EXHIBIT 99
PRESS RELEASE OF PROVIDENT BANCORP, INC.
[Letterhead of Provident Bancorp]
NEWS RELEASE
FOR IMMEDIATE RELEASE Stock Symbol: PBCP
Monday, October 25, 2004 Traded on Nasdaq National Market
CONTACT:
Paul A. Maisch, SVP & Chief Financial Officer
Roberta Lenett, VP & Manager of Shareholder Relations
(845) 369-8082
PROVIDENT BANCORP ANNOUNCES
QUARTERLY EARNINGS OF
$4.2 MILLION, OR $0.11 PER DILUTED SHARE
UP 57% FROM QUARTER ENDED SEPTEMBER 30, 2003
MONTEBELLO, NY - October 21, 2004 -- Provident Bancorp, Inc. (Nasdaq-National
Market: PBCP), the parent company of Provident Bank, today announced that for
the three months ended September 30, 2004, net income was $4.2 million, or $0.11
per diluted share compared to net income of $2.6 million, or $0.07 per diluted
share for the three months ended September 30, 2003, an increase of $0.04, or
57%. Net income for the fiscal year ended September 30, 2004 was $11.0 million,
including after-tax charges of: (i) $3.0 million due to the establishment of the
charitable foundation in connection with the second-step conversion in January
2004, (ii) $463,000 in merger integration costs for Ellenville National Bank
("ENB") and (iii) $1.2 million in amortization of core deposit intangibles. This
compares to $11.3 million for the twelve-months ended September 30, 2003, which
included only $263,000 in after-tax cost of amortization of core deposit
intangibles. Diluted earnings per share were $0.29 for the twelve months ended
September 30, 2004 compared to $0.32 for the same period last year. Excluding
the above items, adjusted diluted earnings per share would have been $0.42 for
the full year ended September 30, 2004 compared to $0.33 for the same period in
2003. Earnings per share results for the prior periods have been restated to
reflect the 4.4323-to-one conversion ratio as a result of the Company's
second-step conversion.
George Strayton, the Company's President and CEO, commented: "Since 1999
Provident Bank had been operating under a mutual holding company structure. As
such, we were able to establish a solid operating and business platform that
positioned us well for the growth opportunities in our marketplace. In January
2004 we successfully raised $196 million in capital in conjunction with our
second-step conversion. We simultaneously acquired Ellenville National Bank,
which added $219 million in loans, $327 million in deposits and nine branches to
the Provident franchise. On October 1st of this year we completed the
acquisition of Warwick Community Bancorp, Inc., adding approximately $300
million in loans, $500 million in deposits and another nine branches to the
Bank. Since September 30, 2003, Provident Bank increased assets from $1.2
billion to $2.5 billion and doubled the number of branches from 18 to 36. Twenty
nine of these branches are concentrated in Rockland and Orange Counties, with
the remaining seven branches located in contiguous counties.
Our strong market share in Rockland is now augmented by an even stronger market
share in Orange. Significant population growth and healthy business climates
make these New York State Counties very desirable places to do business. The
banks that Provident acquired in Orange County have similar business
strategies, with the delivery of superior customer service as the core value. I
believe the resulting combination will provide value to our customers,
shareholders, employees and all the communities in which we do business."
Total assets as of September 30, 2004 were $1.8 billion, an increase of $651.8
million, or 55.5%, over assets of $1.2 billion at September 30, 2003. The
increase is due primarily to (i) the January acquisition of ENB, whose assets
totaled $349.7 million on the merger date (ii) proceeds from the offering in the
second-step conversion of $192.2 million, net of related costs and (iii)
internal growth of the company.
