly improving the ratio to non-performing loans increased to approximately 71 percent from 62 percent. Provision for loan losses increased by $1.2 million during the fourth quarter. For the fourth quarter of fiscal 2011, provision for loan losses was $8.8 million.

• Securities gains were $3.0 million after tax based on the period’s effective tax rate, for the fourth quarter.

Gotham Bank Acquisition

On August 10, 2012 the Company accelerated its growth into the New York City market area with the completion of the Gotham Bank acquisition with $434.0 million of assets, $209.4 million of loans, and $368.5 million in deposits. Intangible assets increased $9.8 million due to good will and core deposit intangibles associated with the transaction. The fair value analysis of the assets resulted in a discount of 1.9 percent to the loan portfolio and a core deposit premium of 2.8 percent. Merger related costs related to this acquisition were $5.9 million or $4.5 million net of taxes.

Net Interest Income and Margin

Fourth quarter fiscal 2012 compared with fourth quarter fiscal 2011

Net interest income was $25.2 million for the fourth quarter of fiscal 2012, up $2.4 million for the same quarter of fiscal 2011. Reflecting the current interest rate environment, the tax-equivalent yield on investments decreased 37 basis points and loan yields were down 25 basis points compared to the fourth quarter fiscal 2011. As a result, the yield on interest-earning assets declined 32 basis points. The cost of deposits increased 1 basis point to 27 basis points, and the cost of

⁴  Tier 1 leverage based on period end assets equated to 7.6%, still well capitalized.

borrowings decreased by 4 basis points to 3.65 percent. The resulting net interest margin on a tax-equivalent basis was 3.38 percent for the fourth quarter of fiscal 2012, compared to 3.58 percent for the same period a year ago.

Fourth quarter fiscal 2012 compared with linked quarter ended June 30, 2012

Net interest income for the quarter ending September 30, 2012 increased $1.2 million to $25.2 million, compared to $24.1 million at the linked quarter ending June 30, 2012. The tax-equivalent net interest margin decreased to 3.38 percent from 3.59 percent in the linked quarter. Loan yields were 4.97 percent. Deposit costs increased by 5 basis points mainly due to the inflow of Gotham deposits, while the cost of borrowings decreased 12 basis points.

Noninterest Income

Fourth quarter fiscal 2012 compared with fourth quarter fiscal 2011

Noninterest income remained stable for the fourth quarter fiscal 2012 compared with fourth quarter fiscal 2011. Increases in deposit fees, service charges and gain on sale of loans partly offset the decrease in the net gain on sale of securities.

Fourth quarter fiscal 2012 compared with linked quarter ended June 30, 2012

Noninterest income increased $1.0 million to $9.0 million for the fourth fiscal quarter of 2012 compared to the linked quarter ended June 30, 2012, primarily due to security gains.

Noninterest Expense

Fourth quarter fiscal 2012 compared with fourth quarter fiscal 2011

Noninterest expense increased $4.4 million, when compared to the fourth quarter fiscal 2011, mostly due to merger related charges of $4.5 million net of tax incurred during the fourth quarter of fiscal 2012. The fourth quarter of fiscal 2011 includes $3.2 million of restructuring charges.

Fourth quarter fiscal 2012 compared with the linked quarter ended June 30, 2012

Noninterest expense increased $7.6 million, or 36.0 percent over the linked quarter. Increases of $4.5 million were seen in merger related costs related to the Gotham acquisition, totaling approximately $4.9 million. Compensation and benefits increased $2.0 million in part due to the Gotham acquisition, and incentive bonus accruals.

Income Taxes

The Company recorded income tax expense for the year 2012 at an effective tax rate of 23.6 percent compared to 19.3 percent for the same period in fiscal 2011. The difference is primarily due to an increased write-off of credits in 2011, as well as larger tax-exempt municipal security interest relative to pre-tax income for fiscal 2011.

