Provident Financial Services, Inc. Announces First Quarter Earnings and Declares Increased Quarterly Cash Dividend
ISELIN, NJ, April 29, 2016 - Provident Financial Services, Inc. (NYSE:PFS) (the “Company”) reported net income of $21.0 million, or $0.33 per basic and diluted share for the three months ended March 31, 2016, compared to net income of $19.8 million, or $0.32 per basic and diluted share for the three months ended March 31, 2015.
Results of operations for the first quarter of 2016 were favorably impacted by growth in both average loans outstanding and average non-interest bearing deposits, along with growth in wealth management income. These factors helped mitigate the impact of compression in the net interest margin.
Christopher Martin, Chairman, President and Chief Executive Officer commented: “Our first quarter results were strong, as our core margin remained relatively stable, and we experienced solid loan and deposit growth. As we move into the second quarter, our loan pipeline remains at historically high levels with diversification among all loan types. With an increase in our cash dividend to $0.18 from $0.17 per share, Provident stockholders will be receiving a dividend yield of approximately 3.50%, based on our current stock price. We remain optimistic about the business climate for our markets as the regional economic outlook and local housing markets continue to show improvement.” Martin continued: “I applaud the efforts of our officers and employees who made it possible for Provident Bank to be named by Forbes as one of the best banks in America.”
Declaration of Quarterly Dividend
The Company’s Board of Directors declared a quarterly cash dividend of $0.18 per common share payable on May 31, 2016, to stockholders of record as of the close of business on May 13, 2016. The dividend is an increase of 5.9% from the prior quarter's regular cash dividend of $0.17 per common share.
Balance Sheet Summary
Total assets increased $114.5 million to $9.03 billion at March 31, 2016, from $8.91 billion at December 31, 2015, primarily due to a $100.5 million increase in total loans and a $12.9 million increase in total investments.
The Company’s loan portfolio increased $100.5 million, or 1.5%, to $6.64 billion at March 31, 2016, from $6.54 billion at December 31, 2015. Loan originations totaled $646.8 million and loan purchases totaled $28.6 million for the three months ended March 31, 2016. The loan portfolio had net increases of $84.2 million in multi-family mortgage loans, $45.7 million in commercial loans and $8.5 million in residential mortgage loans, partially offset by net decreases of $22.0 million in construction loans, $10.1 million in consumer loans and $5.9 million in commercial mortgage loans. Commercial real estate, commercial and construction loans represented 72.6% of the loan portfolio at March 31, 2016, compared to 72.1% at December 31, 2015.
At March 31, 2016, the Company’s unfunded loan commitments totaled $1.24 billion, including commitments of $555.1 million in commercial loans, $237.3 million in construction loans and $145.2 million in commercial mortgage loans. Unfunded loan commitments at December 31, 2015 and March 31, 2015 were $1.15 billion and $1.28 billion, respectively.
Total investments increased $12.9 million, or 0.8%, to $1.53 billion at March 31, 2016, from $1.52 billion at December 31, 2015, largely due to purchases of mortgage-backed and municipal securities and an increase in unrealized gains on securities available for sale, partially offset by principal repayments on mortgage-backed securities, maturities of municipal and agency bonds and sales of certain mortgage-backed securities.
Total deposits increased $230.9 million, or 3.9%, during the three months ended March 31, 2016, to $6.15 billion. Total core deposits, which consist of savings and demand deposit accounts, increased $175.0 million to $5.36 billion at March 31, 2016, while time deposits increased $55.9 million to $795.6 million at March 31, 2016. The increase in core deposits was largely attributable to an $80.5 million increase in interest bearing demand deposits, a $78.3 million increase in money market deposits and a $20.0 million increase in savings deposits. The increase in time deposits was primarily due to a $54.5 million increase in brokered certificates of deposits. At March 31,
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2016, total brokered deposits were $153.2 million. Core deposits represented 87.1% of total deposits at March 31, 2016, compared to 87.5% at December 31, 2015.
Borrowed funds decreased $137.5 million, or 8.1% during the three months ended March 31, 2016, to $1.57 billion, as shorter-term wholesale fundings were replaced by net inflows of deposits for the period. Borrowed funds represented 17.4% of total assets at March 31, 2016, a decrease from 19.2% at December 31, 2015.
