EXHIBIT 99
PRESS RELEASE OF PROVIDENT BANCORP, INC.
NEWS RELEASE
FOR IMMEDIATE RELEASE Stock Symbol: PBCP
Thursday, July 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 $3.1 MILLION, $0.40 PER DILUTED SHARE
DECLARES QUARTERLY DIVIDEND OF $0.15
MONTEBELLO, NY - July 23, 2003 -- Provident Bancorp, Inc. (Nasdaq-National
Market: PBCP), the parent company of Provident Bank, today announced that net
income for the three months ended June 30, 2003 was $3.1 million, compared to
net income of $2.1 million for the three months ended June 30, 2002, an increase
of $1.0 million or 44.9%. Basic and diluted earnings per share increased 42.9%
and 48.1%, respectively, to $0.40, compared to $0.28 and $0.27 for basic and
diluted, respectively, for the same period last year. Net income for the nine
months ended June 30, 2003 was $8.7 million, compared to net income of $7.3
million for the nine months ended June 30, 2002, an increase of $1.4 million, or
19.2%. Basic and diluted earnings per share increased 19.1% and 19.4% to $1.12
and $1.11, respectively, for the nine-months ended June 30, 2003 compared to
$0.94 and $0.93, respectively, for the same period last year.
Included in net income for the quarter was $394,000 and $811,000 in gains from
the sale of loans and investment securities, increases of $342,000 and $760,000,
respectively, over prior year amounts. These gains supplement falling asset
yields in the current continued low interest rate environment.
The Company also announced that the Board of Directors has declared a quarterly
cash dividend of $0.15 per share. The dividend is payable August 21, 2003 to
holders of record as of August 7, 2003.
George Strayton, the Company's President and CEO, stated, "Despite continued
high levels of refinance activity, commercial real estate, business and
construction loans grew $10 million in the quarter ended June 30, 2003. This led
to an overall $5.6 million growth in loans (including loans held for sale) for
the quarter. Further, our business plan of generating strong core deposits is on
target as transaction accounts grew by $11 million and savings and money markets
have grown by $16.1 million, leading to an overall deposit growth of $16.9
million for the quarter. These overall levels of growth in targeted businesses
will help to diversify and balance the Bank's net interest margin when we see
the interest cycle change. The recently announced proposed acquisition of
Ellenville National Bank, the second commercial bank we will have acquired, will
further assist us in this diversification process as well as expand our
geographic footprint in Orange County and two new counties."
Total assets as of June 30, 2003 were $1,114.7 million, an increase of $87.0
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million, or 8.5% over assets of $1,027.7 million at September 30, 2002, and an
increase of $73.9 million, or 7.1%, over assets of $1,040.8 million at June 30,
2002.
Net Loans as of June 30, 2003 were $682.6 million, an increase of $21.8 million,
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or 3.3%, over net loan balances of $660.8 million at September 30, 2002, and an
increase of $34.1 million, or 5.2%, over balances at June 30, 2002. Residential
loans continued to grow during the nine-month period, posting an increase of
$13.7 million, or 3.7%, over balances at September 30, 2002, primarily in
bi-weekly mortgages. Commercial loans increased by $10.9 million, or 4.9%,
during the nine-month period, while consumer loans remained relatively unchanged
as prepayments and maturities of existing facilities virtually offset
originations of $32.5 million. Asset quality continues to be strong. At $5.4
million, or 0.48% of total assets, non-performing assets are up slightly from
$5.0 million at both September 30, 2002 and June 30, 2002.
Deposits as of June 30, 2003 were $857.5 million, up $57.9 million, or 7.2%,
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from September 30, 2002, and $60.3 million, or 7.6%, from June 30, 2002. Deposit
growth has occurred in transaction, savings and money market accounts while
certificates of deposit declined by $11.2 million, or 4.6%, compared to
September 30, 2002. As of June 30, 2003 retail and commercial transaction
accounts were 25.5% of deposits compared to 24.2% at September 30, 2002 and
23.9% at June 30, 2002.
