NEWS RELEASE
CONTACT: Kenneth J. Wagner, SVP Investor Relations
Provident Financial Services, Inc.
(201) 915-5344
FOR RELEASE 7:43 A.M. Eastern Time: October 28, 2005
Provident Financial Services, Inc. Announces 18% Increase in Quarterly
Earnings Per Share and Declares Increased Quarterly Cash Dividend
JERSEY CITY, NJ, October 28 /PRNewswire-First Call/ - Provident Financial
Services, Inc. (NYSE:PFS) (the "Company") reported basic and diluted earnings
per share of $0.23 for the quarter ended September 30, 2005, representing
increases of 17.8% and 17.5%, respectively, compared to basic and diluted
earnings per share of $0.19 for the quarter ended September 30, 2004. Basic and
diluted earnings per share were $0.66 and $0.65, respectively, for the nine
months ended September 30, 2005, representing increases of 20.9% and 20.0%,
respectively, compared to basic and diluted earnings per share of $0.54 for the
nine months ended September 30, 2004. Net income for the three months ended
September 30, 2005 totaled $14.9 million, an increase of $1.6 million, or 11.9%,
compared to $13.3 million reported for the same period in 2004. Net income was
$43.7 million for the nine months ended September 30, 2005, an increase of $11.5
million, or 35.7%, compared to $32.2 million for the same period in 2004.
The earnings and per share data 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, from the July 14, 2004 merger date.
Earnings for the nine months ended September 30, 2005 were also impacted by the
acceptance of a Voluntary Resignation Initiative ("VRI") by certain officers of
the Company in the second quarter of 2005, which resulted in an after-tax charge
of $815,000. Third quarter and nine months 2004 earnings were impacted by
one-time expenses related to the merger and integration of First Sentinel's
operations of approximately $870,000, net of tax.
Paul M. Pantozzi, Chairman and Chief Executive Officer, commented, "Our third
quarter results reflect our disciplined response to the challenges of the
current operating environment. As the yield curve continued to flatten, we
remained competitive but not aggressive in our pricing of both loans and
deposits in order to minimize compression of our net interest margin. We viewed
this as a strategic priority as opposed to balance sheet growth for its own
sake. We remained similarly disciplined in our ongoing management of
non-interest expense toward the goal of improvement in our operating efficiency.
Finally, our capital management strategy has remained on track, as evidenced by
the repurchase of 1.6 million shares during the quarter and the Board's approval
of an increased cash dividend."
Declaration of Quarterly Dividend
The Company's Board of Directors declared a quarterly cash dividend of $0.09 per
common share, an increase of 12.5% from the prior quarter's cash dividend of
$0.08 per share, payable on November 30, 2005, to stockholders of record as of
the close of business on November 14, 2005.
Balance Sheet Summary
Total assets were $6.18 billion at September 30, 2005, compared to $6.43 billion
at December 31, 2004, as reductions in securities balances were used to fund
repayments of borrowings, net deposit outflows and common stock repurchases.
Total investments decreased $265.7 million, or 14.0%, during the nine months
ended September 30, 2005. The decrease was primarily attributable to paydowns on
mortgage-backed securities and maturities of debt securities. In addition, the
Company sold $32.7 million of primarily mortgage-backed securities during the
period as part of its ongoing interest rate risk management process.
The Company's net loans decreased $26.2 million, or 0.7%, during the nine months
ended September 30, 2005, despite loan originations of $841.1 million and
purchases of $110.0 million, as loan repayments continued at an accelerated
pace. Further contributing to this decline, the Company sold $31.5 million in
20- and 30- year fixed-rate residential mortgage loans during the nine months
ended September 30, 2005, as another component of the Company's ongoing interest
rate risk management process.
At September 30, 2005, the Company's unfunded loan pipeline totaled $793.8
million, including $318.7 million in construction loan commitments, $172.5
million in commercial loan commitments and $89.5 million in commercial mortgage
commitments. This compares with an unfunded loan pipeline of $730.9 million at
June 30, 2005.
Cash and cash equivalents increased $33.1 million, or 20.2%, during the nine
months ended September 30, 2005, pending deployment into higher-yielding asset
categories and/or repayment of maturing borrowings.
Borrowed funds decreased $117.7 million, or 10.1%, during the nine months ended
September 30, 2005, as a result of maturities and paydowns on amortizing
obligations.
