NEWS RELEASE
Provident Financial Services (NYSE: PFS)
Contact:
Kenneth J. Wagner
Senior Vice President
Investor Relations
Provident Financial Services, Inc.
830 Bergen Avenue
Jersey City, NJ 07306
201-915-5344
For Release: 5:00 pm EST, January 22, 2004
Provident Financial Services, Inc. Announces Quarterly Earnings, Declares 20%
Increase in Quarterly Dividend and Announces Commencement of
Stock Repurchase Program
JERSEY CITY, NJ, January 23, 2004 - Provident Financial Services, Inc.
(NYSE:PFS) the holding company for The Provident Bank reported net income of
$8.2 million for the quarter ended December 31, 2003, an increase of $312,000 or
3.95% compared to net income of $7.9 million for the quarter ended December 31,
2002. For the year ended December 31, 2003, Provident Financial Services
reported net income of $18.7 million, a decrease of $7.8 million or 29.47%
compared to net income of $26.6 million for the year ended December 31, 2002.
This reduction in net income for the year ended December 31, 2003 is due
primarily to the one-time expense associated with the $15.6 million contribution
net of tax to The Provident Bank Foundation. Provident Financial Services
reported basic and diluted earnings per share of $0.15 for the quarter ended
December 31, 2003 and basic and diluted earnings per share of $0.31 for year the
year ended December 31, 2003, which includes the results of operations from
January 15, 2003.
DECLARATION OF QUARTERLY DIVIDEND
- ---------------------------------
On January 22, 2004, the Board of Directors of Provident Financial Services,
Inc. declared a quarterly cash dividend of $0.06 per common share. The dividend
is payable on February 27, 2004 to stockholders of record as of the close of
business on February 13, 2004. This quarterly cash dividend represents a 20%
increase over the current dividend.
AUTHORIZATION OF STOCK REPURCHASE PROGRAM
- -----------------------------------------
On January 22, 2004, the Company's Board of Directors also authorized the
repurchase of up to 3,039,630 shares, or approximately 5%, of the Company's
outstanding shares of common stock. Repurchases will be made from time to time
and will be effectuated through open-market purchases, unsolicited negotiated
transactions, or in such other manner deemed appropriate by management,
Completion of the repurchase program will not be limited to a specific time
period. The Company's repurchase activities will take into account SEC safe
harbor rules and guidance for issuer repurchases, in particular with respect to
repurchases during the pendency of an acquisition
Commenting on the Company's earnings and Board's actions, Paul M. Pantozzi,
Chairman, CEO and President of Provident Financial Services and The Provident
Bank noted "our net interest margin improved as prepayment activity on loans and
mortgage-related securities slowed during the fourth quarter. We also continued
to successfully attract and retain core deposits that had a positive impact on
interest rate spreads."
Pantozzi added, "Our first year as a public company was marked by a challenging
economic environment but also by strategic steps designed to enhance our market
position and franchise value. Our pending acquisition of First Sentinel Bancorp,
which we expect to complete later this year, will expand our franchise in one of
New Jersey's most attractive markets. Also, our reduced emphasis on the mortgage
warehouse line of business, although presently weighting our loan portfolio mix
toward residential mortgages, permits us to concentrate more resources on
growing our commercial real estate and business lending lines. These steps are
consistent with our goals to strategically deploy capital and return value to
our stockholders. In line with this, we are pleased the Board of Directors has
decided to increase the quarterly dividend and has approved commencement of our
first stock repurchase program."
