Provident Financial Services, Inc. Announces Quarterly Earnings
ISELIN, NJ, April 26, 2013 - Provident Financial Services, Inc. (NYSE:PFS) (the “Company”) reported net income of $17.8 million, or $0.31 per basic and diluted share for the three months ended March 31, 2013, compared to net income of $18.4 million, or $0.32 per basic and diluted share for the three months ended March 31, 2012.
Earnings for the first quarter of 2013 were aided by improvements in asset quality and a related reduction in the provision for loan losses compared with the same period last year, while growth in both average loans outstanding and average lower-costing core deposits have helped offset the adverse impact of the prolonged low interest rate environment.
Christopher Martin, Chairman, President and Chief Executive Officer, commented, “Our first quarter earnings reflect continued solid performance, despite a tepid recovery in the economy and an ultra-competitive environment. Earnings benefitted from margin expansion from the trailing quarter and stable credit quality. With our market providing limited business lending opportunities, we maintained our conservative credit discipline and concentrated on relationship expansion. Expense management remains a key focus as we continue to seek out additional efficiencies within our operations.”
Balance Sheet Summary
Total assets decreased $96.9 million, or 1.3%, to $7.19 billion at March 31, 2013, from $7.28 billion at December 31, 2012, primarily due to decreases in total investments and cash and cash equivalents, partially offset by an increase in total loans.
Total investments decreased $62.1 million, or 3.7%, to $1.60 billion at March 31, 2013, from $1.66 billion at December 31, 2012, largely due to principal repayments on mortgage-backed securities, maturities of municipal and agency bonds, and the sale of certain mortgage-backed securities which had a heightened risk of prepayment, partially offset by purchases of mortgage-backed and municipal securities.
Cash and cash equivalents decreased $39.1 million to $64.7 million at March 31, 2013, from $103.8 million at December 31, 2012. The decline in cash was attributable to a decrease in total deposits and an increase in total loans, partially offset by a decrease in total investments.
The Company’s loan portfolio increased $5.7 million during the three months ended March 31, 2013 to $4.91 billion. Loan growth was tempered by the repayment of $17.3 million on two shared national credits during the quarter. Loan originations totaled $348.3 million and loan purchases totaled $2.8 million for the three months ended March 31, 2013. The loan portfolio had net increases of $19.0 million in commercial and multi-family mortgage loans, $15.5 million in construction loans and $8.5 million in commercial loans, which were offset by decreases of $30.8 million in residential mortgage loans and $5.4 million in consumer loans. Commercial real estate, commercial and construction loans represented 63.2% of the loan portfolio at March 31, 2013, compared to 62.4% at December 31, 2012.
At March 31, 2013, the Company’s unfunded loan commitments totaled $940.1 million, including $347.3 million in commercial loan commitments, $220.3 million in construction loan commitments and $87.9 million in commercial mortgage commitments. Unfunded loan commitments at December 31, 2012 were $869.0 million.
Total deposits decreased $151.7 million, or 2.8%, during the three months ended March 31, 2013 to $5.28 billion. Core deposits, which consist of savings and demand deposit accounts, decreased $109.9 million, or 2.5%, to $4.36 billion at March 31, 2013. The majority of the core deposit decrease was in demand and money market deposits and included certain expected outflows resulting from client tax planning considerations. Time deposits decreased $41.8 million, or 4.4%, to $915.7 million at March 31, 2013, with the majority of the decrease occurring in the 6-, 12- and 60-month maturity categories. Core deposits represented 82.6% of total deposits at March 31, 2013, compared to 82.4% at December 31, 2012. The Company remains focused on developing core deposit relationships, while strategically permitting the run-off of time deposits.
Borrowed funds increased $50.7 million, or 6.3% during the three months ended March 31, 2013, to $854.0 million, as wholesale funding partially replaced the outflow in deposits. Borrowed funds represented 11.9% of total assets at March 31, 2013, an increase from 11.0% at December 31, 2012.
Stockholders’ equity increased $9.2 million, or 0.9% during the three months ended March 31, 2013, to $990.4 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 three months ended March 31, 2013 totaled 55,666 shares at an average cost of $15.08 per share in connection with employee income tax withholding on stock-based compensation. At March 31, 2013, 4.1 million shares remained eligible for repurchase under the current authorization. At March 31, 2013, book value per share and tangible book value per share were $16.52 and $10.55, respectively, compared with $16.37 and $10.40, respectively, at December 31, 2012.