Net Loans as of September 30, 2004 were $980.3 million, an increase of $277.1
million, or 39.4%, over net loan balances of $703.2 million at September 30,
2003. Loans acquired from ENB totaled $219.2 million, while allowances for loan
losses acquired in connection with ENB were $5.7 million, or 2.6% of ENB's
outstanding loan balances. Inclusive of ENB loans acquired, (1) commercial loans
increased by $234.0 million, or 92.6%, over balances at September 30, 2003; (2)
consumer loans increased by $49.4 million, or 61.2%, during the twelve-month
period; and (3) residential loans remained unchanged. Asset quality continues to
be strong. At $2.7 million, or 0.15% of total assets, non-performing assets were
down from $4.7 million at September 30, 2003 as two loans totaling $2.1 million
were resolved in the fiscal fourth quarter of 2004.
Securities increased by $229.1 million, or 61.2%, to $603.4 million at September
30, 2004 from $374.3 million at September 30, 2003 as the Company invested the
majority of the stock offering funds received in securities. Investments were
made primarily in mortgage-backed securities, which increased by $147.3 million,
or 69.5%, and in U.S. Government and Federal Agency Securities, which increased
by $60.3 million, or 45.2%.
Deposits as of September 30, 2004 were $1.2 billion, up $370.0 million, or
42.6%, from September 30, 2003. Deposits acquired from ENB totaled $326.8
million. As of September 30, 2004 retail and commercial transaction accounts
were 30.0% of deposits compared to 25.9% at September 30, 2003.
Stockholders' equity increased by $231.8 million to $349.6 million at September
30, 2004 compared to $117.9 million at September 30, 2003. The Company completed
its second-step conversion in January 2004 raising $192.4 million in new
capital, net of related costs. In addition, $39.7 million and $4.0 million,
respectively, in new capital were issued for the purchase of ENB and for the
formation of the charitable foundation. Net income of $11.0 million for the
fiscal year also increased capital. Partially offsetting the increases were the
payments of cash dividends totaling $5.0 million, the purchase of ESOP shares
totaling $10.0 million and net declines in accumulated comprehensive income of
$3.7 million.
Income Information - Quarter
- ----------------------------
Net interest income before provision for loan losses for the three months ended
September 30, 2004 was $17.5 million, compared to $11.3 million for the three
months ended September 30, 2003, an increase of $6.2 million or 54.9%. The
increase in net interest income was largely due to a $563.9 million increase in
average earning assets to $1.6 billion for the quarter ended September 30, 2004,
as compared to $1.0 billion for the same quarter in the prior year, due
primarily to the Ellenville National Bank acquisition, net proceeds from the
second-step offering and continued internal growth. The increase in average
earning assets was partially offset by a decline in average yield of twelve
basis points from 5.34% to 5.22%. Included within loan interest for the quarter
was $733,000 in interest recoveries from the resolution of two significant
nonaccrual loans. This impacted the yield on earning assets by increasing the
quarterly yield by 18 basis points. Despite a decrease in the average cost of
interest bearing liabilities of six basis points, interest expense for the
quarter increased $832,000 compared to the same quarter in 2003, as average
interest-bearing liabilities increased by $310.2 million. On a fully taxable
equivalent basis, net interest margin increased by five basis points to 4.39%,
while net interest spread declined by four basis points to 4.05%. The impact of
the previously mentioned nonaccrual interest income recovery increased taxable
equivalent net interest margin by 18 basis points.
Non-interest income was $3.1 million for the three months ended September 30,
2004 compared to $2.3 million for the comparable period in 2003. Gains on the
sale of securities were $561,000 for the current three-month period, compared to
$112,000 for the same period last year. During the three month period ended
September 30, 2004, the Company also recorded gains on sales of loans totaling
$88,000, compared to $259,000 for the same period last year. Excluding the
effects of gains on sales of securities and loans, the
increase in non-interest income was $535,000, or 27.8%. Deposit fees and service
charges increased by $468,000, or 35.2%, of which $402,000 was generated from
the acquired ENB branches and $66,000 was due primarily to volume-driven
increases in overdraft, non-sufficient funds, and ATM and debit card fees. Other
non-interest income increased by $90,000 or 27.2%, due primarily to sales of
mutual funds and annuities.