COMPARISON OF OPERATING RESULTS
1
Total net interest income increased $5.0 million or 17.32% to $33.9 million for
the quarter ended December 31, 2003 compared to $28.9 million for the quarter
ended December 31, 2002. Interest income for the fourth quarter of 2003
increased $2.4 million or 5.52% to $46.4 million compared to $44.0 million for
the comparable quarter in 2002. Compared to the previous quarter, the premium
amortization expense related to prepayments on mortgage-backed securities
decreased $2.4 million or 64.9%, to $1.3 million at December 31, 2003 compared
to $3.7 million at September 30, 2003, due to an increase in long term interest
rates and a decrease in refinance activity during the quarter. Interest expense
decreased $2.6 million or 17.04% to $12.5 million for the quarter ended December
31, 2003 compared to $15.1 million for the quarter ended December 31, 2002.
The average balance of investment securities held to maturity and securities
available for sale increased $825.5 million or 99.13% to $1.66 billion for the
quarter ended December 31, 2003 compared to $1.00 billion for the comparable
period in 2002. This increase is primarily due to the investment of proceeds
from the conversion of The Provident Bank from a mutual to stock savings bank,
leverage transactions and the reinvestment of cash from loan prepayments and
refinance activity due to the prevailing low interest rate environment. The
average balance of net loans increased $114.8 million or 5.74% to $2.11 billion
for the quarter ended December 31, 2003 compared to $2.0 billion for the
comparable quarter in 2002. The average yield on interest earning assets
decreased 102 basis points to 4.67% for the quarter ended December 31, 2003
compared to 5.69% for the comparable quarter in 2002, primarily due to the
reinvestment of cash from loan and mortgage-backed securities prepayments in
lower yielding loans and investments, as well as rate modifications in the
commercial real estate portfolio. Compared to the trailing quarter, the average
yield on interest earning assets increased 18 basis points to 4.67%.
Average core deposit account balances increased $136.1 million or 8.42% to $1.75
billion for the fourth quarter ended December 31, 2003 compared to $1.62 billion
(excluding conversion escrow balance) at December 31, 2002. Core deposit
accounts consist of all demand deposit and savings accounts. Average time
deposit balances decreased $80.4 million or 7.52% to $988.8 million for the
quarter ended December 31, 2003 compared to $1.07 billion for the comparable
quarter in 2002. Average borrowings increased $430.7 million or 189.06% to
$658.5 million for the quarter ended December 31, 2003 compared to $227.8
million for the quarter ended December 31, 2002. The average cost of interest
bearing liabilities decreased 70 basis points to 1.64% for the quarter ended
December 31, 2003 compared to 2.34% for the quarter ended December 31, 2002, and
compared to the trailing quarter, the average cost of interest bearing
liabilities decreased 12 basis points. The decrease in the average cost of
interest-bearing liabilities can be attributed to the decrease in core deposit
account rates and the continued decrease in rates on time deposits.
Net interest margin decreased 32 basis points to 3.41% for the quarter ended
December 31, 2003 compared to 3.73% for the quarter ended December 31, 2002, and
the net interest margin decreased 60 basis points to 3.35% compared to 3.95% for
the year ended December 31, 2002. The interest rate spread decreased 32 basis
points to 3.03% for the quarter ended December 31, 2003 compared to 3.35% for
the comparable quarter in 2002, and the interest rate spread decreased 67 basis
points to 2.89% from 3.56% for the year ended December 31, 2002. Compared to the
trailing quarter, net interest margin increased 26 basis points to 3.41% from
3.15% and interest rate spread increased 30 basis points to 3.03%. Net interest
margin and net interest spread have improved in the fourth quarter primarily due
to the slowdown in refinance activity and a reduction in the premium
amortization expense associated with prepayments on mortgage-backed securities.