Stockholders’ equity increased $18.1 million, or 1.5% for the three months ended March 31, 2016, to $1.21 billion, due to net income earned for the period and an increase in unrealized gains on securities available for sale, partially offset by dividends paid to stockholders. For the three months ended March 31, 2016, 146,245 shares of common stock were repurchased at an average cost of $18.45 per share, a portion of which were made in connection with withholding to cover income taxes on the vesting of stock-based compensation. At March 31, 2016, 3.2 million shares remained eligible for repurchase under the current authorization. Book value per share and tangible book value per share(1) at March 31, 2016 were $18.47 and $12.00, respectively, compared with $18.26 and $11.75, respectively, at December 31, 2015.
Results of Operations
Net Interest Income and Net Interest Margin
For the three months ended March 31, 2016, net interest income increased $1.1 million to $63.1 million, from $61.9 million for the same period in 2015. The improvement in net interest income for the three months ended March 31, 2016 was primarily attributable to growth in average loans outstanding resulting from organic originations and an increase in average non-interest bearing demand deposits, partially offset by period-over-period compression in the net interest margin.
The Company’s net interest margin decreased six basis points to 3.11% for the quarter ended March 31, 2016, from 3.17% for the trailing quarter. The weighted average yield on interest-earning assets decreased four basis points to 3.66% for the quarter ended March 31, 2016, compared with 3.70% for the quarter ended December 31, 2015. The average yield on earning assets and net interest margin for the trailing quarter were favorably impacted by five basis points due to the accelerated recognition of $1.0 million of deferred income on a prepaid commercial loan. The weighted average cost of interest-bearing liabilities for the quarter ended March 31, 2016 was 0.68%, a two basis point increase from the trailing quarter. The average cost of interest bearing deposits for the quarter ended March 31, 2016 was 0.32%, a one basis point increase from the quarter ended December 31, 2015. Average non-interest bearing demand deposits totaled $1.19 billion for the quarter ended March 31, 2016, compared with $1.17 billion for the quarter ended December 31, 2015. The average cost of borrowed funds for the quarter ended March 31, 2016 was 1.71%, compared with 1.65% for the trailing quarter.
The net interest margin decreased 13 basis points to 3.11% for the quarter ended March 31, 2016, compared with 3.24% for the quarter ended March 31, 2015. The weighted average yield on interest-earning assets decreased 12 basis points to 3.66% for the quarter ended March 31, 2016, compared with 3.78% for the quarter ended March 31, 2015, while the weighted average cost of interest bearing liabilities increased one basis point to 0.68% for the quarter ended March 31, 2016, compared with 0.67% for the first quarter of 2015. The average cost of interest bearing deposits for the quarter ended March 31, 2016 was 0.32%, compared with 0.31% for the same period last year. Average non-interest bearing demand deposits increased $133.6 million to $1.19 billion for the quarter ended March 31, 2016, compared with $1.05 billion for the quarter ended March 31, 2015. The average cost of borrowed funds for the quarter ended March 31, 2016 was 1.71%, compared with 1.82% for the same period last year.
Non-Interest Income
Non-interest income totaled $13.0 million for the quarter ended March 31, 2016, an increase of $2.7 million, or 26.4%, compared to the same period in 2015. Wealth management income increased $1.8 million to $4.3 million for the three months ended March 31, 2016, compared to $2.6 million for the same period in 2015. The increase in wealth management income was primarily attributable to fees earned from assets under management acquired in the MDE transaction, which closed on April 1, 2015. Other income increased $477,000 for the three months ended March 31, 2016, compared to the same period in 2015, primarily due to a $204,000 gain recognized on the sale of deposits resulting from a strategic branch divestiture and an increase in net gains on loan sales, partially
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offset by a decrease in net fees on loan-level interest rate swap transactions. Also contributing to the increase in non-interest income, fee income for the three months ended March 31, 2016 increased $407,000 to $6.5 million, compared to $6.1 million for the same period in 2015. This increase was largely due to a $481,000 increase in ATM and debit card revenue and a $343,000 increase in deposit related fees, partially offset by a $548,000 decrease in prepayment fees on commercial loans. Net gains on securities transactions increased $94,000 for the three months ended March 31, 2016, compared to the same period in 2015.
