NEWS RELEASE
FOR IMMEDIATE RELEASE Stock Symbol: PBCP
Thursday, April 24, 2003 Traded on Nasdaq National Market
CONTACT:
Paul A. Maisch, SVP & CFO
Roberta Lenett, VP & Manager of Shareholder Relations
(845) 369-8082
PROVIDENT BANCORP ANNOUNCES QUARTERLY EARNINGS
OF $2.5 MILLION, $0.32 PER DILUTED SHARE
MONTEBELLO, NY - April 24, 2003 -- Provident Bancorp, Inc. (Nasdaq-National
Market: PBCP), the parent company of Provident Bank, today announced that net
income for the three months ended March 31, 2003 was $2.5 million, compared to
net income of $2.6 million for the three months ended March 31, 2002, a decrease
of $0.1 million. Basic and diluted earnings per share decreased to $0.33 and
$0.32, respectively, compared to $0.34 and $0.33 for basic and diluted,
respectively, for the same period last year. Net income for the six months ended
March 31, 2003 was $5.56 million, compared to net income of $5.13 million for
the six months ended March 31, 2002, an increase of $0.4 million, or 7.8%. Basic
and diluted earnings per share increased to $0.72 and $0.71, respectively, for
the six-month period compared to $0.67 and $0.66, respectively, for the same
period last year.
Included in net income for the quarter were several large items. A one-time
compensation expense payment of $324,000 offset exceptional interest recoveries
on nonperforming loans and prepayment fee collections of approximately $300,000.
Further, the Company was able to generate an additional $369,000 in gains from
the sale of residential mortgages and $337,000 from the sale of investment
securities over prior year amounts. These gains supplement falling asset yields
in the current continued low interest rate environment.
George Strayton, the Company's President and CEO, stated, "The quarterly
origination of loans in all categories totaled $94 million and outpaced the
previous year's $65 million of originations. However, significant loan
repayments and curtailments impeded asset growth and associated earnings.
Although earnings for the quarter are similar to those of the same quarter last
year, we are pleased that our net interest margin, although less than last year,
continues to be strong."
Total assets as of March 31, 2003 were $1,091.3 million, an increase of $63.6
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million, or 6.2% over assets of $1,027.7 million at September 30, 2002, and an
increase of $171.7 million, or 18.7%, over assets of $919.6 million at March 31,
2002. In April 2002, the Company acquired The National Bank of Florida ("NBF"),
which increased assets by $90.7 million.
Net Loans as of March 31, 2003 were $679.7 million, an increase of $18.9
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million, or 2.9%, over net loan balances of $660.8 million at September 30,
2002, and an increase of $57.3 million, or 9.2%, over balances at March 31,
2002, including $23.1 million acquired from NBF. Residential loans continued to
grow during the six-month period, posting an increase of $20.5 million, or 5.6%,
over balances at September 30, 2002, primarily in bi-weekly mortgages.
Commercial and consumer loans remained relatively unchanged as prepayments and
maturities of existing facilities virtually offset originations of $89.9
million. Asset quality continues to be strong. At $5.8 million or 0.53% of total
assets, non-performing assets are up slightly from $5.0 million or 0.49% at
September 30, 2002, and $3.6 million or 0.39% at March 31, 2002.
Deposits as of March 31, 2003 were $840.6 million, up $41.0 million, or 5.1%,
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from September 30, 2002, and $162.7 million, or 24.0%, from March 31, 2002,
including $88.2 million from NBF. Deposit growth has occurred in transaction,
savings and money market accounts while certificates of deposit are viritually
unchanged compared to September 30, 2002. As of March 31, 2003 retail and
commercial transaction accounts were 24.7% of deposits compared to 24.2% at
September 30, 2002 and 22.8% at March 31, 2002.
Stockholders' equity increased by $2.6 million to $113.5 million at March 31,
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2003 compared to $110.9 million at September 30, 2002. In addition to net income
of $5.6 million for the six-month period, equity increased by $0.8 million due
to activity related to the Company's ESOP, stock option and management retention
plans. Partially offsetting these increases were cash dividends, which reduced
stockholders' equity by $1.3 million, and the change in after-tax unrealized
gains on securities available for sale, which decreased equity by $1.2 million.