Credit Quality

Nonperforming loans decreased to $39.8 million at September 30, 2012 compared to $44.5 million at June 30, 2012. We disposed of one ADC (“Acquisition, Development and Construction”) loan of approximately $3.0 million and completed foreclosure on $1.5 million from the ADC portfolio. During the quarter, we also disposed of $2.0 million in foreclosed properties, reducing that balance from $7.3 million at June 30, 2012 to $6.4 million at September 30, 2012. Net charge-offs for the quarter were $2.8 million compared to $3.5 million in provision. For the year, net charge-offs were $10.2 million and the provision was $10.6 million. The allowance for loan losses at September 30, 2012 was $28.3 million, 71 percent of nonperforming loans and 1.47 percent of the Provident loan portfolio, excluding loans acquired from Gotham which are carried at fair value and are not assigned any reserves.

Key Balance Sheet Changes

• Assets increased $872.7 million or 27.7 percent compared to June 30, 2012 as a result of increases in investment securities of $267.8 million, net loans of $267.8 million, and cash balances of $326.5 million.

• Deposits increased $779.1 million compared to June 30, 2012, with growth experienced in all deposit categories. Municipal deposits increased $422.0 million compared to June 30, 2012, as a result of seasonal tax deposits.

• Securities increased $267.8 million over June 30, 2012 levels, primarily due to purchases of $462.8 million in securities during the fourth fiscal quarter partially offset by sales of $100.0 million, with associated gains of $3.2 million, and $95.0 million in calls, maturities and principal pay downs.

• Foreclosed properties decreased by 12.2 percent from June 30, 2012 to $6.4 million at September 30, 2012, as we continue to actively manage our portfolios and the market moves towards a greater stability.

Capital and Liquidity

Provident Bank remained well capitalized at September 30, 2012 with a Tier 1 Leverage ratio of approximately 8.9 percent based on average assets. Tier 1 Leverage ratio based on period end assets was approximately 7.6 percent, which is still considered well capitalized. Tangible book value per share decreased to $7.30 at September 30, 2012 from $7.35 at June 30, 2012, due to the acquisition of Gotham. Total capital increased $49.0 million from June 30, 2012, to $492.2 million at September 30, 2012, due primarily to the capital raise announced previously.

Subsequent Events

During October the Company agreed to sell Hudson Valley Investment Advisors, LLC (“HVIA”), an investment advisory firm. The assets related to HVIA are shown on the balance sheet as assets held for sale at a fair value of $4.6 million which reflects deductions in goodwill of $3.3 million.

About Provident New York Bancorp

Headquartered in Montebello, N.Y., Provident Bank, with $4.0 billion in assets, specializes in the delivery of service and solutions to business owners, their families, and consumers in communities within the greater New York City marketplace through teams of dedicated and experienced relationship managers. Our franchise includes 35 Financial Centers. Provident Bank offers a complete line of commercial, business, and consumer banking products and services. For more information, visit the Provident Bank web site atwww.providentbanking.com.

FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISK FACTORS

In addition to historical information, this earnings release may contain forward-looking statements for purposes of applicable securities laws. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are subject to numerous assumptions, risks and uncertainties. There are a number of important factors described in documents previously filed by the Company with the Securities and Exchange Commission, and other factors that could cause the Company’s actual results to differ materially from those contemplated by such forward-looking statements. The Company undertakes no obligation to publicly release the results of any revisions to those forward-looking statements, which may be made to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.

Financial information contained in this release should be considered to be an estimate pending completion of the annual audit of the Company’s financial statements and the filing of its fiscal 2012 Annual Report on Form 10-K with the Securities and Exchange Commission. While the Company is not aware of any need to revise the results disclosed in this release, the Company’s auditors currently are reviewing the Company’s testing of the carrying amount of goodwill on its financial statements in view of the relationship between the Company’s book value per share and the market price of its common stock at the end of the fiscal year. Moreover, accounting literature may require adverse information received by management between the date of this release and the filing of the 10-K to be reflected in the results of fiscal 2012, even though the new information was received by management in fiscal 2013 subsequent to the date of this release.