Non-Interest Expense
For the three months ended March 31, 2016, non-interest expense increased $1.4 million to $44.9 million, compared to the three months ended March 31, 2015. Compensation and benefits expense increased $1.8 million to $26.0 million for the three months ended March 31, 2016, compared to $24.2 million for the same period in 2015. This increase was principally due to an increase in salary expense associated with new employees added as a result of the MDE acquisition, additional salary expense related to annual merit increases and an increase in employee medical and retirement benefit costs, partially offset by lower stock-based compensation expense. Data processing expenses increased $218,000 to $3.2 million for the three months ended March 31, 2016, compared to the same period in 2015, largely due to an increase in software maintenance expense and electronic banking costs. Partially offsetting these increases in non-interest expense, net occupancy costs decreased $738,000 to $6.4 million for the three months ended March 31, 2016, compared to $7.2 million for the three months ended March 31, 2015, primarily due to a decrease in seasonal expenses resulting from a milder winter, combined with decreases in facilities and equipment maintenance expenses. Also, other operating expenses decreased $168,000 to $6.0 million for the three months ended March 31, 2016, compared to the same period in 2015, principally due to a decrease in attorney fees, a portion of which were related to the Company's loan asset recovery activities, partially offset by increases in business development and personnel recruitment expenses.
The Company’s annualized non-interest expense as a percentage of average assets(1) was 2.01% for the quarter ended March 31, 2016, compared with 2.07% for the same period in 2015. The efficiency ratio (non-interest expense divided by the sum of net interest income and non-interest income)(1) was 58.98% for the quarter ended March 31, 2016, compared with 60.14% for the same period in 2015.
Asset Quality
The Company’s total non-performing loans at March 31, 2016 were $50.6 million, or 0.76% of total loans, compared with $44.5 million, or 0.68% of total loans at December 31, 2015 and $50.9 million, or 0.83% of total loans at March 31, 2015. The $6.1 million increase in non-performing loans at March 31, 2016, compared with the trailing quarter, was due to a $4.5 million increase in non-performing commercial loans, a $2.0 million increase in non-performing residential mortgages and a $499,000 increase in non-performing multi-family loans, partially offset by a $1.1 million decrease in non-performing consumer loans. The increase in non-performing commercial loans was largely attributable to a single relationship secured by business assets. At March 31, 2016, impaired loans totaled $54.2 million with related specific reserves of $5.1 million, compared with impaired loans totaling $50.9 million with related specific reserves of $2.3 million at December 31, 2015. At March 31, 2015, impaired loans totaled $90.8 million with related specific reserves of $6.7 million.
At March 31, 2016, the Company’s allowance for loan losses remained unchanged at 0.94% of total loans from December 31, 2015, and decreased from 1.00% of total loans at March 31, 2015. The Company recorded a provision for loan losses of $1.5 million for the three months ended March 31, 2016, compared with a provision of $600,000 for the three months ended March 31, 2015. For the three months ended March 31, 2016, the Company had net charge-offs of $734,000, compared with net charge-offs of $1.2 million for the same period in 2015. The allowance for loan losses increased $767,000 to $62.2 million at March 31, 2016, from $61.4 million at December 31, 2015.
At March 31, 2016, the Company held $11.0 million of foreclosed assets, compared with $10.5 million at December 31, 2015. During the quarter, there were eight additions to foreclosed assets with a carrying value of $1.5 million and ten properties sold with a carrying value of $1.0 million. Foreclosed assets at March 31, 2016 consisted of $5.8 million of residential real estate, $5.1 million of commercial real estate and $156,000 of marine vessels. Total non-performing assets at March 31, 2016 increased $6.6 million, or 12.0%, to $61.7 million, or 0.68% of total assets, from $55.1 million, or 0.62% of total assets at December 31, 2015.
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Income Tax Expense
For the three months ended March 31, 2016, the Company’s income tax expense was $8.7 million, compared with $8.4 million for the three months ended March 31, 2015. The increase in income tax expense was a function of growth in pre-tax income for the three months ended March 31, 2016. The Company’s effective tax rates were 29.4% and 29.8% for the three months ended March 31, 2016 and 2015, respectively.
About the Company
Provident Financial Services, Inc. is the holding company for The Provident Bank, a community-oriented bank offering "commitment you can count on" since 1839. The Provident Bank provides a comprehensive array of financial products and services through its network of branches throughout northern and central New Jersey, as well as Bucks, Lehigh and Northampton counties in Pennsylvania. The Bank also provides fiduciary and wealth management services through its wholly owned subsidiary, Beacon Trust Company.
Post Earnings Conference Call
Representatives of the Company will hold a conference call for investors on Friday, April 29, 2016 at 10:00 a.m. Eastern Time to discuss highlights of the Company’s financial results for the quarter ended March 31, 2016. The call may be accessed by dialing 1-888-336-7149 (Domestic), 1-412-902-4175 (International) or 1-855-669-9657 (Canada). Internet access to the call is also available (listen only) at www.Provident.bank 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 set forth in Item 1A of the Company's Annual Report on Form 10-K, or supplemented by its quarterly reports on Form 10-Q, and 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 have any obligation to update any forward-looking statements to reflect events or circumstances after the date of this statement.