Results of Operations
Net Interest Income and Net Interest Margin
For the three months ended March 31, 2013, net interest income decreased $942,000, to $53.9 million, from $54.8 million for the same period in 2012. The decline in net interest income resulted from compression in the net interest margin, which was substantially mitigated by the increase in average interest earning assets, primarily average loans outstanding, funded with the growth in lower-costing average core deposits, largely interest and non-interest bearing demand deposits.
The net interest margin for the quarter ended March 31, 2013 decreased 9 basis points to 3.33% compared with 3.42% for the quarter ended March 31, 2012. The decrease in the net interest margin for the quarter ended March 31, 2013, compared with the same period last year, was primarily attributable to reductions in the weighted average yield on interest-earning assets, which declined 27 basis points to 3.92% for the quarter ended March 31, 2013, compared with 4.19% for the quarter ended March 31, 2012. The weighted average cost of interest-bearing liabilities declined 19 basis points to 0.71% for the quarter ended March 31, 2013, compared with 0.90% for the first quarter of 2012. The average cost of interest bearing deposits for the quarter ended March 31, 2013 was 0.44%, compared with 0.62% for the same period last year. Average non-interest bearing demand deposits totaled $819.5 million for the quarter ended March 31, 2013, compared with $670.1 million for the quarter ended March 31, 2012. The average cost of borrowed funds for the quarter ended March 31, 2013 was 2.24%, compared with 2.25% for the same period last year.
The Company’s net interest margin increased 4 basis points to 3.33% for the quarter ended March 31, 2013, from 3.29% for the quarter ended December 31, 2012. The increase in the net interest margin versus the trailing quarter was primarily attributable to reductions in the weighted average cost of interest-bearing liabilities. The weighted average cost of interest-bearing liabilities was 0.71% for the quarter ended March 31, 2013, compared with 0.77% for the trailing quarter. The weighted average yield on interest-earning assets was 3.92% for the quarter ended March 31, 2013, unchanged from the quarter ended December 31, 2012. The average cost of interest bearing deposits for the quarter ended March 31, 2013 was 0.44%, compared with 0.50% for the trailing quarter. The average cost of borrowed funds for the quarter ended March 31, 2013 was 2.24%, compared with 2.29% for the quarter ended December 31, 2012.
Non-Interest Income
Non-interest income totaled $9.9 million for the quarter ended March 31, 2013, a decrease of $2.8 million, or 21.9%, compared to the same period in 2012. Net gains on securities transactions decreased $1.7 million, totaling $511,000 for the three months ended March 31, 2013, compared with $2.2 million for the same period in 2012. For both the three months ended March 31, 2013 and 2012, the Company identified and strategically sold select securities which had a heightened risk of accelerated prepayment. The proceeds from these sales were reinvested in similar securities with more stable projected cash flows. Other income decreased $844,000 for the three months ended March 31, 2013, compared to the same period in 2012, primarily due to income recognized in the prior year quarter associated with the discontinuance of the Company’s debit card rewards program, a decrease in gains related to loan sales and an increase in net losses on the sale of foreclosed real estate. Additionally, fee income decreased $115,000 to $8.0 million for the three months ended March 31, 2013, from $8.1 million for the three months ended March 31, 2012, largely due to lower deposit-based fee revenue and a decrease in wealth management fees, partially offset by increased commercial loan prepayment fee income.
Non-Interest Expense
For the three months ended March 31, 2013, non-interest expense increased $155,000, or 0.4%, to $36.9 million, compared to $36.8 million for the three months ended March 31, 2012. Compensation and benefits increased $483,000 for the quarter ended March 31, 2013, compared to the quarter ended March 31, 2012, due to higher salary expense associated with annual merit increases, increased severance costs and increased incentive compensation accrual, partially offset by reduced employee medical and retirement benefit costs. Net occupancy expense increased $180,000 for the three months ended March 31, 2013, compared with the same period in 2012, primarily attributable to higher snow removal costs and increased depreciation expense related to branch renovations, partially offset by lower rent expense, a portion of which was due to branch consolidations in 2012. Partially offsetting these increases in non-interest expense, other operating expenses decreased $235,000, or 4.0%, to $5.6 million for the quarter ended March 31, 2013, from $5.9 million for the same period in 2012, due primarily to decreases in debit card processing costs, legal expenses, loan collection activity, and loan administration expenses. These decreases in other operating expenses were partially offset by valuation adjustments related to foreclosed real estate. Also, the amortization of intangibles decreased $228,000 for the three months ended March 31, 2013, compared with the same period in 2012, as a result of scheduled reductions in core deposit intangible amortization. FDIC insurance expense decreased $140,000, to $1.3 million for the three months ended March 31, 2013, from $1.4 million for the same period in 2012, primarily due to a lower assessment rate.