Stockholders' equity increased by $4.8 million to $115.7 million at June 30,
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2003 compared to $110.9 million at September 30, 2002. In addition to net income
of $8.7 million for the nine-month period, equity increased by $1.4 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 $1.9 million, and the change in after-tax unrealized
gains on securities available for sale, which decreased equity by $1.5 million.
During the first nine months of fiscal 2003, the Company repurchased 60,700
common shares, bringing the total shares repurchased to 391,251 shares under its
previously announced repurchase programs, which authorized the repurchase of up
to 553,990 shares. Net of option-related reissuances, treasury shares held by
the Company at June 30, 2003 were 320,740.
Income Information - Quarter
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Net interest income after provision for loan losses for the three months ended
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June 30, 2003 was $11.1 million, compared to $10.6 million for the three months
ended June 30, 2002, an increase of $484,000 or 4.6%. The increase in net
interest income was largely due to a $59.8 million increase in average earning
assets to $1,004.4 million during the quarter ended June 30, 2003, as compared
to $944.6 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 68 basis points from 6.37% to 5.69%. A decrease in
the average cost of interest bearing liabilities of 65 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 $14.4
million. Net interest margin declined by 8 basis points to 4.50%, while net
interest spread declined by 3 basis points to 4.20%.
Non-interest income for the three months ended June 30, 2003 was $2.8 million
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compared to $1.3 million for the three months ended June 30, 2002, an increase
of $1.5 million, or 110.6%. Realized gains on securities available for sale were
$811,000 for the current three-month period, compared to $51,000 for the same
period last year. During the three-month period ending June 30, 2003, the
Company also recorded gains on sales of loans totaling $394,000, compared to
$52,000 for the same period last year. Excluding the effects of gains on sales
of securities and loans, the increase was $378,000, or 30.6%. Banking fees and
service charges increased by $175,000, or 17.1%, due primarily to volume-driven
increases in overdraft, non-sufficient funds, and debit card fees. Loan fees and
charges increased by $96,000, or 70.6%. In addition, the formation of a Bank
Owned Life Insurance ("BOLI") program in December 2002, generated $163,000 in
other income during the current three-month period.
Non-interest expenses for the three months ended June 30, 2003 increased by
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$627,000, or 7.4%, to $9.1 million, compared to $8.5 million for the three
months ended June 30, 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, contributing to increases in compensation and employee
benefits of $716,000 and in data processing costs of $126,000. Excluding the new
and acquired branch-related salaries and benefits, the increase in compensation
and benefits was $576,000, or 13.1%. The increase is primarily due to a
retirement plan increase of $82,000, net health insurance premiums increase of
$50,000 and $664,000, or 21.6%, due to annual salary increases and additional
administration staff. Other expenses decreased by $360,000, or 17.5%, due
primarily to a $275,000 reduction of recorded losses as last year's expenses
included a charge of $240,000 to resolve a refinanced residential loans
reconciliation issue. Also non-recurring expenses associated with the
integration of NBF totaled $286,000 for the third quarter last year. An increase
of $147,000 in consulting fees was incurred in the quarter primarily to improve
the Company's technological infrastructure.
Income Information - Nine Months
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Net interest income after provision for loan losses increased by $3.1 million,
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or 10.1%, to $33.6 million for the nine months ended June 30, 2003 from $30.5
million for the same period in 2002. The increase in interest income reflects an
increase in average earning assets of $96.3 million to $985.6 million, offset by
a decline in yield of 73 basis points to 5.93%. The cost of interest bearing
liabilities declined by $3.9 million as the average rate paid on interest
bearing funds decreased 87 basis points to 1.54%, even though average balances
increased by $74.5 million to $808.3 million. Net interest margin decreased from
4.68% to 4.67% and net interest spread improved from 4.25% to 4.39%. 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.