Footnotes
(1) Tangible book value per share, return on average tangible equity, annualized core non-interest expense as a percentage of average assets and the efficiency ratio are non-GAAP financial measures. Please refer to the Notes on page 8 which contain the reconciliation of GAAP to non-GAAP financial measures and the associated calculations.
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| PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY | |||||||
| Consolidated Statements of Financial Condition | |||||||
| March 31, 2016 (Unaudited) and December 31, 2015 | |||||||
| (Dollars in Thousands) | |||||||
| Assets | March 31, 2016 | December 31, 2015 | |||||
| Cash and due from banks | $ | 107,252 | $ | 100,899 | |||
| Short-term investments | 859 | 1,327 | |||||
| Total cash and cash equivalents | 108,111 | 102,226 | |||||
| Securities available for sale, at fair value | 984,206 | 964,534 | |||||
Investment securities held to maturity (fair value of $491,349 at March 31, 2016 (unaudited) and $488,331 at December 31, 2015) | 472,934 | 473,684 | |||||
| Federal Home Loan Bank Stock | 72,135 | 78,181 | |||||
| Loans | 6,638,127 | 6,537,674 | |||||
| Less allowance for loan losses | 62,191 | 61,424 | |||||
| Net loans | 6,575,936 | 6,476,250 | |||||
| Foreclosed assets, net | 11,029 | 10,546 | |||||
| Banking premises and equipment, net | 88,249 | 88,987 | |||||
| Accrued interest receivable | 25,399 | 25,766 | |||||
| Intangible assets | 425,260 | 426,277 | |||||
| Bank-owned life insurance | 184,389 | 183,057 | |||||
| Other assets | 78,526 | 82,149 | |||||
| Total assets | $ | 9,026,174 | $ | 8,911,657 | |||
| Liabilities and Stockholders' Equity | |||||||
| Deposits: | |||||||
| Demand deposits | $ | 4,353,814 | $ | 4,198,788 | |||
| Savings deposits | 1,005,430 | 985,478 | |||||
| Certificates of deposit of $100,000 or more | 389,985 | 324,215 | |||||
| Other time deposits | 405,633 | 415,506 | |||||
| Total deposits | 6,154,862 | 5,923,987 | |||||
| Mortgage escrow deposits | 25,636 | 23,345 | |||||
| Borrowed funds | 1,570,141 | 1,707,632 | |||||
| Other liabilities | 61,413 | 60,628 | |||||
| Total liabilities | 7,812,052 | 7,715,592 | |||||
| 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 65,732,579 outstanding at March 31, 2016 and 65,489,354 outstanding at December 31, 2015 | 832 | 832 | |||||
| Additional paid-in capital | 1,001,919 | 1,000,810 | |||||
| Retained earnings | 517,365 | 507,713 | |||||
| Accumulated other comprehensive income (loss) | 4,169 | (2,546 | ) | ||||
| Treasury stock | (269,105 | ) | (269,014 | ) | |||
| Unallocated common stock held by the Employee Stock Ownership Plan | (41,058 | ) | (41,730 | ) | |||
| Common Stock acquired by the Directors' Deferred Fee Plan | (6,350 | ) | (6,517 | ) | |||
| Deferred Compensation - Directors' Deferred Fee Plan | 6,350 | 6,517 | |||||
| Total stockholders' equity | 1,214,122 | 1,196,065 | |||||
| Total liabilities and stockholders' equity | $ | 9,026,174 | $ | 8,911,657 | |||
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| PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY | ||||||||
| Consolidated Statements of Income | ||||||||
| Three Months Ended March 31, 2016 and 2015 (Unaudited) | ||||||||
| (Dollars in Thousands, except per share data) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2016 | 2015 | |||||||
| Interest income: | ||||||||
| Real estate secured loans | $ | 44,233 | $ | 43,289 | ||||
| Commercial loans | 14,952 | 13,439 | ||||||
| Consumer loans | 5,636 | 5,794 | ||||||
| Securities available for sale and Federal Home Loan Bank stock | 5,780 | 6,301 | ||||||