Non-interest income was flat for the quarter remaining at $6.5 million for the
quarter ended December 31, 2003 compared to $6.5 million for the comparable
period in 2002. During the fourth quarter, fees on retail accounts increased
$246,000 or 6.1% to $4.3 million at December 31, 2003 compared to $4.0 million
for the quarter ended December 31, 2002. This increase is primarily attributable
to fee income associated with the introduction of overdraft privilege on
checking accounts during the quarter. Income associated with the cash surrender
value of bank owned life insurance increased $296,000 or 40.0% to $1.0 million
for the quarter ended December 31, 2003 compared to $738,000 for the quarter
ended December 31, 2002. This increase was due to an additional purchase of $20
million of bank owned life insurance in the first quarter of 2003. Other income
decreased $789,000 or 56.0% to $622,000 in the fourth quarter of 2003 compared
to $1.4 million in the comparable quarter of 2002. This decrease is due to a
decrease of $277,000 in net gains on the sale of loans and a decrease of
$245,000 in sale of other assets. For the year ended December 31, 2003,
non-interest income decreased $313,000 or 1.30% to $23.8 million compared to
$24.1 million at December 31, 2002. For the year ended December 31, 2003, fees
on retail accounts increased $1.2 million or 7.80% to $16.3 million compared to
$15.1 million for the year ended December 31, 2002. Other income decreased $1.7
million or 43.0% to $2.3 million at December 31, 2003 compared to $4.0 million
at December 31, 2002. For the year ended December 31, 2003, net gains on the
sale of loans decreased $997,000 or 44.67% to $1.2 million compared to $2.2
million in the comparable period in 2002. For the year ended December 31, 2003,
net gains on the sale of other assets decreased $565,000 or 64.57% to $310,000
compared to $875,000 for the comparable period in 2002.
Non-interest expense increased $5.4 million or 22.83% to $28.8 million for the
quarter ended December 31, 2003 compared to $23.5 million for the quarter ended
December 31, 2002. For the year ended December 31, 2003, non-interest expense
increased $37.7 million or 42.31% to $126.8 million compared to $89.1 million
for the year ended December 31, 2002. The increase in non-interest expense for
the year ended December 31, 2003 is primarily due to the one-time expense
associated with the $24 million contribution to The Provident Bank Foundation
that was recorded in the first quarter of 2003 and benefit expenses related to
stock based benefit plans. Salary and benefit expense increased $3.6 million or
29.0% to $15.9 million for the three months ended December 31, 2003 compared to
$12.3 million for the three months ended December 31, 2002. For the year ended
December 31, 2003 salary and benefit expense increased $7.8 million or 16.69% to
$54.7 million compared to $46.9 million at December 31, 2002. The increase in
salaries and benefits expense for the year ended December 31, 2003 is primarily
attributable to expenses related to new stock based benefit plans: the employee
2
stock ownership plan in the amount of $2.7 million, the stock award plan in the
amount of $1.9 million and stock option plan in the amount of $1.7 million. In
the quarter ended September 30, 2003, we adopted the fair value based method,
SFAS No. 123 "Accounting for Stock Based Compensation" to recognize compensation
expense on all outstanding stock option awards from the time of grant. Other
operating expenses increased $1.5 million or 34.9% to $5.6 million for the
quarter ended December 31, 2003 compared to $4.2 million for the comparable
quarter in 2002. For the year ended December 31, 2003, other operating expenses
increased $3.6 million or 22.64% to $19.4 million compared to $15.8 million on
December 31, 2002. This increase is primarily due to an increase of $1.5 million
or 201.85% in corporate insurance expense, $775,000 or 25.81% in advertising and
promotions and $940,000 or 7.11% in occupancy expense.
The provision for loan losses for the quarter ended December 31, 2003 was
$100,000, a decrease of $450,000 compared to $550,000 for the quarter ended
December 31, 2002. For the year ended December 31, 2003, the provision for loan
losses was $1.2 million compared to $12.8 million in 2002. This decrease is
related to an $11.8 million charge to the allowance for loan losses recognized
in the third quarter of 2002 related to a non-performing mortgage warehouse
loan. The allowance for loan losses was $20.6 million or 0.92% of total loans at
December 31, 2003 compared to $21.0 million or 1.02% of total loans at December
31, 2002. At December 31, 2003, the allowance for loan losses as a percentage of
non-performing loans increased to 336.67% from 246.55% at December 31, 2002.