The Company’s annualized non-interest expense as a percentage of average assets was 2.08% for the quarter ended March 31, 2013, unchanged from the same period in 2012. The efficiency ratio (non-interest expense divided by the sum of net interest income and non-interest income) was 57.87% for the quarter ended March 31, 2013, compared with 54.45% for the same period in 2012.
Asset Quality
The Company’s total non-performing loans at March 31, 2013 were $99.1 million, or 2.02% of total loans, compared with $99.0 million, or 2.02% of total loans at December 31, 2012, and $120.3 million, or 2.58% of total loans at March 31, 2012. The $69,000 increase in non-performing loans at March 31, 2013, compared with the trailing quarter, was largely due to a $2.3 million increase in non-performing residential loans and a $470,000 increase in commercial mortgage loans, offset by a $1.9 million decrease in non-performing commercial loans and a $751,000 decrease in non-performing consumer loans. The increase in non-performing residential mortgage loans was largely attributable to a single $1.8 million loan the value of which is supported by a recent appraisal. As a result, the overall risk profile of the non-performing loan portfolio improved as higher-risk commercial non-performing loans decreased during the quarter. At March 31, 2013, impaired loans totaled $112.0 million with related specific reserves of $6.6 million, compared with impaired loans totaling $109.6 million with related specific reserves of $7.2 million at December 31, 2012. At March 31, 2012, impaired loans totaled $111.6 million with related specific reserves of $8.0 million.
At March 31, 2013, the Company’s allowance for loan losses was 1.43% of total loans, unchanged from December 31, 2012, and a decrease from 1.59% of total loans at March 31, 2012. The Company recorded a provision for loan losses of $1.5 million for the quarter ended March 31, 2013, compared with $5.0 million for the quarter ended March 31, 2012, as a result of year-over-year improvements in asset quality and stabilization of collateral values. For the three-month period ended March 31, 2013, the Company had net charge-offs of $1.8 million, compared with net charge-offs of $5.4 million for the same period in 2012. The allowance for loan losses at March 31, 2013 was $70.0 million, compared to $70.3 million at December 31, 2012.
At March 31, 2013, the Company held $12.2 million of foreclosed assets, compared with $12.5 million at December 31, 2012, as resolutions during the quarter of $2.3 million were largely offset by additions of $2.0 million. Foreclosed assets at March 31, 2013 consisted of $6.5 million of commercial real estate, $5.1 million of residential real estate and $228,000 of marine vessels.
Income Tax Expense
For the three months ended March 31, 2013, the Company’s income tax expense was $7.6 million, compared with $7.3 million for the same period in 2012. The increase in income tax expense was a function of growth in pre-tax income from taxable sources. The Company’s effective tax rate was 29.8% and 28.5% for the three months ended March 31, 2013 and 2012, 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, through its network of 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, April 26, 2013 regarding highlights of the Company’s first quarter 2013 financial results. The call may be accessed by dialing 1-888-317-6016 (Domestic), 1-412-317-6016 (International) or 1-855-669-9657 (Canada). Internet access to the call is also available (listen only) at www.providentnj.com by going to Investor Relations and clicking on Webcast.
Forward Looking Statements
Certain statements contained herein are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “estimate,” “anticipate,” “continue,” or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those related to the economic environment, particularly in the market areas in which the Company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity.