| Investment securities held to maturity | 3,331 | 3,396 | ||||||
| Deposits, federal funds sold and other short-term investments | 42 | 12 | ||||||
| Total interest income | 73,974 | 72,231 | ||||||
| Interest expense: | ||||||||
| Deposits | 3,821 | 3,588 | ||||||
| Borrowed funds | 7,084 | 6,715 | ||||||
| Total interest expense | 10,905 | 10,303 | ||||||
| Net interest income | 63,069 | 61,928 | ||||||
| Provision for loan losses | 1,500 | 600 | ||||||
| Net interest income after provision for loan losses | 61,569 | 61,328 | ||||||
| Non-interest income: | ||||||||
| Fees | 6,461 | 6,054 | ||||||
| Wealth management income | 4,311 | 2,558 | ||||||
| Bank-owned life insurance | 1,332 | 1,348 | ||||||
| Net gain on securities transactions | 96 | 2 | ||||||
| Other income | 818 | 341 | ||||||
| Total non-interest income | 13,018 | 10,303 | ||||||
| Non-interest expense: | ||||||||
| Compensation and employee benefits | 26,030 | 24,201 | ||||||
| Net occupancy expense | 6,434 | 7,172 | ||||||
| Data processing expense | 3,245 | 3,027 | ||||||
| FDIC Insurance | 1,322 | 1,218 | ||||||
| Amortization of intangibles | 1,005 | 927 | ||||||
| Advertising and promotion expense | 879 | 761 | ||||||
| Other operating expenses | 5,963 | 6,131 | ||||||
| Total non-interest expense | 44,878 | 43,437 | ||||||
| Income before income tax expense | 29,709 | 28,194 | ||||||
| Income tax expense | 8,736 | 8,392 | ||||||
| Net income | $ | 20,973 | $ | 19,802 | ||||
| Basic earnings per share | $ | 0.33 | $ | 0.32 | ||||
| Average basic shares outstanding | 63,351,093 | 62,673,887 | ||||||
| Diluted earnings per share | $ | 0.33 | $ | 0.32 | ||||
| Average diluted shares outstanding | 63,519,755 | 62,840,951 | ||||||
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| 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, | ||||||||
| 2016 | 2015 | |||||||
| STATEMENTS OF INCOME: | ||||||||
| Net interest income | $ | 63,069 | $ | 61,928 | ||||
| Provision for loan losses | 1,500 | 600 | ||||||
| Non-interest income | 13,018 | 10,303 | ||||||
| Non-interest expense | 44,878 | 43,437 | ||||||
| Income before income tax expense | 29,709 | 28,194 | ||||||
| Net income | 20,973 | 19,802 | ||||||
| Diluted earnings per share | $0.33 | $0.32 | ||||||
| Interest rate spread | 2.98 | % | 3.11 | % | ||||
| Net interest margin | 3.11 | % | 3.24 | % | ||||
| PROFITABILITY: | ||||||||
| Annualized return on average assets | 0.94 | % | 0.94 | % | ||||
| Annualized return on average equity | 6.97 | % | 6.94 | % | ||||
Annualized return on average tangible equity (2) | 10.76 | % | 10.67 | % | ||||
Annualized non-interest expense to average assets (3) | 2.01 | % | 2.07 | % | ||||
Efficiency ratio (4) | 58.98 | % | 60.14 | % | ||||
| ASSET QUALITY: | ||||||||
| Non-accrual loans | $ | 50,649 | $ | 50,888 | ||||
| 90+ and still accruing | — | — | ||||||
| Non-performing loans | 50,649 | 50,888 | ||||||
| Foreclosed assets | 11,029 | 5,924 | ||||||
| Non-performing assets | 61,678 | 56,812 | ||||||
| Non-performing loans to total loans | 0.76 | % | 0.83 | % | ||||
| Non-performing assets to total assets | 0.68 | % | 0.67 | % | ||||
| Allowance for loan losses | $ | 62,191 | $ | 61,110 | ||||
| Allowance for loan losses to total non-performing loans | 122.79 | % | 120.09 | % | ||||
| Allowance for loan losses to total loans | 0.94 | % | 1.00 | % | ||||
| AVERAGE BALANCE SHEET DATA: | ||||||||
| Assets | $ | 8,960,605 | $ | 8,510,326 | ||||
| Loans, net | 6,503,275 | 6,028,265 | ||||||
| Earning assets | 8,054,107 | 7,662,592 | ||||||