Total deposits decreased $86.1 million, or 2.1%, during the nine months ended
September 30, 2005. Total deposits were $3.96 billion at September 30, 2005,
with core deposits, consisting of savings and demand deposit accounts,
representing 64.6% of total deposits.
Treasury stock increased $83.3 million for the year-to-date. Common stock
repurchases for the three and nine months ended September 30, 2005, totaled 1.6
million shares at an average cost of $17.82 per share, and 4.7 million shares at
an average cost of $17.87 per share, respectively. At September 30, 2005, book
value per share and tangible book value per share were $15.55 and $9.24,
respectively. An additional 2.7 million shares remain eligible for repurchase
under the current common stock repurchase authorization.
Results of Operations
Net Interest Margin
The net interest margin compressed three basis points to 3.31% for the quarter
ended September 30, 2005, from 3.34% for the quarter ended June 30, 2005. This
was a decrease of 12 basis points compared with the net interest margin of 3.43%
for the quarter ended September 30, 2004. The weighted average rate for
interest-earning assets was 5.11% for the three months ended September 30, 2005,
compared with 5.01% for the trailing quarter and 4.89% for the three months
ended September 30, 2004. The weighted average rate for interest-bearing
liabilities was 2.13% for the quarter ended September 30, 2005, compared with
1.97% for the trailing quarter and 1.70% for the third quarter of 2004.
For the nine months ended September 30, 2005, the net interest margin was 3.35%.
This was a decrease of six basis points compared with the net interest margin of
3.41% for the nine months ended September 30, 2004. The weighted average rate
for interest-earning assets was 5.03% for the nine months ended September 30,
2005, compared with 4.77% for the nine months ended September 30, 2004. The
weighted average rate for interest-bearing liabilities was 1.99% for the nine
months ended September 30, 2005, compared with 1.69% for the nine months ended
September 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 $7.8 million for the quarter ended September 30,
2005, a decrease of $380,000, or 4.6%, compared to the same period in 2004. An
increase of $531,000 in fee income for the quarter ended September 30, 2005,
compared with the same period in 2004, was more than offset by a decrease in net
gains on securities sales of $364,000 and a $578,000 decrease in other income.
The increase in fee income was primarily attributable to loan prepayment fees
and fees related to the outsourcing of the official check function. The
reduction in other income was primarily attributable to the recognition of
losses on loan sales of $221,000 during the quarter ended September 30, 2005,
compared with gains of $90,000 realized during the same period in 2004.
For the year-to-date, non-interest income totaled $21.5 million, a decrease of
$1.0 million, or 4.6%, compared to the same period in 2004. Increases in fee
income of $1.7 million and income on Bank Owned Life Insurance ("BOLI") of
$645,000 were more than offset by a reduction in securities gains of $1.2
million and a decline in other income of $2.2 million. The increase in fee
income was primarily attributable to loan prepayment fees, ATM and debit card
income, fees related to the outsourcing of the official check function and
mortgage servicing fees. The increase in BOLI income was primarily a result of
additional BOLI acquired from First Sentinel in the July 2004 merger. Other
income for the nine months ended September 30, 2005, included losses on loan
sales of $231,000, compared with gains of $1.4 million recorded in 2004.
Non-Interest Expense
For the three months ended September 30, 2005, non-interest expense decreased
$4.3 million, or 12.6%, to $30.0 million, compared to $34.3 million for the
three months ended September 30, 2004. Compensation and employee benefits
expense decreased $2.6 million for the quarter ended September 30, 2005,
compared with the same period in 2004, due primarily to reductions in staff and
executive severance costs recorded in 2004. The Company employed 895 full-time
equivalent employees at September 30, 2005, compared with 961 full-time
equivalent employees at September 30, 2004. Advertising expense decreased
$767,000 for the quarter ended September 30, 2005, compared with the same period
in 2004, largely as a result of the cost of customer communications associated
with the integration of the First Sentinel business in 2004. Amortization of
intangibles decreased $358,000 for the quarter ended September 30, 2005,
compared with the same period in 2004, primarily as a result of the conclusion
of the amortization of a core deposit intangible from an earlier acquisition.
Furthermore, other non-interest expense decreased $521,000 for the quarter ended
September 30, 2005, compared with the same period in 2004, with significant
reductions noted in consultant fees and printing and supplies expense.
