Provident Financial Services, Inc. Announces 60% Increase in Quarterly
Earnings, Third Stock Repurchase Program and Quarterly Cash Dividend
JERSEY CITY, NJ, July 28, 2005 - Provident Financial Services, Inc. (NYSE:PFS)
(the "Company") reported net income of $13.8 million for the three months ended
June 30, 2005 and $28.8 million for the six months ended June 30, 2005, compared
to $8.6 million and $18.9 million for the same periods in 2004. This represented
increases of $5.2 million, or 60.5%, and $9.9 million, or 52.5%, compared with
the three and six months ended June 30, 2004, respectively. Basic and diluted
earnings per share were $0.21 and $0.20, respectively, for the quarter and $0.43
and $0.42, respectively, for the six months ended June 30, 2005, compared to
basic and diluted earnings per share of $0.16 for the quarter and $0.34 for the
six months ended June 30, 2004.
The 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. Second quarter 2005
earnings were also impacted by the acceptance of a Voluntary Resignation
Initiative ("VRI") by certain officers of the Company, which resulted in an
after-tax charge of $815,000, or $0.01 per share.
Paul M. Pantozzi, Chairman and Chief Executive Officer, commented, "Given the
flatness of the yield curve and pricing pressures experienced on both sides of
the balance sheet, our net interest margin compressed slightly during the second
quarter. We addressed this by maintaining a disciplined pricing structure for
both loans and deposits, albeit at the expense of some growth."
Pantozzi added, "We also maintained our commitment to improve long-term
management of operating expenses. In particular, the Voluntary Resignation
Initiative, which was effective as of June 30, 2005, will favorably impact our
staffing cost structure going forward."
Authorization of Third Stock Repurchase Program
On July 27, 2005, the Company's Board of Directors authorized the Company's
third stock repurchase program. This program will commence upon completion of
the Company's current repurchase program, under which 683,000 shares remain to
be purchased. Under the new authorization, the Company may repurchase 5% of the
amount of shares of common stock currently outstanding, or approximately 3.6
million shares. 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.
Declaration of Quarterly Dividend
The Company's Board of Directors declared a quarterly cash dividend of $0.08 per
common share payable on August 31, 2005 to stockholders of record as of the
close of business on August 12, 2005.
Balance Sheet Summary
Total assets were $6.29 billion at June 30, 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 $192.0 million, or 10.1%, during the six months
ended June 30, 2005. The decrease was primarily attributable to paydowns on
mortgage-backed securities and maturities of debt securities. In addition, the
Company sold $30.5 million of mortgage-backed securities during the period as
part of its ongoing interest rate risk management process.
The Company's net loans decreased $23.1 million, or 0.6%, during the six months
ended June 30, 2005, primarily as a result of the categorization of $18.7
million in fixed-rate residential mortgage loans as held for sale. The Company
had a commitment to sell these loans at June 30, 2005. The planned loan sale is
another component of the Company's ongoing interest rate risk management
process.
Partially offsetting these declines, cash and cash equivalents increased $45.8
million, or 28.0%, during the six months ended June 30, 2005, pending deployment
into higher-yielding asset categories.
Borrowed funds decreased $66.3 million, or 5.7%, during the six months ended
June 30, 2005, as a result of maturities and paydowns on amortizing obligations.
Total deposits decreased $54.9 million, or 1.4%, during the six months ended
June 30, 2005. Total deposits were $4.00 billion at June 30, 2005, with core
deposits, consisting of savings and demand deposit accounts, representing 65.2%
of total deposits.
Treasury stock increased $54.8 million for the year-to-date. Common stock
repurchases for the three and six months ended June 30, 2005 totaled 1.6 million
shares at an average cost of $17.76 per share, and 3.1 million shares at an
average cost of $17.90 per share, respectively. At June 30, 2005, book value per
share and tangible book value per share were $15.50 and $9.32, respectively. An
additional 683,000 shares remain eligible for repurchase under the current
common stock repurchase authorization.
Results of Operations
Net Interest Margin
The net interest margin was 3.34% for the quarter ended June 30, 2005 and 3.38%
for the quarter ended March 31, 2005. This was an increase of six basis points
compared with the net interest margin of 3.28% for the quarter ended June 30,
2004. The weighted average rate for interest-earning assets was 5.01% for the
three months ended June 30, 2005, compared with 4.97% for the trailing quarter
and 4.58% for the three months ended June 30, 2004. The weighted average rate
for interest-bearing liabilities was 1.97% for the quarter ended June 30, 2005,
compared with 1.88% for the trailing quarter and 1.69% for the second quarter of
2004.