Provident New York Bancorp and Subsidiaries

CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION

(unaudited, in thousands, except share and per share data)

	September 30, 2012			September 30, 2011			June 30, 2012
Assets:
Cash and due from banks	$	437,982		$	281,512		$	111,400
Total securities		1,153,248			849,884			885,433
Loans held for sale		7,505			4,176			5,369
HVIA assets held for sale		4,550			—			—
Loans:
One- to four-family residential mortgage loans		350,022			389,765			357,943
Commercial real estate, commercial business		1,415,811			913,279			1,114,764
Acquisition, development and construction loans		144,061			175,931			165,125
Consumer loans		209,578			224,824			213,195
Total loans, gross		2,119,472			1,703,799			1,851,027
Allowance for loan losses		(28,282	)		(27,917	)		(27,587	)
Total loans, net		2,091,190			1,675,882			1,823,440
Federal Home Loan Bank stock, at cost		19,249			17,584			18,207
Premises and equipment, net		38,483			40,886			38,877
Goodwill		162,631			160,861			160,861
Other amortizable intangibles		7,164			4,629			3,718
Bank owned life insurance		59,017			56,967			58,506
Foreclosed properties		6,403			5,391			7,292
Other assets		35,359			39,630			36,937
Total assets	$	4,022,781		$	3,137,402		$	3,150,040
Liabilities:
Deposits
Retail	$	167,050		$	194,299		$	167,527
Commercial		412,630			296,505			320,849
Municipal		367,624			160,422			15,936
Personal NOW deposits		213,755			164,637			203,290
Business NOW deposits		38,486			37,092			39,170
Municipal NOW deposits		195,882			200,773			180,433
Total transaction accounts		1,395,427			1,053,728			927,205
Savings		506,538			429,825			476,349
Money market deposits		821,704			509,483			673,498
Certificates of deposit		387,482			303,659			255,039
Total deposits		3,111,151			2,296,695			2,332,091
Borrowings		345,176			323,522			314,154
Borrowings Senior Note		—			51,499			—
Mortgage escrow funds and other liabilities		74,286			34,552			60,667
Total liabilities		3,530,613			2,706,268			2,706,912
Stockholders’ equity		492,168			431,134			443,128
Total liabilities and stockholders’ equity	$	4,022,781		$	3,137,402		$	3,150,040
Shares of common stock outstanding at period end		44,173,470			37,864,008			37,899,007
Book value per share	$	11.14		$	11.39		$	11.69
Tangible book value per share	$	7.30		$	7.02		$	7.35

Provident New York Bancorp and Subsidiaries

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(unaudited, in thousands, except share and per share data)

