EXHIBIT 99
PRESS RELEASE OF PROVIDENT FINANCIAL SERVICES, INC.
Contact:
Kenneth J. Wagner
Investor Relations
Provident Financial Services, Inc.
830 Bergen Avenue
Jersey City, NJ 07306
201-915-5344
Provident Financial Services Announces Operating Results for the First Quarter
of 2003, a One-Time Contribution of $24 million to The Provident Bank Foundation
And Declares a Quarterly Cash Dividend of $0.04 per Common Share
JERSEY CITY, NJ, April 29, 2003 - Provident Financial Services, Inc. (NYSE:PFS)
the holding company for The Provident Bank reported a net loss of $6.4 million
for the quarter ended March 31, 2003 compared to net income of $6.9 million for
the quarter ended March 31, 2002. Provident Financial reported a basic loss per
share of ($0.12) for the quarter ended March 31, 2003, which includes the
results of operations from January 15, 2003, the date The Provident Bank
completed its conversion to a stock institution, through March 31, 2003. The net
loss for the first quarter of 2003 was due to the one-time expense associated
with the $15.6 million net of tax, or $0.26 per share, contribution to The
Provident Bank Foundation.
On January 15, 2003, Provident Financial Services, Inc. became the holding
company for The Provident Bank, in connection with the completion of the
conversion of The Provident Bank to a stock-chartered savings bank. In
accordance with The Provident Bank's Plan of Conversion, 1,920,000 shares of
common stock and cash of $4.8 million were donated by Provident Financial
Services, Inc. to The Provident Bank Foundation. This stock and cash
contribution was recorded as a one time $24.0 million expense in the first
quarter operating results and an increase to capital stock and paid in capital
was recorded for $19.2 million. Provident Financial recorded a tax benefit of
$8.4 million related to the contribution expense and a corresponding increase to
its deferred tax assets.
The Board of Directors at its meeting of April 24, 2003 declared a quarterly
cash dividend of $0.04 per common share. The dividend will be payable May 30,
2003 to stockholders of record as of the close of business on May 15, 2003.
"During our first quarter as a public company, we continued to execute our
strategy of delivering quality services and expanding our customer
relationships. The result has been growth in both assets and core earnings,"
said Paul M. Pantozzi, Chairman of the Board, Chief Executive Officer and
President of Provident Financial Services, Inc. and The Provident Bank. "We are
pleased to have established The Provident Bank Foundation as a reflection of our
commitment to community service," Pantozzi added. "We are equally pleased that
the Board declared a quarterly cash dividend of $0.04 per common share."
COMPARISON OF OPERATING RESULTS
Total net interest income increased $5.2 million or 19% to $32.6 million for the
quarter ended March 31, 2003 compared to $27.4 million for the quarter ended
March 31, 2002. Interest income for the first quarter of 2003 increased $3.9
million or 8.9% to $47.6 million compared to $43.7 million for the comparable
quarter in 2002. Interest expense decreased $1.3 million or 8.2% to $14.9
million for the quarter ended March 31, 2003 compared to $16.3 million for the
quarter ended March 31, 2002.
The average balance of investment securities held to maturity and securities
available for sale, increased $936.7 million or 141.12% to $1.60 billion at
March 31, 2003 compared to $663.8 million for the comparable period in 2002,
primarily as a result of the proceeds from the conversion and a leverage
strategy implemented in the fourth quarter of 2002. The average balance of net
loans increased $9.4 million or 0.48% to $1.963 billion for the quarter ended
March 31, 2003 compared to $1.954 billion for the comparable quarter in 2002.
The average yield on interest earning assets decreased 130 basis points to 5.10%
for the quarter ended March 31, 2003 compared to 6.40% for the comparable
quarter in 2002. The reduction in the yield on interest earning assets was
attributable primarily to the reinvestment of cash flows from loan and mortgage
backed securities prepayments in lower yielding loans and investments and to the
temporary investment of conversion account proceeds in short-term U.S.
Government securities.
Average core deposit account balances increased $265.7 million or 20.17% to
$1.583 billion at March 31, 2003 compared to $1.317 billion for the quarter
ended March 31, 2002. Core deposit accounts consist of all demand deposit and
savings accounts. Average time deposit balances decreased $17.7 million or 1.68%
to $1.037 billion for the quarter ended March 31, 2003 compared to $1.055
billion for the comparable quarter in 2002. Average borrowings increased $228.5
million or 121.86% to $416.0 million for the quarter ended March 31, 2003
compared to $187.5 million for the quarter ended March 2002. The average cost of
interest bearing liabilities decreased 62 basis points to 2.17% at March 31,
2003 compared to 2.79% at March 31, 2002. The increase in core deposit accounts
which have lower yields than time deposits, in addition to the decrease in rates
on core deposit accounts, along with our ability to refinance existing
borrowings at lower rates, contributed to the decrease in the average cost of
interest-bearing liabilities.