For the six months ended June 30, 2005, the net interest margin was 3.36%. This
was a decrease of three basis points compared with the net interest margin of
3.39% for the six months ended June 30, 2004. The weighted average rate for
interest-earning assets was 4.99% for the six months ended June 30, 2005,
compared with 4.68% for the six months ended June 30, 2004. The weighted average
rate for interest-bearing liabilities was 1.93% for the six months ended June
30, 2005, compared with 1.68% for the six months ended June 30, 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 $7.6 million for the quarter ended June 30, 2005, an
increase of $836,000, or 12.4%, compared to the same period in 2004. Fee income
increased $1.2 million for the quarter ended June 30, 2005, compared with the
same period in 2004, primarily as a result of an increase in loan and retail
fees of $308,000, an increase of $358,000 in checking and retail deposit fees
and an increase of $145,000 in ATM and debit card income. In addition, income on
bank-owned life insurance ("BOLI") increased $305,000 for the three months ended
June 30, 2005, compared with the second quarter of 2004, primarily as a result
of additional BOLI acquired from First Sentinel in the July 2004 merger.
Partially offsetting these increases, net gains on securities sales decreased
$239,000 for the quarter ended June 30, 2005, compared with the same period in
2004, and other income decreased $467,000 for the quarter ended June 30, 2005,
compared with the same period in 2004.
For the year-to-date, non-interest income totaled $13.7 million, a decrease of
$650,000, or 4.5%, compared to the same period in 2004. Increases in fee income
of $1.2 million and BOLI income of $614,000 were more than offset by a reduction
in securities gains of $797,000 and a decline in other income of $1.7 million.
Other income for the six months ended June 30, 2005 included losses on loan
sales of $10,000, compared with gains of $1.3 million recorded in 2004.
Non-Interest Expense
For the three months ended June 30, 2005, non-interest expense increased $7.2
million, or 27.4%, to $33.2 million, compared to $26.1 million for the three
months ended June 30, 2004. Compensation and employee benefits expense increased
$3.8 million for the quarter ended June 30, 2005, compared with the same period
in 2004, due primarily to increased headcount as a result of the First Sentinel
acquisition. The Company employed 913 full-time equivalent employees at June 30,
2005, compared with 695 full-time equivalent employees at June 30, 2004. In
addition, the Company recorded a charge of $1.4 million in 2005 in connection
with the VRI. Amortization of intangibles increased $1.3 million for the quarter
ended June 30, 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 $383,000 for the quarter ended
June 30, 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 $167,000 for the quarter ended June 30, 2005,
compared with the same period in 2004.
For the six months ended June 30, 2005, non-interest expense increased $11.9
million, or 22.5%, to $64.6 million, compared to $52.7 million for the six
months ended June 30, 2004. Compensation and employee benefits expense increased
$6.5 million for the six months ended June 30, 2005, compared with the same
period in 2004, as a result of increased staffing and the $1.4 million VRI
expense. Amortization of intangibles increased $2.9 million for the six months
ended June 30, 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 $2.2 million and data processing expense of $663,000 for the six months ended
June 30, 2005, compared with the same period in 2004, were also due primarily to
the acquisition and integration of First Sentinel's operations. Partially
offsetting these increases, advertising and promotions expense declined $840,000
for the six months ended June 30, 2005, compared with the same period in 2004.
The Company's annualized non-interest expense as a percentage of average assets
improved to 2.1% for the quarter ended June 30, 2005, compared with 2.5% for the
same period in 2004. For the six months ended June 30, 2005, annualized
non-interest expense as a percentage of average assets was 2.1%, compared with
2.5% 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
62.1% for the quarter ended June 30, 2005, compared with 66.5% for the same
period in 2004. For the six months ended June 30, 2005, the efficiency ratio was
60.5%, compared with 64.9% for the same period in 2004.