During the first six months of fiscal 2003, the Company repurchased 37,500
common shares, bringing the total shares repurchased to 368,051 shares under its
previously announced repurchase programs, which authorized the repurchase of up
to 376,740 shares. Net of option-related reissuances, treasury shares held by
the Company at March 31, 2003 were 307,898.
Income Information - Quarter
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Net interest income after provision for loan losses for the three months ended
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March 31, 2003 was $11.2 million, compared to $10.2 million for the three months
ended March 31, 2002, an increase of $1.0 million or 9.8%. The increase in net
interest income was largely due to a $104.0 million increase in average earning
assets to $973.6 million during the quarter ended March 31, 2003, as compared to
$869.6 million for the same quarter in the prior year, due primarily to the NBF
acquisition. The increase in average earning assets was partially offset by a
decline in average yield of 77 basis points from 6.79% to 6.02%. A decrease in
the average cost of interest bearing liabilities of 92 basis points led to a
$1.2 million drop in interest expense for the quarter compared to the same
quarter in 2002, even as interest-bearing liabilities increased by $104.0
million. Net interest margin declined by 4 basis points to 4.79%, while net
interest spread improved by 15 basis points to 4.55%.
Non-interest income for the three months ended March 31, 2003 was $2.4 million
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compared to $1.2 million for the three months ended March 31, 2002, an increase
of $1.2 million, or 100%. Realized gains on securities available for sale were
$427,000 for the current three-month period, compared to $90,000 for the same
period last year. During the three-month period ending March 31, 2003, the
Company also recorded gains on sales of loans totaling $403,000, while there was
only $34,000 for the same period last year. Excluding the effects of gains on
sales of securities and loans, the increase was $431,000, or 39.0%. Banking fees
and service charges increased by $179,000, or 19.1%, due primarily to
volume-driven increases in overdraft, NSF, and debit card fees. Loan fees and
charges increased by $62,000, or 33.3%, primarily as the result of a $100,000
prepayment fee received. In addition, the formation of a Bank Owned Life
Insurance ("BOLI") program in December, 2002, generated $161,000 in other income
during the current three-month period.
Non-interest expenses for the three months ended March 31, 2003 increased by
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$2.3 million, or 31.5%, to $9.6 million, compared to $7.3 million for the three
months ended March 31, 2002. The acquisition of NBF in April, 2002, played a
major role in the increases in most categories, as did the opening of a new
branch in February, 2003, reflecting increases in compensation and employee
benefits of $264,000 and in occupancy and equipment costs of $119,000. Also,
amortization of intangible assets of $115,000 in the current three-month period
is related to the deposit premiums recorded as a result of the acquisition.
Excluding the new branch-related salaries, the increase in compensation and
benefits was $1.1 million, or 27.5%. The $1.1 million increase is primarily due
to a $324,000 payout of an employment agreement, retirement plan and deferred
compensation costs increase of $193,000, net health insurance premiums increase
of $71,000 and annual salary increases and additional administration staff.
Other expenses increased by $844,000, or 25.6%, due primarily to the start-up
costs mentioned above, and an increase in advertising of $191,000 related to the
new branch, and an increase of $161,000 in consulting and other professional
fees incurred primarily to improve the Company's technological infrastructure.
Income Information - Six Months
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Net interest income after provision for loan losses increased by $2.6 million,
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or 13.1% for the six months ended March 31, 2003 to $22.5 million from the same
period in 2002. The increase in interest income reflects an increase in average
earning assets of $114.3 million to $976.2 million, offset by a decline in yield
of 77 basis points to 6.05%. The cost of interest bearing liabilities declined
by $2.6 million as the average rate paid on interest bearing funds dropped 98
basis points to 1.57% even though average balances increased by $104.6 million
to $810.9 million. Net interest margin increased from 4.73% to 4.75% and net
interest spread improved from 4.27% to 4.49%. As noted in the above discussion,
the increase in the Bank's net interest income is due, in large part, to the
relative changes in the yield and cost of the Bank's assets and liabilities as a
result of decreasing market interest rates since 2001. This decrease in market
interest rates has reduced the cost of interest-bearing liabilities faster and
to a greater extent than the rates on interest-earning assets such as loans and
securities. However, if recently low interest rate levels persist for an
extended period of time, the prepayment of assets could continue at a rate
exceeding scheduled repayment. Such funds received would most likely be
reinvested at lower yields than that of its previously held assets. Also, as the
reduction in liability costs have already exceeded the pace at which assets
repriced downward, net interest margin may be further compressed. Conversely, if
the geopolitical factors and an economic recovery become more apparent, market
interest rates could rise. Competitive pressures could cause a rise in the
Company's funding costs and lead to pressures on net interest margin.
