EXHIBIT 99.1
PRESS RELEASE OF PROVIDENT BANCORP, INC.
DATED JANUARY 21, 2005
Provident Bancorp, Inc.
NEWS RELEASE
FOR IMMEDIATE RELEASE Stock Symbol: PBCP
January 21, 2005 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, EXCLUDING MERGER EXPENSES, OF
$5.2 MILLION, OR $0.12 PER DILUTED SHARE
MONTEBELLO, NY - January 21, 2005 -- Provident Bancorp, Inc. (Nasdaq-National
Market: PBCP), the parent company of Provident Bank, today announced that for
the three months ended December 31, 2004, net income was $5.0 million, or $0.11
per diluted share compared to net income of $3.0 million, or $.09 per diluted
share for the three months ended December 31, 2003, an increase of $2.0 million,
or 66.1%. Included in the earnings for the current three-month period are
after-tax charges for merger integration costs ($228,000 or $0.01per share).
Excluding merger integration costs, net income would have been $5.2 million, or
$0.12 per diluted share for the three months ended December 31, 2004. Earnings
per share results for the prior period have been restated to reflect the
4.4323-to-one conversion ratio as a result of the Company's second-step
conversion.
"Provident Bank has successfully completed the Warwick and Ellenville mergers
which have given us the second leading market share in our combined core markets
of Rockland and Orange counties. These mergers, combined with the bank's organic
growth, have increased our gross operating income by 87%, including the fact
that there were minimal security gains realized in the 2004 period.", stated
George Strayton, the Company's President and CEO. "We continue to focus on the
synergies that the mergers present. The bank's concentration of branches,
deposit growth of $831 million and an increase in earning assets by over $1
billion has resulted in an overall increase in franchise value for our
shareholders. Additional synergies will be realized through the launch of our
new brand identity which was announced on November 2, 2004. This new visual
identity will serve as the fundamental cornerstone of the total integration of
our employees, branch network, products and services with the ideals our brand
values stand for: Community, Consistency, Connection, Empowerment and Trust."
Total assets as of December 31, 2004 were $2.6 billion, an increase of $727.3
million, or 39.8%, over assets of $1.8 billion at September 30, 2004, and an
increase of $1.2 billion, or 95.5%, over assets of $1.3 billion at December 31,
2003. The increase over September 30, 2004 period was due primarily to (i) the
October 2004 acquisition of Warwick Community Bancorp, Inc. ("WSB" or
"Warwick"), whose assets totaled $703.7 million on the merger date and (ii)
internal growth of the company. The increase over December 31, 2003, was due
primarily to (i) the acquisition of Ellenville National Bank ("ENB") in January,
2004, (ii) proceeds from the Company's second-step stock offering in January,
2004, (iii) the October 2004 acquisition of Warwick, and (iv) internal growth of
the Company. Goodwill and intangibles increased by $159.1 million from December
31, 2003 upon the completion of these acquisitions.
Net Loans as of December 31, 2004 were $1.3 billion, an increase of $284.5
million, or 29.0%, over net loan balances of $980.3 million at September 30,
2004, and an increase of $560.1 million, or 79.5%, over balances at December 31,
2003. Loans acquired from WSB totaled $288.2 million, while allowances for loan
losses acquired in connection with WSB were $4.9 million, or 1.70% of WSB's
outstanding loan balances. Inclusive of Warwick loans acquired, commercial loans
increased by $190.8 million, or 39.2%, over balances at September 30, 2004.
Consumer loans increased by $35.6 million, or 27.4%, during the three-month
period, while residential loans increased by $62.9 million, or 16.5%. Asset
quality continues to be strong. At $3.4 million, non-performing assets as a
percentage of total assets is 0.13%, down from 0.15% at September 30, 2004 and
0.38% at December 31, 2003.
Securities increased by $344.7 million, or 57.1%, to $948.1 million at December
31, 2004 from $603.4 million at September 30, 2004. Investments were made
primarily in mortgage-backed securities, which increased by $246.7 million, or
68.7%, and in U.S. Government and Federal Agency Securities, which increased by
$97.7 million, or 50.8%.
Deposits as of December 31, 2004 were $1.7 billion, up $462.2 million, or 37.3%,
from September 30, 2004, and $831.6 million, or 95.6%, from December 31, 2003.
Deposits acquired from Warwick totaled $475.1 million. As of December 31, 2004
retail and commercial transaction accounts were 29.6% of deposits compared to
30.1% at September 30, 2004 and 26.3% at December 31, 2003.
Stockholders' equity increased by $77.0 million to $426.5 million at December
31, 2004 compared to $349.5 million at September 30, 2004. $74.6 million in new
capital was issued for the purchase of Warwick. Net income of $5.0 million for
the three-month period also increased capital. Partially offsetting the
increases were the payments of cash dividends totaling $1.6 million, and net
declines in accumulated comprehensive income of $1.9 million. Tier I capital to
assets stands at 10.75% at December 31, 2004.
