NEWS RELEASE
CONTACT: Kenneth J. Wagner, SVP Investor Relations
Provident Financial Services, Inc.
(201) 915-5344
FOR RELEASE 7:43 A.M. Eastern Time: April 27, 2005
Provident Financial Services, Inc. Announces 46% Increase in Quarterly
Earnings and Declares Increased Quarterly Cash Dividend
JERSEY CITY, NJ, April 27 /PRNewswire-First Call/ -- Provident Financial
Services, Inc. (NYSE:PFS) (the "Company") reported net income of $15.0 million
for the three months ended March 31, 2005, a 45.9% increase compared to net
income of $10.3 million for the same period in 2004. Basic and diluted earnings
per share increased 17.4% and 16.2%, respectively, to $0.22 for the quarter
ended March 31, 2005, compared to basic and diluted earnings per share of $0.19
for the quarter ended March 31, 2004.
The three month earnings and per share data for 2005 reflect the inclusion of
the operations of First Sentinel Bancorp, Inc. ("First Sentinel") which merged
with the Company on July 14, 2004 and the related issuance of 18.5 million
shares of the Company's common stock in connection with the merger.
Paul M. Pantozzi, Chairman and Chief Executive Officer, commented, "In the first
quarter we continued to make steady progress in expense management while
maintaining both our net interest margin, as compared with the trailing quarter,
and our focus on asset quality. Also, we have consistently pursued our capital
management strategy, as witnessed by our stock repurchase activity during the
quarter. In line with that, I am pleased to report that the Board has approved a
14.3% increase in the quarterly cash dividend to $0.08 per common share. "
Declaration of Quarterly Dividend
The Company's Board of Directors declared a quarterly cash dividend of $0.08 per
common share, an increase of 14.3% from the prior quarter's cash dividend of
$0.07 per share. The dividend is payable on May 31, 2005 to stockholders of
record as of the close of business on May 13, 2005.
Balance Sheet Summary
Total assets were $6.36 billion at March 31, 2005, compared to $6.43 billion at
December 31, 2004, as reductions in securities balances were used to fund
repayments of borrowings and common stock repurchases.
Total investments decreased $117.9 million, or 6.2%, during the quarter ended
March 31, 2005. The decrease was primarily attributable to paydowns on
mortgage-backed securities and maturities of debt securities. In addition, the
Company sold $11.5 million of mortgage-backed securities during the quarter as
part of its ongoing interest rate risk management process.
The Company's net loans decreased $28.6 million, or 0.8%, during the three
months ended March 31, 2005, primarily as a result of a $34.1 million reduction
in residential mortgage loans, partially offset by an $11.8 million increase in
consumer loans. The increase in consumer loans was primarily attributable to
growth in second mortgage and indirect auto loans.
Partially offsetting these declines, cash and cash equivalents increased $72.5
million, or 44.3%, during the quarter ended March 31, 2005, pending deployment
into higher-yielding asset categories.
Borrowed funds decreased $56.6 million, or 4.9%, during the quarter ended March
31, 2005, as a result of maturities and paydowns on amortizing obligations.
Total deposits increased $1.4 million during the quarter ended March 31, 2005,
with an $8.0 million increase in time deposits partially offset by decreases in
savings and demand accounts. Total deposits were $4.05 billion at March 31,
2005, with core deposits, consisting of savings and demand deposit accounts,
representing 65.4% of total deposits.
Common stock repurchases for the three months ended March 31, 2005 totaled 1.5
million shares at an average cost of $18.04 per share. At March 31, 2005, book
value per share and tangible book value per share totaled $15.33 and $9.26,
respectively. An additional 2.2 million shares remain eligible for repurchase
under the current common stock repurchase authorization.