The Company cautions readers not to place undue reliance on any such forward-looking statements which speak only as of the date made. The Company advises readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake and specifically declines any obligation to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events
| PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY |
| Consolidated Statements of Financial Condition |
| March 31, 2013 (Unaudited) and December 31, 2012 |
| (Dollars in Thousands) |
| | | | | | | | | |
| Assets | | | March 31, 2013 | | December 31, 2012 |
| | | | | | | | | |
| Cash and due from banks | | $ | 63,495 | $ | 101,850 |
| Short-term investments | | | 1,212 | | 1,973 |
| | | | Total cash and cash equivalents | | | 64,707 | | 103,823 |
| | | | | | | | | |
| Securities available for sale, at fair value | | | 1,215,540 | | 1,264,002 |
| Investment securities held to maturity (fair value of $355,144 at | | | | | |
| | March 31, 2013 (unaudited) and $374,916 at December 31, 2012) | | | 342,696 | | 359,464 |
| Federal Home Loan Bank Stock | | | 40,675 | | 37,543 |
| | | | | | | | | |
| Loans | | | | | 4,910,355 | | 4,904,699 |
| | Less allowance for loan losses | | | 70,034 | | 70,348 |
| | | | Net loans | | | 4,840,321 | | 4,834,351 |
| | | | | | | | | |
| Foreclosed assets, net | | | 12,192 | | 12,473 |
| Banking premises and equipment, net | | | 67,103 | | 66,120 |
| Accrued interest receivable | | | 22,099 | | 24,002 |
| Intangible assets | | | | 357,477 | | 357,907 |
| Bank-owned life insurance | | | 148,496 | | 147,286 |
| Other assets | | | | | 75,469 | | 76,724 |
| | | | Total assets | | $ | 7,186,775 | $ | 7,283,695 |
| | | | | | | | | |
| Liabilities and Stockholders' Equity | | | | | |
| | | | | | | | | |
| Deposits: | | | | | | | |
| | Demand deposits | | $ | 3,435,629 | $ | 3,556,011 |
| | Savings deposits | | | 925,274 | | 914,787 |
| | Certificates of deposit of $100,000 or more | | | 304,917 | | 324,901 |
| | Other time deposits | | | 610,761 | | 632,572 |
| | | | Total deposits | | | 5,276,581 | | 5,428,271 |
| | | | | | | | | |
| Mortgage escrow deposits | | | 22,541 | | 21,238 |
| Borrowed funds | | | 854,007 | | 803,264 |
| Other liabilities | | | 43,201 | | 49,676 |
| | | | Total liabilities | | | 6,196,330 | | 6,302,449 |
| | | | | | | | | |
| 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 59,968,621 outstanding at March 31, 2013, and 59,937,955 | | | | | |
| | outstanding at December 31, 2012 | | | 832 | | 832 |
| Additional paid-in capital | | | 1,022,386 | | 1,021,507 |
| Retained earnings | | | 399,291 | | 389,549 |
| Accumulated other comprehensive income | | | 6,053 | | 7,716 |
| Treasury stock | | | | | (386,737) | | (386,270) |
| Unallocated common stock held by the Employee Stock Ownership Plan ("ESOP") | | | (51,380) | | (52,088) |
| Common Stock acquired by the Directors' Deferred Fee Plan ("DDFP") | | | (7,275) | | (7,298) |
| Deferred Compensation - DDFP | | | 7,275 | | 7,298 |
| | | | Total stockholders' equity | | | 990,445 | | 981,246 |
| | | | Total liabilities and stockholders' equity | | $ | 7,186,775 | $ | 7,283,695 |
| | | | | | | | | |
| PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY |
| Consolidated Statements of Income |
| Three Months Ended March 31, 2013 and 2012 (Unaudited) |
| (Dollars in Thousands, except per share data) |
| | | | | | | | |
| | | | | | Three Months Ended |
| | | | | | March 31, |
| | | | | | 2013 | | 2012 |
| Interest income: | | | | | |