	Quarter Ended September 30,						Three Months Ended June 30,			Twelve Months Ended September 30,
	2012			2011			2012			2012			2011
Interest and dividend income:
Loans and loan fees	$	24,396		$	21,995		$	22,312		$	91,010		$	89,500
Securities taxable		3,909			3,825			4,224			16,538			14,493
Securities non-taxable		1,543			1,786			1,581			6,497			7,441
Other earning assets		265			211			228			992			1,180
Total interest income		30,113			27,817			28,345			115,037			112,614
Interest expense:
Deposits		1,789			1,384			1,262			5,581			6,104
Borrowings		3,085			3,642			3,001			12,992			15,220
Total interest expense		4,874			5,026			4,263			18,573			21,324
Net interest income		25,239			22,791			24,082			96,464			91,290
Provision for loan losses		3,500			8,784			2,312			10,612			16,584
Net interest income after provision for loan losses		21,739			14,007			21,770			85,852			74,706
Non-interest income:
Deposit fees and service charges	$	3,065		$	2,727		$	2,816		$	11,377		$	10,811
Net gain on sales of securities		3,152			4,519			2,412			10,452			10,011
Other than temporary loss on securities		(3	)		(251	)		(6	)		(47	)		(278	)
Title insurance fees		332			275			249			1,106			1,224
Bank owned life insurance		512			514			518			2,050			2,049
Gain on sale of loans		429			166			578			1,897			1,027
Gain on sale of premises and equipment		70			—			—			75			—
Loss on sale of HVIA		(135	)		—			—			(135	)		—
Investment management fees		776			733			802			3,143			3,080
Fair value loss on interest rate caps		(6	)		(170	)		(14	)		(63	)		(197	)
Other		834			543			624			2,297			2,224
Total non-interest income		9,026			9,056			7,979			32,152			29,951
Non-interest expense:
Compensation and benefits		12,873			10,129			10,845			46,038			43,662
Stock-based compensation plans		302			303			326			1,187			1,162
Merger related expenses		4,928			—			451			5,925			255
Defined benefit settlement charge/CEO transition		—			—			—			—			1,772
Restructuring charge (severance/branch relocation)		—			3,201			—			—			3,201
Occupancy and office operations		3,959			3,693			3,388			14,457			14,508
Advertising and promotion		369			677			440			1,849			3,328
Professional fees		1,136			1,147			1,128			4,247			4,389
Data and check processing		715			718			705			2,802			2,763
Amortization of intangible assets		334			338			283			1,245			1,426
FDIC insurance and regulatory assessments		843			636			782			3,096			2,910
ATM/debit card expense		438			425			437			1,711			1,584
Foreclosed property expense		573			677			428			1,618			1,171
Other		2,314			2,438			1,949			7,782			7,980
Total non-interest expense		28,784			24,382			21,162			91,957			90,111
Income before income tax expense		1,981			(1,319	)		8,587			26,047			14,546
Income tax expense (benefit)		(280	)		(826	)		2,378			6,159			2,807
Net income (loss)	$	2,261		$	(493	)	$	6,209		$	19,888		$	11,739
Basic earnings (loss) per common share	$	0.06		$	(0.01	)	$	0.17		$	0.52		$	0.31
Diluted earnings (loss) per common share		0.06			(0.01	)		0.17			0.52			0.31
Dividends declared		0.06			0.06			0.06			0.24			0.24
Weighted average common shares:
Basic		41,054,458			37,332,121			37,302,693			38,227,653			37,452,596
Diluted		41,099,237			37,332,245			37,330,467			38,248,046			37,453,542

Selected Financial Condition Data:					Three Months Ended
(in thousands except share and per share data)	09/30/12		06/30/12		03/31/12		12/31/11		09/30/11
End of Period
Total assets	$	4,022,781	$	3,150,040	$	3,210,871	$	3,084,166	$	3,137,402
Loans, gross (1)		2,119,472		1,851,027		1,799,112		1,775,893		1,703,799
Securities available for sale		1,010,872		714,200		852,717		785,462		739,844
Securities held to maturity		142,376		171,233		174,824		182,076		110,040
Bank owned life insurance		59,017		58,506		57,987		57,485		56,967
Goodwill		162,631		160,861		160,861		160,861		160,861
Other amortizable intangibles		7,164		3,718		4,001		4,306		4,629
Other non-earning assets		80,245		83,106		80,020		78,710		85,907
Deposits		3,111,151		2,332,091		2,368,988		2,135,555		2,296,695
Borrowings		345,176		314,154		313,849		468,543		375,021
Equity		492,168		443,128		439,699		437,682		431,134
Other comprehensive income related to investment securities reflected in stockholders’ equity		15,066		14,141		13,780		15,823		13,604
Average Balances
Total assets	$	3,451,055	$	3,133,958	$	3,131,854	$	3,062,520	$	2,978,273
Loans, gross:
Real estate- residential mortgage		352,724		360,487		374,498		385,269		398,420
Real estate- commercial mortgage		989,349		868,963		838,935		752,325		681,165
Real estate- Acquisition, Development & Construction		156,726		165,442		163,116		172,155		186,398
Commercial and industrial		263,922		205,051		197,507		203,929		208,181
Consumer loans		210,650		215,555		220,537		224,422		226,687
Loans total (1)		1,973,371		1,815,498		1,794,593		1,738,100		1,700,851
Securities (taxable)		841,373		778,782		799,753		696,293		717,893
Securities (non-taxable)		181,540		182,003		185,062		205,366		208,692
Total earning assets		3,070,315		2,797,093		2,792,042		2,715,027		2,634,941
Non earning assets		380,740		336,865		339,812		347,493		343,332
Non-interest bearing checking		592,962		483,589		503,539		500,621		486,504
Interest bearing NOW accounts		398,493		412,072		389,846		398,885		309,729
Total transaction accounts		991,455		895,661		893,385		899,506		796,233
Savings (including mortgage escrow funds)		539,904		493,234		463,971		445,236		461,566
Money market deposits		756,655		697,342		654,013		577,387		504,476
Certificates of deposit		303,788		265,375		284,737		302,713		371,907
Total deposits and mortgage escrow		2,591,802		2,351,612		2,296,106		2,224,842		2,134,182
Total interest bearing deposits (including escrow)		1,998,840		1,868,023		1,792,567		1,724,221		1,647,678
Borrowings		336,217		320,237		375,766		392,785		391,391
Equity		475,652		441,956		439,384		431,129		433,841
Selected Operating Data:
Condensed Tax Equivalent Income (Loss) Statement
Interest and dividend income	$	30,113	$	28,345	$	28,411	$	28,168	$	27,817
Tax equivalent adjustment*		830		852		861		955		962
Interest expense		4,874		4,263		4,506		4,930		5,026
Net interest income (tax equivalent)		26,069		24,934		24,766		24,193		23,753
Provision for loan losses		3,500		2,312		2,850		1,950		8,784
Net interest income after provision for loan losses		22,569		22,622		21,916		22,243		14,969
Non-interest income		9,026		7,979		7,971		7,176		9,056
Non-interest expense		28,784		21,162		21,290		20,721		24,382
Income (loss) before income tax expense		2,811		9,439		8,597		8,698		(357	)
Income tax expense (tax equivalent)*		550		3,230		2,896		2,981		136
Net income (loss)	$	2,261	$	6,209	$	5,701	$	5,717	$	(493	)