Net interest margin decreased 52 basis points to 3.50% for the quarter ended
March 31, 2003 compared to 4.02% for the quarter ended March 31, 2002 and the
net interest margin decreased 48 basis points compared to 3.98% for the year
ended December 31, 2002. The interest rate spread decreased 68 basis points to
2.93% at March 31, 2003 compared to 3.61% for the comparable quarter in 2002 and
the interest rate spread decreased 82 basis points from 3.75% for the year ended
December 31, 2002.
Non-interest income decreased $946,000 to $5.1 million for the quarter ended
March 31, 2003 compared to $6.0 million for the comparable period in 2002. For
the three months ended March 31, 2003, Provident Financial recorded a net loss
of $392,000 on available for sale securities compared to a net gain of $981,000
for the comparable period in 2002, due primarily to a gain of $959,000 in the
2002 quarter related to the receipt of stock as the result of an insurance
company demutualization. Fees on retail and business accounts increased $387,000
or 10.56% to $4.1 million for the three months ended March 31, 2003 compared to
$3.7 million for the three months ended March 31, 2002. Other retail fees
increased $138,000 or 33.10% to $555,000 at March 31, 2003 compared to $417,000
for the comparable period in 2002.
Non-interest expense increased $25.5 million or 115.54% to $47.5 million for the
quarter ended March 31, 2003 compared to $22.1 million for the comparable
quarter in 2002. On January 15, 2003 Provident Financial Services, Inc.
contributed $24 million in cash and stock to The Provident Bank Foundation,
accounting for the increase in non-interest expense. Excluding this charge, the
efficiency ratio decreased to 61.71% at March 31, 2003 compared to 67.86% at
March 31, 2002. Salary and benefit expense increased $498,000 or 4.32% to $12.0
million for the three months ended March 31, 2003 compared to $11.5 million for
the three months ended March 31, 2002. Amortization of intangibles increased
$292,000 or 32.34% to $1.2 million for the three months ended March 31, 2003
compared to $903,000 at March 31, 2002. This increase was attributable to the
amortization of the core deposit intangible associated with the acquisition of
two branch offices from another financial institution in September 2002.
The provision for loan losses for the three months ended March 31, 2003 and 2002
was $600,000. The allowance for loan losses was $21.0 million or 1.05% of total
loans at March 31, 2003 compared to $21.7 million or 1.11% of total loans at
March 31, 2002 and $21.0 million or 1.02% of total loans at December 31, 2002.
At March 31, 2003, the allowance for loan losses as a percentage of
non-performing loans decreased to 323.37% from 392.93% at March 31, 2002 and
increased from 246.55% at December 31, 2002.
COMPARISON OF FINANCIAL CONDITION
Total assets at March 31, 2003 increased $168.2 million or 4.29% to $4.1 billion
compared to $3.9 billion at December 31, 2002.
Total loans at March 31, 2003 decreased $59.3 million or 2.89% to $1.99 billion
compared to $2.05 billion at December 31, 2002. Residential mortgage loans
increased $2.8 million or 0.41% to $702.3 million for the three months ended
March 31, 2003 compared to $699.5 million at December 31, 2002. Residential
mortgage loan originations totaled $97.8 million, repayments (excluding
scheduled amortization) totaled $83.5 million and residential loans sales
totaled $1.6 million for the quarter ended March 31, 2003, compared to
originations of $118.0 million, repayments (excluding scheduled amortization) of
$118.8 million and residential loan sales of $15.2 million in the fourth quarter
of 2002. Commercial real estate loans decreased $13.9 million or 3.19% to $423.7
million at March 31, 2003 compared to $437.7 million at December 31, 2002.
Multi-family loans increased $540,000 to $77.5 million at March 31, 2003
compared to $77 million at December 31, 2002. Construction loans decreased $3.4
million or 3.5% to $92.7 million at March 31, 2003 compared to $96.0 million at
December 31, 2002. Commercial loans increased $603,000 or 0.32% to $190.6
million at March 31, 2003 compared to $190.0 million at December 31, 2002.
Mortgage warehouse loans decreased $44.8 million or 16.22% to $231.6 million at
March 31, 2003 compared to $276.4 million at December 31, 2002. Consumer loans
decreased $1.2 million or 0.42% to $274.6 million at March 31, 2003 compared to
$275.8 million at December 31, 2002. Retail loans, which consist of 1-4 family
residential mortgages and consumer loans, such as fixed rate home equity loans
and lines of credit, totaled $976.9 million and accounted for 49.03% of the loan
portfolio at March 31, 2003 compared to $975.3 million or 47.53% of the
portfolio at December 31, 2002. Commercial loans, consisting of commercial real
estate, multi family, construction, mortgage warehouse and commercial loans,
totaled $1.016 billion, accounting for 50.97% of the loan portfolio at March 31,
2003 compared to $1.1 billion or 52.47% at December 31, 2002.