| | Real estate secured loans | $ | 38,335 | $ | 38,959 |
| | Commercial loans | | 9,971 | | 10,370 |
| | Consumer loans | | 5,957 | | 6,289 |
| | Securities available for sale and Federal Home Loan Bank stock | | 6,192 | | 8,332 |
| | Investment securities held to maturity | | 2,839 | | 2,918 |
| | Deposits, Federal funds sold and other short-term investments | | 10 | | 12 |
| | | Total interest income | | 63,304 | | 66,880 |
| | | | | | | | |
| Interest expense: | | | | | |
| | Deposits | | | | 4,956 | | 7,002 |
| | Borrowed funds | | 4,453 | | 5,041 |
| | | Total interest expense | | 9,409 | | 12,043 |
| | | Net interest income | | 53,895 | | 54,837 |
| Provision for loan losses | | 1,500 | | 5,000 |
| | | Net interest income after provision for loan losses | | 52,395 | | 49,837 |
| | | | | | | | |
| Non-interest income: | | | | |
| | Fees | | | | 7,960 | | 8,075 |
| | Bank owned life insurance | | 1,210 | | 1,362 |
| | Net gain on securities transactions | | 511 | | 2,183 |
| | Other income | | 264 | | 1,108 |
| | | Total non-interest income | | 9,945 | | 12,728 |
| | | | | | | | |
| Non-interest expense: | | | | |
| | Compensation and employee benefits | | 20,991 | | 20,508 |
| | Net occupancy expense | | 5,206 | | 5,026 |
| | Data processing expense | | 2,622 | | 2,588 |
| | FDIC Insurance | | 1,250 | | 1,390 |
| | Amortization of intangibles | | 511 | | 739 |
| | Advertising and promotion expense | | 746 | | 685 |
| | Other operating expenses | | 5,620 | | 5,855 |
| | | Total non-interest expenses | | 36,946 | | 36,791 |
| | | Income before income tax expense | | 25,394 | | 25,774 |
| Income tax expense | | 7,566 | | 7,346 |
| | | Net income | $ | 17,828 | $ | 18,428 |
| | | | | | | | |
| Basic earnings per share | $ | 0.31 | $ | 0.32 |
| Average basic shares outstanding | | 57,167,198 | | 57,051,827 |
| | | | | | | | |
| Diluted earnings per share | $ | 0.31 | $ | 0.32 |
| Average diluted shares outstanding | | 57,337,215 | | 57,082,631 |
| | | | | | | | |
| PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY |
| Consolidated Financial Highlights |
| (Dollars in Thousands, except share data) (Unaudited) |
| | | | | | | | | |
| | | | | | At or for the |
| | | | | | Three Months Ended |
| | | | | | March 31, |
| | | | | | 2013 | | | 2012 |
| STATEMENTS OF INCOME: | | | | | |
| Net interest income | | $ | 53,895 | | $ | 54,837 |
| Provision for loan losses | | | 1,500 | | | 5,000 |
| Non-interest income | | | 9,945 | | | 12,728 |
| Non-interest expense | | | 36,946 | | | 36,791 |
| Income before income tax expense | | 25,394 | | | 25,774 |
| Net income | | | | 17,828 | | | 18,428 |
| Diluted earnings per share | | | $0.31 | | | $0.32 |
| Interest rate spread | | | 3.21% | | | 3.29% |
| Net interest margin | | | 3.33% | | | 3.42% |
| | | | | | | | | |
| PROFITABILITY: | | | | | | |
| Annualized return on average assets | | 1.00% | | | 1.04% |
| Annualized return on average equity | | 7.32% | | | 7.71% |
| Annualized non-interest expense to average assets | | 2.08% | | | 2.08% |
| Efficiency ratio (1) | | | 57.87% | | | 54.45% |
| | | | | | | | | |
| ASSET QUALITY: | | | | | | |
| Non-accrual loans | | $ | 99,059 | | $ | 120,343 |
| 90+ and still accruing | | | — | | | — |
| Non-performing loans | | | 99,059 | | | 120,343 |
| Foreclosed assets | | | 12,192 | | | 14,440 |
| Non-performing assets | | | 111,251 | | | 134,783 |
| Non-performing loans to total loans | | 2.02% | | | 2.58% |
| Non-performing assets to total assets | | 1.55% | | | 1.89% |
| Allowance for loan losses | | $ | 70,034 | | $ | 73,996 |