Non-interest income for the nine-month period ended June 30, 2003 increased to
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$7.2 million, an increase of $3.3 million, or 86.6%, compared to $3.9 million
for the same nine-month period last year. Realized gains on securities available
for sale and gains on sales of loans were $1.9 million and $836,000,
respectively, for the current period, generating a combined increase of $2.4
million over the securities and loan sales gains of $380,000 for the same period
last year. Banking fees and service charges increased to $3.4 million for the
current nine-month period, an increase of $467,000, or 15.9%, over the same
period last year. The increase is primarily attributable to volume-related
increases in transaction account fees of $333,000 resulting from the new and
acquired branches. Other income increased by $518,000, or 95.9%, to $1.1 million
for the nine-month period ended June 30, 2003, from $540,000 for the same period
last year. The increase is primarily due to $324,000 in income from the BOLI and
an increase of $217,000 in loan prepayment penalties which totaled $306,000 for
the current nine-month period compared to $89,000 for the same period last year.
Non-interest expenses increased to $27.1 million for the nine-month period ended
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June 30, 2003, an increase of $4.2 million, or 18.5%, compared to $22.9 million
for the same nine-month period last year. Increases in compensation and benefits
directly attributable to the new and acquired branches were $592,000 and in
occupancy and office operations were $279,000. Compensation and benefits
increased by an additional $2.3 million, of which $324,000 represented the
pay-out of an employment agreement, $253,000 was attributable to the increased
cost of stock-based compensation plans, $261,000 is due to additional retirement
plan expense, $167,000 is related to higher health insurance premiums and the
remaining increase is due to annual salary increases of approximately 4% and
additional administration staff. Additional increases in non-interest expense
categories for the current year to date period are additional advertising costs
of $259,000, or 25.1%, related to new branches and products, and a
volume-related increase of $384,000, or 29.2%, in data processing costs. Other
non-interest expense increased by $393,000 or 8.1% primarily due to increased
consulting and other professional fees of $396,000 incurred mostly for
technological development.
Mr. Strayton added, "We're very excited with our recently announced second step
conversion in conjunction with the acquisition of Ellenville National Bank. The
reaction to the news has been very positive and we are already working
diligently on preparation of the regulatory filings and the integration of
Ellenville into Provident Bank."
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)
June 30, 2003 September 30, 2002 June 30, 2002
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Assets:
Cash and due from banks $ 32,473 $ 35,093 $ 30,869
Federal funds sold 11,000 -- 11,580
Total securities 334,700 292,937 307,080
Loans held for sale 2,554 -- 1,085
Loans:
One-to four-family residential mortgage loans 379,794 366,111 364,758
Commercial real estate, commercial business
and construction loans 232,562 221,669 213,670
Consumer loans 81,254 83,419 80,339
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Gross loans 693,610 671,199 658,767
Allowance for loan losses (11,055) (10,383) (10,222)
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Total loans, net 682,555 660,816 648,545
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Federal Home Loan Bank stock, at cost 5,819 5,348 6,387
Premises and equipment, net 11,616 11,071 10,956
Goodwill 13,540 13,540 13,063
Bank owned life insurance 12,324 -- --
Other assets 8,117 8,896 11,239
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Total assets $ 1,114,698 $ 1,027,701 $ 1,040,804
=========== =========== ===========
Liabilities:
Deposits:
Transaction accounts $ 218,636 $ 193,114 $ 190,644