Income Information - Quarter
- ----------------------------
Net interest income after provision for loan losses for the three months ended
December 31, 2004 was $21.6 million, compared to $11.4 million for the three
months ended December 31, 2003, an increase of $10.2 million or 89.0%. The
increase in interest income was largely due to a $1.1 billion increase in
average earning assets to $2.2 billion during the quarter ended December 31,
2004, as compared to $1.1 billion for the same quarter in the prior year. The
increase is primarily due to the ENB and Warwick acquisitions, 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 10 basis
points from 5.25% to 5.15%, on a fully taxable equivalent basis. Interest
expense increased by $3.5 million for the quarter compared to the same quarter
in 2003, as average interest-bearing liabilities increased by $883.0 million and
the average cost of interest-bearing liabilities increased 16 basis points. Net
interest margin declined by 24 basis points to 4.00%, while net interest spread
declined by 25 basis points to 3.72%, due to the assets acquired being recorded
at current market interest rates.
Non-interest income was $4.0 million for the three months ended December 31,
2004 compared to $2.8 million for the three months ended December 31, 2003.
Deposit fees and service charges increased by $1.2 million, or 97.1%, of which
$905,000 was generated from the acquired Warwick and ENB branches, while
$295,000 was due primarily to volume-driven increases in overdraft,
non-sufficient funds, and ATM and debit card fees. Other non-interest income
increased by $317,000, or 97.8%, due to higher earnings on the Company's bank
owned life insurance ("BOLI") investments. Income derived from the Company's new
wholly-owned title subsidiary Hardenburgh Abstract Company, Inc. was $358,000.
Gains on the sale of securities were $49,000 for the current three-month period,
compared to $930,000 for the same period last year. During the three-month
period ended December 31, 2004, the Company also recorded gains on sales of
loans totaling $59,000, compared to $86,000 for the same period last year.
Excluding the effects of gains on sales of securities, the increase in
non-interest income was $2.1 million, or 119.2% ($4.0 million vs. $1.9 million).
Non-interest expenses for the three months ended December 31, 2004 increased by
$8.1 million, or 85.0%, to $17.7 million, compared to $9.6 million for the three
months ended December 31, 2003. The acquisition of ENB in January, 2004 and
Warwick in October, 2004 played a major role in the increases in most
categories. Compensation and employee benefits increased by $3.4 million, or
76.6%, to $7.8 million for the period ended December 31, 2004. Of that amount,
$709,000 and $680,000 was attributable to the Warwick and ENB acquisitions,
respectively and the remainder was due to staff additions for future growth and
expansion, as
well as normal merit increases. An increase in the cost of stock-based
compensation benefits of $169,000, or 25.2%, occurred during the current
three-month period primarily due to vesting and allocations of stock under
benefit plans at an average common stock price of $12.66 per share for the three
months ended December 31, 2004 compared to $10.26 per share for the three months
ended December 31, 2003. Occupancy and office operations increased by $821,000,
or 61.9%, for the three months ended December 31, 2004, almost all of which was
attributable to the acquired ENB and Warwick properties. Advertising and
promotion increased $695,000, or 148.5%, primarily as a result of the Warwick
merger and the new brand identity the Company has unveiled. Professional fees
increased by $184,000, or 38.0%, due primarily to fees associated with the
Company's compliance with the provisions of Sarbanes-Oxley Section 404.
Amortization of core deposit intangible increased by $1.0 million as a result of
the Warwick and ENB deposits acquired. Stationery and office supplies increased
by $106,000, or 71.1%, due to the doubling of our branches compared to the prior
year. Data and check processing increased $504,000, or 67.7%, primarily due to
the higher level of services related to the accounts acquired in the mergers.
Other expenses increased by $665,00, or 63.0%, due primarily to increases in
correspondent bank expense, postage, telephone expense and insurance premium
expense, all directly related to the increased size of Provident Bank following
the mergers. Further, merger integration expenses were $380,000.