| Allowance for loan losses to total non-performing loans | | 70.70% | | | 61.49% |
| Allowance for loan losses to total loans | | 1.43% | | | 1.59% |
| | | | | | | | | |
| AVERAGE BALANCE SHEET DATA: | | | | | |
| Assets | | | $ | 7,220,211 | | $ | 7,101,853 |
| Loans, net | | | | 4,829,796 | | | 4,584,512 |
| Earning assets | | | 6,479,902 | | | 6,358,860 |
| Core deposits | | | 4,434,375 | | | 4,068,187 |
| Borrowings | | | | 804,919 | | | 900,785 |
| Interest-bearing liabilities | | | 5,350,792 | | | 5,408,985 |
| Stockholders' equity | | | 987,984 | | | 961,136 |
| Average yield on interest-earning assets | | 3.92% | | | 4.19% |
| Average cost of interest-bearing liabilities | | 0.71% | | | 0.90% |
| | | | | | | | | |
| LOAN DATA: | | | | | | |
| Mortgage loans: | | | | | | |
| | Residential | $ | 1,234,173 | | $ | 1,297,437 |
| | Commercial | | | 1,349,565 | | | 1,262,756 |
| | Multi-family | | 743,356 | | | 572,491 |
| | Construction | | | 135,611 | | | 118,714 |
| Total mortgage loans | | | 3,462,705 | | | 3,251,398 |
| | Commercial loans | | | 874,880 | | | 834,211 |
| | Consumer loans | | | 573,784 | | | 571,010 |
| Total gross loans | | | 4,911,369 | | | 4,656,619 |
| | Premium on purchased loans | | 4,683 | | | 5,621 |
| | Unearned discounts | | | (73) | | | (95) |
| Net deferred | | (5,624) | | | (3,343) |
| Total loans | | | $ | 4,910,355 | | $ | 4,658,802 |
| Notes | | | | | | | |
| | | | | | | | | |
(1) Efficiency Ratio Calculation | | | | | |
| | | | | | Three Months Ended |
| | | | | | March 31, |
| | | | | | 2013 | | | 2012 |
| | Net interest income | | $ | 53,895 | | $ | 54,837 |
| | Non-interest income | | | 9,945 | | | 12,728 |
| | Total income | | $ | 63,840 | | $ | 67,565 |
| | | | | | | | | |
| | Non-interest expense | | $ | 36,946 | | $ | 36,791 |
| | | | | | | | | |
| | Expense/income | | | 57.87% | | | 54.45% |
| | | | | | | | | |
| PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY |
| Net Interest Margin Analysis |
| Quarterly Average Balances |
| (Unaudited) (Dollars in Thousands) |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | March 31, 2013 | | | | December 31, 2012 | |
| | | | | | | Average | | | | Average | | | | Average | | | | Average | |
| | | | | | | Balance | | Interest | | Yield | | | | Balance | | Interest | | Yield | |
| | Interest-Earning Assets: | | | | | | | | | | | | | | | | |
| | | Deposits | | | $ | 16,639 | $ | 10 | | 0.25% | | | $ | 37,442 | $ | 24 | | 0.25% | |
| | | Federal funds sold and | | | | | | | | | | | | | | | | |
| | | other short-term investments | | 1,424 | | — | | 0.01% | | | | 1,738 | | — | | 0.14% | |
| | | Investment securities (1) | | | 350,326 | | 2,839 | | 3.24% | | | | 350,890 | | 2,912 | | 3.32% | |
| | | Securities available for sale | | | 1,243,647 | | 5,764 | | 1.85% | | | | 1,325,804 | | 5,963 | | 1.80% | |
| | | Federal Home Loan Bank stock | | 38,070 | | 428 | | 4.56% | | | | 37,811 | | 435 | | 4.58% | |
| | | Net loans: (2) | | | | | | | | | | | | | | | | |
| | | Total mortgage loans | | | 3,418,532 | | 38,335 | | 4.49% | | | | 3,380,309 | | 38,903 | | 4.55% | |
| | | Total commercial loans | | | 839,389 | | 9,971 | | 4.78% | | | | 812,727 | | 10,125 | | 4.91% | |
| | | Total consumer loans | | | 571,875 | | 5,957 | | 4.22% | | | | 579,063 | | 6,241 | | 4.29% | |
| | | Total net loans | | | 4,829,796 | | 54,263 | | 4.51% | | | | 4,772,099 | | 55,269 | | 4.58% | |
| | | Total Interest-Earning Assets | | $ | 6,479,902 | $ | 63,304 | | 3.92% | | | $ | 6,525,784 | $ | 64,603 | | 3.92% | |