Non-interest income for the six-month period ended March 31, 2003 increased to
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$4.4 million, an increase of $1.9 million, or 76%, compared to $2.5 million for
the same six-month period last year. Realized gains on securities available for
sale and sales of loans were $1.1 million and $442,000, respectively, for the
current period, generating a combined increase of $1.2 million over the
securities and loan sales gains of $278,000 for the same period last year.
Banking fees and service charges increased to $2.2 million for the current
six-month period, an increase of $293,000, or 15.8%, over the same period last
year. The increase is primarily attributable to volume-related increases in
transaction account fees of $270,000 resulting from the new and acquired
branches. Other income increased by $315,000, or 96.6%, to $641,000 for the
six-month period ended March 31, 2003, from $326,000 for the same period last
year. The increase is primarily due to $161,000 in income from the BOLI and the
previously mentioned prepayment fee received, as well as a one-time fee of
$86,000 from the Company's check-printing vendor.
Non-interest expenses increased to $18.0 million for the six-month period ended
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March 31, 2003, an increase of $3.6 million, or 25%, compared to $14.4 million
for the same six-month period last year. Increases in compensation and benefits
directly attributable to the new branches were $522,000 and in occupancy and
office operations were $283,000. Compensation and benefits increased by an
additional $1.7 million, of which $324,000 represented the pay-out of an
employment agreement, $212,000 was attributable to the increased cost of
stock-based compensation plans, $234,000 is due to additional retirement plan
and other deferred compensation expense, $118,000 is related to higher health
insurance premiums and the remaining increase is due to annual salary increases
of approximately 4.5% and additional administration staff. The Company amortized
$242,000 of intangible assets during the current year-to-date period as a result
of the NBF acquisition. Other expenses increased by $917,000, or 13.9%, for the
current year-to-date period due primarily to additional advertising costs of
$206,000, or 29.2%, related to new branches and products, a volume-related
increase of $258,000, or 30.6%, in data processing costs, and increased
consulting and other professional fees of $222,000 incurred primarily for
technological development.
Mr. Strayton added, "In the past year we have applied the resources of the Bank
to offer convenient delivery channels for our customers to access us. Acquiring
The National Bank of Florida and opening a branch in Harriman and a second New
City location, demonstrate our commitment to expanding the communities we serve.
Further, extended and Sunday banking hours, internet access and a dedicated
staff of corporate and community bankers reinforce our commitment to delivering
high quality service that will generate solid core earnings in these challenging
times."
Other financial information is included in the tables that follow.
Note:
In addition to historical information, this earnings release may contain
forward-looking statements. For this purpose, any statements contained herein
that are not statements of historical fact may be deemed to be forward-looking
statements. There are a number of important factors which have been outlined in
previously filed documents 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.
Provident Bancorp, Inc.