Savings and money market deposits 406,577 362,983 358,857
Certificates of deposit 232,321 243,529 247,674
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Total deposits 857,534 799,626 797,175
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Borrowings 116,732 102,968 113,127
Mortgage escrow funds and other 24,695 14,240 22,191
Total liabilities 998,961 916,834 932,493
Stockholders' equity 115,737 110,867 108,311
----------- ----------- -----------
Total liabilities and stockholders' equity $ 1,114,698 $ 1,027,701 $ 1,040,804
=========== =========== ===========
Common shares outstanding at period end 7,959,260 7,997,512 8,035,420
Book value per share $ 14.54 $ 13.86 $ 13.48
Provident Bancorp, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except share data)
Three Months Ended Nine Months Ended
June 30, June 30,
2003 2002 2003 2002
---- ---- ---- ----
Interest and dividend income:
Loans $ 10,724 $ 11,212 $ 33,199 $ 33,434
Securities and other earning assets 3,528 3,798 10,516 10,895
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Total interest and dividend income 14,252 15,010 43,715 44,329
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Interest expense:
Deposits 1,837 2,880 6,147 8,881
Borrowings 1,138 1,337 3,164 4,319
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Total interest expense 2,975 4,217 9,311 13,200
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Net interest income 11,277 10,793 34,404 31,129
Provision for loan losses 200 200 800 600
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Net interest income after provision for loan losses 11,077 10,593 33,604 30,529
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Non-interest income:
Banking fees and service charges 1,196 1,021 3,399 2,932
Gains on sales of securities available for sale 811 51 1,895 288
Gains on sales of loans 394 52 836 92
Other 417 214 1,058 540
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Total non-interest income 2,818 1,338 7,188 3,852
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Non-interest expense:
Compensation and employee benefits 5,110 4,394 15,109 12,227
Occupancy and office operations 1,321 1,229 3,811 3,495
Advertising and promotion 378 325 1,289 1,030
Data processing 599 473 1,700 1,316
Other 1,698 2,058 5,227 4,834
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Total non-interest expense 9,106 8,479 27,136 22,902
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Income before income tax expense 4,789 3,452 13,656 11,479
Income tax expense 1,683 1,309 4,989 4,209
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Net income $ 3,106 $ 2,143 $ 8,667 $ 7,270
---------- ---------- ---------- ----------
Per common share:
Basic earnings $ 0.40 $ 0.28 $ 1.12 $ 0.94
Diluted earnings 0.40 0.27 1.11 0.93
Dividends declared 0.15 0.11 0.42 0.29
Weighted average common shares:
Basic 7,704,623 7,713,880 7,714,631 7,700,978
Diluted 7,826,513 7,851,393 7,830,657 7,828,946
Provident Bancorp, Inc.
SELECTED ADDITIONAL FINANCIAL DATA
(unaudited, $ in thousands)
June 30, September 30, June 30,
2003 2002 2002
---- ---- ----
Asset Quality Data:
Non-performing loans (NPLs) $ 5,370 $ 4,954 $ 4,737
Non-performing assets (NPAs) $ 5,370 $ 4,995 $ 4,937
NPLs as % of total loans 0.77% 0.74% 0.72%
NPAs as % of total assets 0.48% 0.49% 0.47%
Allowance for loan losses as % of NPLs 206% 210% 216%
Allowance for loan losses as % of total loans 1.59% 1.55% 1.55%
Capital Ratios:
Equity to total assets (consolidated) 10.38% 10.79% 10.41%
Tier 1 capital ratio (Bank only) 8.34% 8.45% 8.10%
Three Months Ended Nine Months Ended
June 30, June 30,
2003 2002 2003 2002
---- ---- ---- ----
Performance Ratios (annualized):
Return on:
Average assets 1.13% 0.86% 1.09% 1.04%
Average common equity 10.89% 8.08% 10.27% 9.20%
Average tangible equity 12.50% 9.06% 11.83% 9.54%
Net interest rate spread 4.20% 4.23% 4.39% 4.25%
Net interest margin 4.50% 4.58% 4.67% 4.68%
Average Balance Data:
Average assets $ 1,100,851 $ 1,002,579 $ 1,065,414 $ 932,160
Average earning assets 1,004,381 944,616 985,611 889,323
Average stockholders' equity 114,425 106,433 112,801 105,706