COMPARISON OF FINANCIAL CONDITION
Total assets at December 31, 2003 increased $365.7 million or 9.33% to $4.3
billion compared to $3.9 billion at December 31, 2002.
Total loans at December 31, 2003 increased $184.5 million or 8.99% to $2.24
billion compared to $2.05 billion at December 31, 2002. Residential mortgage
loans increased $345.3 million or 49.37% to $1.04 billion at December 31, 2003
compared to $699.5 million at December 31, 2002. Residential mortgage loan
originations totaled $397.7 million and one-to-four family loans purchased
totaled $352.2 million at December 31, 2003. Residential loan payoffs totaled
$334.6 million, excluding scheduled amortization, and loans sold totaled $16.1
million for the year ended December 31, 2003. Commercial real estate loans
increased $11.4 million or 2.61% to $449.1 million at December 31, 2003 compared
to $437.7 million at December 31, 2002. Multi-family loans increased $13.5
million or 17.59% to $90.6 million at December 31, 2003 compared to $77.0
million at December 31, 2002. Construction loans increased $3.0 million or 3.17%
to $99.1 million at December 31, 2003 compared to $96.0 million at December 31,
2002. Commercial loans increased $56.6 million or 29.80% to $246.6 million at
December 31, 2003 compared to $190.0 million at December 31, 2002. Mortgage
warehouse loans decreased $272.2 million or 98.50% to $4.1 million at December
31, 2003 compared to $276.4 million at December 31, 2002, consistent with the
strategic decision to de-emphasize this line of business. The sale of mortgage
warehouse loans was completed in November 2003. Consumer loans increased $23.5
million or 8.51% to $299.3 million at December 31, 2003 compared to $275.8
million at December 31, 2002. Retail loans, which consist of one to four family
residential mortgages and consumer loans, such as fixed-rate home equity loans
and lines of credit, totaled $1.3 billion and accounted for 60.24% of the loan
portfolio at December 31, 2003 compared to $975.3 million or 47.53% of the
portfolio at December 31, 2002. The increase in retail loans as a percentage of
the total loan portfolio was the result of our decision to exit the mortgage
warehouse business during the fourth quarter of 2003. Proceeds from the sale of
the mortgage warehouse portfolio were reinvested primarily in residential
mortgage loans. The Company intends to rebalance the loan portfolio, consistent
with its strategy to maintain a 50% retail and 50% commercial mix. Commercial
loans, consisting of commercial real estate, multi-family, construction,
mortgage warehouse and commercial loans, totaled $889.5 million, accounting for
39.76% of the loan portfolio at December 31, 2003 compared to $1.1 billion or
52.47% at December 31, 2002.
Investment securities held to maturity increased $301.7 million or 139.59% to
$517.8 million at December 31, 2003, compared to $216.1 million at December 31,
2002. The increase in investment securities held to maturity was the result of
leverage strategies that were completed during 2003 and an increase of $118
million in the municipal bond portfolio. Securities available for sale decreased
$90.3 or 7.27% to $1.2 billion at December 31, 2003 compared to $1.2 billion at
December 31, 2002.
Bank-owned life insurance increased $23.8 million or 50.04% to $71.5 million at
December 31, 2003 compared to $47.7million at December 31, 2002. This increase
was due primarily to an additional $20.0 million purchase of bank-owned life
insurance in the first quarter of 2003 and increases in the cash surrender
value.
Total non-performing loans totaled $6.1 million at December 31, 2003 compared to
$8.5 million at December 31, 2002. Total non-performing loans as a percentage of
total loans were 0.27% at December 31, 2003 and 0.41% at December 31, 2002. The
allowance for loan losses as a percentage of non-performing loans was 336.67% at
December 31, 2003 and 246.55% at December 31, 2002. The allowance for loan
losses as a percentage of total loans was 0.92% at December 31, 2003 and 1.02%
at December 31, 2002.