For the nine months ended September 30, 2005, non-interest expense increased
$7.6 million, or 8.7%, to $94.6 million, compared to $87.1 million for the nine
months ended September 30, 2004. Compensation and employee benefits expense
increased $3.8 million for the nine months ended September 30, 2005, compared
with the same period in 2004, as a result of increased staffing following the
First Sentinel acquisition and a $1.4 million expense recognized in the second
quarter of 2005 in connection with the VRI. Amortization of intangibles
increased $2.5 million for the nine months ended September 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 $642,000 for the nine months ended September 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 $1.6 million for the nine months ended September 30, 2005, compared
with the same period in 2004.
The Company's annualized non-interest expense as a percentage of average assets
improved to 1.9% for the quarter ended September 30, 2005, compared with 2.2%
for the same period in 2004. For the nine months ended September 30, 2005,
annualized non-interest expense as a percentage of average assets was 2.0%,
compared with 2.4% 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 57.1% for the quarter ended September 30, 2005, compared
with 62.3% for the same period in 2004. For the nine months ended September 30,
2005, the efficiency ratio was 59.3%, compared with 63.8% for the same period in
2004.
Asset Quality
The Company continues to emphasize asset quality. Total non-performing loans at
September 30, 2005 were $6.5 million, or 0.18% of total loans, compared to $6.2
million, or 0.17% of total loans at December 31, 2004, and $4.9 million, or
0.13% of total loans at September 30, 2004. At September 30, 2005, the Company's
allowance for loan losses was 0.89% of total loans, compared with 0.91% of total
loans at December 31, 2004, and 0.90% of total loans at September 30, 2004. The
Company recorded provisions for loan losses of $100,000 and $500,000 for the
three and nine months ended September 30, 2005, respectively, compared with
provisions of $1.1 million and $2.7 million for the three and nine months ended
September 30, 2004, respectively. For the three and nine months ended September
30, 2005, net charge-offs totaled $832,000 and $1.6 million, respectively,
compared with net charge-offs of $1.3 million and $2.6 million for the same
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 76 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 October 28, 2005 regarding highlights of the
Company's third quarter 2005 financial results. The call may be accessed by
dialing 1-877-407-9210 (Domestic) or 1-201-689-8049 (International). 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
September 30, 2005 (Unaudited) and December 31, 2004
(Dollars in Thousands)
Assets September 30, 2005 December 31, 2004
--------------------------------- ----------------------------
Cash and due from banks $ 127,076 $ 121,187
Federal funds sold 60,000 16,000
Short-term investments 9,680 26,507
--------------------------------- ----------------------------
Total cash and cash equivalents 196,756 163,694
--------------------------------- ----------------------------
Investment securities (market value of $420,375
at September 30, 2005 (unaudited) and $450,071
at December 31, 2004) 421,057 445,633
Securities available for sale, at fair value 1,170,318 1,406,340
Federal Home Loan Bank stock 43,208 48,283
Loans held for sale 1,664 --
Loans 3,679,907 3,707,211
Less allowance for loan losses 32,621 33,766
--------------------------------- ----------------------------
Net loans 3,647,286 3,673,445
--------------------------------- ----------------------------
Foreclosed assets, net 421 140
Banking premises and equipment, net 62,538 64,605
Accrued interest receivable 20,893 23,865
Intangible assets 437,459 443,148
Bank-owned life insurance 109,770 105,932
Other assets 64,101 58,237
--------------------------------- ----------------------------
Total assets $ 6,175,471 $ 6,433,322
================================= ============================
Liabilities and Stockholders' Equity
Deposits:
Demand deposits $ 1,142,838 $ 1,116,812
Savings deposits 1,418,168 1,538,466
Certificates of deposit of $100,000 or more 278,111 253,024
Other time deposits 1,125,231 1,142,171
--------------------------------- ----------------------------