Non-interest expenses for the three months ended September 30, 2004 increased by
$4.8 million, or 50.5%, to $14.4 million, compared to $9.6 million for the three
months ended September 30, 2003. The acquisition of ENB in January 2004 played a
major role in the increases in most categories. Compensation and employee
benefits increased by $2.0 million, or 44.7%, to $6.5 million for the period
ended September 30, 2004. Of that amount, $780,000 was attributable to the ENB
acquisition and the remainder was due to staff additions for future growth and
expansion, as well as normal merit increases. A decrease in stock-based
compensation plans of $81,000, or 10.3%, occurred during the current three-month
period. Occupancy and office operations increased by $540,000, or 39.5%, and
data processing expense increased $287,000 or 37.6% for the three months ended
September 30, 2004, almost all of which was attributable to the acquisition of
ENB. Professional fees increased by $628,000, or 171.3%, due primarily to fees
associated with the Company's compliance with the provisions of Section 404 of
the Sarbanes Oxley Act of 2002 ("Sarbanes Oxley") and fees paid to contracted
consultants engaged to run day-to-day operations, as the Company's permanent
employees focused on the integrations of ENB and Warwick Community Bancorp, Inc.
("Warwick"). Amortization of core deposit intangible increased by $502,000 as a
result of the ENB deposits acquired. Other expenses increased by $823,000, or
60.5%, due primarily to increases of $71,000, $73,000, $127,000, $104,000,
$120,000 and $215,000 in SEC and shareholder-related expenses, courier expenses,
supplies expense, insurance, postage, and miscellaneous operational write-offs,
respectively.
Income tax expense increased by $404,000 for the three months ended September
30, 2004 compared to the same period in 2003. However, the Company's effective
tax rate declined to 29.3% from 34.4% as the Company recorded a reduction of
$300,000 in tax expense reflecting the expiration of certain previously open tax
years.
Income Information - Fiscal Year
- --------------------------------
Net interest income after provision for loan losses increased by $15.9 million,
or 35.5%, to $60.7 million for the fiscal year ended September 30, 2004 from
$44.8 million for the same period in 2003. The increase in interest income of
$16.7 million reflects an increase in average earning assets of $441.5 million
to $1.4 billion, partially offset by a decline in yield of 59 basis points to
5.20%. The cost of interest-bearing liabilities increased by $922,000 as the
average balances increased by $241.1 million to $1.1 billion, even though the
average rate paid on average interest bearing funds decreased 24 basis points to
1.21%. On a fully taxable equivalent basis, net interest margin decreased from
4.59% to 4.31% and net interest spread declined from 4.33% to 3.99%. The impact
of the previously mentioned nonaccrual interest income recovery increased fully
taxable equivalent net interest margin by five basis points for the year ended
September 30, 2004.
Non-interest income for the fiscal year ended September 30, 2004 increased to
$11.6 million, an increase of $2.0 million, or 21.1%, compared to $9.6 million
for the same period last year. Gains on sales of securities and loans were $2.5
million and $320,000, respectively, for the current period, generating a
combined decrease of $327,000 from the securities and loan sales gains of $2.0
million and $1.1 million, respectively, for the prior year. Deposit fees and
service charges increased to $6.6 million for the current fiscal year, an
increase of $2.1 million, or 48.2%, over the same period last year. The increase
is primarily attributable to increases in service fees of $1.2 million resulting
from the acquired branches, coupled with volume-related increases in service
fees on new and existing accounts at the original Provident branches. Other
income including loan fees and charges increased by $207,000, or 10.2%, to $2.2
million for the year ended September 30, 2004, from $2.0 million for the same
period last year. The increase is primarily due to $552,000 in income from the
Bank Owned Life Insurance ("BOLI") for the current fiscal year compared to
$483,000 for the same period last year, as the BOLI program was only established
for nine months of fiscal 2003 and $107,000 in increased income on mutual funds
and annuity sales.