Total deposits decreased $547.4 million or 16.88% to $2.7 billion at December
31, 2003 from $3.2 billion at December 31, 2002. The largest decrease was in
demand deposit accounts, which decreased $494.4 million to $775.0 million at
December 31, 2003 from $1.3 billion at December 31, 2002. This decrease is
primarily attributable to the funds in the conversion escrow account totaling
$526.0 million that were held for the purchase of shares of Provident Financial
Services, Inc. common stock. Savings deposits increased $65.5 million or 6.63%
to $987.9 million at December 31, 2003 compared to $922.4 million at December
31, 2002. Compared to the trailing quarter, core deposits increased $36.5
million or 2.11% to $1.76 billion at December 31, 2003 and represented 65.39% of
total deposits compared to 64.18% at September 30, 2003. Time deposits decreased
3
$118.4 million or 11.26% to $933.1 million at December 31, 2003 from $1.05
billion at December 31, 2002
Total borrowed funds increased $413.2 million or 127.91% to $736.3 million at
December 31, 2003 from $323.1 million at December 31, 2002. Federal Home Loan
Bank borrowings increased $424.6 million or 158.94% to $691.7 million at
December 31, 2003 compared to $267.1 million at December 31, 2002. The increase
in borrowed funds was due primarily to leverage strategies that were implemented
during the course of the year.
The Provident Bank maintains its corporate offices in Jersey City, New Jersey.
The Provident Bank currently operates 54 full service branches throughout
northern and central New Jersey.
On December 22, 2003 Provident Financial Services, Inc. entered into an
agreement under which First Sentinel Bancorp, Inc. will merge into Provident
Financial Services and First Savings Bank, the wholly owned subsidiary of First
Sentinel, will merge into The Provident Bank. Consideration will be paid to
First Sentinel stockholders in a combination of stock and cash valued at
approximately $642 million. The transaction is subject to regulatory and
shareholder approval.
First Sentinel Bancorp, Inc. is the holding company for First Savings Bank. At
September 30, 2003, the company had consolidated total assets of $2.2 billion
and total stockholders' equity of $217 million. First Savings Bank, which offers
a variety of business and consumer banking services, is a New Jersey chartered
capital stock savings bank that has operated in its market area since 1901. It
operates 22 branch offices in central New Jersey, 18 of which are located in
Middlesex County, two in Monmouth County, one in Somerset County and one in
Union County.
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.
4
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Condition
December 31, 2003 and December 31, 2002
(Dollars in Thousands)
Assets December 31, 2003 December 31, 2002
---------------------------------------------
Cash and due from banks $ 106,228 101,352
Federal funds sold -- 73,000
Short-term investments 69,624 90,503
---------------------------------------------
Total cash and cash equivalents 175,852 264,855
---------------------------------------------
Investment securities (market value of $524,429 517,789 216,119
and $221,435 at December 31, 2003
and December 31, 2002, respectively)
Securities available for sale, at fair value 1,151,829 1,242,118
Federal Home Loan Bank stock 34,585 13,356
Loans 2,237,367 2,052,855
Less allowance for loan losses 20,631 20,986
---------------------------------------------