Investment securities held to maturity increased $219.3 million or 101.49% to
$435.5 million at March 31, 2003, compared to $216.1 million at December 31,
2002. The increase in the held to maturity portfolio was attributable to the
purchase of $200 million in mortgage backed securities with funds borrowed from
the Federal Home Loan Bank during the quarter ended March 31, 2003, as part of a
leverage strategy. Securities available for sale increased $45.4 million or
3.65% to $1.29 billion at March 31, 2003 compared to $1.24 billion at December
31, 2002. The increase in the available for sale portfolio can be attributed
primarily to the re-investment of principal prepayments on loans.
Total non-performing loans totaled $6.5 million at March 31, 2003 compared to
$8.5 million at December 31, 2002 and $5.5 million at March 31, 2002.
Non-performing assets were $6.5 million and $8.5 million at March 31, 2003 and
December 31, 2002, respectively, compared to $5.7 million at March 31, 2002.
Total non-performing loans as a percentage of total loans were 0.33% at March
31, 2003 compared to 0.41% at December 31, 2002 and 0.29% at March 31, 2002. The
allowance for loan losses as a percentage of non-performing loans was 323.37% at
March 31, 2003 compared to 246.55% at December 31, 2002 and 392.93% at March 31,
2002. The allowance for loan losses as a percentage of total loans increased 3
basis points to 1.05% at March 31, 2003 compared to 1.02% at December 31, 2002
and decreased 6 basis points from 1.11% at March 31, 2002.
Total deposits decreased $610.7 million or 18.83% to $2.6 billion at March 31,
2003 from $3.2 billion at December 31, 2002. The largest decrease was in demand
deposit accounts, which decreased $587.7 million to $681.7 million at March 31,
2003 from $1.27 billion at December 31, 2002. This decrease is primarily
attributable to the funds held in the conversion escrow account totaling $526
million that were held for the purchase of Provident Financial Services, Inc.,
common stock. Savings deposits increased $4.2 million or 0.45% to $926.6 million
at March 31, 2003 compared to $922.4 million at December 31, 2002.
Total borrowed funds increased $191.1 million or 59.16% to $514.2 million at
March 31, 2003 from $323.1 million at December 31, 2002. Federal Home Loan Bank
borrowings increased $198.0 million or 74.13% to $465.1 million at March 31,
2003 compared to $267.1 million at December 31, 2002. During the first quarter,
the Company continued implementing a leverage strategy, borrowing $200 million
from the Federal Home Loan Bank and investing the proceeds in mortgage backed
securities.
The Provident Bank maintains its corporate offices in Jersey City, New Jersey.
The Provident Bank currently operates 49 full service branches throughout
northern and central New Jersey.
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 wishes to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made. The Company
wishes to advise 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 SUBSIDIARIES
Consolidated Statements of Condition
March 31, 2003 (Unaudited) and December 31, 2002
(Dollars in Thousands)
Assets March 31, 2003 December 31, 2002
-------------- ---------------
Cash and due from banks $ 93,598 101,352
Federal funds sold 70,000 73,000
Short-term investments 25,541 90,503
------------- -------------
Total cash and cash equivalents 189,139 264,855
------------- -------------
Investment securities (market value of $444,432 435,466 216,119
(unaudited) and $221,435 at March 31,
2003 and December 31, 2002, respectively)
Securities available for sale, at fair value 1,287,473 1,242,118
Federal Home Loan Bank stock 23,295 13,356
Loans 1,993,550 2,052,855
Less allowance for loan losses 21,016 20,986
------------- -------------
Net loans 1,972,534 2,031,869
------------- -------------
Other real estate owned, net -- --
Banking premises and equipment, net 43,948 44,005
Accrued interest receivable 16,946 15,842
Intangible assets 24,463 25,405
Bank owned life insurance 68,461 47,659
Other assets 25,650 17,980
------------- -------------
Total assets $ 4,087,375 3,919,208
============= =============
Liabilities and Equity
Deposits:
Demand deposits $ 681,683 1,269,421
Savings deposits 926,593 922,404
Certificates of deposit of $100,000 or more 161,458 160,867
Other time deposits 862,869 890,642
------------- -------------
Total deposits 2,632,603 3,243,334
Mortgage escrow deposits 9,971 9,582
Borrowed funds 514,209 323,081
Other liabilities 26,311 17,202
------------- -------------
Total liabilities 3,183,094 3,593,199
------------- -------------
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, 61,538,300 shares issued and 61,538,300
and 0 shares outstanding at March 31, 2003 and