Results of Operations
Net Interest Margin
The net interest margin was 3.38% for each of the quarters ended March 31, 2005
and December 31, 2004. This was a decrease of 12 basis points compared with the
net interest margin of 3.50% for the quarter ended March 31, 2004. The weighted
average rate for interest-earning assets was 4.97% for the three months ended
March 31, 2005, compared with 4.90% for the trailing quarter and 4.79% for the
three months ended March 31, 2004. The weighted average rate for
interest-bearing liabilities was 1.88% for the quarter ended March 31, 2005,
compared with 1.79% for the trailing quarter and 1.67% for the first quarter of
2004. The increases in rates on interest-earning assets and interest-bearing
liabilities reflect increases in market interest rates experienced throughout
the past year.
Non-Interest Income
Non-interest income totaled $6.2 million for the quarter ended March 31, 2005, a
decrease of $1.5 million, or 19.4%, compared to the same period in 2004. During
the quarter ended March 31, 2004, the Company sold $71.8 million of fixed-rate
30- and 20-year residential mortgages as part of its interest rate risk
management process, realizing gains of $1.3 million. In addition, the Company
incurred net losses on securities sales of $131,000 for the quarter ended March
31, 2005, compared with net gains of $427,000 for the same period in 2004.
Partially offsetting these decreases, income on bank-owned life insurance
("BOLI") increased $309,000 for the three months ended March 31, 2005, compared
with the first quarter of 2004, primarily as a result of additional BOLI
acquired from First Sentinel in the July 2004 merger.
Non-Interest Expense
For the three months ended March 31, 2005, non-interest expense increased $4.7
million, or 17.7%, to $31.4 million, compared to $26.7 million for the three
months ended March 31, 2004. Compensation and employee benefits expense
increased $2.6 million for the quarter ended March 31, 2005, compared with the
same period in 2004, due primarily to increased headcount as a result of the
First Sentinel acquisition. The Company employed 915 full-time equivalent
employees at March 31, 2005, compared with 703 full-time equivalent employees at
March 31, 2004. Amortization of intangibles increased $1.6 million for the
quarter ended March 31, 2005, compared with the same period in 2004, primarily
as a result of amortization of the core deposit intangible recorded in
connection with the First Sentinel acquisition. Additional increases in
occupancy expense of $1.1 million and data processing expense of $280 thousand
for the quarter ended March 31, 2005, compared with the same period in 2004,
were also due primarily to the acquisition and integration of First Sentinel's
operations. As a result of the First Sentinel acquisition, the Company added 22
full-service branch locations, including the former headquarters building, which
now serves as the Provident Loan Center.
Partially offsetting these increases, advertising and promotions expense
declined $673,000 for the quarter ended March 31, 2005, compared with the same
period in 2004, as the Company continued to focus its efforts on expense
management. The Company's annualized non-interest expense as a percentage of
average assets improved to 1.98% for the quarter ended March 31, 2005, compared
with 2.54% for the same period in 2004. The efficiency ratio (non-interest
expense divided by the sum of net interest income and non-interest income)
improved to 58.8% for the quarter ended March 31, 2005, compared with 63.4% for
the same period in 2004.
Asset Quality
The Company continues to emphasize asset quality. Total non-performing loans as
of March 31, 2005 were $5.6 million, or 0.15% of total loans, compared to $6.2
million, or 0.17% of total loans at December 31, 2004, and $4.4 million, or
0.19% of total loans at March 31, 2004. At March 31, 2005, the Company's
allowance for loan losses was 0.92% of total loans, compared with 0.91% of total
loans at December 31, 2004, and 0.91% of total loans at March 31, 2004. The
Company did not record a provision for loan losses for the three months ended
March 31, 2005, as a result of improvements in asset quality, a decrease in
loans outstanding, and net recoveries during the period of $71 thousand. For the
three months ended March 31, 2004, the provision for loan losses totaled $600
thousand, while net charge-offs were $611 thousand.
About the Company
Provident Financial Services, Inc. is the holding company for The Provident
Bank, a community-oriented bank that offers a full range of retail and
commercial loan and deposit products. The Bank currently operates 78 full
service branches throughout northern and central New Jersey.