Net loans 2,216,736 2,031,869
---------------------------------------------
Other real estate owned, net 41 --
Banking premises and equipment, net 46,741 44,005
Accrued interest receivable 16,842 15,842
Intangible assets 23,938 25,405
Bank owned life insurance 71,506 47,659
Other assets 29,019 17,980
---------------------------------------------
Total assets $ 4,284,878 3,919,208
=============================================
Liabilities and Equity
Deposits:
Demand deposits $ 774,988 1,269,421
Savings deposits 987,877 922,404
Certificates of deposit of $100,000 or more 148,306 160,867
Other time deposits 784,805 890,642
---------------------------------------------
Total deposits 2,695,976 3,243,334
Mortgage escrow deposits 11,061 9,582
Borrowed funds 736,328 323,081
Other liabilities 24,394 17,202
---------------------------------------------
Total liabilities 3,467,759 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 60,792,600 outstanding at December 31, 2003
and 0 shares issued and outstanding at December 31, 2002, respectively
615
Additional paid-in capital 606,541
Retained earnings 324,250 314,111
Accumulated other comprehensive income 6,416 11,898
Less: Unallocated common stock held by
Employee Stock Ownership Plan (78,816)
Less: Common Stock acquired by the Stock Award Plan (41,887)
--------------------------------------------
Total stockholders' equity 817,119 326,009
--------------------------------------------
--------------------------------------------
Total liabilities and stockholder
equity $ 4,284,878 3,919,208
============================================
5
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Operations
Three Months and Year Ended December 31, 2003 and 2002
(Dollars in Thousands)
Three Months Ended Year Ended
December 31 December 31
---------------------------------------------
2003 2002 2003 2002
---------------------------------------------
Interest income:
Real estate secured loans $ 21,744 21,525 84,307 93,893
Commercial loans 4,045 5,842 20,711 18,894
Consumer loans 4,573 4,936 18,432 21,167
Investment securities 4,984 1,381 17,708 5,323
Securities available for sale 10,785 10,077 41,639 36,465
Other short-term investments 93 78 463 281
Federal funds 206 161 1,246 1,284
---------------------------------------------
Total interest income 46,430 44,000 184,506 177,307
---------------------------------------------
Interest expense:
Deposits 8,209 12,984 39,171 54,837
Borrowed funds 4,325 2,125 15,462 8,404
---------------------------------------------
Total interest expense 12,534 15,109 54,633 63,241
---------------------------------------------
Net interest income 33,896 28,891 129,873 114,066
Provision for loan losses 100 550 1,160 12,800
---------------------------------------------
Net interest income after
provision for loan losses 33,796 28,341 128,713 101,266
---------------------------------------------
Non-interest income:
Fees 4,282 4,036 16,325 15,144
Net gain on securities
transactions 455 -- 1,116 960
Commissions 83 269 280 1,201
Bank owned life insurance 1,034 738 3,847 2,869
Other income 622 1,411 2,266 3,973
---------------------------------------------
Total non-interest income 6,476 6,454 23,834 24,147
---------------------------------------------
Non-interest expense:
Salaries and employee benefits 15,886 12,316 54,683 46,862
Net occupancy expense 3,595 3,386 14,157 13,220
Federal deposit insurance 101 106 440 417
Data processing expense 1,679 1,557 6,618 6,080