| Core deposits | 5,230,345 | 4,981,618 | ||||||
| Borrowings | 1,688,892 | 1,492,714 | ||||||
| Interest-bearing liabilities | 6,485,777 | 6,229,529 | ||||||
| Stockholders' equity | 1,210,210 | 1,157,078 | ||||||
| Average yield on interest-earning assets | 3.66 | % | 3.78 | % | ||||
| Average cost of interest-bearing liabilities | 0.68 | % | 0.67 | % | ||||
| LOAN DATA: | ||||||||
| Mortgage loans: | ||||||||
| Residential | $ | 1,263,699 | $ | 1,246,809 | ||||
| Commercial | 1,710,182 | 1,689,287 | ||||||
| Multi-family | 1,318,251 | 1,070,926 | ||||||
| Construction | 309,656 | 274,001 | ||||||
| Total mortgage loans | 4,601,788 | 4,281,023 | ||||||
| Commercial loans | 1,480,002 | 1,243,783 | ||||||
| Consumer loans | 556,056 | 601,323 | ||||||
| Total gross loans | 6,637,846 | 6,126,129 | ||||||
| Premium on purchased loans | 6,011 | 5,386 | ||||||
| Unearned discounts | (40 | ) | (47 | ) | ||||
| Net deferred | (5,690 | ) | (6,769 | ) | ||||
| Total loans | $ | 6,638,127 | $ | 6,124,699 | ||||
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Notes - Reconciliation of GAAP to Non-GAAP Financial Measures - (Dollars in Thousands, except share data) | ||||||||
| (1) Book and Tangible Book Value per Share | ||||||||
| At March 31, | ||||||||
| 2016 | 2015 | |||||||
| Total stockholders' equity | $ | 1,214,122 | $ | 1,157,671 | ||||
| Less: total intangible assets | 425,260 | 403,505 | ||||||
| Total tangible stockholders' equity | $ | 788,862 | $ | 754,166 | ||||
| Shares outstanding | 65,732,579 | 65,171,983 | ||||||
| Book value per share (total stockholders' equity/shares outstanding) | $18.47 | $17.76 | ||||||
| Tangible book value per share (total tangible stockholders' equity/shares outstanding) | $12.00 | $11.57 | ||||||
| (2) Return on Average Tangible Equity | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2016 | 2015 | |||||||
| Total average stockholders' equity | $ | 1,210,210 | $ | 1,157,078 | ||||
| Less: total average intangible assets | 425,897 | 404,091 | ||||||
| Total average tangible stockholders' equity | $ | 784,313 | $ | 752,987 | ||||
| Net income | $ | 20,973 | $ | 19,802 | ||||
| Annualized return on average tangible equity (net income/total average stockholders' equity) | 10.76 | % | 10.67 | % | ||||
| (3) Annualized Non-Interest Expense/Average Assets Calculation | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2016 | 2015 | |||||||
| Annualized non-interest expense | $ | 180,498 | $ | 176,161 | ||||
| Average assets | 8,960,605 | 8,510,326 | ||||||
| Non-interest expense/average assets | 2.01 | % | 2.07 | % | ||||
| (4) Efficiency Ratio Calculation | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2016 | 2015 | |||||||
| Net interest income | $ | 63,069 | $ | 61,928 | ||||
| Non-interest income | 13,018 | 10,303 | ||||||
| Total income | 76,087 | 72,231 | ||||||
Non-interest expense | 44,878 | 43,437 | ||||||
| Expense/income | 58.98 | % | 60.14 | % | ||||
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| PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY | |||||||||||||||||||
| Net Interest Margin Analysis | |||||||||||||||||||
| Quarterly Average Balances | |||||||||||||||||||
| (Unaudited) (Dollars in Thousands) | |||||||||||||||||||
| March 31, 2016 | December 31, 2015 | ||||||||||||||||||
| Average | Average | Average | Average | ||||||||||||||||
| Balance | Interest | Yield/Cost | Balance | Interest | Yield/Cost | ||||||||||||||
Interest-Earning Assets: | |||||||||||||||||||
| Deposits | $ | 33,239 | $ | 42 | 0.50% | $ | 21,688 | $ | 17 | 0.28% | |||||||||