Asset Quality
The Company continues to emphasize asset quality. Total non-performing loans as
of June 30, 2005 were $7.3 million, or 0.20% of total loans, compared to $6.2
million, or 0.17% of total loans at December 31, 2004, and $4.0 million, or
0.17% of total loans at June 30, 2004. At June 30, 2005, the Company's allowance
for loan losses was 0.91% of total loans, compared with 0.91% of total loans at
December 31, 2004, and 0.88% of total loans at June 30, 2004. The Company
recorded a $400,000 provision for loan losses for the three and six months ended
June 30, 2005, compared with provisions of $1.1 million and $1.7 million for the
three and six months ended June 30, 2004, respectively. For the three and six
months ended June 30, 2005, net charge-offs totaled $884,000 and $813,000,
respectively, compared with net charge-offs of $750,000 and $1.4 million for the
same respective periods in 2004.
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 July 28, 2005 regarding highlights of the Company's
second quarter 2005 financial results. The call may be accessed by dialing
1-800-798-2884 (Domestic) or 1-617-614-6207 (International) and stating the pass
code number: 39243491. 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 SUBSIDIARY
Consolidated Statements of Condition
June 30, 2005 (Unaudited) and December 31, 2004
(Dollars in Thousands)
Assets June 30, 2005 December 31, 2004
--------------------------------- ----------------------------
Cash and due from banks $ 140,967 $ 121,187
Federal funds sold 54,000 16,000
Short-term investments 14,531 26,507
--------------------------------- ----------------------------
Total cash and cash equivalents 209,498 163,694
--------------------------------- ----------------------------
Investment securities (market value of $439,601
at June 30, 2005 (unaudited) and $450,071
at December 31, 2004) 435,249 445,633
Securities available for sale, at fair value 1,227,790 1,406,340
Federal Home Loan Bank stock 45,254 48,283
Loans held for sale 18,650 --
Loans 3,683,736 3,707,211
Less allowance for loan losses 33,353 33,766
--------------------------------- ----------------------------
Net loans 3,650,383 3,673,445
--------------------------------- ----------------------------
Foreclosed assets, net 584 140
Banking premises and equipment, net 63,365 64,605
Accrued interest receivable 23,031 23,865
Intangible assets 438,996 443,148
Bank-owned life insurance 108,484 105,932
Other assets 67,470 58,237
--------------------------------- ----------------------------
Total assets $ 6,288,754 $ 6,433,322
================================= ============================
Liabilities and Stockholders' Equity
Deposits:
Demand deposits $ 1,105,476 $ 1,116,812
Savings deposits 1,500,893 1,538,466
Certificates of deposit of $100,000 or more 266,563 253,024
Other time deposits 1,122,657 1,142,171
--------------------------------- ----------------------------
Total deposits 3,995,589 4,050,473
Mortgage escrow deposits 21,223 15,389
Borrowed funds 1,099,790 1,166,064
Subordinated debentures 26,778 27,113
Other
liabilities 44,237 37,507
--------------------------------- ----------------------------
Total liabilities 5,187,617 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 71,028,196 shares outstanding at
June 30, 2005, and 79,879,017 shares issued and
74,078,784 shares outstanding at December 31, 2004 799 799
Additional paid-in capital 962,643 960,792
Retained earnings 376,449 358,678
Accumulated other comprehensive (loss) income (679) 3,767
Treasury stock at cost (125,565) (70,810)
Unallocated common stock held by Employee Stock
Ownership Plan (74,742) (76,101)
Common Stock acquired by the Stock Award Plan (37,768) (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 1,101,137 1,136,776
--------------------------------- ----------------------------
Total liabilities and stockholders'
equity $ 6,288,754 $ 6,433,322
================================= ============================
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Income