Non-interest expenses, including the Charitable Foundation contribution of $5.0
million, increased to $56.1 million for the fiscal year ended September 30,
2004, an increase of $19.4 million, or 52.6%, compared to $36.8 million for the
prior year. Major increases in compensation and benefits ($2.5 million) and
occupancy and office operations ($1.1 million) were directly attributable to the
increased operations resulting from the acquisition of ENB. Compensation and
benefits increased by an additional $3.1 million due to annual salary
increases and staff additions. Stock-based compensation expense increased by
$584,000, or 26.5%, as the company's per share value increased from an average
of $7.43 per share for the year ended September 30, 2003 to an average of $10.95
per share for the year ended September 30, 2004. Also, the Company allocated
additional shares related to the $10.0 million ESOP plan purchase. Professional
fees increased to $2.7 million for the year ended September 30, 2004, an
increase of $1.1 million, or 68.0%, over the comparable period in the prior
year. The increase is primarily due to the additional fees associated with
Sarbanes-Oxley compliance, and the fees for contracted consultants engaged
during the integration periods of ENB and Warwick. Additional increases in
non-interest expense categories for the current fiscal year were advertising
costs of $393,000, or 23.7%, and a volume-related increase of $711,000, or
24.3%, in data and check processing costs. The Company incurred $773,000 in
integration costs for the current fiscal year, due primarily to the expenses
associated with the systems conversion of ENB. Amortization of intangible assets
increased by $1.6 million due to the addition of the ENB core deposit
intangible. Other non-interest expense increased by $2.1 million, or 39.0%,
primarily due to increases in SEC and shareholder relations expenses ($231,000),
supplies expenses ($520,000), postage ($269,000), ATM transaction expenses
($172,000), insurance expense ($199,000), courier related expense ($148,000),
and miscellaneous operational write-offs ($215,000).
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, dollars in
thousands, except per share data)
September 30, September 30,
-------------- ------------
2004 2003
---- ----
Assets:
Cash and due from banks $ 107,571 $ 33,500
Total securities 603,375 374,259
Loans held for sale 855 2,364
Loans:
One-to four-family residential mortgage loans 380,749 380,776
Commercial real estate, commercial business
and construction 486,904 252,857
loans
Consumer loans 129,981 80,620
------------ ------------
Gross loans 997,634 714,253
Allowance for loan losses (17,353) (11,069)
------------ ------------
Total loans, net 980,281 703,184
------------ ------------
Federal Home Loan Bank stock, at cost 10,247 8,220
Premises and equipment, net 16,846 11,647
Goodwill 65,612 13,540
Core deposit intangible 5,624 1,063
Bank owned life insurance 13,245 12,483
Other assets 22,419 14,045
------------ ------------
Total assets $ 1,826,075 $ 1,174,305
============ ============
Liabilities:
Deposits:
Transaction accounts $ 372,799 $ 225,376
Savings and money market deposits 533,410 407,939
Certificates of deposit 333,323 236,238
------------ ------------
Total deposits 1,239,532 869,553
------------ ------------
Borrowings 214,909 164,757
Mortgage escrow funds and other 22,011 22,138
------------ ------------
Total liabilities 1,476,452 1,056,448
Stockholders' equity 349,623 117,857
------------ ------------
Total liabilities and stockholders' equity $ 1,826,075 $ 1,174,305
============ ============
Common shares outstanding at period end (1) 39,655,167 35,221,365
Book value per share $ 8.82 $ 3.35
(1) Prior period share information has been adjusted to reflect the
4.4323-to-one conversion ratio in connection with the Company's second step
conversion in January 2004.