| Federal funds sold and other short-term investments | 1,437 | — | 0.06% | 1,528 | — | 0.03% | |||||||||||||
Investment securities (1) | 474,130 | 3,331 | 2.81% | 473,007 | 3,344 | 2.83% | |||||||||||||
| Securities available for sale | 965,490 | 4,886 | 2.02% | 979,724 | 4,922 | 2.01% | |||||||||||||
| Federal Home Loan Bank stock | 76,536 | 894 | 4.70% | 76,431 | 768 | 3.99% | |||||||||||||
Net loans: (2) | |||||||||||||||||||
| Total mortgage loans | 4,543,468 | 44,233 | 3.87% | 4,498,133 | 45,290 | 3.98% | |||||||||||||
| Total commercial loans | 1,399,478 | 14,952 | 4.25% | 1,327,394 | 14,472 | 4.30% | |||||||||||||
| Total consumer loans | 560,329 | 5,636 | 4.04% | 571,186 | 5,536 | 3.85% | |||||||||||||
| Total net loans | 6,503,275 | 64,821 | 3.97% | 6,396,713 | 65,298 | 4.03% | |||||||||||||
| Total Interest-Earning Assets | $ | 8,054,107 | $ | 73,974 | 3.66% | $ | 7,949,091 | $ | 74,349 | 3.70% | |||||||||
| Non-Interest Earning Assets: | |||||||||||||||||||
| Cash and due from banks | 98,510 | 91,341 | |||||||||||||||||
| Other assets | 807,988 | 805,875 | |||||||||||||||||
| Total Assets | $ | 8,960,605 | $ | 8,846,307 | |||||||||||||||
| Interest-Bearing Liabilities: | |||||||||||||||||||
| Demand deposits | $ | 3,051,598 | $ | 2,191 | 0.29% | $ | 2,991,192 | $ | 2,109 | 0.28% | |||||||||
| Savings deposits | 991,038 | 285 | 0.12% | 978,615 | 271 | 0.11% | |||||||||||||
| Time deposits | 774,249 | 1,345 | 0.70% | 760,504 | 1,290 | 0.67% | |||||||||||||
| Total Deposits | 4,816,885 | 3,821 | 0.32% | 4,730,311 | 3,670 | 0.31% | |||||||||||||
| Borrowed funds | 1,668,892 | 7,084 | 1.71% | 1,674,876 | 6,948 | 1.65% | |||||||||||||
| Total Interest-Bearing Liabilities | 6,485,777 | 10,905 | 0.68% | 6,405,187 | 10,618 | 0.66% | |||||||||||||
| Non-Interest Bearing Liabilities: | |||||||||||||||||||
| Non-interest bearing deposits | 1,187,709 | 1,170.255 | |||||||||||||||||
| Other non-interest bearing liabilities | 76,909 | 76,082 | |||||||||||||||||
| Total non-interest bearing liabilities | 1,264,618 | 1,246,337 | |||||||||||||||||
| Total Liabilities | 7,750,395 | 7,651,524 | |||||||||||||||||
| Stockholders' equity | 1,210,210 | 1,194,783 | |||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 8,960,605 | $ | 8,846,307 | |||||||||||||||
| Net interest income | $ | 63,069 | $ | 63,731 | |||||||||||||||
| Net interest rate spread | 2.98% | 3.04% | |||||||||||||||||
| Net interest-earning assets | $ | 1,568,330 | $ | 1,543,904 | |||||||||||||||
Net interest margin (3) | 3.11% | 3.17% | |||||||||||||||||
| Ratio of interest-earning assets to | |||||||||||||||||||
| total interest-bearing liabilities | 1.24x | 1.24x | |||||||||||||||||
| (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. |
9
| PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY | |||||||||||||||||||
| Net Interest Margin Analysis | |||||||||||||||||||
| Average Year to Date Balances | |||||||||||||||||||
| (Unaudited) (Dollars in Thousands) | |||||||||||||||||||
| March 31, 2016 | March 31, 2015 | ||||||||||||||||||
| Average | Average | Average | Average | ||||||||||||||||
| Balance | Interest | Yield/Cost | Balance | Interest | Yield/Cost | ||||||||||||||
| Interest-Earning Assets: | |||||||||||||||||||
| Deposits | $ | 33,239 | $ | 42 | 0.50% | $ | 18,842 | $ | 12 | 0.25% | |||||||||
| Federal funds sold and other short term investments | 1,437 | — | 0.06% | 1,149 | — | 0.03% | |||||||||||||
Investment securities (1) | 474,130 | 3,331 | 2.81% | 473,374 | 3,396 | 2.87% | |||||||||||||
| Securities available for sale | 965,490 | 4,886 | 2.02% | 1,071,853 | 5,437 | 2.03% | |||||||||||||