Post Earnings Conference Call
Representatives of the Company will hold a conference call for investors at
10:00 a.m. Eastern Time on April 28, 2005 regarding highlights of the Company's
first quarter 2005 financial results. The call can be accessed by dialing
1-800-798-2796 (Domestic) or 1-617-614-6204 (International) and stating the pass
code number: 53025851. Internet access to the call is also available (listen
only) at www.providentnj.com by going to Investor Relations and clicking on
Webcast.
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, 2005 (Unaudited) and December 31, 2004
(Dollars in Thousands)
Assets March 31, 2005 December 31, 2004
--------------------------------- ----------------------------
Cash and due from banks $ 137,556 $ 121,187
Federal funds sold 65,000 16,000
Short-term investments 33,666 26,507
--------------------------------- ----------------------------
Total cash and cash equivalents 236,222 163,694
--------------------------------- ----------------------------
Investment securities (market value of $429,194
at March 31, 2005 (unaudited) and $450,071
at December 31, 2004) 430,445 445,633
Securities available for sale, at fair value 1,305,927 1,406,340
Federal Home Loan Bank stock 46,002 48,283
Loans 3,678,695 3,707,211
Less allowance for loan losses 33,837 33,766
--------------------------------- ----------------------------
Net loans 3,644,858 3,673,445
--------------------------------- ----------------------------
Foreclosed assets, net 140 140
Banking premises and equipment, net 63,557 64,605
Accrued interest receivable 22,923 23,865
Intangible assets 441,068 443,148
Bank-owned life insurance 107,228 105,932
Other assets 61,106 58,237
--------------------------------- ----------------------------
Total assets $ 6,359,476 $ 6,433,322
================================= ============================
Liabilities and Stockholders' Equity
Deposits:
Demand deposits $ 1,115,840 $ 1,116,812
Savings deposits 1,532,906 1,538,466
Certificates of deposit of $100,000 or more 260,086 253,024
Other time deposits 1,143,071 1,142,171
--------------------------------- ----------------------------
Total deposits 4,051,903 4,050,473
Mortgage escrow deposits 20,363 15,389
Borrowed funds 1,109,489 1,166,064
Subordinated debentures 26,946 27,113
Other liabilities 37,700 37,507
--------------------------------- ----------------------------
Total liabilities 5,246,401 5,296,546
--------------------------------- ----------------------------
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,
79,879,017 shares issued and 72,585,746 shares outstanding at
March 31, 2005, and 79,879,017 shares issued and
74,078,784 shares outstanding at December 31, 2004 799 799
Additional paid-in capital 961,730 960,792
Retained earnings 368,543 358,678
Accumulated other comprehensive (loss) income (5,611) 3,767
Treasury stock at cost (97,907) (70,810)
Unallocated common stock held by Employee Stock
Ownership Plan (75,421) (76,101)
Common Stock acquired by the Stock Award Plan (39,058) (40,349)
Common Stock acquired by the Directors' Deferred Fee Plan (13,224) (13,379)
Deferred compensation - Directors' Deferred Fee Plan 13,224 13,379
--------------------------------- ----------------------------
Total stockholders' equity 1,113,075 1,136,776
--------------------------------- ----------------------------
Total liabilities and stockholders'
equity $ 6,359,476 $ 6,433,322
================================= ============================
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDAIRIES
Consolidated Statements of Income