| | | | | | | | | | | | | | | | | | | | |
| | Non-Interest Earning Assets: | | | | | | | | | | | | | | | | |
| | | Cash and due from banks | | | 75,239 | | | | | | | | 80,974 | | | | | |
| | | Other assets | | | 665,070 | | | | | | | | 662,724 | | | | | |
| | | Total Assets | | $ | 7,220,211 | | | | | | | $ | 7,269,482 | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | Interest-Bearing Liabilities: | | | | | | | | | | | | | | | | |
| | | Demand deposits | | $ | 2,696,385 | $ | 1,954 | | 0.29% | | | $ | 2,675,980 | $ | 2,293 | | 0.34% | |
| | | Savings deposits | | | 918,535 | | 267 | | 0.12% | | | | 903,774 | | 339 | | 0.15% | |
| | | Time deposits | | | 930,953 | | 2,735 | | 1.19% | | | | 980,682 | | 3,056 | | 1.24% | |
| | | Total Deposits | | | 4,545,873 | | 4,956 | | 0.44% | | | | 4,560,436 | | 5,688 | | 0.50% | |
| | | Borrowed funds | | | 804,919 | | 4,453 | | 2.24% | | | | 818,122 | | 4,708 | | 2.29% | |
| | | Total Interest-Bearing Liabilities | $ | 5,350,792 | $ | 9,409 | | 0.71% | | | $ | 5,378,558 | $ | 10,396 | | 0.77% | |
| | | | | | | | | | | | | | | | | | | | |
| | Non-Interest Bearing Liabilities | | | 881,435 | | | | | | | | 898,549 | | | | | |
| | | Total Liabilities | | | 6,232,227 | | | | | | | | 6,277,107 | | | | | |
| | | Stockholders' equity | | | 987,984 | | | | | | | | 992,375 | | | | | |
| | | Total Liabilities and Stockholders' Equity | $ | 7,220,211 | | | | | | | $ | 7,269,482 | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | Net interest income | | | | $ | 53,895 | | | | | | | $ | 54,207 | | | |
| | | | | | | | | | | | | | | | | | | | |
| | Net interest rate spread | | | | | | | 3.21% | | | | | | | | 3.15% | |
| | Net interest-earning assets | | $ | 1,129,110 | | | | | | | $ | 1,147,226 | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | Net interest margin (3) | | | | | | | 3.33% | | | | | | | | 3.29% | |
| | Ratio of interest-earning assets to | | | | | | | | | | | | | | | | |
| | total interest-bearing liabilities | | | 1.21 | x | | | | | | | 1.21 | 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.
| PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY | | |
| Net Interest Margin Analysis | | |
| Average Year to Date Balances | | |
| (Unaudited) (Dollars in Thousands) | | |
| | | | | | | | | | | | | | | | |
| | | | | March 31, 2013 | | | March 31, 2012 | | |
| | | | | Average | | | Average | | | Average | | | Average | | |
| | | | | Balance | | Interest | Yield | | | Balance | | Interest | Yield | | |
| Interest-Earning Assets: | | | | | | | | | | | | | |
| | Deposits | $ | 16,639 | $ | 10 | 0.25% | | $ | 19,412 | $ | 12 | 0.25% | | |
| | Federal funds sold and | | | | | | | | | | | | | |
| | other short-term investments | | 1,424 | | — | 0.01% | | | 1,264 | | — | 0.03% | | |
| | Investment securities (1) | | 350,326 | | 2,839 | 3.24% | | | 343,703 | | 2,918 | 3.40% | | |
| | Securities available for sale | | 1,243,647 | | 5,764 | 1.85% | | | 1,370,978 | | 7,852 | 2.29% | | |
| | Federal Home Loan Bank stock | | 38,070 | | 428 | 4.56% | | | 38,991 | | 480 | 4.95% | | |
| | Net loans: (2) | | | | | | | | | | | | | |
| | Total mortgage loans | | 3,418,532 | | 38,335 | 4.49% | | | 3,201,705 | | 38,959 | 4.84% | | |
| | Total commercial loans | | 839,389 | | 9,971 | 4.78% | | | 818,192 | | 10,370 | 5.05% | | |
| | Total consumer loans | | 571,875 | | 5,957 | 4.22% | | | 564,615 | | 6,289 | 4.48% | | |
| | Total net loans | | 4,829,796 | | 54,263 | 4.51% | | | 4,584,512 | | 55,618 | 4.83% | | |