| Federal Home Loan Bank stock | 76,536 | 894 | 4.70% | 69,109 | 864 | 5.07% | |||||||||||||
Net loans: (2) | |||||||||||||||||||
| Total mortgage loans | 4,543,468 | 44,233 | 3.87% | 4,210,152 | 43,289 | 4.11% | |||||||||||||
| Total commercial loans | 1,399,478 | 14,952 | 4.25% | 1,212,557 | 13,439 | 4.46% | |||||||||||||
| Total consumer loans | 560,329 | 5,636 | 4.04% | 605,556 | 5,794 | 3.88% | |||||||||||||
| Total net loans | 6,503,275 | 64,821 | 3.97% | 6,028,265 | 62,522 | 4.16% | |||||||||||||
| Total Interest-Earning Assets | $ | 8,054,107 | $ | 73,974 | 3.66% | $ | 7,662,592 | $ | 72,231 | 3.78% | |||||||||
Non-Interest Earning Assets: | |||||||||||||||||||
| Cash and due from banks | 98,510 | 76,024 | |||||||||||||||||
| Other assets | 807,988 | 771,710 | |||||||||||||||||
| Total Assets | $ | 8,960,605 | $ | 8,510,326 | |||||||||||||||
Interest-Bearing Liabilities: | |||||||||||||||||||
| Demand deposits | $ | 3,051,598 | $ | 2,191 | 0.29% | $ | 2,944,909 | $ | 1,912 | 0.26% | |||||||||
| Savings deposits | 991,038 | 285 | 0.12% | 982,592 | 245 | 0.10% | |||||||||||||
| Time deposits | 774,249 | 1,345 | 0.70% | 809,314 | 1,431 | 0.72% | |||||||||||||
| Total Deposits | 4,816,885 | 3,821 | 0.32% | 4,736,815 | 3,588 | 0.31% | |||||||||||||
| Borrowed funds | 1,668,892 | 7,084 | 1.71% | 1,492,714 | 6,715 | 1.82% | |||||||||||||
| Total Interest-Bearing Liabilities | $ | 6,485,777 | $ | 10,905 | 0.68% | $ | 6,229,529 | $ | 10,303 | 0.67% | |||||||||
| Non-Interest Bearing Liabilities: | |||||||||||||||||||
| Non-interest bearing deposits | 1,187,709 | 1,054.117 | |||||||||||||||||
| Other non-interest bearing liabilities | 76,909 | 69.602 | |||||||||||||||||
| Total non-interest bearing liabilities | 1,264,618 | 1,123,719 | |||||||||||||||||
| Total Liabilities | 7,750,395 | 7,353,248 | |||||||||||||||||
| Stockholders' equity | 1,210,210 | 1,157,078 | |||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 8,960,605 | $ | 8,510,326 | |||||||||||||||
| Net interest income | $ | 63,069 | $ | 61,928 | |||||||||||||||
| Net interest rate spread | 2.98% | 3.11% | |||||||||||||||||
| Net interest-earning assets | $ | 1,568,330 | $ | 1,433,063 | |||||||||||||||
Net interest margin (3) | 3.11% | 3.24% | |||||||||||||||||
| Ratio of interest-earning assets to | |||||||||||||||||||
| total interest-bearing liabilities | 1.24x | 1.23x | |||||||||||||||||
| (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. | |||||||||||||||||||
10
| The following table summarizes the quarterly net interest margin for the previous five quarters. | ||||||||||||||
| 3/31/16 | 12/31/15 | 9/30/15 | 06/30/15 | 3/31/15 | ||||||||||
| 1st Qtr. | 4th Qtr. | 3rd Qtr. | 2nd Qtr. | 1st Qtr. | ||||||||||
| Interest-Earning Assets: | ||||||||||||||
| Securities | 2.36 | % | 2.33 | % | 2.26 | % | 2.28 | % | 2.38 | % | ||||
| Net loans | 3.97 | % | 4.03 | % | 4.02 | % | 4.08 | % | 4.16 | % | ||||
| Total interest-earning assets | 3.66 | % | 3.70 | % | 3.66 | % | 3.71 | % | 3.78 | % | ||||
| Interest-Bearing Liabilities: | ||||||||||||||
| Total deposits | 0.32 | % | 0.31 | % | 0.31 | % | 0.31 | % | 0.31 | % | ||||
| Total borrowings | 1.71 | % | 1.65 | % | 1.61 | % | 1.77 | % | 1.82 | % | ||||
| Total interest-bearing liabilities | 0.68 | % | 0.66 | % | 0.65 | % | 0.67 | % | 0.67 | % | ||||
| Interest rate spread | 2.98 | % | 3.04 | % | 3.01 | % | 3.04 | % | 3.11 | % | ||||
| Net interest margin | 3.11 | % | 3.17 | % | 3.13 | % | 3.17 | % | 3.24 | % | ||||
| Ratio of interest-earning assets to interest-bearing liabilities | 1.24x | 1.24x | 1.24x | 1.23x | 1.23x | |||||||||
11