Three Months Ended March 31, 2005 and 2004
(Dollars in Thousands)
Three Months Ended
March 31
-----------------------------
2005 2004
-------------- --------------
(Unaudited)
Interest income:
Real estate secured loans $ 38,278 $ 23,177
Commercial loans 4,953 3,887
Consumer loans 7,250 4,635
Investment securities 4,432 5,142
Securities available for sale 13,780 9,836
Other short-term investments 146 170
Federal funds 118 140
------------- --------------
Total interest income 68,957 46,987
------------- --------------
Interest expense:
Deposits 12,905 7,866
Borrowed funds 8,542 4,719
Subordinated debentures 345 --
------------- --------------
Total interest expense 21,792 12,585
------------- --------------
Net interest income 47,165 34,402
Provision for loan losses -- 600
------------- --------------
Net interest income after
provision for loan losses 47,165 33,802
------------- --------------
Non-interest income:
Fees 4,692 4,735
Net (loss) gain on securities transactions (131) 427
Bank-owned life insurance 1,296 987
Other income 313 1,507
------------- --------------
Total non-interest income 6,170 7,656
------------- --------------
Non-interest expense:
Compensation and employee benefits 17,044 14,408
Net occupancy expense 4,900 3,798
Data processing expense 2,120 1,840
Advertising and promotion expense 730 1,403
Amortization of intangibles 2,128 522
Other operating expenses 4,455 4,695
------------- --------------
Total non-interest expense 31,377 26,666
------------- --------------
Income before income tax expense 21,958 14,792
Income tax expense 6,936 4,498
------------- --------------
Net income $ 15,022 $ 10,294
============= ==============
Basic earnings per share $0.22 $0.19
Average basic shares outstanding 68,172,885 54,849,271
Diluted earnings per share $0.22 $0.19
Average diluted shares outstanding 68,934,081 54,895,895
PROVIDENT FINANCIAL SERVICES, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except share data) (Unaudited)
At or for the Three
Months Ended
March 31
--------
2005 2004
---- ----
INCOME STATEMENT:
Net interest income $47,165 $34,402
Provision for loan losses -- 600
Non-interest income 6,170 7,656
Non-interest expense 31,377 26,666
Income before income tax expense 21,958 14,792
Net income 15,022 10,294
Basic earnings per share $0.22 $0.19
Diluted earnings per share $0.22 $0.19
Interest rate spread 3.09% 3.12%
Net interest margin 3.38% 3.50%
PROFITABILITY:
Annualized return on average assets 0.95% 0.98%
Annualized return on average equity 5.34% 5.06%
Annualized non-interest expense to
average assets 1.98% 2.54%
Efficiency ratio (1) 58.83% 63.40%
ASSET QUALITY:
Non-performing loans $5,590 $4,382
Foreclosed assets 140 32
Non-performing loans to
total loans 0.15% 0.19%
Non-performing assets to
total assets 0.09% 0.10%
Allowance for loan losses $33,837 $20,620
Allowance for loan losses to
non-performing loans 605.31% 470.56%
Allowance for loan losses to
total loans 0.92% 0.91%
AVERAGE BALANCE SHEET DATA:
Assets $6,339,184 $4,230,184
Loans, net 3,654,614 2,204,793
Earning assets 5,554,271 3,948,659
Core deposits 2,597,502 1,742,035
Borrowings 1,168,448 688,484
Interest-bearing liabilities 4,698,182 3,034,511
Stockholders' equity 1,125,479 818,040
Average yield on interest-
earning assets 4.97% 4.79%
Average cost of interest-
bearing liabilities 1.88% 1.67%
Notes
(1) Efficiency Ratio Calculation
Three Months Ended
March 31
--------
2005 2004
---- ----
Net interest income $47,165 $34,402
Non-interest income 6,170 7,656
------- -------
Total income $53,335 $42,058
======= =======