Three and Six Months Ended June 30, 2005 and 2004
(Dollars in Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
June 30 June 30
----------------------------- ----------------------------
2005 2004 2005 2004
------------- --------------- ------------- --------------
(Unaudited) (Unaudited)
Interest income:
Real estate secured loans $ 38,636 $ 23,539 $ 76,914 $ 47,305
Commercial loans 5,283 3,728 10,236 7,026
Consumer loans 7,251 4,761 14,501 9,396
Investment securities 4,218 4,581 8,650 9,723
Securities available for sale 12,850 8,344 26,630 18,180
Other short-term investments 170 130 316 300
Federal funds 418 234 536 374
------------- --------------- ------------- --------------
Total interest income 68,826 45,317 137,783 92,304
------------- --------------- ------------- --------------
Interest expense:
Deposits 14,111 7,936 27,016 15,802
Borrowed funds 8,385 4,885 16,927 9,604
Subordinated debentures 359 -- 704 --
------------- --------------- ------------- --------------
Total interest expense 22,855 12,821 44,647 25,406
------------- --------------- ------------- --------------
Net interest income 45,971 32,496 93,136 66,898
Provision for loan losses 400 1,050 400 1,650
------------- --------------- ------------- --------------
Net interest income after
provision for loan losses 45,571 31,446 92,736 65,248
------------- --------------- ------------- --------------
Non-interest income:
Fees 6,185 4,948 10,877 9,683
Net gain (loss) on securities transactions 69 308 (62) 735
Bank-owned life insurance 1,256 951 2,552 1,938
Other income 42 509 355 2,016
------------- --------------- ------------- --------------
Total non-interest income 7,552 6,716 13,722 14,372
------------- --------------- ------------- --------------
Non-interest expense:
Compensation and employee benefits 17,921 14,074 34,965 28,482
Net occupancy expense 4,781 3,720 9,681 7,518
Data processing expense 2,207 1,824 4,327 3,664
Advertising and promotion expense 1,474 1,641 2,204 3,044
Amortization of intangibles 1,858 573 3,986 1,095
Other operating expenses 4,987 4,245 9,442 8,940
------------- --------------- ------------- --------------
Total non-interest expense 33,228 26,077 64,605 52,743
------------- --------------- ------------- --------------
Income before income tax expense 19,895 12,085 41,853 26,877
Income tax expense 6,126 3,504 13,062 8,002
------------- --------------- ------------- --------------
Net income $ 13,769 $ 8,581 $ 28,791 $ 18,875
============= =============== ============= ==============
Basic earnings per share $0.21 $0.16 $0.43 $0.34
Average basic shares outstanding 66,724,470 54,924,643 67,444,677 54,791,399
Diluted earnings per share $0.20 $0.16 $0.42 $0.34
Average diluted shares outstanding 67,479,362 54,924,725 68,202,721 54,791,440
PROVIDENT FINANCIAL SERVICES, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except share data) (Unaudited)
At or for the Three At or for the Six
Months Ended Months Ended
June 30 June 30
-------------------------------------------------------------
2005 2004 2005 2004
---- ---- ---- ----
INCOME STATEMENT:
Net interest income $45,971 $32,496 $93,136 $66,898
Provision for loan losses 400 1,050 400 1,650
Non-interest income 7,552 6,716 13,722 14,372
Non-interest expense 33,228 26,077 64,605 52,743
Income before income tax expense 19,895 12,085 41,853 26,877
Net income 13,769 8,581 28,791 18,875
Basic earnings per share $0.21 $0.16 $0.43 $0.34
Diluted earnings per share $0.20 $0.16 $0.42 $0.34
Interest rate spread 3.04% 2.89% 3.06% 3.00%
Net interest margin 3.34% 3.28% 3.36% 3.39%
PROFITABILITY:
Annualized return on average assets 0.88% 0.81% 0.92% 0.89%
Annualized return on average equity 4.98% 4.21% 5.20% 4.65%
Annualized non-interest expense to
average assets 2.12% 2.45% 2.07% 2.50%
Efficiency ratio (1) 62.08% 66.50% 60.46% 64.90%
ASSET QUALITY:
Non-performing loans $7,345 $3,986
Foreclosed assets 584 32
Non-performing loans to
total loans 0.20% 0.17%
Non-performing assets to