December 31, 2002, respectively 615 --
Additional paid-in capital 604,999 --
Retained earnings 307,668 314,111
Accumulated other comprehensive income 11,497 11,898
Less: Unallocated common stock held by
Employee Stock Ownership Plan (20,498) --
------------- -------------
Total stockholders' equity 904,281 326,009
------------- -------------
Total liabilities and ============= =============
stockholders equity $ 4,087,375 3,919,208
============= =============
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
For the Three Months ended March 31, 2003 and 2002 (Unaudited)
(Dollars in thousands, except per share data)
Three months ended
March 31,
--------------------------
2003 2002
----------- -----------
Interest income:
Real estate secured loans $ 21,377 24,929
Commercial loans 5,554 3,964
Consumer loans 4,812 5,515
Investment securities 3,688 1,368
Securities available for sale 11,753 7,553
Other short-term investments 68 28
Federal funds 314 336
----------- -----------
Total interest income 47,566 43,693
----------- -----------
Interest expense:
Deposits 12,151 14,164
Borrowed funds 2,768 2,088
----------- -----------
Total interest expense 14,919 16,252
----------- -----------
Net interest income 32,647 27,441
Provision for loan losses 600 600
----------- -----------
Net interest income after
provision for loan losses 32,047 26,841
----------- -----------
Non-interest income:
Fees 4,053 3,666
Net gain (loss) on securities transactions (392) 981
Commissions 71 274
Bank owned life insurance 802 697
Other income 555 417
----------- -----------
Total non-interest income 5,089 6,035
----------- -----------
Non-interest expense:
Salaries and employee benefits 12,025 11,527
Net occupancy expense 3,410 3,299
Federal deposit insurance 108 104
Data processing expense 1,618 1,550
Advertising and promotion expense 657 718
Amortization of intangibles 1,195 903
Other operating expenses 4,516 3,950
Contribution to The Provident Bank Foundation 24,000 --
----------- -----------
Total non-interest expenses 47,529 22,051
----------- -----------
Income before income tax
(benefit)expense and the
cumulative effect of a
change in accounting principle $ (10,393) 10,825
Income tax (benefit) expense (3,950) 3,382
----------- -----------
Income (loss) before the
cumulative effect of Change in (6,443) 7,443
accounting principle
Cumulative effect of a change
in accounting principle, net of -- (519)
tax of $0
----------- -----------
Net income (loss) $ (6,443) 6,924
============ ===========
Basic (loss) per share $ (0.12) --
Average basic shares outstanding
(from the date of conversion) 60,130,912 --
PROVIDENT FINANACIAL SERVICES, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share data)(unaudited)
At or For the
Three Months Ended
March 31,
2003 2002
------- -------
INCOME STATEMENT:
Net Interest Income $ 32,647 $ 27,441
Provision for Loan Losses 600 600
Non-interest Income 5,089 6,035
Non-interest Expense 47,529 22,051
Income (Loss) before income tax expense
(benefit) and the cumulative effect of a
change in accounting principle (10,393) 10,825
Cumulative effect of a change in accounting
principle
-- (519)
Net Income (Loss) (6,443) 6,924
Basic and Diluted Earnings (Loss) Per Share (1) $ (0.12) --
Interest Rate Spread 2.93% 3.61%
Net Interest Margin 3.50% 4.02%
ASSET QUALITY:
Non-performing loans to
total loans 0.33% 0.28%
Non-performing assets to
total assets 0.16% 0.19%
Allowance for loan losses to
non-performing loans 323.37% 392.93%
Allowance for loan losses to
total loans 1.05% 1.11%
AVERAGE BALANCE SHEET DATA:
Assets $ 3,953,982 $ 2,908,217
Loans, net $ 1,963,121 $ 1,953,737
Core Deposits $ 1,583,038 $ 1,317,372
Borrowings $ 416,042 $ 187,524
Stockholders Equity $ 801,368 $ 292,766
Average yield on interest
earning assets 5.10% 6.40%
Average cost of interest
bearing liabilities 2.17% 2.79%
CAPITAL:
Leverage Capital 22.14% 9.42%
Total risk based capital 37.67% 14.93%
Average equity to
average assets 20.27% 10.07%
<FN>
Notes
(1) Basic (loss) per share is calculated by dividing the results of operations
of ($7,423,000) by the weighted average shares outstanding from January 15,
2003, the date The Provident Bank completed its Plan of Conversion, through
March 31, 2003.
(2) Efficiency Ratio Calculation - The efficiency ratio is calculated by
dividing total operating expense by total operating income.
3/31/03 3/31/02
--------- ---------
Net Interest Income 32,647
27,441
Non Interest Income
5,089 6,035
(Less) gains/plus losses on securities
392 (981)
--------- ---------
Total operating income: 38,128
32,495
Non interest expense: 47,529
22,051
Less: One time charitable contribution expense (24,000)
Total operating expense: 23,529
--------- ---------
Expense/Income: 61.71% 67.86%
</FN>