Total deposits 3,964,348 4,050,473
Mortgage escrow deposits 18,768 15,389
Borrowed funds 1,048,387 1,166,064
Subordinated debentures 26,611 27,113
Other liabilities 38,955 37,507
--------------------------------- ----------------------------
Total liabilities 5,097,069 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 69,372,501 shares outstanding at
September 30, 2005, and 74,078,784 shares outstanding
at December 31, 2004 799 799
Additional paid-in capital 963,545 960,792
Retained earnings 385,685 358,678
Accumulated other comprehensive (loss) income (6,893) 3,767
Treasury stock at cost (154,152) (70,810)
Unallocated common stock held by Employee Stock
Ownership Plan (74,062) (76,101)
Common Stock acquired by the Stock Award Plan (36,520) (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 1,078,402 1,136,776
-------------------------------- ----------------------------
Total liabilities and stockholders'
equity $ 6,175,471 $ 6,433,322
================================ ============================
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Income
Three and Nine Months Ended September 30, 2005 and 2004 (Unaudited)
(Dollars in Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- ----------------------------
2005 2004 2005 2004
------------- --------------- ------------- --------------
Interest income:
Real estate secured loans $ 38,759 $ 36,978 $ 115,673 $ 84,283
Commercial loans 5,691 3,953 15,927 10,979
Consumer loans 7,889 6,552 22,390 15,948
Investment securities 4,275 4,799 12,925 14,522
Securities available for sale 12,271 14,423 38,901 32,603
Other short-term investments 103 108 419 408
Federal funds 283 95 819 469
------------- --------------- ------------- --------------
Total interest income 69,271 66,908 207,054 159,212
------------- --------------- ------------- --------------
Interest expense:
Deposits 15,603 11,321 42,619 27,123
Borrowed funds 8,478 8,404 25,405 18,008
Subordinated debentures 379 253 1,083 253
------------- --------------- ------------- --------------
Total interest expense 24,460 19,978 69,107 45,384
------------- --------------- ------------- --------------
Net interest income 44,811 46,930 137,947 113,828
Provision for loan losses 100 1,050 500 2,700
------------- --------------- ------------- --------------
Net interest income after
provision for loan losses 44,711 45,880 137,447 111,128
------------- --------------- ------------- --------------
Non-interest income:
Fees 6,384 5,853 17,261 15,536
Net gain on securities transactions 213 577 151 1,312
Bank-owned life insurance 1,286 1,255 3,838 3,193
Other income (63) 515 292 2,531
------------- --------------- ------------- --------------
Total non-interest income 7,820 8,200 21,542 22,572
------------- --------------- ------------- --------------
Non-interest expense:
Compensation and employee benefits 15,221 17,869 50,186 46,351
Net occupancy expense 4,842 4,837 14,523 12,355
Data processing expense 2,135 2,156 6,462 5,820
Amortization of intangibles 1,595 1,953 5,581 3,048
Advertising and promotion 1,086 1,853 3,290 4,897
Other operating expenses 5,151 5,672 14,593 14,612
------------- --------------- ------------- --------------
Total non-interest expense 30,030 34,340 94,635 87,083
------------- --------------- ------------- --------------
Income before income tax expense 22,501 19,740 64,354 46,617
Income tax expense 7,564 6,397 20,626 14,399
------------- --------------- ------------- --------------
Net income $ 14,937 $ 13,343 $ 43,728 $ 32,218
============= =============== ============= ==============
Basic earnings per share $0.23 $0.19 $0.66 $0.54
Average basic shares outstanding 65,324,553 68,729,870 66,730,203 59,444,983
Diluted earnings per share $0.23 $0.19 $0.65 $0.54
Average diluted shares outstanding 66,081,331 69,370,675 67,487,825 59,660,492
PROVIDENT FINANCIAL SERVICES, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except share data) (Unaudited)
At or for the Three At or for the Nine
Months Ended Months Ended
September 30, September 30,
-------------------------------------------------------------
2005 2004 2005 2004
---- ---- ---- ----
INCOME STATEMENT:
Net interest income $44,811 $46,930 $137,947 $113,828
Provision for loan losses 100 1,050 500 2,700
Non-interest income 7,820 8,200 21,542 22,572
Non-interest expense 30,030 34,340 94,635 87,083
Income before income tax expense 22,501 19,740 64,354 46,617
Net income 14,937 13,343 43,728 32,218