| | Total Interest-Earning Assets | $ | 6,479,902 | $ | 63,304 | 3.92% | | $ | 6,358,860 | $ | 66,880 | 4.19% | | |
| | | | | | | | | | | | | | | | |
| Non-Interest Earning Assets: | | | | | | | | | | | | | |
| | Cash and due from banks | | 75,239 | | | | | | 79,586 | | | | | |
| | Other assets | | 665,070 | | | | | | 663,407 | | | | | |
| | Total Assets | $ | 7,220,211 | | | | | $ | 7,101,853 | | | | | |
| | | | | | | | | | | | | | | | |
| Interest-Bearing Liabilities: | | | | | | | | | | | | | |
| | Demand deposits | $ | 2,696,385 | $ | 1,954 | 0.29% | | $ | 2,507,930 | $ | 2,783 | 0.45% | | |
| | Savings deposits | | 918,535 | | 267 | 0.12% | | | 890,165 | | 374 | 0.17% | | |
| | Time deposits | | 930,953 | | 2,735 | 1.19% | | | 1,110,105 | | 3,845 | 1.39% | | |
| | Total Deposits | | 4,545,873 | | 4,956 | 0.44% | | | 4,508,200 | | 7,002 | 0.62% | | |
| | Borrowed funds | | 804,919 | | 4,453 | 2.24% | | | 900,785 | | 5,041 | 2.25% | | |
| | Total Interest-Bearing Liabilities | $ | 5,350,792 | $ | 9,409 | 0.71% | | $ | 5,408,985 | $ | 12,043 | 0.90% | | |
| | | | | | | | | | | | | | | | |
| Non-Interest Bearing Liabilities | | 881,435 | | | | | | 731,732 | | | | | |
| | Total Liabilities | | 6,232,227 | | | | | | 6,140,717 | | | | | |
| | Stockholders' equity | | 987,984 | | | | | | 961,136 | | | | | |
| | Total Liabilities and Stockholders' Equity | $ | 7,220,211 | | | | | $ | 7,101,853 | | | | | |
| | | | | | | | | | | | | | | | |
| Net interest income | | | $ | 53,895 | | | | | $ | 54,837 | | | |
| | | | | | | | | | | | | | | | |
| Net interest rate spread | | | | | 3.21% | | | | | | 3.29% | | |
| Net interest-earning assets | $ | 1,129,110 | | | | | $ | 949,875 | | | | | |
| | | | | | | | | | | | | | | | |
| Net interest margin (3) | | | | | 3.33% | | | | | | 3.42% | | |
| Ratio of interest-earning assets to | | | | | | | | | | | | | |
| total interest-bearing liabilities | | 1.21 | x | | | | | 1.18 | x | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | (1) Average outstanding balance amounts shown are amortized cost. | | | | | | | |
| | (2) Average outstanding balance are net of the allowance for loan losses, deferred loan fees and expenses, loan premium and discounts and include non-accrual loans. |
| | (3) Annualized net interest income divided by average interest-earning assets. | | | | |
| The following table summarizes the quarterly net interest margin for the previous five quarters. | | |
| | | | | | | | | | | | |
| | | | 3/31/13 | | 12/31/12 | | 9/30/12 | | 6/30/12 | | 3/31/12 |
| | | | 1st Qtr. | | 4th Qtr. | | 3rd Qtr. | | 2nd Qtr. | | 1st Qtr. |
| Interest-Earning Assets: | | | | | | | | | | | |
| Securities | | | 2.19% | | 2.13% | | 2.17% | | 2.42% | | 2.54% |
| Net loans | | | 4.51% | | 4.58% | | 4.68% | | 4.76% | | 4.83% |
| Total interest-earning assets | | | 3.92% | | 3.92% | | 3.99% | | 4.11% | | 4.19% |
| | | | | | | | | | | | |
| Interest-Bearing Liabilities: | | | | | | | | | | | |
| Total deposits | | | 0.44% | | 0.50% | | 0.54% | | 0.58% | | 0.62% |
| Total borrowings | | | 2.24% | | 2.29% | | 2.32% | | 2.20% | | 2.25% |
| Total interest-bearing liabilities | | | 0.71% | | 0.77% | | 0.82% | | 0.85% | | 0.90% |
| | | | | | | | | | | | |
| Interest rate spread | | | 3.21% | | 3.15% | | 3.17% | | 3.26% | | 3.29% |
| Net interest margin | | | 3.33% | | 3.29% | | 3.31% | | 3.39% | | 3.42% |
| | | | | | | | | | | | |
| Ratio of interest-earning assets to interest-bearing liabilities | 1.21x | | 1.21x | | 1.20x | | 1.18x | | 1.18x |
11