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(unaudited, in thousands, except share data)
March 31, September 30, March 31,
2003 2002 2002
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Assets:
Cash and due from banks $31,861 $35,093 $17,398
Federal funds sold --- --- 15,700
Total securities 334,165 298,285 242,377
Loans:
One-to four-family residential mortgage loans 386,629 366,111 366,162
Commercial real estate, commercial business
and construction 222,527 221,669 189,681
loans
Consumer loans 81,437 83,419 76,014
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Gross loans 690,593 671,199 631,857
Allowance for loan losses (10,901) (10,383) (9,503)
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Total loans, net 679,692 660,816 622,354
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Premises and equipment, net 11,344 11,071 9,109
Goodwill 13,540 13,540 ---
Bank owned life insurance 12,161 --- ---
Other assets 8,490 8,896 12,614
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Total assets $ 1,091,253 $ 1,027,701 $ 919,552
=============== =========== ==========
Liabilities:
Deposits:
Transaction accounts $207,568 $ 193,114 $154,742
Savings and money market deposits 390,521 362,983 297,937
Certificates of deposit 242,512 243,529 225,203
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Total deposits 840,601 799,626 677,882
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Borrowings 119,388 102,968 117,283
Mortgage escrow funds and other 17,719 14,240 18,577
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Total liabilities 977,708 916,834 813,742
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Stockholders' equity:
Common stock 828 828 828
Additional paid-in capital 36,979 36,696 36,748
Unallocated common stock held by ESOP / RRP (2,637) (3,082) (3,581)
Treasury stock, at cost (6,854) (5,874) (4,229)
Retained earnings 80,819 76,727 73,429
Accumulated other comprehensive income 4,410 5,572 2,615
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Stockholders' equity 113,545 110,867 105,810
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Total liabilities and stockholders' equity $ 1,091,253 $ 1,027,701 $919,552
=============== =========== ==========
Common shares outstanding at period end 7,972,102 7,997,512 8,043,499
Book value per share $ 14.24 $ 13.86 $ 13.16
Provident Bancorp, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except share data)
Three Months Ended Six Months Ended
March 31, March 31
2003 2002 2003 2002
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Interest and dividend income:
Loans $11,129 $11,002 $22,475 $22,222
Securities and other earning assets 3,310 3,556 6,988 7,097
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Total interest and dividend income 14,439 14,558 29,463 29,319
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Interest expense:
Deposits 1,965 2,698 4,310 6,001
Borrowings 982 1,494 2,026 2,982
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Total interest expense 2,947 4,192 6,336 8,983
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Net interest income 11,492 10,366 23,127 20,336
Provision for loan losses 300 175 600 400
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Net interest income after provision for loan losses 11,192 10,191 22,527 19,936
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Non-interest income:
Banking fees and service charges 1,114 935 2,203 1,911
Gains on sales of securities available for sale 427 90 1,084 237
Gains on sales of loans 403 34 442 40
Other 423 171 641 326
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Total non-interest income 2,367 1,230 4,370 2,514
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Non-interest expense:
Compensation and employee benefits 5,304 3,976 9,999 7,833
Occupancy and office operations 1,254 1,182 2,490 2,266
Advertising and promotion 495 304 911 705
Data processing 528 440 1,101 843
Other 1,976 1,368 2,776
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3,529
Total non-interest expense 9,557 7,270 18,030 14,423
------------ --------- ------- --------
Income before income tax expense 4,002 4,151 8,867 8,027
Income tax expense 1,482 1,550 3,306 2,900
------------ --------- ------- --------
Net income $2,520 $2,601 $ 5,561 $5,127
============ ========= ======= ========
Per common share:
Basic earnings $0.33 $ 0.34 $ 0.72 $0.67
Diluted earnings 0.32 0.33 0.71 0.66
Dividends declared 0.14 0.10 0.27 0.18
Weighted average common shares:
Basic 7,717,668 7,703,009 7,719,635 7,694,528
Diluted 7,835,432 7,847,100 7,834,907 7,825,278
Provident Bancorp, Inc.
SELECTED ADDITIONAL FINANCIAL DATA
(unaudited, $ in thousands)
March 31, September 30, March 31,
2003 2002 2002
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Asset Quality Data:
Non-performing loans (NPLs) $5,634 $ 4,954 $ 3,369
Non-performing assets (NPAs) $5,774 $ 4,995 $ 3,617
NPLs as % of total loans 0.82% 0.74% 0.53%
NPAs as % of total assets 0.53% 0.49% 0.39%
Allowance for loan losses as % of NPLs 193% 210% 282%
Allowance for loan losses as % of total loans 1.58% 1.55% 1.50%
Capital Ratios:
Equity to total assets (consolidated) 10.41% 10.79% 11.51%
Tier 1 capital ratio (Bank only) 8.49% 8.45% 10.38%
Three Months Ended Six Months Ended
March 31, March 31,
2003 2002 2003 2002
------- ------- --------- -------
Performance Ratios (annualized):
Return on:
Average assets 0.97% 1.16% 1.06% 1.15%
Average common equity 9.09% 9.88% 9.96% 9.76%
Average tangible equity 10.50% 9.90% 11.52% 9.78%
Net interest rate spread 4.55% 4.40% 4.49% 4.27%
Net interest margin 4.79% 4.83% 4.75% 4.73%
Average Balance Data:
Average assets 1,055,754 907,034 1,047,695 896,952
Average earning assets 973,601 869,620 976,226 861,909
Average stockholders' equity 112,406 106,743 111,989 105,343