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, including, but not
limited to increases in anticipated merger integration expenses. 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)
December 31, September 30, December 31,
------------ ------------- ------------
2004 2004 2003
---- ---- ----
Assets:
Cash and due from banks $ 57,869 $ 107,571 $ 40,331
Federal Funds Sold 15,000
Total securities 948,081 603,375 484,801
Loans held for sale 2,466 855 727
Loans:
One-to four-family residential mortgage loans 443,629 380,749 369,676
Commercial real estate, commercial business
and construction 677,676 486,904 265,043
loans
Consumer loans 165,613 129,981 81,193
------------ ------------ ------------
Gross loans 1,286,918 997,634 715,912
Allowance for loan losses (22,165) (17,353) (11,249)
------------ ------------ ------------
Total loans, net 1,264,753 980,281 704,663
------------ ------------ ------------
Federal Home Loan Bank stock, at cost 19,704 10,247 5,665
Premises and equipment, net 29,269 16,846 11,465
Goodwill 157,722 65,260 13,540
Core Deposit Intangible 14,892 5,624 --
Bank owned life insurance 26,882 13,245 12,641
Other assets 31,792 22,847 17,125
------------ ------------ ------------
Total assets $ 2,553,430 $ 1,826,151 $ 1,305,958
============ ============ ============
Liabilities:
Deposits:
Demand deposits $ 366,464 $ 289,360 $ 166,518
NOW deposits 137,024 83,439 62,305
------------ ------------ ------------
Total transaction accounts 503,488 372,799 228,823
Savings and money market deposits 804,149 533,410 423,514
Certificates of deposit 394,138 333,323 217,832
------------ ------------ ------------
Total deposits 1,701,775 1,239,532 870,169
------------ ------------ ------------
Stock Subscriptions -- -- 174,660
Borrowings 392,845 214,909 113,653
Mortgage escrow funds and other 32,269 22,198 27,946
------------ ------------ ------------
Total liabilities 2,126,889 1,476,639 1,186,428
Stockholders' equity 426,541 349,512 119,530
------------ ------------ ------------
Total liabilities and stockholders' equity $ 2,553,430 $ 1,826,151 $ 1,305,958
============ ============ ============
Common shares outstanding at period end (1) 45,910,902 39,618,373 35,224,911
Book value per share $ 9.29 $ 8.82 $ 3.39
(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 common stock offering in January 2004.
Provident Bancorp, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except share and per share data)
Three Months Ended
December 31,
2004 2003
---- ----
Interest and dividend income:
Loans $ 19,413 $ 10,530
Securities 8,478 3,765
Other earning assets 121 23
----------- -----------
Total interest and dividend income 28,012 14,318
----------- -----------
Interest expense:
Deposits 3,367 1,557
Borrowings 2,943 1,210
----------- -----------
Total interest expense 6,310 2,767
----------- -----------
Net interest income 21,702 11,551
Provision for loan losses 150 150
----------- -----------
Net interest income after provision for loan losses 21,552 11,401
----------- -----------
Non-interest income:
Deposit fees and service charges 2,535 1,286
Loan fees and late charges 383 177
Gains on sales of securities available for sale 49 930
Gains on sales of loans 59 86
Title insurance fees 358 --
Other 641 324
----------- -----------
Total non-interest income 4,025 2,803
----------- -----------
Non-interest expense:
Compensation and employee benefits 7,834 4,435
Stock-based compensation plans 840 671
Occupancy and office operations 2,148 1,327
Advertising and promotion 1,163 468
Professional fees 668 484
Data and check processing 1,248 744
Stationery and office supplies 255 149
Merger integration costs 380 --
Amortization of intangible assets 1,127 84
ATM/debit card expense 326 153
Other 720 1,055
----------- -----------
Total non-interest expense 17,709 9,570
----------- -----------
Income before income tax expense 7,868 4,634
Income tax expense 2,853 1,589
----------- -----------
Net income $ 5,015 $ 3,045
=========== ===========
Per common share:
Basic earnings $ 0.11 $ 0.09
Diluted earnings 0.11 0.09
Dividends declared 0.04 0.03
Weighted average common shares (1):
Basic 44,322,927 34,301,264
Diluted 44,926,104 34,943,686
(1) Prior period information has been adjusted to reflect the 4.4323-to-one
conversion ratio in connection with the Company's second-step stock offering.
Provident Bancorp, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands)
December 31, September 30, December 31,
2004 2004 2003
-------------------------------------------
Asset Quality Data:
Non-performing loans (NPLs) $ 3,390 $ 2,737 $ 4,988
Non-performing assets (NPAs) 3,390 2,737 4,988
NPLs as % of total loans 0.26% 0.27% 0.70%
NPAs as % of total assets 0.13% 0.15% 0.38%
Allowance for loan losses as % of NPLs 654% 634% 226%
Allowance for loan losses as % of total loans 1.72% 1.74% 1.57%
Capital Ratios:
Equity to total assets (consolidated) 16.70% 19.15% 9.18%
Tier 1 capital consolidated 10.75% 15.91% 8.05%
Three Months Ended
December 31,
2004 2003
----------------------------
Performance Ratios (annualized):
Return on:
Average assets 0.79% 1.04%
Average common equity 4.69% 10.42%
Net interest rate spread (tax-equivalent basis) 3.72% 3.97%
Net interest margin (tax-equivalent basis) 4.00% 4.24%
Average Balance Data:
Average assets $ 2,528,200 $ 1,181,863
Average earning assets 2,175,767 1,092,953
Average stockholders' equity 424,515 117,632