total assets 0.13% 0.09%
Allowance for loan losses $33,353 $20,920
Allowance for loan losses to
non-performing loans 454.09% 524.84%
Allowance for loan losses to
total loans 0.91% 0.88%
AVERAGE BALANCE SHEET DATA:
Assets $6,274,548 $4,252,727 $6,306,501 $4,241,480
Loans, net 3,660,106 2,290,966 3,657,375 2,247,879
Earning assets 5,489,415 3,981,525 5,521,664 3,965,092
Core deposits 2,590,589 1,768,765 2,594,026 1,755,395
Borrowings 1,124,017 693,534 1,146,110 691,009
Interest-bearing liabilities 4,645,019 3,058,327 4,671,454 3,046,419
Stockholders' equity 1,106,380 814,845 1,115,876 816,443
Average yield on interest-
earning assets 5.01% 4.58% 4.99% 4.68%
Average cost of interest-
bearing liabilities 1.97% 1.69% 1.93% 1.68%
Notes
(1) Efficiency Ratio Calculation
Three Months Ended June 30 Six Months Ended June 30
-------------------------- ------------------------
2005 2004 2005 2004
---- ---- ---- ----
Net interest income $ 45,971 $ 32,496 $ 93,136 $ 66,898
Non-interest income 7,552 6,716 13,722 14,372
--------- --------- --------- ---------
Total income $ 53,523 $ 39,212 $ 106,858 $ 81,270
======= ====== ======= ======
Non-interest expense $ 33,228 $ 26,077 $ 64,605 $ 52,743
====== ====== ====== ======
Expense/Income: 62.08% 66.50% 60.46% 64.90%
====== ====== ====== ======
Average Quarterly Balances
NET INTEREST MARGIN ANALYSIS
(Unaudited) (Dollars in Thousands) June 30, 2005 March 31, 2005
------------- --------------
Average Average Average Average
Balance Interest Yield Balance Interest Yield
--------------------------------------- ---------------------------------
Interest-Earning Assets:
Federal Funds Sold and
Other Short-Term Investments $ 82,202 $ 588 2.87% $ 46,234 $ 264 2.32%
Investment Securities (1) 425,340 4,218 3.97% 439,877 4,432 4.04%
Securities Available for Sale 1,276,344 12,302 3.86% 1,366,170 13,392 3.92%
Federal Home Loan Bank Stock 45,423 548 4.84% 47,376 388 3.32%
Net Loans (2)
Total Mortgage Loans 2,772,638 38,636 5.57% 2,785,029 38,278 5.50%
Total Commercial Loans 356,216 5,283 5.87% 348,828 4,953 5.68%
Total Consumer Loans 531,252 7,251 5.47% 520,757 7,250 5.63%
------------- ------------ ----------- ----------
Total Interest-Earning Assets 5,489,415 68,826 5.01% 5,554,271 68,957 4.97%
------------- ------------ ----------- ----------
Non-Interest Earning Assets:
Cash and Due from Banks 101,294 102,229
Other Assets 683,839 682,684
------------- -----------
Total Assets $ 6,274,548 $ 6,339,184
============= ===========
Interest-Bearing Liabilities:
Demand Deposits $ 606,275 1,245 0.82% $ 615,272 1,196 0.79%
Savings Deposits 1,520,867 4,004 1.06% 1,518,618 3,622 0.97%
Time Deposits 1,393,860 8,862 2.55% 1,395,844 8,087 2.35%
------------- ------------ ----------- ----------
Total Deposits 3,521,002 14,111 1.61% 3,529,734 12,905 1.48%
------------- ------------ ----------- ----------
Borrowed Funds 1,124,017 8,744 3.12% 1,168,448 8,887 3.08%
------------- ------------ ----------- ----------
Total Borrowings 1,124,017 8,744 3.12% 1,168,448 8,887 3.08%
------------- ------------ ----------- ----------
Total Interest-Bearing Liabilities 4,645,019 22,855 1.97% 4,698,182 21,792 1.88%
------------- ------------ ----------- ----------
Non-Interest Bearing Liabilities 523,149 515,523
------------- -----------
Total Liabilities 5,168,168 5,213,705
Stockholders' Equity 1,106,380 1,125,479
------------- -----------
Total Liabilities & Stockholders'
Equity $ 6,274,548 $ 6,339,184
============= ===========
Net interest income $ 45,971 $ 47,165
============ ==========
Net interest rate spread 3.04% 3.09%
==== ====
Net interest-earning assets $ 844,396 $ 856,089
============= ===========
Net interest margin (3) 3.34% 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) Annualized net interest income divided by average interest-earning
assets.
</FN>
The following table summarizes the quarterly net interest margin for the
previous year, inclusive.
6/30/05 3/31/05 12/31/04 9/30/04 6/30/04
2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr.