Basic earnings per share $0.23 $0.19 $0.66 $0.54
Diluted earnings per share $0.23 $0.19 $0.65 $0.54
Interest rate spread 2.98% 3.19% 3.04% 3.08%
Net interest margin 3.31% 3.43% 3.35% 3.41%
PROFITABILITY:
Annualized return on average assets 0.96% 0.87% 0.93% 0.88%
Annualized return on average equity 5.42% 5.16% 5.28% 4.84%
Annualized non-interest expense to
average assets 1.93% 2.21% 2.02% 2.37%
Efficiency ratio (1) 57.06% 62.29% 59.34% 63.84%
ASSET QUALITY:
Non-performing loans $6,465 $4,889
Foreclosed assets 421 32
Non-performing loans to
total loans 0.18% 0.13%
Non-performing assets to
total assets 0.11% 0.08%
Allowance for loan losses $32,621 $33,630
Allowance for loan losses to
non-performing loans 504.58% 687.92%
Allowance for loan losses to
total loans 0.89% 0.90%
AVERAGE BALANCE SHEET DATA:
Assets $6,188,773 $6,154,411 $6,266,827 $4,886,347
Loans, net 3,659,764 3,405,859 3,658,180 2,636,690
Earning assets 5,402,747 5,442,634 5,481,589 4,461,198
Core deposits 2,566,915 2,540,794 2,581,520 2,019,111
Borrowings 1,103,611 1,173,304 1,131,788 854,321
Interest-bearing liabilities 4,565,435 4,670,130 4,635,726 3,591,234
Stockholders' equity 1,092,876 1,034,078 1,108,125 889,517
Average yield on interest-
earning assets 5.11% 4.89% 5.03% 4.77%
Average cost of interest-
bearing liabilities 2.13% 1.70% 1.99% 1.69%
Notes
(1) Efficiency Ratio Calculation
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2005 2004 2005 2004
---- ---- ---- ----
Net interest income $44,811 $46,930 $137,947 $113,828
Non-interest income 7,820 8,200 21,542 22,572
--------- --------- ---------- ----------
Total income $52,631 $55,130 $159,489 $136,400
====== ====== ======= =======
Non-interest expense $30,030 $34,340 $ 94,635 $ 87,083
====== ====== ====== ======
Expense/Income: 57.06% 62.29% 59.34% 63.84%
====== ====== ====== ======
Average Quarterly Balances
NET INTEREST MARGIN ANALYSIS
(Unaudited) (Dollars in Thousands) September 30, 2005 June 30, 2005
------------------ -------------
Average Average Average Average
Balance Interest Yield Balance Interest Yield
--------------------------------------- ---------------------------------
Interest-Earning Assets:
Federal Funds Sold and
Other Short-Term Investments $ 46,332 $ 386 3.31% $ 82,202 $ 588 2.87%
Investment Securities (1) 429,596 4,275 3.99% 425,340 4,218 3.97%
Securities Available for Sale 1,222,842 11,705 3.83% 1,276,344 12,302 3.86%
Federal Home Loan Bank Stock 44,213 566 5.08% 45,423 548 4.84%
Net Loans (2)
Total Mortgage Loans 2,747,397 38,759 5.63% 2,772,638 38,636 5.57%
Total Commercial Loans 371,342 5,691 6.00% 356,216 5,283 5.87%
Total Consumer Loans 541,025 7,889 5.79% 531,252 7,251 5.47%
------------- ------------ ----------- ----------
Total Interest-Earning Assets 5,402,747 69,271 5.11% 5,489,415 68,826 5.01%
------------- ------------ ----------- ----------
Non-Interest Earning Assets:
Cash and Due from Banks 102,519 101,294
Other Assets 683,507 683,839
------------- -----------
Total Assets $ 6,188,773 $ 6,274,548
============= ===========
Interest-Bearing Liabilities:
Demand Deposits $ 614,294 1,698 1.10% $ 606,275 1,245 0.82%
Savings Deposits 1,468,944 4,119 1.11% 1,520,867 4,004 1.06%
Time Deposits 1,378,586 9,786 2.82% 1,393,860 8,862 2.55%
------------- ------------ ----------- ----------
Total Deposits 3,461,824 15,603 1.79% 3,521,002 14,111 1.61%
------------- ------------ ----------- ----------
Borrowed Funds 1,103,611 8,857 3.18% 1,124,017 8,744 3.12%
------------- ------------ ----------- ----------
Total Borrowings 1,103,611 8,857 3.18% 1,124,017 8,744 3.12%
------------- ------------ ----------- ----------
Total Interest-Bearing Liabilities 4,565,435 24,460 2.13% 4,645,019 22,855 1.97%
------------- ------------ ----------- ----------
Non-Interest Bearing Liabilities 530,462 523,149
------------- -----------
Total Liabilities 5,095,897 5,168,168
Stockholders' Equity 1,092,876 1,106,380
------------- -----------
Total Liabilities & Stockholders'
Equity $ 6,188,773 $ 6,274,548
============= ===========
Net interest income $ 44,811 $ 45,971
============ ==========
Net interest rate spread 2.98% 3.04%
==== ====
Net interest-earning assets $ 837,312 $ 844,396
============= ===========
Net interest margin (3) 3.31% 3.34%
==== ====
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.
9/30/05 6/30/05 3/31/05 12/31/04 9/30/04
3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr.