Provident Bancorp, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited, dollars in thousands, except per share data)
Three Months Ended Year Ended
September 30, September 30,
2004 2003 2004 2003
---- ---- ---- ----
Interest and dividend income:
Loans $ 15,442 $ 10,616 $ 54,093 $ 43,815
Securities 5,598 3,362 20,231 13,586
Other earning assets 81 97 184 389
----------- ----------- ----------- -----------
Total interest and dividend income 21,121 14,075 74,508 57,790
----------- ----------- ----------- -----------
Interest expense:
Deposits 2,219 1,628 7,901 7,775
Borrowings 1,362 1,121 5,081 4,285
----------- ----------- ----------- -----------
Total interest expense 3,581 2,749 12,982 12,060
----------- ----------- ----------- -----------
Net interest income 17,540 11,326 61,526 45,730
Provision for loan losses 225 100 800 900
----------- ----------- ----------- -----------
Net interest income after provision for loan losses 17,315 11,226 60,726 44,830
----------- ----------- ----------- -----------
Non-interest income:
Deposit fees and service charges 1,798 1,330 6,570 4,432
Loan fees and late charges 242 265 832 903
Net gain on sales of securities 561 112 2,455 2,006
Net gain on sales of loans 88 259 320 1,096
Other 422 332 1,396 1,118
----------- ----------- ----------- -----------
Total non-interest income 3,111 2,298 11,573 9,555
----------- ----------- ----------- -----------
Non-interest expense:
Compensation and employee benefits 6,478 4,476 23,001 17,451
Stock-based compensation plans 707 788 2,790 2,206
Occupancy and office operations 1,907 1,367 6,741 5,178
Advertising and promotion 506 367 2,050 1,657
Professional fees 995 367 2,655 1,580
Data and check processing costs 1,049 762 3,634 2,923
Stationery and office supplies 251 124 1,036 516
Integration costs 0 4 773 4
Amortization of core deposit intangibles 595 93 2,063 438
Establishment of charitable foundation 0 0 5,000 0
Other 1,933 1,237 6,403 4,837
----------- ----------- ----------- -----------
Total non-interest expense 14,421 9,585 56,146 36,790
----------- ----------- ----------- -----------
Income before income tax expense 6,005 3,939 16,153 17,595
Income tax expense 1,760 1,355 5,136 6,344
----------- ----------- ----------- -----------
Net income $ 4,245 $ 2,584 $ 11,017 $ 11,251
=========== =========== =========== ===========
Per common share:
Basic earnings $ 0.11 $ 0.08 $ 0.30 $ 0.33
Diluted earnings 0.11 0.07 0.29 0.32
Dividends declared 0.04 0.03 0.15 0.13
Weighted average common shares (1):
Basic 37,877,763 34,163,623 36,809,451 34,186,015
Diluted 38,499,635 34,718,808 37,444,381 34,663,258
(1) Prior period information has been adjusted to reflect the 4.4323-to-one
conversion ratio in connection with the Company's second-step conversion.
Provident Bancorp, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except share data)
September 30, September 30,
2004 2003
---------- ----------
Asset Quality Data:
Non-performing loans (NPLs) $ 2,737 $ 4,697
Non-performing assets (NPAs) 2,737 4,697
NPLs as % of total loans 0.27% 0.66%
NPAs as % of total assets 0.15% 0.40%
Allowance for loan losses as % of NPLs 634% 236%
Allowance for loan losses as % of total loans 1.74% 1.55%
Capital Ratios:
Equity to total assets (consolidated) 19.15% 10.04%
Tier 1 capital ratio (Bank only) 11.28% 8.14%
Tier 1 capital consolidated 15.91% 8.70%
Three Months Ended Twelve-months Ended
September 30, September 30,
2004 2003 2004 2003
-------------- -------------- -------------- --------------
Performance Ratios (annualized):
Return on:
Average assets 0.93% 0.90% 0.69% 1.04%
Average common equity 4.89% 8.91% 3.94% 9.92%
Net interest rate spread (tax-equivalent basis) 4.05% 4.09% 3.99% 4.33%
Net interest margin (tax-equivalent basis) 4.39% 4.34% 4.31% 4.59%
Average Balance Data:
Average assets $ 1,808,002 $ 1,133,447 $ 1,607,594 $ 1,082,562
Average earning assets 1,609,285 1,045,378 1,446,003 1,004,484
Average stockholders' equity 345,360 115,054 279,888 113,369