(1) Does not reflect allowance for loan losses of $28,282, $27,587, $27,787, $28,245, and $27,917.

* Tax exempt income assumed at a statutory 35% federal rate

	Three Months Ended
	09/30/12			06/30/12			03/31/12			12/31/11			09/30/11
Performance Ratios (annualized)
Return on Average Assets		0.26	%		0.80	%		0.73	%		0.74	%		-0.07	%
Return on Average Equity		1.89	%		5.65	%		5.22	%		5.26	%		-0.45	%
Non-Interest Income to Average Assets		1.04	%		1.02	%		1.02	%		0.93	%		1.21	%
Non-Interest Expense to Average Assets		3.32	%		2.72	%		2.73	%		2.68	%		3.25	%
Operating Efficiency Adjusted(2)		71.98	%		65.53	%		67.86	%		67.80	%		70.24	%
Analysis of Net Interest Income
Yield on Loans		4.97	%		5.01	%		5.03	%		5.13	%		5.22	%
Yield on Investment Securities- Tax Equivalent		2.44	%		2.79	%		2.81	%		2.96	%		2.81	%
Yield on Earning Assets- Tax Equivalent		4.01	%		4.20	%		4.22	%		4.26	%		4.33	%
Cost of Deposits		0.27	%		0.22	%		0.21	%		0.23	%		0.26	%
Cost of Borrowings		3.65	%		3.77	%		3.52	%		3.65	%		3.69	%
Cost of Interest Bearing Liabilities		0.83	%		0.78	%		0.84	%		0.92	%		0.98	%
Net Interest Rate Spread- Tax Equivalent Basis		3.18	%		3.42	%		3.38	%		3.34	%		3.35	%
Net Interest Margin- Tax Equivalent Basis		3.38	%		3.59	%		3.57	%		3.54	%		3.58	%
Capital Information Data
Tier 1 Leverage Ratio- Bank Only (Preliminary)		7.57	%		8.67	%		8.30	%		8.51	%		8.14	%
Tier 1 Risk-Based Capital- Bank Only (Preliminary)		290,056			257,621			252,586			247,433			241,196
Total Risk-Based Capital- Bank Only (Preliminary)		315,338			283,033			277,512			273,911			265,307
Tangible Capital Consolidated(3)		322,373			278,549			274,837			272,515			265,644
Tangible Capital as a % of Tangible Assets Consolidated(3)		8.37	%		9.33	%		9.02	%		9.34	%		8.94	%
Shares Outstanding		44,173,470			37,899,007			37,899,007			37,883,008			37,864,008
Shares Repurchased during qrtr (open market)		—			—			—			—			183,000
Basic weighted common shares outstanding		41,054,458			37,302,693			37,280,651			37,252,464			37,332,121
Diluted common shares outstanding		41,099,237			37,330,467			37,316,778			37,252,464			37,332,245
Basic earnings (loss) per common share	$	0.06		$	0.17		$	0.15		$	0.15		$	(0.01	)
Diluted earnings (loss) per common share		0.06			0.17			0.15			0.15			(0.01	)
Dividends Paid per common share		0.06			0.06			0.06			0.06			0.06
Book Value per common share		11.14			11.69			11.60			11.55			11.39
Tangible Book Value per common share(3)		7.30			7.35			7.25			7.19			7.02
Asset Quality Measurements
Non-performing loans (NPLs): non-accrual	$	35,444		$	41,048		$	47,269		$	40,777		$	36,477
Non-performing loans (NPLs): still accruing		4,370			3,450			4,693			5,136			4,090
Other Real Estate Owned		6,403			7,292			5,828			5,625			5,391
Non-performing assets (NPAs)		46,217			51,790			57,790			51,538			45,958
Net Charge-offs		2,805			2,512			3,308			1,622			10,252
Net Charge-offs as % of average loans (annualized)		0.57	%		0.55	%		0.74	%		0.37	%		2.41	%
NPLs as % of total loans		1.88	%		2.40	%		2.89	%		2.59	%		2.38	%
NPAs as % of total assets		1.15	%		1.64	%		1.80	%		1.67	%		1.46	%
Allowance for loan losses as % of NPLs		71	%		62	%		53	%		62	%		69	%
Allowance for loan losses as % of Provident only loans		1.47	%		1.49	%		1.54	%		1.59	%		1.64	%
Special mention loans		42,422			37,555			37,379			18,424			23,026
Substandard / doubtful loans		88,662			88,395			89,135			99,383			93,989