Interest-Earning Assets:
Securities 3.88% 3.86% 3.90% 3.76% 3.79%
Net Loans 5.69% 5.58% 5.53% 5.52% 5.55%
Total Interest-Earning Assets 5.11% 5.01% 4.97% 4.90% 4.89%
Interest-Bearing Liabilities:
Total Deposits 1.79% 1.61% 1.48% 1.37% 1.29%
Total Borrowings 3.18% 3.12% 3.08% 3.01% 2.94%
Total Interest-Bearing Liabilities 2.13% 1.97% 1.88% 1.79% 1.70%
Interest Rate Spread 2.98% 3.04% 3.09% 3.11% 3.19%
Net Interest Margin 3.31% 3.34% 3.38% 3.38% 3.43%
Ratio of Interest-Earning Assets to
Total Interest-Bearing Liabilities 1.18x 1.18x 1.18x 1.18x 1.17x
Average YTD Balances
NET INTEREST MARGIN ANALYSIS
(Unaudited)(Dollars in Thousands)
September 30, 2005 June 30, 2005
------------------ -------------
Average Average Average Average
Balance Interest Yield Balance Interest Yield
--------------------------------------- ---------------------------------
Interest-Earning Assets:
Federal Funds Sold and
Other Short-Term Investments $ 58,256 $ 1,238 2.84% $ 106,645 $ 877 1.10%
Investment Securities (1) 431,567 12,925 4.00% 494,534 14,522 3.92%
Securities Available for Sale 1,287,927 37,399 3.87% 1,185,256 32,192 3.63%
Federal Home Loan Bank Stock 45,659 1,502 4.40% 38,073 411 1.44%
Net Loans (2)
Total Mortgage Loans 2,768,364 115,673 5.57% 1,960,222 84,283 5.74%
Total Commercial Loans 358,960 15,927 5.85% 314,134 10,979 4.67%
Total Consumer Loans 530,856 22,390 5.64% 362,334 15,948 5.88%
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Total Interest-Earning Assets 5,481,589 207,054 5.03% 4,461,198 159,212 4.77%
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Non-Interest Earning Assets:
Cash and Due from Banks 102,015 88,748
Other Assets 683,223 336,401
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Total Assets $ 6,266,827 $ 4,886,347
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Interest-Bearing Liabilities:
Demand Deposits $ 611,943 4,139 0.90% $ 508,172 3,143 0.83%
Savings Deposits 1,502,628 11,745 1.05% 1,155,000 7,327 0.85%
Time Deposits 1,389,367 26,735 2.57% 1,073,741 16,653 2.07%
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Total Deposits 3,503,938 42,619 1.63% 2,736,913 27,123 1.32%
------------- ------------ ----------- ----------
Borrowed Funds 1,131,788 26,488 3.13% 854,321 18,261 2.86%
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Total Borrowings 1,131,788 26,488 3.13% 854,321 18,261 2.86%
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Total Interest-Bearing Liabilities 4,635,726 69,107 1.99% 3,591,234 45,384 1.69%
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Non-Interest Bearing Liabilities 522,976 405,596
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Total Liabilities 5,158,702 3,996,830
Stockholders' Equity 1,108,125 889,517
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Total Liabilities & Stockholders'
Equity $ 6,266,827 $ 4,886,347
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Net interest income $ 137,947 $ 113,828
============ ==========
Net interest rate spread 3.04% 3.08%
==== ====
Net interest-earning assets $ 845,863 $ 869,964
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Net interest margin (3) 3.35% 3.41%
==== ====
Ratio of interest-earning assets to
interest-bearing liabilities 1.18x 1.24x
============= ===========
<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.
Nine Months Ended
---------------------------------------
9/30/05 9/30/04 9/30/03
------- ------- -------
Interest-Earning Assets:
Securities 3.88% 3.51% 3.26%
Net Loans 5.60% 5.63% 6.28%
Total Interest-Earning Assets 5.03% 4.77% 4.82%
Interest-Bearing Liabilities:
Total Deposits 1.63% 1.32% 1.76%
Total Borrowings 3.13% 2.86% 2.77%
Total Interest-Bearing Liabilities 1.99% 1.69% 1.95%
Interest Rate Spread 3.04% 3.08% 2.87%
Net Interest Margin 3.35% 3.41% 3.35%
Ratio of Interest-Earning Assets to
Total Interest-Bearing Liabilities 1.18x 1.24x 1.33x