-------- -------- -------- -------- --------
Interest-Earning Assets:
Securities 3.86% 3.90% 3.76% 3.79% 3.16%
Net Loans 5.58% 5.53% 5.52% 5.55% 5.62%
Total Interest-Earning Assets 5.01% 4.97% 4.90% 4.89% 4.58%
Interest-Bearing Liabilities:
Total Deposits 1.61% 1.48% 1.37% 1.29% 1.35%
Total Borrowings 3.12% 3.08% 3.01% 2.94% 2.83%
Total Interest-Bearing Liabilities 1.97% 1.88% 1.79% 1.70% 1.69%
Interest Rate Spread 3.04% 3.09% 3.11% 3.19% 2.89%
Net Interest Margin 3.34% 3.38% 3.38% 3.43% 3.28%
Ratio of Interest-Earning Assets to
Total Interest-Bearing Liabilities 1.18x 1.18x 1.18x 1.17x 1.30x
Average YTD Balances
NET INTEREST MARGIN ANALYSIS
(Unaudited) (Dollars in Thousands) June 30, 2005 June 30, 2004
------------- -------------
Average Average Average Average
Balance Interest Yield Balance Interest Yield
--------------------------------------- ---------------------------------
Interest-Earning Assets:
Federal Funds Sold and
Other Short-Term Investments $ 64,317 $ 852 2.67% $ 131,214 $ 674 1.03%
Investment Securities (1) 432,569 8,650 4.01% 504,858 9,723 3.87%
Securities Available for Sale 1,321,009 25,694 3.89% 1,048,455 17,935 3.44%
Federal Home Loan Bank Stock 46,394 936 4.07% 32,686 245 1.51%
Net Loans (2)
Total Mortgage Loans 2,779,021 76,914 5.53% 1,637,212 47,305 5.81%
Total Commercial Loans 352,667 10,236 5.77% 296,808 7,026 4.76%
Total Consumer Loans 525,687 14,501 5.56% 313,859 9,396 6.02%
------------- ----------- ---------- ----------
Total Interest-Earning Assets 5,521,664 137,783 4.99% 3,965,092 92,304 4.68%
------------- ----------- ---------- ----------
Non-Interest Earning Assets:
Cash and Due from Banks 101,759 82,814
Other Assets 683,078 193,574
------------- ----------
Total Assets $ 6,306,501 $ 4,241,480
============= ==========
Interest-Bearing Liabilities:
Demand Deposits $ 610,748 2,441 0.81% $ 431,703 1,613 0.75%
Savings Deposits 1,519,749 7,626 1.01% 984,036 4,362 0.89%
Time Deposits 1,394,847 16,949 2.45% 939,671 9,827 2.10%
------------- ----------- ---------- ----------
Total Deposits 3,525,344 27,016 1.55% 2,355,410 15,802 1.35%
------------- ----------- ---------- ----------
Borrowed Funds 1,146,110 17,631 3.10% 691,009 9,604 2.79%
------------- ----------- ---------- ----------
Total Borrowings 1,146,110 17,631 3.10% 691,009 9,604 2.79%
------------- ----------- ---------- ----------
Total Interest-Bearing Liabilities 4,671,454 44,647 1.93% 3,046,419 25,406 1.68%
------------- ----------- ---------- ----------
Non-Interest Bearing Liabilities 519,171 378,618
------------- ----------
Total Liabilities 5,190,625 3,425,037
Stockholders' Equity 1,115,876 816,443
------------- ----------
Total Liabilities & Stockholders'
Equity $ 6,306,501 $ 4,241,480
============= ==========
Net interest income $ 93,136 $ 66,898
=========== =========
Net interest rate spread 3.06% 3.00%
==== ====
Net interest-earning assets $ 850,210 $ 918,673
============= ==========
Net interest margin (3) 3.36% 3.39%
==== ====
Ratio of interest-earning assets to
interest-bearing liabilities 1.18x 1.30x
============= ==========
- ----------------------------------------------
<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) Annualized net interest income divided by average interest-earning
assets.
</FN>
The following table summarizes the YTD net interest margin for the previous
three years, inclusive.
Six Months Ended
----------------------------------------
6/30/05 6/30/04 6/30/03
------- ------- -------
Interest-Earning Assets:
Securities 3.88% 3.35% 3.46%
Net Loans 5.56% 5.70% 6.43%
Total Interest-Earning Assets 4.99% 4.68% 5.00%
Interest-Bearing Liabilities:
Total Deposits 1.55% 1.35% 1.91%
Total Borrowings 3.10% 2.79% 2.75%
Total Interest-Bearing Liabilities 1.93% 1.68% 2.05%
Interest Rate Spread 3.06% 3.00% 2.94%
Net Interest Margin 3.36% 3.39% 3.46%
Ratio of Interest-Earning Assets to
Total Interest-Bearing Liabilities 1.18x 1.30x 1.34x