(2) The operating efficiency ratio represents non-interest expense divided by the sum of net interest income and non-interest income. As in the case of net interest income, generally, net interest income as utilized in calculating the operating efficiency ratio is typically expressed on a tax-equivalent basis. Moreover, most institutions, in calculating the the operating efficiency ratio, also adjust both noninterest expense and noninterest income to exclude from these items (as calculated under generally accepted accounting principles) certain component elements, such as non-recurring charges, other real estate expense and amortization of intangibles (deducted from non interest expense) and security transactions and other non-recurring items (excluded from non interest income). We follow these practices.

(3) Provident Bank provides supplemental reporting of Non-GAAP tangible equity ratios as management believes this information is useful to investors.

The following table shows the reconciliation of tangible equity and the tangible equity ratio:

	09/30/12			06/30/12			03/31/12			12/31/11			09/30/11
Total Assets	$	4,022,781		$	3,150,040		$	3,210,871		$	3,084,166		$	3,137,402
Goodwill and other amortizable intangibles		(169,795	)		(164,579	)		(164,862	)		(165,167	)		(165,490	)
Tangible Assets	$	3,852,986		$	2,985,461		$	3,046,009		$	2,918,999		$	2,971,912
Stockholders’ equity		492,168			443,128			439,699			437,682			431,134
Goodwill and other amortizable intangibles		(169,795	)		(164,579	)		(164,862	)		(165,167	)		(165,490	)
Tangible Stockholders’ equity	$	322,373		$	278,549		$	274,837		$	272,515		$	265,644
Outstanding Shares		44,173,470			37,899,007			37,899,007			37,883,008			37,864,008
Tangible capital as a % of tangible assets (consolidated)		8.37	%		9.33	%		9.02	%		9.34	%		8.94	%
Tangible book value per share	$	7.30		$	7.35		$	7.25		$	7.19		$	7.02

Selected Financial Condition Data to reconcile GAAP Earnings to Earnings excluding merger related expenses 2012:

	Excluding Merger Expense YTD		Including Merger Expense As Reported YTD		Excluding Merger Expense QTD		Including Merger Expense As Reported QTD
(in thousands except share and per share data)	09/30/12		09/30/12		09/30/12		09/30/12
Average Balances
Total assets	$	3,195,299	$	3,195,299	$	3,451,055	$	3,451,055
Loans, gross:
Real estate- residential mortgage		368,264		368,264		352,724		352,724
Real estate- commercial mortgage		862,439		862,439		989,349		989,349
Real estate- Acquisition, Development & Construction		164,360		164,360		156,726		156,726
Commercial and industrial		217,198		217,198		263,922		263,922
Consumer loans		217,789		217,789		210,650		210,650
Loans total (1)		1,830,050		1,830,050		1,973,371		1,973,371
Securities (taxable)		778,994		778,994		841,373		841,373
Securities (non-taxable)		188,520		188,520		181,540		181,540
Total earning assets		2,843,902		2,843,902		3,070,315		3,070,315
Non earning assets		351,397		351,397		380,740		380,740
Non-interest bearing checking		520,265		520,265		592,962		592,962
Interest bearing NOW accounts		399,819		399,819		398,493		398,493
Total transaction accounts		920,084		920,084		991,455		991,455
Savings (including mortgage escrow funds)		485,624		485,624		539,904		539,904
Money market deposits		671,325		671,325		756,655		756,655
Certificates of deposit		289,230		289,230		303,788		303,788
Total deposits and mortgage escrow		2,366,263		2,366,263		2,591,802		2,591,802
Total interest bearing deposits (including escrow)		1,845,998		1,845,998		1,998,840		1,998,840
Borrowings		356,296		356,296		336,217		336,217
Equity		446,112		447,065		472,100		475,652
Selected Operating Data:
Condensed Tax Equivalent Income (Loss) Statement
Interest and dividend income	$	115,037	$	115,037	$	30,113	$	30,113
Tax equivalent adjustment*		3,498		3,498		830		830
Interest expense		18,573		18,573		4,874		4,874
Net interest income (tax equivalent)		99,962		99,962		26,069		26,069
Provision for loan losses		10,612		10,612		3,500		3,500
Net interest income after provision for loan losses		89,350		89,350		22,569		22,569
Non-interest income		32,152		32,152		9,026		9,026
Non-interest expense		86,032		91,957		23,856		28,784
Income (loss) before income tax expense		35,470		29,545		7,739		2,811
Income tax expense (tax equivalent)*		11,079		9,657		848		550
Net income (loss)	$	24,391	$	19,888	$	6,891	$	2,261

(1) Does not reflect allowance for loan losses of $28,282.

* Tax exempt income assumed at a statutory 35% federal rate

Selected Financial Condition Data to reconcile GAAP Earnings to Earnings excluding merger related expenses for 2012:

	Year to Date Excluding Merger Expense			Year to Date Including Merger Expense			Quarter to Date Excluding Merger Expense			Quarter to Date Including Merger Expense
(in thousands except share and per share data)	09/30/12			09/30/12			09/30/12			09/30/12
Performance Ratios1
Return on Average Assets		0.76	%		0.62	%		0.79	%		0.26	%
Return on Average Equity		5.47	%		4.45	%		5.76	%		1.89	%
Non-Interest Income to Average Assets		1.01	%		1.01	%		1.04	%		1.04	%
Non-Interest Expense to Average Assets		2.69	%		2.88	%		2.75	%		3.32	%
Earnings Per Share Information
Merger expense net of tax		4,503			4,503			4,630			4,630
Tax rate		24.00	%		24.00	%		6.00	%		6.00	%
Non interest expense		86,032			91,957			23,856			28,784
Net Income		24,391			19,888			6,891			2,261
Basic weighted common shares outstanding		38,227,653			38,227,653			41,054,458			41,054,458
Diluted common shares outstanding		38,248,046			38,248,046			41,099,237			41,099,237
Basic (loss) earnings per common share	$	0.64		$	0.52		$	0.17		$	0.06

¹  Annualized for quarterly data

Selected Financial Condition Data to reconcile GAAP Earnings to Earnings excluding restructuring and defined benefit settlement (“DBS”) charges for 2011:

	Year to Date Excluding Restructuring DBS charges			Year to Date Including Restructuring DBS charges			Quarter to Date Excluding Restructuring DBS charges			Quarter to Date Including Restructuring DBS charges
(in thousands except share and per share data)	09/30/11			09/30/11			09/30/11			09/30/11
Performance Ratios1
Return on Average Assets		0.76	%		0.40	%		0.34	%		-0.07	%
Return on Average Equity		3.69	%		2.75	%		5.76	%		-0.45	%
Non-Interest Income to Average Assets		1.02	%		1.02	%		1.21	%		1.21	%
Non-Interest Expense to Average Assets		2.89	%		3.06	%		2.82	%		3.25	%
Earnings Per Share Information
Restructuring and defined benefit settlement charge net of taxes		4,028			4,028			3,009			3,009
Tax rate		19.00	%		19.00	%		6.00	%		6.00	%
Non interest expense		85,138			90,111			21,181			24,382
Net Income		15,767			11,739			2,516			(493	)
Basic weighted common shares outstanding		37,452,596			37,452,596			41,054,458			41,054,458
Diluted common shares outstanding		37,453,542			37,453,542			41,099,237			41,099,237
Basic (loss) earnings per common share	$	0.42		$	0.31		$	0.06		$	(0.01	)

¹  Annualized for quarterly data

Selected Financial Condition Data to reconcile GAAP Earnings to Earnings excluding restructuring and defined benefit settlement charges for 2011:

	Excluding Merger Expense YTD		Including Merger Expense As Reported YTD		Excluding Merger Expense QTD			Including Merger Expense As Reported QTD
(in thousands except share and per share data)	09/30/11		09/30/11		09/30/11			09/30/11
Average Balances
Total assets	$	2,949,251	$	2,949,251	$	2,978,273		$	2,978,273
Loans, gross:
Real estate- residential mortgage		392,509		392,509		398,420			398,420
Real estate- commercial mortgage		638,928		638,928		681,165			681,165
Real estate- Acquisition, Development & Construction		207,026		207,026		186,398			186,398
Commercial and industrial		224,056		224,056		208,181			208,181
Consumer loans		231,384		231,384		226,687			226,687
Loans total (1)		1,693,903		1,693,903		1,700,851			1,700,851
Securities (taxable)		695,961		695,961		717,893			717,893
Securities (non-taxable)		213,450		213,450		208,692			208,692
Total earning assets		2,609,748		2,609,748		2,634,941			2,634,941
Non earning assets		339,503		339,503		343,332			343,332
Non-interest bearing checking		472,388		472,388		486,504			486,504
Interest bearing NOW accounts		315,623		315,623		309,729			309,729
Total transaction accounts		788,011		788,011		796,233			796,233
Savings (including mortgage escrow funds)		432,227		432,227		461,566			461,566
Money market deposits		489,347		489,347		504,476			504,476
Certificates of deposit		373,142		373,142		371,907			371,907
Total deposits and mortgage escrow		2,082,727		2,082,727		2,134,182			2,134,182
Total interest bearing deposits (including escrow)		1,610,339		1,610,339		1,647,678			1,647,678
Borrowings		422,816		422,816		391,391			391,391
Equity		426,913		427,290		433,841			433,841
Selected Operating Data:
Condensed Tax Equivalent Income (Loss) Statement
Interest and dividend income	$	112,614	$	112,614	$	27,817		$	27,817
Tax equivalent adjustment*		4,007		4,007		962			962
Interest expense		21,324		21,324		5,026			5,026
Net interest income (tax equivalent)		95,297		95,297		23,753			23,753
Provision for loan losses		16,584		16,584		8,784			8,784
Net interest income after provision for loan losses		78,713		78,713		14,969			14,969
Non-interest income		29,951		29,951		9,056			9,056
Non-interest expense		90,111		90,111		24,382			24,382
Income (loss) before income tax expense		18,553		18,553		(357	)		(357	)
Income tax expense (tax equivalent)*		6,814		6,814		136			136
Net income (loss)	$	11,739	$	11,739	$	(493	)	$	(493	)

(1) Does not reflect allowance for loan losses of $27,917.

* Tax exempt income assumed at a statutory 35% federal rate