Non-interest expense $31,377 $26,666
Expense/Income: 58.83% 63.40%
======= =======
Average Quarterly Balance
NET INTEREST MARGIN ANALYSIS
(Unaudited) (Dollars in Thousands) March 31, 2005 December 31, 2004
-------------- -----------------
Average Average Average Average
Balance Interest Yield Balance Interest Yield
--------------------------------------- ---------------------------------
Interest-Earning Assets:
Federal Funds Sold and
Other Short-Term Investments $ 46,234 $ 264 2.32% $ 31,015 $ 124 1.59%
Investment Securities (1) 439,877 4,432 4.04% 454,764 4,661 4.08%
Securities Available for Sale 1,366,170 13,392 3.92% 1,457,204 13,776 3.76%
Federal Home Loan Bank Stock 47,376 388 3.32% 50,754 296 2.32%
Net Loans (2)
Total Mortgage Loans 2,785,029 38,278 5.50% 2,856,170 39,313 5.48%
Total Commercial Loans 348,828 4,953 5.68% 343,923 5,025 5.81%
Total Consumer Loans 520,757 7,250 5.63% 511,890 7,136 5.55%
------------- ----------- ---------- ---------
Total Interest-Earning Assets $ 5,554,271 68,957 4.97% $ 5,705,720 70,331 4.90%
------------- ----------- ---------- ---------
Non-Interest Earning Assets:
Cash and Due from Banks 102,229 107,695
Other Assets 682,684 672,192
------------- ----------
Total Assets $ 6,339,184 $ 6,485,607
============= ==========
Interest-Bearing Liabilities:
Demand Deposits $ 615,272 1,196 0.79% $ 639,244 1,131 0.70%
Savings Deposits 1,518,618 3,622 0.97% 1,546,669 3,684 0.95%
Time Deposits 1,395,844 8,087 2.35% 1,402,534 7,568 2.15%
------------- ----------- ---------- ---------
Total Deposits 3,529,734 12,905 1.48% 3,588,447 12,383 1.37%
------------- ----------- ---------- ---------
Borrowed Funds 1,168,448 8,887 3.08% 1,246,652 9,418 3.01%
------------- ----------- ---------- ---------
Total Borrowings 1,168,448 8,887 3.08% 1,246,652 9,418 3.01%
------------- ----------- ---------- ---------
Total Interest-Bearing Liabilities $ 4,698,182 21,792 1.88% $ 4,835,099 21,801 1.79%
------------- ----------- ---------- ---------
Non-Interest Bearing Liabilities 515,523 522,361
------------- ----------
Total Liabilities 5,213,705 5,357,460
Stockholders' Equity 1,125,479 1,128,147
------------- ----------
Total Liabilities & Stockholders'
Equity $ 6,339,184 $ 6,485,607
============= ==========
Net interest income $ 47,165 $ 48,530
=========== =========
Net interest rate spread 3.09% 3.11%
==== ====
Net interest-earning assets $ 856,089 $ 870,621
============= ==========
Net interest margin (3) 3.38% 3.38%
==== ====
Ratio of interest-earning assets to
interest-bearing liabilities 1.18x 1.18x
============= ==========
<FN>
- ----------------------------------------------
(1) Average outstanding balance amounts shown are amortized cost.
(2) Average outstanding balances are 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>
The following table summarizes the net interest margin for the previous year,
inclusive.
3/31/05 12/31/04 9/30/04 6/30/04 3/31/04
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
-------- -------- -------- -------- --------
Interest-Earning Assets:
Securities 3.90% 3.76% 3.79% 3.16% 3.53%
Net Loans 5.53% 5.52% 5.55% 5.62% 5.78%
Total Interest-Earning Assets 4.97% 4.90% 4.89% 4.58% 4.79%
Interest-Bearing Liabilities:
Total Deposits 1.48% 1.37% 1.29% 1.35% 1.35%
Total Borrowings 3.08% 3.01% 2.94% 2.83% 2.76%
Total Interest-Bearing Liabilities 1.88% 1.79% 1.70% 1.69% 1.67%
Interest Rate Spread 3.09% 3.11% 3.19% 2.89% 3.12%
Net Interest Margin 3.38% 3.38% 3.43% 3.28% 3.50%
Ratio of interest-earning assets to
total interest-bearing liabilities 1.18x 1.18x 1.17x 1.30x 1.30x