Advertising and promotion expense 1,216 729 3,770 3,003
Amortization of intangibles 702 1,188 3,699 3,677
Other operating expenses 5,646 4,186 19,412 15,828
Contribution to The Provident Bank Foundation -- -- 24,000 --
---------------------------------------------
Total non-interest expenses 28,825 23,468 126,779 89,087
---------------------------------------------
Income before income tax expense
and the cumulative effect of a change
in accounting principle $ 11,447 11,327 25,768 36,326
Income tax expense 3,236 3,428 7,024 9,231
---------------------------------------------
Income before the cumulative effect
of a change in accounting principle 8,211 7,899 18,744 27,095
Cumulative effect of a change in accounting principle,
net of tax of $0 -- -- -- (519)
---------------------------------------------
Net income $ 8,211 7,899 18,744 26,576
=============================================
Basic Earnings Per Share $0.15 $0.31
Average basic shares outstanding 55,395,928 57,835,726
Diluted Earnings Per Share $0.15 $0.31
Average diluted shares outstanding 55,299,358 57,965,640
6
PROVIDENT FINANCIAL SERVICES, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(dollars in thousands, except share data)
For the For the
Three Months Ended Year Ended
December 31, December 31,
2003 2002 2003 2002
---- ---- ---- ----
INCOME STATEMENT:
Net Interest Income 33,896 28,891 29,873 114,066
Provision for Loan Losses 100 550 1,160 12,800
Non-interest Income 6,476 6,454 23,834 24,147
Non-interest Expense 28,825 23,468 126,779 89,087
Income before income tax expense
and the cumulative effect of a
change in accounting principle 11,447 11,327 25,768 36,326
Cumulative effect of a change in
accounting principle 0 0 0 -519
Net Income 8,211 7,899 18,744 26,576
Basic Earnings Per Share (1) $0.15 - $0.31 -
Diluted Earnings Per Share (1) $0.15 - $0.31 -
Interest Rate Spread 3.03% 3.35% 2.89% 3.56%
Net Interest Margin 3.41% 3.73% 3.35% 3.95%
PROFITABILITY:
Return on average assets 0.78% 0.96% 0.46% 0.86%
Return on average equity 4.00% 8.82% 2.31% 8.71%
Operating expense to average assets 2.74% 2.84% 3.08% 2.90%
Efficiency ratio (net of foundation expense) (2) 71.40% 66.40% 66.87% 64.46%
ASSET QUALITY:
Non-performing loans 6,128 8,512
Other Real Estate Owned 41 0
Non-performing loans to total loans
0.27% 0.41%
Non-performing assets to total assets
0.14% 0.22%
Allowance for loan losses 20,631 20,986
Allowance for loan losses to non performing loans
336.67% 246.55%
Allowance for loan losses to total loans 0.92% 1.02%
AVERAGE BALANCE SHEET DATA:
Assets 4,209,811 3,306,557 4,117,127 3,074,555
Loans, net 2,114,565 1,999,777 2,014,861 1,949,778
Earnings Assets 3,966,012 3,091,289 3,878,107 2,887,680
Core Deposits 1,751,646 1,615,539 1,694,160 1,469,995
Borrowings 658,533 227,820 567,732 204,988
Interest Bearing Liabilities 3,031,235 2,559,498 2,925,897 2,454,922
Stockholders Equity 821,146 358,382 812,452 304,963
Average yield on interest earning assets 4.67% 5.69% 4.76% 6.14%
Average cost of interest bearing liabilities 1.64% 2.34% 1.87% 2.58%
CAPITAL:
Leverage Capital 18.81% 8.98% 18.81% 8.98%
Total risk based capital 31.43% 13.32% 31.43% 13.32%
Average equity to average assets 19.52% 10.84% 19.73% 9.92%
<FN>
Notes
- -----
(1) Basic and Diluted Earnings Per Share for the year ended December 31, 2003
includes the results of operations from January 15, 2003, the date we
completed our Plan of Conversion in the amount of $17,755,000, for the
twelve months ended December 31, 2003.
(2) Efficiency Ratio Calculation
</FN>
7
12/31/2003 12/31/2002 12/31/2003 12/31/2002
---------- ---------- ---------- ----------
Net Interest Income 33,896 28,891 129,873 114,066
Non Interest Income 6,476 6,454 23,834 24,147
Total Income: 40,372 35,345 153,707 138,213
Non Interest Expense: 28,825 23,468 126,779 89,087
LESS: Provident Bank Charitable Foundation Donation - - (24,000) -
---------- ---------- ---------- ----------
Adjusted Non Interest Expense 28,825 23,468 102,779 89,087
Expense/Income: 71.40% 66.40% 66.87% 64.46%
====== ====== ====== ======
8
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
NET INTEREST MARGIN ANALYSIS
(dollars in thousands, except share data)
December 31, 2003 September 30, 2003
----------------- ------------------
Average Average Average Average
Balance Interest Yield Balance Interest Yield
----------------------------------------- -------------------------------------------
Interest Earning Assets:
Fed Funds Sold and
Other Short Term $ 120,156 $ 299 0.99 % $ 188,892 $ 473 0.99 %
Investments
Investment Securities (1) 509,207 4,984 3.88 % 520,499 4,195 3.20 %
Securities Available for Sale 1,170,446 10,771 3.65 % 1,132,680 8,400 2.94 %
Federal Home Loan bank Stock 30,655 14 0.18 % 28,086 337 4.76 %
Net Loans (2) 2,114,565 30,362 5.70 % 2,016,717 30,449 5.99 %
--------------- ------------- ------------- ----------
Total Interest Earning Assets: $ 3,945,029 $ 46,430 4.67 % $ 3,886,874 $ 43,854 4.48 %
---------------- ------------- ------------- ----------
Non-Interest Earning Assets:
Cash and Due from Banks 79,207 93,990
Other Assets 185,575 186,987
--------------- -------------
TOTAL ASSETS $ 4,209,811 $ 4,167,851
=============== =============
Interest Bearing Liabilities:
Demand Deposits $ 446,084 $ 849 0.76 % $ 415,705 $ 786 0.75 %
Savings Deposits 988,870 2,398 0.96 % 974,467 2,513 1.02 %
Time Deposits 937,748 4,962 2.10 % 974,912 5,493 2.24 %
--------------- ------------- ------------- ----------
TOTAL DEPOSITS 2,372,702 8,209 1.37 % 2,365,084 8,792 1.47 %
--------------- ------------- ------------- ----------
Borrowed Funds 658,533 4,325 2.61 % 612,819 4,325 2.80 %
--------------- ------------- ------------- ----------
TOTAL BORROWINGS 658,533 4,325 2.61 % 612,819 4,325 2.80 %
--------------- ------------- ------------- ----------
Total Interest Bearing Liabilities: $ 3,031,235 $ 12,534 1.64 % $ 2,977,903 $ 13,117 1.75 %
--------------- ------------- ------------- ----------
Non-Interest Bearing Liabilities 357,430 343,063
--------------- -------------
TOTAL LIABILITIES 3,388,665 3,320,966
Equity 821,146 846,885
--------------- -------------
TOTAL LIAB & CAPITAL $ 4,209,811 $ 4,167,851
=============== =============
Net Interest Income $ 33,896 $ 30,737
============ ==========
Net interest rate spread 3.03 % 2.73 %
Net interest earning assets $ 913,794 $ 908,971
=============== =============
Net Interest Margin (3) 3.41 % 3.15 %
Ratio of interest-earning assets to
total interest-bearing liabilities 1.30 x 1.31 x
=============== =============
<FN>
- --------------------------------------------------------------------------------
(1) Average oustanding balance amounts shown are amortized cost.
(2) Average outstanding balances shown net of the allowance for loan
losses, deferred loan fees and expenses, loan premiums and discounts
and include non-accrual loans.
(3) Net interest income divided by average interest-earning assets.
</FN>
9
The following table summarizes the net interest margin for the previous year,
inclusive.
Quarter Ended
12/31/03 09/30/03 06/30/03 03/31/03 12/31/02
-------- -------- -------- -------- --------
Interest Earning Assets:
Securities 3.49% 2.84% 3.38% 3.58% 4.34%
Net Loans 5.70% 5.99% 6.31% 6.56% 6.41%
Total Interest Earning Assets: 4.67% 4.49% 4.86% 5.16% 5.69%
Interest Bearing Liabilities:
Total Deposits 1.37% 1.47% 1.71% 2.11% 2.21%
Total Borrowings 2.61% 2.80% 2.79% 2.70% 3.70%
Total Interest Bearing Liabilities: 1.64% 1.76% 1.92% 2.17% 2.34%
Interest Rate Spread 3.03% 2.73% 2.94% 2.99% 3.34%
Net Interest Margin 3.41% 3.14% 3.41% 3.53% 3.73%
Ratio of interest-earning assets to
total interest-bearing liabilities 1.30x 1.31x 1.33x 1.35x 1.20x
10